Possible Postponement of EUDR

EU Commissioner Jessica Roswall, Directorate-General for Environment, Water Resilience and a Competitive Circular Economy, wrote a letter to the European Parliament today declaringthe Commission's intention to postpone the application of the European Deforestation Regulation (“EUDR”) by one year. The same was confirmed by Alois Rainer, the German Minister for Agriculture, Food and Regional Identity. The Regulation, which entered into force on 29 July 2023, was originally scheduledto apply from 30 December 2024. Following a previous deferral, the applicationdate had already been moved to 30 December 2025.

Withtoday’s announcement, the Commission signals a further delay, pushing theexpected application date to 30 December 2026.

TheCommissioner explicitly referred to concerns with regards to the functioning ofthe information system (“TRACES”) but also emphasized that theinformation system is currently still being tested. The Commission did notindicate any plans for substantive amendments to the regulation. As such, theEUDR is expected to apply in its current form once the new timeline takeseffect.

The information system TRACES is the centralsystem for submitting a Due Diligence Statement, one of the key requirementsaccording to Article 3 lit. c) EUDR for relevant products to enter and leavethe Union market but also to be allowed to sell relevant products on the Unionmarket. In the case of import and export, the reference number generated by TRACESfor a Due Diligence Statement needs to be indicated in the respective customsdeclarations. Therefore, a working information system is key for undisruptedsupply chains.  

TheCommission currently finds that new projections on the number of expectedoperations and interactions between economic operators and the IT system have ledto a substantial upward reassessment of the projected load on the IT system. Therefore,the Commission believes this might lead to the system slowing down tounacceptable levels and even complete shutdowns. Operators and traders wouldthen be unable to register, upload, and retrieve the necessary information forcustoms which could lead to disruptions in the flow of goods.

Similarto last year's procedures, the European Commission now needs to formally proposea change to the EUDR. As the EUDR is already in force since 29 June 2023, aformal legislative procedure will follow, whereby the European Parliament andthe Council of the European Union must approve of the proposed delay.

Thetimeline for implementing the postponement of the EUDR is currently stillunclear. However, given the support of numerous Member States and the EUCommission, it is likely that the applicability of the EUDR will be postponeduntil 2026. Whether the EUDR will also become subject to an omnibus-packageremains to be seen.