Regulation (EU) 2023/1115, known as EUDR, is one of the European Union’s most ambitious and comprehensive initiatives to tackle global deforestation. This regulatory framework aims to ensure that only deforestation-free products, compliant with the laws of their country of origin, can enter the European market or be exported.
The regulation applies to cocoa, coffee, soy, palm oil, wood, rubber, and cattle, as well as their derived products. Its complexity arises from a combination of technical, legal, and logistical requirements that compel economic operators to adopt rigorous due diligence processes and maintain a high level of transparency throughout the supply chain.
In this article, we provide a detailed analysis of the obligations imposed by the Regulation on the relevant categories—operators and traders—highlighting how these requirements vary depending on their position in the supply chain and the size of the company, distinguishing between Small and Medium Enterprises (SMEs) and large enterprises (non-SMEs).
We will offer a clear overview of the differences between these roles, starting from the definitions provided by the regulation, and explore the practical implications for businesses required to comply with these provisions.
Definitions Under Regulation (EU) 2023/1115
- Operator: Any natural or legal person who, in the course of a commercial activity, places relevant products on the market or exports them.
- Trader: Any person in the supply chain other than the operator who, in the course of a commercial activity, makes relevant products available on the market.
- Downstream Operators: Subjects that process a product listed in Annex I (already subject to due diligence) into another Annex I product or export such products.
Obligations for Non-SME Operators
Non-SME operators face the strictest obligations under the EUDR. Before placing the relevant products on the EU market or exporting them, they must:
- Conduct Due Diligence to prove that the products are deforestation-free and have been produced in compliance with the relevant legislation of the country of production.
- Submit the Due Diligence Statement through the EU's IT system, known as TRACES, or via integration with compatible company systems.
- Retain a copy of the Due Diligence Statement for five years.
- Inform competent authorities and traders to whom they have supplied the products if they receive new relevant information indicating a risk of non-compliance. In the case of exports, the operator must inform the competent authorities of the Member State that serves as the country of production.
- Communicate all necessary information to downstream supply chain actors to demonstrate compliance with due diligence requirements, including reference numbers of the submitted statements.
Obligations for Downstream Non-SME Operators
Downstream non-SME operators in the supply chain have similar obligations to upstream operators but can rely on due diligence already conducted, provided that:
- They verify that the due diligence was properly carried out, for example, through independent audits or checks on the due diligence systems of upstream operators.
- They submit a declaration for any parts of the products that have not yet undergone due diligence.
They remain legally responsible in case of any violations of the Regulation.
Obligations for SME Operators
SME operators have simplified obligations compared to large enterprises:
- Reference to existing due diligence: For products that have already undergone due diligence upstream, they only need to provide the reference numbers of the submitted declarations upon request.
- Conducting due diligence: For products not subjected to due diligence, SME operators have the same obligations as non-SME operators and must carry out due diligence.
Obligations for SME Operators
SME operators have simplified obligations compared to large enterprises:
- Reference to existing due diligence: For products that have already undergone due diligence upstream, they are only required to provide, upon request, the reference numbers of the declarations already submitted.
- Conducting due diligence: For products not previously subjected to due diligence, SME operators must fulfill the same obligations as non-SME operators and carry out a due diligence process.
These obligations also apply to SME operators downstream in the supply chain.
Obligations for Traders
- Non-SME Traders: Treated as equivalent to non-SME operators, they are subject to the same due diligence implementation and declaration requirements.
- SME Traders: Required to collect and retain, for five years, information on their suppliers and customers for the relevant products, including the reference numbers of due diligence declarations.
If any information indicates a risk of non-compliance, both SME and non-SME traders must immediately inform the competent authorities and their customers.
Conclusion
The EUDR introduces strict and differentiated obligations to ensure that products placed on the European market are deforestation-free and comply with the regulations of their countries of origin. However, the complexity and volume of required data pose a significant challenge for both operators and traders, whether SMEs or non-SMEs.
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