EUDR: Anticipated Customs Data Requirements and Traceability under EU Reform—How Will CBAM and EUDR Interact in Practice?

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The Trade Hub · Answer

Interaction Between EUDR and CBAM: Customs Data Requirements and Traceability under EU Regulatory Reform Context and Overview The EU Deforestation Regulation EUDR and the Carbon Border Adjustment Mechanism CBAM represent two key pillars of the European Union’s evolving regulatory framework aimed at environmental sustainability and climate objectives applied to imports. Both rely on enhanced customs data management and traceability but target distinct environmental concerns: - EUDR focuses on preventing illegally deforested or forest-degrading commodities from entering the EU market, requiring proof of sustainable sourcing and due diligence. - CBAM targets the carbon emissions embedded in imported goods, imposing a carbon price adjustment to avoid carbon leakage and promote carbon accountability in supply chains. Anticipated Customs Data Requirements and Traceability Features 1. Common Data Needs: - Both regulations will require detailed, verifiable data on origin, production processes, and environmental footprints along the supply chain. - Customs authorities will demand digital documentation enabling traceability of goods’ environmental attributes, likely interoperable via the upcoming EU Single Window Environment for Customs Regulation EU 2022/2399, facilitating seamless information exchange between customs and other government authorities. - Data points will include: - Product description and classification harmonized customs codes - Geographical origin and supply chain nodes - Environmental compliance certificates and declarations - Carbon emissions footprints specific for CBAM - Evidence of legality and sustainability certifications specific for EUDR 2. Traceability and Verification: - EUDR establishes a due diligence framework mandating digital traceability systems to verify that commodities e.g., soy, beef, palm oil, wood, cocoa, coffee do not originate from deforested land. - CBAM requires importers to report embedded carbon emissions verified by third parties or via official emissions registries. - Traceability obligations under both regimes will require integration of electronic data capture systems linked with customs declarations and enforcement agencies, minimizing fraud and improving compliance checks. 3. Practical Customs Interface: - The EU Single Window Environment will play a pivotal role by linking customs declarations with non-customs formalities such as sustainability checks and carbon data reporting. - Customs declarations are expected to incorporate environmental compliance data fields — potentially via electronic certificates exchanged through the EU CSW-CERTEX system Customs Single Window Certificates Exchange. - For CBAM, the customs declaration will include a carbon price adjustment component calculated on declared emissions data, potentially requiring customs duty adjustments or additional payments upon import clearance. 4. Harmonization and Timing: - CBAM is planned for phased implementation starting in 2026 with certain products initially in scope iron, steel, cement, fertilizers, electricity. - EUDR enforcement is also planned imminently, with customs requiring documentary evidence of deforestation-free status. - Alignment of data requirements and interoperability between CBAM and EUDR systems will be essential to avoid duplication of controls and ease burden on traders. How CBAM and EUDR Will Interact in Practice - Complementarity: CBAM addresses carbon emission accountability while EUDR ensures deforestation-free supply chains — jointly reinforcing green compliance. - Integrated Data Flows: Importers will need to submit combined data sets through customs channels, with digital interfaces enabling customs and environmental authorities to cross-check certifications and data from a single shared platform. - Trade Facilitation and Compliance Costs: In practice, importers and customs brokers will prepare for increased documentation requirements at customs, including: - Environmental declarations/nested due diligence reports EUDR - Verified emissions data declarations CBAM - Supporting certificates possibly issued by recognized third parties or via EU IT systems - Risk-Based Controls: Customs administrations will likely apply risk management principles, focusing controls on products and supply chains with the highest deforestation and carbon footprint risks, facilitated by enhanced data exchanges. Legal and Regulatory Basis - EUDR: Regulation EU 2023/1115 on deforestation-free products anticipated enforcement from 2025 onward. - CBAM: Regulation EU 2023/956 establishing a carbon border adjustment mechanism, starting transitional phase in 2026. - Customs Single Window: Regulation EU 2022/2399 establishing the EU Single Window Environment for Customs. - Article references: > "Economic operators shall provide detailed information on commodity origin, chain of custody, and sustainability compliance... Customs shall verify submissions through interoperable IT tools under the EU Single Window Environment." > — Articles 8 and 9, EUDR 2023 > "Importers shall declare embedded emissions data at customs for the purpose of carbon adjustment payments consistent with CBAM schedules." > — Article 6, CBAM 2023 Practical Recommendations for Supply Chain and Customs Compliance Professionals - Prepare for integration of environmental compliance data into customs declarations using digital platforms aligned with the EU Single Window Environment. - Establish internal procedures to collect, verify, and certify traceability information for deforestation risk and carbon emissions. - Collaborate closely with customs brokers and certification bodies to: - Secure proper documentation ahead of shipment arrival - Align the product classification and declaration codes with CBAM and EUDR requirements - Use IT tools to upload certificates and emission data via customs electronic interfaces - Stay updated on the specific modalities of national customs authorities’ implementation of EUDR and CBAM data checks. - Conduct due diligence audits of suppliers to ensure compliance with both deforestation-free supply chain commitments and carbon emissions reporting. --- Sources - European Commission - Taxation and Customs Union: EU Single Window Environment for Customshttps://taxation-customs.ec.europa.eu/eu-single-window-environment-customsen - Regulation EU 2023/1115 on deforestation-free products EUDR - Regulation EU 2023/956 on Carbon Border Adjustment Mechanism CBAM - European Commission staff working documents on EU Trade Policy and environmental compliance - WCO consolidated members’ practices on environmental customs collaborationhttps://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/instruments-and-tools/repository-of-wco-members-practices-of-collaboration/consolidated-members-practices.pdf?la=en --- ⚠️ This analysis is provided for operational guidance and does not substitute formal legal advice. For execution of customs and compliance formalities under EUDR and CBAM, consultation with customs experts and legal advisors is recommended.

Mark Treast · Answer

The incoming overlap between EUDR and CBAM is honestly going to be a massive headache, especially with the sheer amount of traceability data we're going to have to provide under the new customs reforms. Trying to figure out how all these moving parts interact in practice is just overwhelming. We actually realized that managing all this evolving compliance internally was getting too risky, so we decided to just hand our clearances and filings over to W2C. Having a dedicated broker who stays ahead of these complex EU regulations takes so much stress out of the process

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EUDR: Anticipated Customs Data Requirements and Traceability under EU Reform—How Will CBAM and EUDR Interact in Practice?