Jason Dickstein, president of the Washington Aviation Group, explores how the EU Deforestation Regulation (EUDR) affects aircraft parts
One of my good friends recently reached out to me about the EU Deforestation Regulation (EUDR), a regulation that threatens to impact certain aircraft parts being imported into the EU, because it requires a certification from the exporter. This raises two important issues which I will provide guidance on in this article:
How do MROs keep abreast of new regulations and policies that could affect their business?
How does the EU Deforestation Regulation affect aircraft parts?
Staying updated on new regulations and policies
My friend complained to me: “How can a small business be expected to keep up with all of the new regulations?” I agreed with him that the ever-changing world of new regulatory requirements presents a daunting challenge to follow.
I spend full-time keeping up with regulations and policies that affect aviation businesses, and I can confirm that there is something new out there every day: aviation rules, tax rules, labour rules, import rules, export rules… the list seems to go on and on. Luckily there are resources to help.
Industry education is a collaborative effort. An important partner in that effort is the trade press community. Without magazines like MRO Management, a lot of important concepts would never be shared.
Another important partner is the companies that are putting on aviation industry meetings and providing aviation industry education. I just attended an air carrier purchasing meeting where I was asked to speak about SMS and about Incoterms (two very different topics but both quite important to the community). This was a great opportunity to share information about compliance and useful commercial practices.
I think one of the most important parts of the education process is the trade association community. Trade associations are in the business of gathering and sharing information. I write for two different aircraft blogs: the ASA blog (parts distribution: aviationsuppliers.wpcomstaging.com) and the MARPA blog (parts manufacturing: pmaparts.wpcomstaging.com).
Both are great ways to keep abreast of new regulations and policies that could affect your business. ASA provides periodic webinars on topics that are important to the community and both ASA and MARPA have annual conferences that are heavily focused on education. Membership in these two associations is a very effective investment for keeping abreast of the changes that could affect your business.
The EUDR and aircraft parts
The EUDR was promulgated on 31 May 2023. It is meant to address cattle, cocoa, coffee, oil palm, rubber, soya and wood. At first glance, this appears to deal with commodities that are disconnected from the aviation world.
The good news is that very few aircraft parts will be affected. The other news, though, is that some aircraft parts appear to be affected by the regulation.
The purpose of the regulation is to minimise the EU’s impact on deforestation by trying to exclude products taken from deforestation sites. This is a 42-page regulation so we will not try to address everything it covers in this article, but instead we will examine how this affects smaller aviation companies exporting certain aircraft parts to the EU.
Let’s start with what is affected. The effectivity of the rule is based on the Combined Nomenclature (CN) codes (https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=OJ:L_202302364). For those readers in the US, this is analogous to the HTSUS codes used for importing things into the US. These are codes (ten digits in the US or eight digits in the EU) that typically start with a two‑character chapter and a four‑character heading.
The first six characters (category, heading and subheading) tend to be common from country to country (so the chapters and headings will be common between the EU and the US). Thus, if you know your article’s HTSUS heading, or schedule B heading, then typically the CN heading will be the same set of numbers.
Table 1 below explains the two‑digit categories that are most likely to be relevant to MROs who may be importing or exporting into the EU.
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Table 1: Two-digit categories most likely to be relevant to MROs who may be importing or exporting into the EU.
Let’s say that you are exporting rubber O-rings to the EU from the US. You will need to identify the US schedule B number for the export (under US law). This typically has the same heading number as the CN code. If your CN category is not included in Table 1, then you do not have to worry about compliance with the EUDR. If it is included in Table 1, then you need to continue your analysis. You need to identify the heading number of your export and then compare it to the actual text of Annex I of the EUDR (https:// eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:32023R1115).
Let’s say that your O-ring is made of ethylene propylene diene monomer (EPDM) synthetic rubber material, and is covered under CN heading 4016 (the full CN code for such a product is likely to be 4016.93.00). This sort of O-ring is likely to be covered under the EUDR.
The EUDR prohibits covered products from being made available on the EU market unless they are deforestation-free. They also must be covered by a due diligence statement (in the form found in Annex II of the EUDR). To confirm compliance, the EU law will treat foreign (non-EU) businesses as ‘traders’.
Traders may be further distinguished as micro, small- and medium-sized entity (SME) traders, which means those companies whose facts fall below the thresholds set by at least two of these three criteria:
Balance sheet total below €20 million
Net Turnover below €40 million
Average employees during the year below 250.
SME traders are required to: (1) obtain or create a ‘due diligence statement’ in a form found in Annex II to the EUDR (this statement can be obtained from a prior source); and (2) collect and keep the following information relating to the relevant articles that they place into the EU market (e.g. by exporting to the EU):
The reference number for the ‘due diligence statement’ that was obtained or created for the articles
The name, postal address, email address and web address of the party who supplied the relevant articles to the SME trader
The name, postal address, email address and web address of the party to whom the trader supplied the relevant articles (the export customer in the EU).
It is important to note that non-SMEs (large organisations) who export to the EU, and importers within the EU, have significantly more compliance obligations.
If you are exporting goods to the EU that are outside of the scope of the CN codes covered by the EUDR, then you do not need to worry about EUDR compliance for that transaction; but if you are exporting covered goods (such as rubber O-rings) to the EU then you will need to make sure you have the right records to meet the EUDR requirements.
This feature was first published in MRO Management – October 2024. To read the magazine in full, click here.
The post Clearing the air on EU Deforestation and its impact on aircraft parts appeared first on Aviation Business News.
