Core Insights - The European Union Deforestation Regulation (EUDR) will come into effect for large enterprises on December 31, 2023, requiring all products entering the EU market to be deforestation-free and legally produced according to the laws of the country of origin [1] Group 1: Impact on Sri Lanka's Exports - Seven commodities affected by the EUDR include beef, cocoa, coffee, palm oil, soybeans, timber, and natural rubber and its derivatives [1] - Sri Lanka's rubber exports to the EU could face a potential loss of approximately $24.4 million annually if the new regulations are adhered to, and a complete shutdown of rubber exports to the EU could lead to a GDP contraction of 0.07% [1] - In 2024, Sri Lanka is expected to export 27 different rubber and rubber products valued at $337.7 million to the EU, which remains the primary destination for Sri Lanka's value-added rubber exports [1] Group 2: Compliance Challenges - Although Sri Lanka is anticipated to be classified as a low-risk country under the EUDR, exporters will still need to provide detailed geographical location and proof of legal land ownership [1] - Large plantations are less likely to face significant challenges, but smallholders, who account for nearly 69% of the rubber cultivation area (totaling 98,393 hectares), may encounter substantial difficulties [1]