8 July 2003
1. Introduction and
overview of recommendations
FERN welcomes the European Commission’s FLEGT Action Plan as a first step in
the fight against forest crime. The Action Plan rightly acknowledges the
seriousness and complexity of the problem and FERN specifically welcomes the
acknowledgement that the EU as a major consumer of timber products should
direct demand towards only legally harvested timber. In addition FERN welcomes
the Commission’s recognition that law enforcement – without changing unjust
laws[1]
– can make the situation worse for forest people. This understanding is
crucially important in the search for solutions that will work. The Commission
should also be complimented for looking at a wide range of solutions, many of
which need to be developed further.
However, there are some serious shortcomings in the Action Plan:
1.
The Action Plan mentions only the
need for “further research” into the need for legislation to make it illegal to
import illegally-sourced timber into the European Union. While not pre-empting
the outcome of such research, the current wording allows the EU to continue to
launder large volumes of illegally harvested timber. Given that the Action Plan
states that illegal logging undermines many of the essential elements of the
EC’s development objectives, more far-reaching suggestions would have been more
appropriate.
2.
Although the Commission lists a
number of different action points, none is sufficiently concrete to give clear
guidance to member states. Furthermore, by just listing ‘options’ the
Commission presents no clear strategy, which one would expect in an Action
Plan. Therefore the Commission fails to ensure that these initiatives will
adequately address forest crimes.
3.
The Action Plan fails to fully
acknowledge the global nature of the problem of illegal logging, which is
occurring in accession countries (an estimated 50% in Estonia) and Canada as
much as in Russia and in some tropical countries.
4.
No new funds are made available to
implement the suggested actions. The only funds currently available are through
the Tropical Forest Budget Line and Country Strategy Papers (if recipient
countries has agreed).
Therefore
FERN believes that the Council will need to instruct the European Commission to
develop clear steps forward.
FERN calls on the Council to instruct the European
Commission to develop a new Regulation that will:
·
provide the European
Commission with a mandate to negotiate bilateral agreements to ensure
legality in the trade of forest products that include certificates of
legality based on a system of
independently-monitored legality verification in the producer country. These
agreements need to be fair and workable, include the participation of affected
communities and respect human rights (see point 2.a below).
·
make
it illegal to import illegally-sourced timber into the EU (see point 2.b below).
In addition to new legislation FERN believes that it is important for the
Council to:
·
ensure
mandatory application of best available environmental and social standards and
procedures by European Export Credit Agencies to all their operations and
instruct the European Commission to develop and apply binding standards and
procedures to the Cotonou Investment Facility;
·
ensure all EU member
states adapt their government procurement policies to incorporate legality criteria
as well as sustainability criteria for timber and wood products;
·
instruct
the European Commission to include illegal logging in the list of offences in
the draft of the new Money Laundering Directive, to be agreed within the next
three years, and shift the burden of proof so that banks have to report any
activity they should consider suspicious based on the information they have
available;
·
ensure all member
states implement the EU Money Laundering Directive in such a way that banks
have to report on any activity they should consider suspicious and that
all criminal activities are eligible;
·
instruct the European
Commission to include funds for the prevention of illegal logging under the
programming of Country Strategy Papers;
·
request the European
Commission to develop concrete strategies to address illegal logging in
accession countries and Russia.
2. Detailed comments and recommendations
a. Bilateral agreements
to ensure legality in the trade of forest products
The EU should negotiate a
series of bilateral or regional agreements with as wide a range of
timber-exporting countries as possible. The FLEGT Action Plan states that: “There
will be some elements common to each agreement – notably that partner countries
should have or be committed to developing credible legal and administrative
structures and technical systems for the purpose of verifying the legality of
wood production according to national law (page 13)”.
In order for fair and
equitable bilateral agreements to be negotiated and enforced, the Council must
instruct the European Commission as part of the negotiation and implementation
of bilateral agreements to:
·
ensure that all
relevant law is consistent, enforceable and equitable; therefore it cannot
discriminate against vulnerable, forest-dependent communities and should
support sustainable forest management practices. In practice, this will mean a
review of existing forest and forestry law in some producer countries;
·
consult fairly and
effectively with all non-state actors in producer countries (specifically local
people) and the European Union during the negotiation of these agreements and
establish within the framework of the agreements monitoring and complaints
mechanisms for non-state actors;
·
establish an
environment where human rights are respected and good governance applied before
entering negotiations for bilateral agreements. The Commission should recognise that in some countries
participation in negotiations may expose local stakeholders to the risk of
human rights abuses. Where this is possible, the Commission should assess the
risk and act accordingly, taking every opportunity to seek participation
without endangering vulnerable stakeholders.
·
build these agreements
around establishing a certificate of legality based on a system of independently-monitored legality verification in the producer
country as well as spot checks;
·
agree with partner
countries the amount of funds to be allocated for the implementation of these
bilateral agreements in the review of Country Strategy Papers, next due to take
place during 2004.
The implementation of these
agreements requires a new Regulation.
It is highly likely,
however, that some producer countries would not wish to enter into such
bilateral agreements with the EU. The
Commission acknowledges this and states in the Action Plan that further
research is needed to address this issue: ‘the Commission will therefore
review options for and the impact of legislation to control imports of
illegally harvested timber into the EU, and report back to the Council on this
work during 2004’ (page 15).
b. Legislation to make it
illegal to import illegally sourced timber and wood products
As the Action Plan correctly
points out: “In the EU there is currently no Community legislation
prohibiting the import and marketing of timber or timber products produced in
breach of the laws of the country of origin” (page 15). This fact, combined
with the acknowledgement that not all countries will enter into bilateral
agreements, has led NGOs to believe that new legislation is required that makes
it illegal to import, export, transport, sell, receive, acquire, or purchase
timber produced in violation of the laws of the country of origin. NGOs phrase it as ‘to make illegal the import of
illegally sourced forest products’.
FERN is therefore calling
for legislation that would allow law enforcement and customs agencies to
confiscate timber sourced in breach of the legislation of the producer
country.
FERN is not suggesting a
self-standing piece of legislation but instead recommends an additional article
in the Regulation that the European Commission will anyhow draft to make their
bilateral agreements possible. Customs officials have responded positively to
the suggestion of this new article, telling FERN that it would provide them
with opportunities for effective action.
c. Export Credit Agencies (ECAs), the European
Investment Bank (EIB) and the Cotonou Investment Facility:
Many EU-based ECAs and the
EIB are providing financial support for companies and projects that are
involved or implicated in illegal logging.[2]
Unlike export credit agencies in the US and Japan, most European ECAs are not
bound by any environmental or social standards and procedures. The European
Commission’s Action Plan has rightly identified the need for European ECAs, the
EIB and the Cotonou Investment Facility to abide by environmental and social
standards and procedures. To ensure that this need is met, EU governments
should:
·
ensure
that European ECAs and the EIB apply best available environmental, human rights and social standards and procedures[3]
to all their operations;
·
improve
information disclosure practices of ECAs and the EIB on basic project
information and on environmental, social and human rights impact assessments
and economic analyses; and
·
implement
independent, third-party monitoring of projects to assess them against the
above-mentioned standards and procedures, once in force.
Under the Cotonou Agreement with the African, Caribbean and Pacific (ACP)
countries, the European Commission has set up the Cotonou Investment Facility
to be managed by the EIB. The Investment Facility is a €2.2 billion rotating investment facility to finance
projects in the ACP countries that have signed up to the Cotonou agreement. Therefore, the Council should instruct:
·
the European Commission to develop and
implement legally binding, environmental, social, human rights and information
disclosure standards and procedures for the Cotonou Investment Facility.
d. Public procurement:
As major buyers of timber
and wood products, governments and local authorities can affect the market in a
significant way. Many member states, such as the UK, the Netherlands and
Denmark, are developing procurement policies, all of which have to be in line
with the EU Procurement Directives, which are currently in the process of being
adopted. EU procurement policies and government procurement policies should be
used to give preference to legally produced timber, guaranteeing a substantial
share of the market. This would provide a powerful incentive to countries that
are willing to implement bilateral agreements with the European Union.
·
Member states should
develop public procurement policies that only allow governments and local
authorities to buy
timber from ‘legal and sustainable’ sources.
·
The Council should ensure that the new
Directive on public procurement currently being adopted allows timber and wood
products to be bought from ‘legal and sustainable sources’. The Council should
therefore adopt the amendments made by the European Parliament in its second reading
in July 2003, specifically to article 53, which allows the use of environmental
and social criteria in the contract award phase.
e. Money laundering:
In the FLEGT Action Plan, the European Commission undertakes to
establish the extent to which existing member state legislation on money
laundering is applicable to forest sector crimes and disseminate this
information to banks, financial institutions, financial crimes units and
relevant NGOs in the European Union. The Commission also encourages member
states to designate illegal logging as a crime for the purpose of EC Directive
97/2001 on money laundering. However, the Action Plan fails to point out that EU member states are committed to agreeing a third
Directive within a further three years (due by 2006), which is likely to expand
the scope of the legislation even further. It is hoped that the new Directive
will increase the onus on banks, from ‘banks having to report any activities
they consider to be suspicious’ to ‘banks having to report any activity that
they should consider to be suspicious, given the information they have
available’. Several member states have already adopted such text in their
current legislation.
·
Therefore the European Council should instruct the Commission to list
illegal logging as an offence under the
third Directive on money laundering and shift the burden of proof so that banks
have to report any activity they should consider suspicious based on the
information they have available in the draft legislative proposal the European
Commission will submit to the Council and Parliament. In turn, the Council must
commit to adopting these amendments.
In conclusion, FERN directs the Council to Controlling
Imports of Illegal Logging: Options for Europe,[4]
published in December 2002 by FERN and the Royal Institute of International
Affairs. This sets out FERN’s detailed analysis of actions the EU should take
to tackle the complex global problem of illegal logging by strengthening or
extending existing legislative tools and by developing a new Regulation.
[1] See FLEGT Action Plan points 4.1.1 Equitable and just Solutions and 4.1.5 Policy reform
[2] See FERN briefing sheet ‘Export Credits: Fuelling illegal logging, April 2002 available at: www.fern.org
[3] Key Reforms Needed for Export Credit Agencies January 2003 available at www.fern.org
[4] Available at www.fern.org