From Ambition to Dilution?

On 25 October 2025, the European Commission (‘EC’) put forth a proposal to amend the EU Deforestation-Free Products Regulation 2023/115 (‘EUDR’). After two months of negotiations at the European Union (‘EU’) institutional level, a political agreement was reached at the end of December, with the adoption of a new Amending Regulation.

We offer a critical legal analysis of key changes introduced by the amendments: responsibility is moving from joint accountability between operators and traders to a differentiated set of obligations that places the primary burden on upstream operators. This significantly reduces what was widely considered one of the EUDR’s most innovative features.

Background

In alignment with the vision for the future of the EU put forth by the European Union Green Deal (EGD) in 2020, the EUDR was initially adopted in May 2023. It aims to reduce the EU’s contribution to deforestation and forest degradation, carbon leakage, and biodiversity loss by prohibiting the import or export of seven forest-risk commodities – cattle, cocoa, coffee, oil palm, rubber, soy, and wood – if they can be linked to deforestation and illegality in the country of origin.

It thus establishes mandatory due diligence, transparency, and traceability requirements for relevant actors across targeted commodity chains. These include operators (those first placing relevant products on the EU market or exporting them) and traders (those making already-marketed products available), who are subject to differentiated obligations. National competent authorities in EU Member States (‘EU MS’) are tasked with overseeing compliance through checks and enforcement measures, exercising discretion in how these are applied. These obligations, covering both commodities and their derivatives, ensure that products illegally produced or associated with deforestation and forest degradation occurring after 31 December 2020 cannot enter or exit the EU market.

The EUDR builds on the approach of its predecessor, the EU Timber Regulation (‘EUTR’), which focused solely on the legality of harvested timber and imposed due diligence obligations only on the operator first placing timber products on the EU market. However, drawing on the findings of a 2021 fitness check, the EUDR sought to revise this model by distributing compliance responsibilities downstream, therefore extending due diligence obligations within the EU. In doing so, it aimed to establish a joint liability scheme among the actors involved in the trade of these products, enabling greater collaboration, mutual oversight, and heightened vigilance across timber and agri-food supply chains, while expanding the possibilities for holding actors accountable for their supply-chain relationships. As will be developed hereafter, this scheme has evolved considerably amid recent political tensions.

EUDR Implementation Delays and the 2025 Amending Regulation

Since its inception, the EUDR sparked heated debate, both within the EU and abroad. In October 2024, in response to pressures from the private sector and third countries, the EC proposed a 12-month delay to the application of the EUDR, pushing compliance deadlines to 30 December 2025 for large companies and 30 June 2026 for micro/small enterprises. In the interim, several implementing measures were also adopted, including further simplification of obligations. These changes have brought further difficulties for EU MS competent authorities that had already begun to adapt their domestic law.

The issue returned to the political agenda in October 2025, when the EC tabled a new proposal to postpone the EUDR’s application due to significant technical issues with its Information System. Despite strong opposition from civil society and some industry groups, the European Parliament and the Council reached an agreement and ultimately adopted Amending Regulation 2025/2650 on 26 December 2025, just four days before the EUDR was due to enter into application, delaying enforcement by another year to 30 December 2026 for large and medium-sized operators, and 30 June 2027 for micro and small undertakings.

The amendments further introduced new targeted obligations for specific sub-categories of operators, while significantly easing requirements for traders. In addition, the EC is required to submit by 30 April 2026 a report assessing the impact and administrative burden of the EUDR (the ‘Simplification Review’). This process may revisit certain aspects, likely adjusting the scope of products covered through delegated acts, potentially adding products such as palm oil soap and instant coffee, but without launching a new legislative revision. Finally, at the European Parliament’s request, certain printed products have also been excluded from the EUDR scope.

EUDR Amendments in Detail: Shifting Due Diligence Obligations Across the Supply Chain

The December 2025 amendments substantially reshaped the accountability framework originally established under the EUDR by concentrating due diligence requirements at one specific ring of the supply chain, namely on the first operator placing or exporting deforestation-risk products from the EU market (or ‘upstream operators’). Downstream actors are now only required to retain information on their suppliers and clients (a table outlining the changes to the 2023 version is available here). We discuss these changes and their implications below.

Key Obligations Assigned to Upstream Operators

Upstream operators (in the ordinary sense, the first product importer or commodity traders) are now the principal actors targeted under the amended EUDR. Operators must establish a due diligence system allowing them to carry out thorough analyses, risk assessments, and mitigation measures for products they place on or export from the EU market. They must report these elements in a due diligence statement (‘DDS’), and submit it to the competent authorities, enabling authorities to verify compliance. This entails adapting their internal procedures and value chains to ensure sufficient information is available to demonstrate that traded products are not associated with practices that would violate EU market rules.

Within this framework, they now bear primary – though not exclusive – responsibility for fulfilling due diligence, transparency, and traceability obligations. In cases of non-compliance, upstream operators face significant sanctions, including fines of at least 4% of their annual EU turnover, product confiscation, and exclusion from public contracts or funding.

Exemption from Direct Obligations for Micro and Small Primary Operators

Producers of relevant commodities that are micro and small enterprises (‘SMEs’), newly designated as “micro and small primary operators”, have on their end experienced a significant adjustment of their obligations. This sub-category consists of:

• enterprises classified in the EU Accounting Directive 2013/34 as ‘micro or small’ (i.e., those that do not exceed two-thirds of the following thresholds in a financial year: balance sheet total of €4 million, turnover of €8 million, and an average of 50 employees);
• established in countries benchmarked as low risk by the EC;
• and placing on the EU market, or exporting from the EU to third countries, deforestation-risk products that they themselves produce from plots of land located in the low-risk country.

Those companies are now only required to submit a one-off, simplified declaration in the EUDR IT system before placing a product on the market or exporting it. The application of the EUDR to these operators is also deferred until 30 June 2027.

In practice, while this measure may reduce administrative burden for smaller actors in certain commodity chains, it seems primarily to advantage EU-based SME operators for two main reasons. First, all 27 EU countries are classified as low-risk countries under the EC benchmarking. Second, for commodities such as wood, soy or beef, it is economically much more likely that small producers with direct access to the European market are located within the EU. By contrast, the four remaining EUDR commodities can only be cultivated in tropical regions outside the EU and are therefore predominantly imported by large companies. As a result, smallholders from third countries are in practice unlikely to qualify as ‘micro and small primary operators’.

Moreover, the EU now permits those operators to meet traceability requirements by providing a postal address (or registered office) rather than the specific geolocation of the plot of land, leaving significant room for circumvention, since a postal address often differs from the physical location of production. This is particularly problematic in the wood sector, where the EUDR requires detailed documentation not only on the mere presence of a forest but also on its “quality” as it includes aspects of forest degradation (composition, regeneration, species diversity, etc.). Without precise geolocation, it is difficult to see how the ‘deforestation-free’ requirement can be reliably met.

Substantial Dilution of Obligations for Downstream Operators and Traders

Perhaps even more significant is the (complete) dilution of obligations for downstream operators and traders. They no longer need to exercise due diligence, nor verify or submit their own DDS. Instead, they must only retain information on suppliers and clients, with a limited exception for the first downstream operator or trader, who must also keep the DDS reference number. Large traders and downstream operators must also register in the EUDR IT system.

This approach now largely mirrors the earlier logic of the EUTR. A key consequence of this reform is the reallocation of responsibility primarily to upstream operators, while downstream actors are now limited to traceability obligations vis-à-vis their suppliers and clients. These actors are, however, not entirely exempt under the new scheme: if they become aware or are alerted via “substantiated concerns” of non-compliance of the products, they must verify that due diligence was exercised and that no or only a negligible risk was found, possibly relying on documents provided by suppliers.

From a Joint Accountability Framework to Paper-Based Safe Haven

Despite the recent amendments, the core architecture of the EUDR remains largely intact. Aside from the simplified regime for micro and small primary operators and the increased concentration of obligations on upstream operators, the scheme initially introduced under the EUDR, that is the combination of due diligence obligations (i.e., information and reporting, risk assessment, mitigation) and restrictions on the circulation of deforestation and forest degradation embedded commodities, has not fundamentally changed. Politically speaking, this distinguishes the EUDR from other recent EU legislative frameworks, such as the CSRD and CS3D that have not only been postponed but also significantly watered down under the EU Omnibus Simplification Package.

Nevertheless, downstream due diligence and traceability requirements have been significantly diluted on two key aspects. First, downstream operators and traders no longer have verification obligations and face only limited liability when selling products in the EU, substantially reducing the joint accountability scheme initially introduced. For instance, when an operator imports a product into the EU market and then supplies it to another company, the recipient will only need to identify the supplier. Thus, if, for example, a company in Belgium engaged a Croatian intermediary to import soy or palm oil products, potentially in violation of the EUDR, the Belgian company would only be required to collect and retain information on its supplier, with no due diligence obligation nor responsibility for verifying upstream compliance. In such circumstances, it also becomes harder to trigger the responsibility of actors further down the chain, such as manufacturers or supermarket chains, since they are no longer required to conduct due diligence on the products they manufacture or sell.

Second, narrowing the scope of affected transactions limits the capacity of EU MS authorities to sanction multiple actors along the supply chain, creating greater opportunities for circumvention. While the amendments assume compliance can be fully verified at entry and exit points, experience under the EUTR (and the limited number of actual controls) suggest that traceability gaps will persist. For example, between 2017 and 2019, investigations under the EUTR revealed that five European timber companies purchased illegally sourced teak from Myanmar through a Croatian intermediary, which supplied timber across Europe and exploited perceived weaknesses in Croatian enforcement. Whether similar practices will be prevented under the new scheme of the EUDR will now largely depend on EU MS competent authorities’ willingness to implement and enforce the Regulation, as well as the degree of harmonisation in its application across the EU.

While downstream actors are still expected to act in good faith, verify product information in certain cases, and report non-compliance, it is, however, questionable whether these obligations will ever be triggered in practice. Given both the reduced transparency along the supply chains and the way sensitive information circulates within highly competitive supply chains, authorities will face significant challenges in establishing liability when downstream actors fail to report those concerns, particularly in light of the principles of legality and proportionality under EU and national law. This raises doubts as to whether downstream actors will, in practice, face sanctions for circulating non-compliant products.

Despite the above-mentioned challenges, upstream operators can still be held legally responsible for failing to disclose required information or comply with their obligations, even in the absence of negligence or intentional wrongdoing and including after commodities have been transferred. With the EUDR set to apply from January 2027 for large and medium-sized companies, and from July 2027 for SMEs, the timeline for implementation is approaching rapidly. From these dates onwards, all actors will be legally responsible for adhering to their respective obligations and may be subject to sanctions. The financial and reputational risks associated with non-compliance may still encourage upstream operators to reassess supplier relationships and prompt downstream actors to seek assurances that go beyond simple documentation of product origin.