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The European Commission has presented a draft regulation that requires from importers and exporters of cattle, cocoa, coffee, palm oil, soybeans, timber and products produced with them to exercise due diligence in the supply chain.

 

The due diligence in the supply chain is designed to ensure that:

  • mentioned goods and products were not produced on deforested or degraded land after December 31, 2020;
  • have been produced in accordance with the laws of the country of production.

This regulation aims to limit the import and export of goods related to deforestation and introduce a requirement that EU entrepreneurs will have to prove that their global supply chains do not contribute to forest destruction. As part of their due diligence systems, operators placing products on the EU market or exporting products will need to:

  • get information about the goods, quantities, suppliers, country of production, etc. The key requirement at this stage is to obtain the geographic coordinates of the area where the goods were produced. As deforestation is linked to land-use change, monitoring deforestation requires a precise link between a commodity or product placed on the EU market and the land in which it has been grown.
  • use information about the land used to produce goods for analysis and risk assessment in the supply chain.

Failure to comply with any of these requirements will result in the prohibition of these products from being placed on the EU market, and most provisions will apply within 12 months of the entry into force of the regulation. Taking into account the entire legislative process, it can be assumed that it will be January 1, 2023.

The provisions of the regulation have a direct impact in each EU Member State, so no implementation of EU regulations in this area is required. The detailed list of products is set out in the annex to the draft regulation by reference to the CN tariff classification.