We have received information from the German Bundestag that the Federal Government has tabled a bill to implement the European Union (EU) Regulation on deforestation-free products. This ‘Draft Act on the Reform of the Law on Deforestation-Free Products and on the Implementation of Certain Provisions of Directive (EU) 2024/1203 on the Protection of the Environment through Criminal Law’ is quite significant. The EUDR stipulates that, within EU member states, only certain raw materials and products may be placed on the market, made available on the market or exported. This applies to relevant raw materials such as cattle, cocoa, coffee, oil palm, rubber, soya and, above all, timber. A prerequisite for this is that they have been produced on deforestation-free land and lawfully harvested. No deforestation may have taken place on these areas after 31 December 2020.
Many companies are completely unaware that they are affected
Here are therefore some real-life examples from trade-e-bility’s client experience: Products manufactured from, amongst other things, the raw materials listed above may be subject to the EUDR. For example, certain seasonal items, wooden furniture, certain spare parts or certain paper products could be affected by the EUDR. However, whether a product is affected must always be assessed on a case-by-case basis in accordance with Article 1 and Annex I (Customs Tariff) of the EUDR.
Here is an extract from the Bundestag press release:
The Federal Government’s draft bill now stipulates that companies in Germany which place such products or goods on the market must fulfil extensive due diligence obligations. These include gathering information, conducting risk assessments, mitigating risks and submitting a due diligence declaration via a central information system.
The authorities will be obliged to carry out annual checks on a minimum proportion – up to nine per cent – of market participants trading in products from so-called ‘high-risk countries’. Where there are reasonable grounds to suspect infringements, officials may enter business premises and offices, inspect and copy documents and data storage media, and take samples. Measures such as seizure, suspension of placing on the market or export bans may also be ordered. Large market participants must report publicly each year on their due diligence obligations and the measures taken.
Violations are punishable by sanctions, including fines and custodial sentences. The draft provides that the deliberate placing on the market of non-compliant products may be punishable by up to five years’ imprisonment or a fine. Reckless conduct is punishable by up to three years’ imprisonment. For deliberate violations causing particularly serious environmental damage, the penalty range is from one to ten years’ imprisonment. In addition, fines of up to 100,000 euros may be imposed. For larger companies, these may, under certain conditions, amount to up to four per cent of their annual EU-wide turnover. Furthermore, authorities are to be permitted to confiscate seized products and impose a sales ban. There are also provisions to exclude companies from public contracts and state funding programmes.
The law is to be monitored by the state authorities and the Federal Office for Agriculture and Food (BLE). The BLE is also to be able to delegate tasks to private legal entities.
Are you affected?
Contact our trade-e-bility expert team to get answers to your questions such as:
- How do you determine whether you are affected?
- What information needs to be collected about products and suppliers?
- What obligations do (downstream) market participants, micro and small primary producers, and retailers have?
- How does the process for fulfilling due diligence obligations work?
- What is the EU’s country benchmarking and what impact does it have on due diligence obligations (simplified due diligence)?
- What does a due diligence statement under the Regulation contain and how is it submitted?
