EUDR and MERCOSUR: how the EU deforestation regulation impacts your imports

EUDR and MERCOSUR: how the European deforestation regulation impacts your imports\n\nThe European Union's deforestation regulation (EUDR), officially known as Regulation (EU) 2023/1115, is a landmark piece of legislation that aims to combat deforestation and forest degradation on a global scale. It entered into force in June 2023 and imposes strict requirements on companies that import and export certain raw materials and derived products on the EU market. This regulation has major implications for the MERCOSUR countries (Brazil, Argentina, Paraguay, Uruguay), which are major trading partners of the EU and large producers of the products concerned.\n\n### The main provisions of the EUDR\n\nThe EUDR covers seven key raw materials: beef, cocoa, coffee, palm oil, rubber, soy and wood. It also applies to a wide range of derived products, such as leather, chocolate, furniture and paper. To be placed on the EU market, these products must be:\n\n* **Deforestation-free:** The products must not come from land deforested after 31 December 2020.\n* **Legally produced:** The products must have been produced in accordance with the legislation of the country of origin.\n\nTo ensure compliance with these requirements, companies must set up a due diligence system. This system comprises three main steps:\n\n1. **Information gathering:** Companies must collect detailed information on their products, including the geolocation coordinates of the production plots.\n2. **Risk assessment:** Companies must assess the risk of non-compliance of their products with the EUDR requirements.\n3. **Risk mitigation:** If a risk is identified, companies must take measures to mitigate it, for example by carrying out independent audits or by supporting sustainable development projects.\n\n### The impact on MERCOSUR exports\n\nThe MERCOSUR countries are among the world's largest exporters of the products covered by the EUDR. Brazil and Argentina, in particular, are major players in the beef, soy and coffee markets. The EUDR therefore represents a major challenge for these countries, which will have to adapt to the new requirements to maintain their access to the European market.\n\nThe main difficulties for MERCOSUR exporters are:\n\n* **Traceability:** The need to provide geolocation data for each production plot is a major logistical challenge, especially for small producers.\n* **Due diligence:** The implementation of robust due diligence systems requires significant investments in time and resources.\n* **Legal compliance:** Verifying compliance with local legislation can be complex, especially in countries where forest governance is weak.\n\nHowever, the EUDR can also be an opportunity for the MERCOSUR countries. By complying with the requirements of the regulation, they can improve their brand image and access a market of consumers who are increasingly concerned about sustainability. In addition, the EUDR can encourage MERCOSUR governments to strengthen their own policies to combat deforestation.\n\n### The compliance timetable\n\nThe EUDR entered into force in June 2023, but companies have a transition period to comply with the new rules. Large companies have until 30 December 2024 to comply, while small and medium-sized enterprises have until 30 June 2025.\n\n### Key takeaways for businesses\n\n* **Assess exposure:** Companies that import products covered by the EUDR from MERCOSUR countries must assess their exposure to the risks of non-compliance.\n* **Implement due diligence:** It is essential to set up a solid due diligence system to ensure the traceability and legality of products.\n* **Collaborate with suppliers:** Collaboration with MERCOSUR suppliers is essential to collect the necessary information and ensure compliance.\n* **Anticipate changes:** Companies must anticipate future changes and be prepared to adapt to a constantly evolving regulatory environment.\n\nIn conclusion, the EUDR is an ambitious piece of legislation that will have a profound impact on trade between the EU and MERCOSUR. While it presents significant challenges for exporters, it also offers opportunities for those who can adapt and invest in sustainability.