The European Commission published its classification of countries under the EU Deforestation Regulation (EUDR) on Thursday May 22. The classification identified all EU member countries as “low risk.”
Countries including Canada, China, Saudi Arabia, Switzerland, the UK, the US, Vietnam and many others are also considered low risk.
The Commission listed Belarus, North Korea, Myanmar and Russia as high-risk countries. Brazil, Indonesia, Malaysia and other countries were labeled as “standard risk.”
Based on the risk classification system, EU member states’ competent authorities will define and plan their annual compliance checks. There will be checks on 1%, 3% and 9% of operators and traders for low-, standard- and high-risk countries, respectively.
According to the EUDR, the list of countries will be reviewed as often as is necessary in light of new evidence.
Countries classified as low-risk will be allowed to present a simplified due diligence. Standard and high-risk countries will have further obligations, including risk assessments and risk mitigation.
What Fastmarkets experts think
“It feels as if EUDR has been watered down somehow, with so many countries classified as low-risk,” Fastmarkets European director for packaging and graphic paper Alejandro Mata said.
“True, even low-risk countries need to provide geo-location coordinates, but the level of inspection and amount of data behind the due diligence statements (DDS) will make most companies under ‘low-risk’ more likely to comply,” Mata said.
“That said, countries with clear deforestation practices will still face difficulties,” he added.
Mata explained that based on 2024 trade data, most European imports come from Brazil, the EU’s main source for imported market pulp (hardwood). Excluding pulp, China, the US, Indonesia, Canada, Russia, Brazil, Korea and India account for almost 90% of total imports across all paper and board segments.
Of these, only one has been classified as high-risk (Russia), while two have a mid-risk classification (Brazil and Indonesia).
“So, we could expect some higher trade barriers for them,” Mata noted. “Surprisingly, however, China has been classified as low risk. This will lower the impact we expected from 2026 due to EUDR. That said, risk is not entirely eliminated.”
Some pulp and paper (P&P) market participants raised doubts on the way the Commission approached the country benchmarking.
Some sources suggest the Commission assessed country risk by evaluating all commodities together. They did not analyze commodities—cattle, wood, cocoa, soy, palm oil, coffee, and rubber—individually.
If one commodity has deforestation issues, all may be affected. The country could then be labeled high-risk.
The EU Commission did not respond to a request for comment.
Simplification criticized
The Commission also recently approved a simplification package to ease the implementation of the EUDR that raised eyebrows among P&P professionals.
In a statement published on April 15, the Commission said that thanks to the simplifications, companies subject to the EUDR will be allowed to submit due diligence statements (DDS) annually instead of for every shipment or batch placed on the EU market.
But there is no indication of such measures in the updated guideline document.
“I would have loved for this to be true, but it’s not,” one market source told Fastmarkets. “In order to submit the DDS annually, you need to include the raw material you will be using. Actual forests are not raw material; the wood will become raw material once it has been harvested. For the forest industry, it’s impossible to say what specific forest will be used as raw material in our products during the coming year.”
“There is an inconsistency between the press release and the document,” a second market participant said, adding that they are waiting for the Commission to clarify.
“We will continue to deliver different DDS linked to each plot of land,” the second market participant added.
Germany wants changes
On May 5, German parties CDU/CSU and SPD signed their government coalition agreement, creating a new government.
In the agreement, the parties said the new German government would make sure the EUDR does not apply to Germany. It said it would introduce the “zero-risk alternative,” part of an effort to “prevent unnecessary burdens at the European level.”
According to market sources, it would be difficult to introduce the zero-risk option because that would mean changing the regulation. This would put the whole EUDR, which was promoted and approved during the former EU legislature, at risk.
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