A Deep-Dive into the EU Deforestation Regulation: Implications for U.S. Businesses

Further delays and simplification measures related to the EU Deforestation Regulation 2023/1115 (“EUDR”) are once again imminent, following a provisional political agreement on targeted revisions reached between the European Council and European Parliament on Dec. 4, 2025. If the proposed changes are endorsed and published in the EU’s Official Journal this month, the changes will enter into force, including a one-year delay to Dec. 30, 2026 of the requirements coming into effect for large and medium companies (June 30, 2027 for small- and micro-enterprises (“SMEs”)), including U.S. businesses supplying EU customers with products containing wood, cocoa, soy, palm oil, coffee, cattle, rubber, and their derivatives. It was around this time last year that the first one-year delay was proposed, and affected businesses have been seeking practical guidance on how to prepare for compliance amidst the uncertainty. We set out below an overview of the EUDR, including key requirements, recent developments, and broader context as a general guide.

What is the EUDR?

The EUDR aims to reduce the EU’s impact on deforestation and biodiversity loss by setting import and export requirements to target the main driver of deforestation—the expansion of agricultural land linked to the production of certain commodities. The current scope of the EUDR covers seven commodities (cattle, cocoa, coffee, palm oil, rubber, soy, and wood), as well as various derived products listed in the annex to the EUDR (e.g., meat products, leather, natural rubber products, chocolate, coffee, palm nuts, palm oil derivatives, glycerol, soybeans, soybean oil, fuel wood, wood pulp, and paper). EU entities that import or export covered products containing these commodities will be directly in the scope of the EUDR, and those in their supply chains will be impacted, as in-scope businesses must gather and report on supply chain-related information to demonstrate that in-scope products meet the relevant requirements.

What are the key requirements of the EUDR?

The EUDR imposes strict due diligence requirements on businesses selling covered products in the EU market. Once the EUDR takes effect, in-scope products must generally meet three requirements:

• Deforestation-Free: Products must not come from land deforested or degraded since Dec. 31, 2020.
• Legal Compliance: Products must be produced in accordance with the relevant laws of the production country and international human rights laws.
• Due Diligence Statement (“DDS”): Products must be covered by a DDS indicating no more than a negligible risk of non-compliance, and companies must post DDSs to EU TRACES NT. Each DDS must be signed, attesting to the following statement: “By submitting this due diligence statement the operator confirms that due diligence according to the provisions of [the EUDR] was carried out and no or only negligible risk was found that the relevant products are not compliant with Article 3(a) or (b).”

More specific obligations will apply to a business, depending on whether it is an “operator” or a “trader” based on its role in the goods’ movement in or out of the EU:

• Operator: Any person or entity that places relevant products on the EU market or exports them from the EU. If based outside the EU, the first person placing these products on the EU market is deemed the operator. A product is considered “placed on the EU market” when it is first made available there, including goods imported into free circulation from outside the EU or goods released from customs procedures into free circulation in the EU. Operators using products subject to the EUDR in the EU must comply with requirements for both imported raw materials and final products.
• Trader: Those in the supply chain, other than operators, who make relevant products available on the EU market, typically being retailers of the products. Unlike operators, traders do not place products on the market but make them available for distribution, consumption, or use. This means the products have already been imported into the EU or produced within the EU.

To illustrate this, we can consider an EU wholesaler that imports books from a non-EU producer and sells them to an EU retailer. The EU retailer then sells the books to customers within the EU. The EU wholesaler would be the operator, while the EU retailer would be the trader. As a trader, the EU retailer would refer to the wholesaler’s DDS but is responsible for compliance. The non-EU producer, while neither an EU operator nor EU trader, may be contractually obligated to provide certain information to its customer, the EU wholesaler, to allow them to meet their EU legal obligations.

Special provisions apply to SMEs. Under Article 4.8 of the EUDR, an operator that is an SME is not required to exercise due diligence for products that have already been subject to due diligence for which a DDS has already been appropriately submitted. In such a case, an SME operator shall provide the competent authorities of the EU with the reference number of the DDS if it requested by the competent authorities of the EU.

What does the EUDR’s due diligence exercise require?

The due diligence exercise aims to prevent products linked to deforestation from entering or leaving the EU. Operators must gather the following information:

• Product Details: Description and quantity of products.
• Origin of Products: Country of production, geolocation of all plots where commodities were produced, and production date range.
• Supplier Details: Information on businesses or individuals who supplied or received the products.
• Verifiable Evidence: Proof that products are deforestation-free and comply with the production country’s laws (e.g., US state and federal laws). This information must be retained for five years from the date the products are placed on the EU market.

Additionally, a risk assessment must be conducted for each shipment, addressing both legality and deforestation risk, to ensure a compliant DDS for the shipment. The EUDR specifies risk assessment criteria, including the country of production, currently proposed to follow a three-tier system for assessing countries:

• High Risk: High deforestation rates, forest degradation, and agricultural expansion.
• Low Risk: Countries where there are sufficient assurances that high deforestation rates, forest degradation, and agricultural expansion are not occurring.
• Standard Risk: Countries not classified as high or low risk.

The Parliament proposed an additional tier for “No Risk” goods where a DDS may not be required before placing goods on the EU market or exporting them. This proposal was not accepted in 2025 but may be considered in future reviews—perhaps before the EUDR takes effect at the end of 2026, assuming the implementation of the currently proposed extension. As discussed below, the American Forest and Paper Association (“AFPA”), for example, has lobbied the EU to support the creation of a new designation of “No Risk” goods and that U.S.-sourced products should be exempt from the EUDR as being risk-free.

What are the potential penalties for non-compliance?

The EUDR will be enforced by competent authorities in the EU Member States. The EUDR lays down detailed rules on the obligations of competent national authorities to conduct checks (in principle, without warning) on operators and traders established in their territory to ensure they comply with the EUDR. Where relevant products present high risk of non-compliance, the competent authority may require immediate remedial action (e.g., interim measures to prevent those products entering the market). Where relevant products are non-compliant, the competent authority will require the operator/trader to take corrective action (e.g., correction of any formal non-compliance, or a ban on the item being sold in the EU or exported), within a specified and reasonable period of time.

The EUDR also allows for the possibility for private parties to submit substantiated concerns to operators and to competent authorities when they consider that one or more operators or traders are not complying with the EUDR. Such parties must also be entitled, in accordance with national laws of EU Member States, to use administrative or judicial procedures to review the legality of the decisions, acts, or failure to act of the competent authorities under the EUDR.

The intention is for breaches of the EUDR to lead to criminal penalties under the laws of EU Member States, but under the EUDR itself, civil penalties may include:

• Fines proportionate to the environmental damage and value of the items (it will gradually increase with repeated infringements) with a maximum of at least 4% of EU turnover in the preceding year and may be increased to exceed the potential economic benefit;
• Confiscation of the covered products or confiscation of the revenues gained from the items;
• Temporary exclusion from public procurement processes in the EU and public funding in the EU; and
• For serious or repeated infringements, temporary prohibition from dealing in the EU in those items, or a prohibition from using the simplified due diligence process.

What are the recent and ongoing developments?

As previewed above, various proposals have been made (and some, implemented) since the adoption of the EUDR in 2023. As of the December 4, 2025 announcement, the following changes are anticipated to be adopted this month:

• Delay: All businesses will have one more year to comply with new EU rules to prevent deforestation. Large operators and traders will now have to apply the EUDR from December 30, 2026, and small operators (i.e., private individuals and SMEs from June 30, 2027).
• DDS Streamlining: DDSs will only have to be submitted by companies that place a relevant product on the EU market first, not the operators and traders that subsequently commercialize it. SME primary operators will only have to submit a one-off simplified declaration.
• Further Simplification: By April 30, 2026, the Commission must present a report to assess the law’s impact and administrative burden, in particular for SME operators.
• Printed Products: Printed products (e.g., books) will be excluded from the scope of the regulation, as requested by the Parliament (and pursuant to affected industry lobbying efforts).

Commission spokesman, Olof Gill, told a press conference in Brussels that the Commission has concluded that it cannot meet the original commencement date of 30 December 2025 due to “serious capacity concerns regarding the [EU] IT system” designed to support implementation of the EUDR.

For opponents of the legislation (which include industries such as farming and forestry, as well as certain political groups and third countries), the delay presents another opportunity to revise what they consider to be an unworkable law. While Commissioner Roswall denied that the delay is linked to complaints from trade partners and industry, the EUDR has been raised during trade negotiations in 2025 between the U.S. and the EU.

In the Aug. 2025 Joint Statement announcing the framework on a U.S.-EU trade agreement, it was stated that the EU recognizes that production of the EUDR’s relevant commodities within the U.S. “poses negligible risk to global deforestation” and “commits to work to address the concerns of US producers and exporters … with a view to avoiding undue impact on US-EU trade”. The U.S. is currently classified as Low Risk under the EUDR, but U.S. lobbying groups are reportedly seeking a new “Zero” or “Negligible” Risk category, which would exempt US businesses from the EUDR entirely. The EUDR in its current form does not provide a mechanism for zero-risk designation, though the “No Risk” tier has been considered by the Parliament, as discussed above.

What should affected businesses do at this time?

While uncertainty abounds, affected businesses must continue to prepare, particularly until the one-year delay is formally in effect. It is also important to continue to monitor related developments and evaluate their potential impacts on your business, both directly and indirectly through your supply chain. Clark Hill’s Transatlantic Team, including attorneys in Washington, D.C. and Dublin, Ireland, is on hand to assist U.S., Irish, and multinational businesses to prepare for EUDR. If you have questions or would like to discuss, please contact the authors of this alert or your usual Clark Hill contact.

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