Tiếng ViệtQuestion
EUDR: We are a multinational company. We have our factories in Asia and manufacture our products there. We then wholesale our products in the EU market. What are our obligations under the EU Deforestation Regulation? Who should bear the legal obligations of the Regulation?
Background information:
Regulation (EU) 2023/1115, often known as the EU Regulation on Deforestation-free Supply Chain sets out rules to ensure that the supply chains for key commodities, after 2020, are free of deforestation and forest degradation. The seven commodities covered by the EUDR are cattle, cocoa, coffee, oil palm, rubber, soy, wood and their derived products.
Under EUDR, the obligations to exercise due diligence and submit the due diligence statement to demonstrate that (1) the products are deforestation-free and (2) the products have been produced in accordance with the relevant legislation of the country of production are only applicable to operator established in the European Union. Therefore, companies based outside the EU have no legal obligations under the EUDR.
For information: “Operator” is defined in Article 2(15) of the EUDR as any natural or legal person who, in the course of a commercial activity, places relevant products on the market or exports them.
With this in mind, and since the question did not specify where the multinational company is based, we can divide the situation into 2 scenarios:
Scenario 1: The multinational company is based in the EU
We assume that the company is based in the EU and has factories in Asia. After the relevant products have been manufactured in Asia, the company will import and place the products in the EU for wholesale.
In this case, the company is classified as an operator and is covered by the EUDR because it is the first to place the relevant products on the EU market. Therefore, the company must exercise due diligence, submit due diligence statements (DDS) to the Information System and include the DDS reference number in the customs declaration for release for free circulation.
Because the company manufactures the products itself, it has more reliability, control, and access to the information required by EUDR to demonstrate compliance than if it had to obtain it from its suppliers.
For information: which business entity (i.e. operator) should be considered EU-based?
According to Article 2(21)(b) of the EUDR, it means any undertaking which has its registered office, central headquarters or a permanent establishment in the Union.
Scenario 2: The multinational company is based outside the EU
In this case, as mentioned in the background section above, the EUDR applies only to EU-based companies. Since the company is based outside the EU, it is not subject to the legal obligations of the Regulation. So, who should be responsible then?
The quick answer is the first natural or legal person established in the Union who makes such relevant products available on the market (Article (7) EUDR).
For information: Article (7) of the EUDR: Placing on the market by operators established in third countries:
“Where a natural or legal person established outside the Union places relevant products on the market, the first natural or legal person established in the Union who makes such relevant products available on the market shall be deemed to be an operator within the meaning of this Regulation.”
Even you are not required to declare your products under the EUDR. Due to the complexity of the supply chain and trade facilitation, you may want to know what information your EU customers may ask you to provide. For more information, please read our following post: What information would your EU trading partners expect from you?
