Customs Talks: How the new EU Deforestation Regulation (EUDR) will impact business with the UK

Customs Talks: How the new EU Deforestation Regulation (EUDR) will impact business with the UK

The EU Deforestation Regulation (EUDR) brings strict new standards for businesses to prevent deforestation within their supply chains, especially impacting trade with the UK. For a closer look at the EUDR and what it means for businesses, explore this article by our Baker Tilly International network partners in the Netherlands.

Customs Talks: Last year the European Commission adopted legally binding rules to reduce the impact of the EU on deforestation, forest degradation and loss of biodiversity around the globe. These measures simultaneously promote so-called deforestation-free products.

The EU Deforestation Regulation (“EUDR”) will affect international trade. Although it only sets rules for EU importers, these rules will have an effect further up the supply chain. As the United Kingdom is an important trade partner for the EU in general and the Netherlands in particular, this new legislation will impact trade with the UK too. In this article, we discuss a number of points of attention concerning the EUDR for UK businesses.

What is the EUDR?

In a nutshell, the EUDR will impact importers in, and exporters to, the EU, that trade in specific commodities listed in the Regulation. Currently, this includes palm oil, cattle, soy, coffee, cocoa, timber and rubber, as well as products derived from these commodities (such as chocolate).

From 30 December 2024 onward, it must be substantiated by evidence that the products which are within scope of the EUDR are “deforestation-free”. This evidence must be retained in the administrative records. If the evidence is not available, ‘effective, proportionate and dissuasive’ penalties may be imposed, and illegal goods may be seized.

Please note that a postponement has been suggested by the European Commission (“EC”). If this postponement is approved, the implementation will likely be moved to 30 December 2025.

For more information on the EUDR, which companies fall within tis scope, what commodities and derivatives are covered and what the individual obligations for importers, exporters and other operators, please read our explanatory article here.

How are UK businesses impacted by the EUDR?

Under the EUDR, UK businesses that export goods falling within the scope of the EUDR must provide prescribed information for the submission of a due diligence statement (“DDS”). This due diligence statement should amongst others include ‘Country of production and the geolocation of all plots of land where the relevant commodities were produced’. This is a key consideration for UK companies doing business with the EU customers, importing goods into the EU, transferring own stock, or selling into the EU under the DDP Incoterm.

Additionally, as a non-EU established company, the UK business needs to ensure that the customs agent involved is able to submit the registration as well as the DDS, on behalf of the UK business, through the EUDR Portal.

Failure to provide the DDS at time of importation may result in penalties and delays in customs clearance at the EU border.

If your customs agent acts as your ‘Indirect Customs Representative’ for products affected by the EUDR, it is crucial that you discuss these obligations beforehand. If the additional reporting requirements are handled incorrectly, the EUDR may expose the customs agent to risks too.

If you would like to know more about the possible impact of EUDR on your business from a UK perspective, please read this article by the experts at MHA, our Baker Tilly International network partners in the UK.

Get prepared for the EUDR

Regardless of the scope of your EU trading activities, you should review your supply chain and the possible impact EUDR may have on your business. Given the potential risks (ranging from hefty fines to trade bans) and the steps your business may need to take in order to be compliant, proper preparation is vital. And a number of considerations should be reviewed before December 2024 (or December 2025 if the EC’s postponement is approved) to ensure your business is ready for the EUDR.

Don’t postpone your preparation

The EUDR represents a significant shift in regulatory requirements for businesses trading with the EU. As we experienced during the recent implementation of the Carbon Border Adjustment Mechanism (“CBAM”), it is important for businesses to assess whether they are within scope of new legislation. Delaying or underestimating the required preparation may lead to problems later on.

For more information on the EUDR and for support in preparing for the new rules, please feel free to contact us. Our global Baker Tilly International network has experts located all over the world, which means we are perfectly positioned to assist you with any global trade matters.

The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.