10 key interpretations in the EUDR Guidance and FAQ updates: What you need to know

What are the changes?

1. Simplified procedures for downstream operators and traders to ascertain upstream due diligence (FAQ 3.4, 7.25)

   Minimum requirements for downstream non-SME operators and traders to ascertain the quality of upstream due diligence systems are now defined. At a minimum, they must collect the reference and verification numbers of previously submitted DDS, and verify their validity before referencing them in their own DDS submissions.

   As the EU Information System automatically verifies the validity of reference numbers once entered, this second step does not create additional administrative burden.

   As the non-SME downstream operator/trader will still retain responsibility for compliance, the FAQ is clear that further actions to ascertain the quality of upstream due diligence systems are possible. Additional steps are suggested, starting with checking information that forms part of previously submitted DDS (e.g., countries of production, geolocation data, quantities or HS codes). The FAQ then suggests actions to collect and analyse additional information beyond what is in the Information System. Actions such as consulting the due diligence system public summary reports of non-SME upstream suppliers, checking the results of audits, or requesting additional information are described. However, these actions remain optional.

2. Composite products: Due diligence on the main commodity only (Guidance Chapter 9, FAQ 1.3)

   Ambiguities in language between the previous versions of the Guidance and FAQ have now been addressed. The updated Guidance now aligns with the FAQ in confirming that only the relevant products under the main relevant commodity in a composite product must undergo due diligence. For example, a chocolate bar containing cocoa and palm oil requires that operators apply due diligence only in relation to the relevant cocoa products (such as cocoa powder and cocoa butter), as listed in Annex I.

3. DDS may cover multiple shipments, but only up to one year (FAQ 5.19-5.21)

   While already included in previous versions, the updated FAQ further clarifies that operators may submit a DDS that covers multiple shipments. This DDS can therefore be referenced in multiple different customs declarations.

   The FAQ makes it clear that a DDS should only cover a period of up to 12 months, such that it does not cover shipments/batches over a period longer than one year from the time of submission of the statement. This is a sensible limit on the life of the DDS, given that operators are obliged to review their due diligence system once a year. A longer time would lead to difficulties in demonstrating the correspondence between declared products and products actually (or intended to be) placed on the market or exported.

   Additionally, when covering multiple shipments/batches, operators need to remember that the quantity of relevant product being placed on the market must be covered by a DDS, and once that quantity has been placed on the market, a new statement is required for any additional product.

4. Re-imports: New requirements clarified (FAQ 5.4)

   The previous version of the FAQ communicated that a re-import of a relevant product that had left the EU would require due diligence to be conducted anew by the operator, with a new DDS submitted. The argument was that the product had lost its custom status as a Union good.

   Now, the obligations around re-imported relevant products into the EU are significantly altered. The updated FAQ considers the re-importing entity as a ‘downstream operator’. SME re-importers can refer to the original DDS, while non-SMEs must submit a new DDS but may reference the original for traceability purposes.

5. Geolocation data: Not always visible or required (FAQ 3.6, 7.15)

   The updated FAQ clarifies that the EUDR does not impose a legal obligation on ‘upstream’ operators to share geolocation data with downstream actors. Furthermore, upstream operators can choose whether their geolocation data in the DDS is visible, via the Information System, to downstream entities.

   As a result, downstream non-SME operators and traders, when referencing previous DDS, are not required to obtain geolocation data through the Information System or by other means. However, they may still wish to do so voluntarily, for their due diligence (e.g., if they wish to go beyond the minimum required for ascertaining) and are free to arrange information sharing through other channels, in line with data protection laws.

6. Clarified: how to consider trade & customs laws (FAQ 1.29.1, 1.29.2)

   Article 2(40) of the EUDR states that legislation is relevant if it concerns the legal status of the area of production, meaning where laws specifically impact or influence the legal status of the area in which the commodities were produced.

   In the case of trade and customs laws, the updated FAQ clarifies that such laws (which by their nature do not concern the legal status of the area of production) can also be relevant if they specifically concern the relevant sectors of agricultural or timber production. For example, if specific agricultural or forest-related documents need to be supplied at customs or as part of the trade laws of the country of production.

   However, only trade and customs laws in the country of production are relevant. For example, if cocoa beans are grown in country A, processed in country B, and placed on the EU market in country C, only the laws of country A are relevant.

7. Trading of packaging and pallets (FAQ 2.6, 2.15)

   As long as packaging (e.g., a pallet) is placed on or made available on the market or exported as a product in its own right (i.e., standalone packaging), rather than as packaging for another product, it is covered by the EUDR. However, once the concerned packaging becomes a packaging material used exclusively to support, protect or carry a product, it is then not covered by the scope of the regulation. This means the following apply:

   • Selling or renting used packaging material to other companies (like second-hand pallets) is not subject to the EUDR.
   • Empty used packaging already used for the first time to support, protect or carry another product, such as in a closed loop exchange system (e.g., pallets exchanged between companies to be reused for transport), is also outside the scope.

    

   However, if packaging is repaired using new relevant materials (e.g., wood), those new materials will need to be subject to due diligence and a DDS must be submitted.

8. Responsibilities in contractor scenarios (FAQ 3.14)

   The updated FAQ clarifies who is the operator or trader when one company contracts another company to provide relevant products linked to their commercial activities. In such cases, the entity making the product available on the EU market is responsible for compliance.

   For example, if a contractor purchases and supplies chocolate on behalf of a supermarket, the contractor is the trader. If the supermarket owns the product, with the contractor selling it on their behalf without taking ownership, then the supermarket is the operator. The updated documents provide further examples.

9. Samples and correspondence excluded (FAQ 2.13-2.14)

   Items of correspondence, such as letters, are confirmed to be out of scope, as they are not considered market placements. However, if an item of correspondence contains a relevant product (e.g., an envelope containing relevant products), this will be subject to DDS requirements if supplied in the course of a commercial activity.

   In line with the proposed Delegated Act, the updated FAQ confirms that samples for testing or evaluation are also excluded from the EUDR. These samples usually have negligible value and can be used by companies to seek or solicit orders from new suppliers. Products used for examination are often consumed or destroyed in the course of the analysis or testing.

10. Countries of the European Free Trade Association (EFTA) (FAQ 9.13)

    The updated FAQ confirms that Norway, Iceland, and Liechtenstein, though part of the European Economic Area (EEA), are considered as ‘third countries’ in line with Article 2(35) of the EUDR. This is because they are not in the “customs territory” of the EU as defined in Article 2(34) of the regulation. These countries may adopt the regulation in future, but this has not been confirmed, and the process of doing so can take years.

    Switzerland, which is within the EFTA but not part of the EEA, will always continue to be considered as having third country status.