Illegal logging: How the EU can tackle forest crime

April 2003, Schwerpunkt magazine.

 

By Chantal Marijnissen, Trade policy officer, FERN.

 

Around the world, criminal exploitation and trade in forest resources are destroying forest ecosystems, undermining the livelihoods of local communities and depriving governments of much-needed revenue. Timber traders and powerful companies involved in processing, shipping and dealing in forest products operate at an international level. The European Union (EU) has expressed its concern for the influx of illegally-sourced forest products into the European market and is on the brink of taking action to tackle the problem.

 

The international demand for timber and wood products provides a substantial market for illegal produce. The OECD estimates that the global trade in timber is worth more than 150 billion US-Dollar (USD) a year (OECD – Environmental Outlook – Paris 2001, p.122) The EU is the world’s largest importer. Estimates suggest that as much as 50 percent of EU imports of timber and wood products from Southern countries may be illegally sourced and 20 percent from Eastern Europe and the Russian Federation (Forests Monitor ‘EU illegal timber imports Statistics’ in EU Forest Watch July/Aug 2001.

 

 

Indeed, the EU does not possess legislation that makes it illegal to import illegally-sourced timber. Therefore even when customs and law enforcement agencies have evidence that timber entering the EU is illegally-sourced, they have no power to stop it. De facto, the EU is laundering illegal timber and wood products. Effective action to prohibit the imports of illegally-sourced timber and wood products would provide an incentive to supply legal timber and act as a demonstration of political will to address this issue.

 

Calls for a new approach

Environmental and human rights NGOs have been fighting forest crimes for years. But work to combat illegal logging and foster good governance is undermined by the huge demand for cheap timber – whatever its provenance. In turning a blind eye to illegal logging, the importing countries – including the EU member states – are indirectly condoning forest crime. Therefore NGOs are calling for the EU to introduce new legislation that would prohibit the import of illegal-sourced forest products into the EU and provide customs and enforcement agencies with the means to stop the EU laundering illegal timber.

 

FERN and the Royal Institute of International Affairs finalized a report Controlling Imports of Illegal Timber: Options for Europe in December 2002. This paper focuses particularly on trade, finance and procurement issues. It reviews specific instruments and analyses their advantages and disadvantages as well as the practical aspects of their application. It concludes existing legislation and mechanisms that provide good opportunities for the Commission and member states to vigorously pursue;but that additional legislation to prohibit illegal timber entering the EU is also required.

 

Text Box: What is illegal? Illegal logging takes place when timber is harvested, transported, bought or sold in violation of national laws. The harvesting procedure itself may be illegal, including using corrupt means to gain access to forests, extraction without permission or from a protected area, the cutting of protected species or the extraction of timber in excess of agreed limits. Illegalities may also occur during transport, such as illegal processing and export, mis-declaration to customs, and the avoidance of taxes and other charges. It should be noted that what is legal and what is not is not always easy to establish. In many countries laws have contradictory provisions, create an excessive administrative burden, and discriminate against small-scale forest management and local communities. Therefore efforts to reform the forestry laws must proceed in parallel with attempts to enforce existing legislation. This will help ensure that local people who are managing their forest resources in a sustainable manner - but one that is considered illegal by provincial or national legislation - will not be discriminated against. At the same time, an independent judiciary system where the criminal activities of large and powerful operators are prosecuted must be fostered. The European Union has an internal market based on the free movement of goods and as international trade policy is an area of exclusive competence of the Commission, a new Regulation is the appropriate mechanism to exclude illegal timber imports. The objective of the Regulation would be to enable the Community to exclude illegally-sourced timber and wood products, wherever they originate, from Community markets. The main mechanism in order to implement this legislation would be an independently-verified license to accompany legal forest products.

 

EU Action Plan

The European Commission is currently drafting a EU Action Plan to address illegal logging and trade. The Action Plan is expected to be sent to the Council of the European Union by the end of April 2003. Under the Italian presidency, in the second half of this year, the Council will be expected to draft conclusions on the proposed Action Plan.

 

The Action Plan will no doubt include a proposal for a licensing scheme based on voluntary agreements between the EU and partner countries. Signatories to these agreements would restrict the export of wood products to the EU unless of a valid permit testifying to their legal origin is provided. The agreement will include a procedure to license legal timber and wood products as well as independent monitoring mechanisms. This will include technical systems to identify and track wood products from the point of harvest until the point of export. Therefore a study on log tracking methods is being carried out on behalf of the European Commission. The EU will also need to draft a Regulation to support the licensing scheme.

 

Text Box: The magnitude of the problem There is no doubt that illegal logging is wide spread and causing enormous damage to forests, to forests peoples and to the economies of producer countries. As in other areas, the clandestine nature of illegal trade makes its scale and value difficult to estimate. A few examples do, however, give an idea of its magnitude. In Indonesia, recent estimates, comparing legal harvesting against known domestic consumption plus exports, suggest that over 70 percent of logging is illegal in some way (Neil Scotland and Sabine Ludwig: Deforestation the timber Trade and Illegal logging, Brussels April 2002). Similarly, over 80 percent of logging in the Amazon may not comply with government control (The Untachables: Forest Crimes and the Concessionaires – can Cambodia afford to keep them? - London: Global Witness, 1999). A World Resource Institute comparison of import and export data for Burma in 1995 revealed substantial under-declaration, accounting for foregone revenue of 86 million USD or half the official timber exports. The scale of illegal logging represents a major loss of revenue to many countries and can lead to widespread associated environmental damage. A senate committee in the Philippines estimates that the country lost as much as 1.8 billion US-Dollar per year during the 1980s. The Indonesian government estimated in 2002 that costs related to illegal logging are 3 billion USD a year. In developing and emerging market economies, estimates suggest that wood-producing countries lose 10 to 15 billion euros per year. This represents a significant loss of revenue that could otherwise be reinvested in better healthcare, education and the promotion of sustainable forest management. Although the development of a voluntary licensing scheme provides the EU and willing partner countries with a first step to address the trade in illegally-sourced timber, it does not provide customs and law enforcement agencies with the necessary legal basis to confiscate illegal timber or wood products – wherever they come from – entering the EU. For this, new legislation is required to help member states curb their imports of timber that has been produced in contravention of the laws of producer countries.

 

What member states can do

The role of member states in pushing the Action Plan forward will be crucial. As Germany is the largest member state of the European Union, those promoting decisive EU leadership will seek its support. It is vital that the German government gives the Commission the mandate to negotiate bilateral agreements with partner countries to combat illegal trade in forest products and set up the proposed licensing scheme. However, the Action Plan will not adequately address the issue of prohibiting illegally-sourced timber and wood products from entering the EU. In the Council conclusions, Germany should also demand that the Commission drafts a proposal for a Regulation providing for a general prohibition against illegally-sourced forest products.

 

In conclusion, as long as illegal logging and trade in illegal forest products is allowed to continue, there is no hope of controlling deforestation and forest degradation. If governments want their well-meaning initiatives to promote sustainable forest management to have any chance of success, they must attend to the urgent need to stop the flow of illegal timber entering into the EU. This will provide much needed encouragement and support to the producer countries attempting to curb illegal logging in their countries.