Possible postponement of the EUDR

EU Commissioner Jessica Roswall, Directorate-General for Environment, Water Resilience and a Competitive Circular Economy, today informed the European Parliament in a letter of the Commission's intention to postpone the application of the European Deforestation Regulation (“EUDR”) by one year. This was also confirmed by Alois Rainer, the German Federal Minister of Food, Agriculture and Community. The regulation, which entered into force on July 29, 2023, was originally scheduled to apply from December 30, 2024. Following a previous postponement, the application date had already been pushed back to December 30, 2025. With today's announcement, the Commission signals a further delay, postponing the expected application date to December 30, 2026. The Commissioner referred to concerns regarding the functioning of the information system (“TRACES”), but also stressed that the information system is currently still in the testing phase. The Commissioner did not state that she intends to make any significant substantive changes to the regulation. Therefore, it is expected that the EUDR will be applied in its current form once the new timetable enters into force. The TRACES information system is the central system for submitting the due diligence declaration, one of the key requirements under Article 3(c) of the EUDR for relevant products that are to be introduced into and exported from the Union market, as well as for the sale of relevant products on the Union market. For imports and exports, the reference number generated by TRACES for a due diligence declaration must be included in the relevant customs declarations. Therefore, a functioning information system is crucial for uninterrupted supply chains. The Commission now believes that, according to a new forecast, the system's workload due to expected transactions and interactions between economic operators will be significantly higher than originally predicted. This could, according to the Commission, lead to unacceptable slowdowns and even complete system outages. Operators and traders would then no longer be able to register, upload, and retrieve the information required for customs, which could disrupt the flow of goods. Similar to last year, the European Commission must now officially propose the amendment to the EUDR. Since the EUDR has been in force since June 29, 2023, a formal legislative procedure will follow, requiring the European Parliament and the Council of the European Union to approve the proposed postponement. The timetable for implementing the postponement of the EUDR is currently unclear. However, given the support of numerous Member States and the European Commission, it is likely that the application of the EUDR will be postponed until 2026. Whether the EUDR will also be included in an omnibus package remains to be seen.