Regional cooperation to combat illegal logging
REGIONAL COOPERATION TO COMBAT ILLEGAL LOGGING
Options for ASEAN and the East Asia Region
by
Duncan Brack
Associate Fellow, Energy, Environment & Development Programme
Chatham House
10 St James Square, London SW1Y 4LE, UK
www.chathamhouse.org.uk/eedp and www.illegal-logging.info
May 2006
© Chatham House (Royal Institute of International Affairs) 2006
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Credit: © Chatham House (Royal Institute of International Affairs) 2006
Contents
1 Introduction 3
2 Controlling EU–ASEAN trade 3
2.1 Licensing: the EU FLEGT scheme 3
2.2 Implications 4
Extending product coverage 4
Developing the scheme to cover multiple cross-border movements 4
3 Regional cooperation 5
3.1 Forum for debate, consciousness-raising, information-sharing, and exchange of best practice 6
3.2 Data collection and exchange system 6
3.3 Framework for enforcement cooperation 7
3.4 International tracking and licensing system 8
3.5 Building the system 8
1 Introduction
The purpose of this paper is to suggest options for regional cooperation in the ASEAN and/or Asia FLEG region to help combat illegal logging in general and the export of illegal timber in particular.
Section 2 draws on the analyses of the demand and supply of timber in ASEAN and the EU, and the trade between the two regions, also presented to the workshop. For the purpose of this paper, the key conclusions of the those analyses are:
· Exports of industrial roundwood from ASEAN to the EU are not particularly significant.
· Exports of sawnwood are significant and appear to be growing.
· Exports of wood-based panels (WBP), particularly plywood, are significant, though do not appear to be growing.
· Exports of builders’ joinery and carpentry (BJC) and, particularly, furniture, are also significant.
· China is increasingly important in importing raw timber from ASEAN, processing it and exporting it in several forms – particularly furniture – to the EU and other consumer markets, including Japan and the US.
Sections 2 derives some implications for the EU FLEGT licensing scheme in the light of these conclusions.
Section 3 presents a broader set of options for regional cooperation within the region. This is based on a longer paper[1] presented at the Asia FLEG Customs and Forestry Law Enforcement Workshop held in Cebu in November 2005, and the discussions at that event.
2 Controlling EU–ASEAN trade
2.1 Licensing: the EU FLEGT scheme
The establishment, together with cooperating partner countries, of a licensing system for legal timber lies at the heart of the EU’s Action Plan on Forest Law Enforcement, Governance and Trade (FLEGT), published originally in May 2003.[2]
The Action Plan rests primarily on the negotiation of FLEGT voluntary partnership agreements (VPAs) with producer countries. These agreements will put in place in each country a licensing system designed to identify legal products and license them for import to the EU; unlicensed – and therefore possibly illegal – products will be denied entry at the EU border. The agreements will include the provision of capacity-building assistance to partner countries to set up the licensing scheme, improve enforcement and, if necessary, reform their laws – and, where appropriate, provisions for independent scrutiny of the validity of the issue of the licenses, verifying legal behaviour at every stage of the chain of custody of the timber.
As of May 2006, negotiations on VPAs are currently under way between the EU and a series of producer countries, including several in the East Asia region. If the system is to work effectively, it will need to expand to cover all, or nearly all, producer countries that both have significant trade with the EU and suffer governance problems. The EU has already amended its own legal system by agreeing (in December 2005) a new regulation which requires its customs authorities to refuse entry to unlicensed products from partner countries.
Initially the licensing scheme will only cover a limited range of products – raw timber, sawnwood, plywood and veneer – but the intention is to extend it to other product categories as quickly as feasible.
In its basic form the FLEGT licensing system is really designed to deal with timber produced in one country and exported directly to the EU. In reality, as noted above, market developments increasingly see raw timber being harvested in one country, processed in another (for the East Asia region, often China, but also other countries such as Vietnam), and then exported in final form to the EU. As VPA countries may not be under any obligation, under the FLEGT system, to control their own imports, this provides an obvious route for evading the scheme’s requirements. (There is no requirement set out in the regulation for VPA partners to control their imports, but it is nevertheless possible that such a requirement could be specified in the VPA itself, should both parties agree.)
2.2 Implications
There are two main, connected, implications for the development of the FLEGT licensing scheme.
Extending product coverage
First, the list of product categories covered needs to extend as quickly as possible to cover secondary processed products such as BJC, flooring and furniture. In its initial draft form, the EU regulation did not cover plywood and veneer, but an assessment of its likely impact made it clear that, particularly for Indonesia, it was unlikely to be effective unless it was extended to those categories. Similar impact assessments should be carried out soon after the various VPAs with East Asian countries enter into force, and a schedule should be set for them to extended to all categories of timber products. (The regulation already makes it possible for VPA partners and the EU to expand the product category coverage in individual VPAs if they so wish to.)
The main reason why the licensing scheme does not now cover these secondary processed categories lies in the comparative difficulty of tracking the movement of timber through several stages of harvesting, transport and processing, including, often, movement across international borders. As mentioned in the trade flows analysis, combi-plywood manufactured in China from tropical hardwood (for the veneer) and domestic poplar (for the core) forms an important and growing export market.
Developing the scheme to cover multiple cross-border movements
Yet it is precisely this movement of products across international boundaries that must be brought into the licensing scheme. If they are not, FLEGT-licensed timber from VPA countries will be steadily displaced by non-licensed products from China which may well include original material sourced illegally.
There is little point, however, in China agreeing a VPA with the EU; if there is no requirement on VPA countries to control their own imports for legality, all it would do is legitimise imports of manufactured products that, while they were processed entirely legally in China, might still have been sourced illegally in their original countries of origin. In practice, this would bring the whole FLEGT system into disrepute, so unless the licensing system is developed further, the EU should actively avoid agreeing a VPA with China.
What needs to happen is for the licensing system to evolve so that the license travels with the timber from its country of origin through every stage of processing, no matter how many other countries that involves, all the way through the chain of custody to its final destination. This has several implications:
· FLEGT-licensed products must be segregated from non-licensed products throughout the chain of custody. Most certification schemes require this form of segregation, and there is also the possibility of intermediate steps, such as allowing a maximum percentage of unlicensed material in the mix.
· The scheme must be subject to independent monitoring and verification, in the same way as the issue of FLEGT licenses will be.
· The VPAs will need to be written to make it clear that FLEGT licenses can only be awarded to shipments of products which either originate in the country issuing the license or which include timber imported from other countries which have already awarded them FLEGT licenses. (The EU regulation governing the import of products into the EU probably does not need to be amended.)
· It would be sensible for the EU to agree a regional VPA with the whole, or the bulk, of the East Asia region (such regional agreements are envisaged in the EU regulation).
· Since the final destination of products made from timber exported from one country for processing in another will often not be known at the point of export, the FLEGT licensing system logically should extend to cover all exports from partner countries, at least within the area covered by the regional VPA.
This may seem a complex undertaking, but it is no more than what is required under most of the voluntary certification schemes now operating. Furthermore, there is already pressure from within the EU to move in this direction – partly from government procurement policies which require evidence of legal and sustainable production, and partly from public pressure on importers to guarantee the legality of their products (the ending by most UK importers of imports of Chinese plywood in response to a Greenpeace report[3] last autumn is a striking example). Developments like these may, in fact, lead to an increasing likelihood of the EU importing from VPA countries at the expense of China, at least until China itself can be brought into the system.
3 Regional cooperation
This section summarises the conclusions of the longer paper presented at the Cebu workshop in November 2005.[4] The paper outlined returns four desirable components of an international (regional or global) system to control the trade in illegal timber and timber products:
A. A forum for debate, consciousness-raising, information-sharing, and exchange of best practice.
B. A data collection and exchange system, both on legal activities (production, processing, export, import, consumption) and, where detected, illegal behaviour.
C. A framework for enforcement cooperation, including facilitation of cross-border enforcement operations.
D. An international tracking and/or licensing system to guarantee legality, preferably not reliant simply on paper movement documents and ideally, with independent third-party monitoring.
This section considers how these components can be developed, looking at the experience of other international agreements and institutions – these were analysed in the full paper, but include the various FLEG processes, the EU FLEGT initiative, bilateral memorandums of understanding, licensing systems operating under agreements such as the Convention on International Trade in Endangered Species (CITES), and structures of enforcement cooperation such as the World Customs Organisation (WCO) and Interpol. Finally we examine how the components could best be put together into a single agreement, operating at bilateral, regional or global levels.
3.1 Forum for debate, consciousness-raising, information-sharing, and exchange of best practice
This ought to be the easiest component to establish – indeed, the existing structure of the Asia FLEG ministerial meetings, Task Force and Advisory Group already provides the basic infrastructure within the region. Almost all the agreements and institutions analysed in the full paper possess regular ministerial and sub-ministerial meetings which fulfil these functions, and some of them – e.g. the FLEG conferences, or the Asia Forest Partnership – are designed specifically for this purpose.
To operate effectively, the various bodies need to meet on a regular basis round a meaningful agenda. Participation should be open in some way to civil society, both private sector and NGOs (the Asia FLEG Advisory Group provides this route), and also to relevant participants from outside the region (e.g. donors, importing country governments and private sector, etc.). Regular communication between meetings – through the web and/or newsletters – should be encouraged. None of this is particularly complex, but does, of course, require some input of resources and a central coordinating agency or secretariat.
3.2 Data collection and exchange system
Component B should also be relatively straightforward, and various Asia FLEG meetings have discussed the establishment of such a network as an important early step. In common with most other areas of environmental crime (apart from CITES), no organisation systematically collects information on illegal logging and the trade in illegal timber, and such data collection would be of considerable value. The information collection system should be open to input from civil society, both private sector and NGOs, who may sometimes possess better information than governments. Regular summaries and analyses of this information should be circulated, through the information networks described above in Section 3.1.
For a data collection and exchange system to work effectively, a network of enforcement officials (probably from customs agencies and forestry ministries) whose tasks explicitly include helping to coordinate a regional FLEG network, will need to be established. The experience of almost all the agreements and institutions discussed in the full paper highlight the importance of national focal points acting as a central contact for anyone outside the country seeking to establish contact, acquire information, and so on. The central secretariat should be responsible for updating and circulating this list of contacts on a regular basis, and seeking regular inputs of data and information.
As above, this requires resources, in terms of personnel and equipment, though not a great deal more than envisaged for component A. The most obvious existing institution that could take on this task is the WCO’s Asia-Pacific Regional Intelligence Liaison Office (RILO), the regional network of customs agencies.
The Cebu workshop discussed these issues at some length, and concluded that the development of communications protocols for sharing information, including looking at options for a central clearing-house mechanism, should be a priority first step. The meeting also discussed the possibility of standardising export documentation within the region and, again, called for a study of the options. There was also much support for approaching RILO to examine how the illegal timber trade could be made a priority area of analysis. This requires a request from a RILO participating government.
3.3 Framework for enforcement cooperation