Illegal logging and the EU FLEGT Action Plan

 

Why illegal logging is a problem

Illegal logging creates social problems, environmental degradation and loss of economic opportunities on a massive scale. Among other things, illegal logging:

  • Deprives countries of USD 10-15 billion each year in lost revenue
  • Reduces forest sector investments that could boost profits, create jobs and improve livelihoods
  • Harms businesses that trade only in legal products by suppressing timber prices and profits
  • Poses threats to poor forest-dependent communities, to the sustainability of forests and forestry, and to environmental integrity

The global economic value of illegal logging is tens of billions of dollars. Such vast financial flows foster corruption and feed further illegality.

FLEGT: the EU response to illegal logging

The EU developed the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan of 2003 in response to rising international concerns about the social, economic and environmental impacts of illegal logging.

In the early 2000s, international efforts to tackle illegal logging focused on forest management, law enforcement and governance, but not trade. These efforts failed to stem illegality. The European Union therefore decided to factor trade into the policy response to illegal logging. Trade has the potential to create strong incentives in both producer countries and the EU market for verified legal products. The EU FLEGT Action Plan therefore includes both demand- and supply-side measures:

  • The EU FLEGT Regulation of 2005, empowers the European Commission to negotiate Voluntary Partnership Agreements (VPAs) with timber-exporting countries; under these agreements, VPA partner countries ensure they only export to the EU legal products carrying FLEGT licences
  • Other legislation. For instance, the EU Timber Regulation, which bans imports of illegal timber and timber products. The regulation entered into force in 2013. It requires EU importers to adopt due diligence procedures to ensure that the timber and timber products they trade in are legal
  • Support to timber-exporting countries that wish to address illegal logging
  • Support to private-sector initiatives, including voluntary codes of conduct for companies that source timber
  • Promotion of public procurement policies that source only legal products
  • Efforts to ensure that investments do not promote illegal logging
  • Action to address the problem of ‘conflict timber', which is timber whose sale finances armed conflict

These demand-side and supply-side measures are complementary. Under the terms of the EU Timber Regulation, for example, products with FLEGT licences can automatically enter the EU market. For timber products without FLEGT licences, importers must undertake due diligence to demonstrate that they are legal.

A VPA partner country's exports to the EU must all be FLEGT-licensed. Therefore, when a VPA is fully operational, it will make it quicker and easier for a VPA partner country's exporters to sell legal products and will give importers confidence that the timber carries no risk of prosecution.

Economic, social and environmental goals

The FLEGT approach envisages trade in legal timber as a means to achieve economic, social and environmental gains that include improved forest governance, a level playing field for businesses and increased revenues for timber-exporting countries. FLEGT aims to increase both the quantity and quality of trade in legal timber. It has the potential to reshape the sector by:

  • Enabling timber-exporting countries to capture revenue they lose to illegal logging
  • Encouraging investments to improve sustainability and processing capacity, creating jobs and adding value to exports
  • Eliminating unfair competition in the marketplace, which enables illegal wood to undercut legal wood on price.
  • Boosting confidence in legal timber among consumers and other stakeholders, including by restoring confidence once ‘high-risk countries'
  • Improving the image of the forest sector and timber-exporting countries
  • Improving transparency and other aspects of forest governance by embedding in VPAs reforms that national stakeholders demand
  • Clearly defining legality and strengthening law enforcement
  • Formalising the informal sector and reforming domestic markets by including them in the scope of VPAs

Progress under the FLEGT Action Plan

Voluntary Partnership Agreements: In timber-exporting countries, VPA processes have improved transparency, participation, legality clarity, accountability and other aspects of good forest governance.

At the time of writing, six timber exporting countries have signed VPAs with the EU – Cameroon, the Central African Republic, Ghana, Indonesia, Liberia and the Republic of the Congo. These countries are now developing the systems agreed in VPAs. The governments of Ghana and Indonesia are already testing their timber legality assurance systems and preparing the private sector for FLEGT licensing.

Negotiations continue between the EU and nine other countries – Côte d'Ivoire, the Democratic Republic of the Congo, Gabon, Guyana, Honduras, Laos, Malaysia, Thailand and Vietnam.

The 15 countries that are negotiating or implementing VPAs account for 25% of the world's tropical forest cover and 80% of the EU's tropical timber imports.

Another 11 countries in Africa, Asia and Central and South America have expressed interest in VPAs.

EU Timber Regulation: EU member states are making progress in implementing the EU Timber Regulation, which requires member states to designate a competent authority, adopt penalties and check on the performance of companies. The European Commission is working to promote uniform implementation

Public procurement policies: 19 EU member states now have such policies. The evidence suggests that they are having a positive effect on increasing market share for verified legal and sustainable timber.

Private sector initiatives: There is strong support for the EU Timber Regulation and VPAs among members of the European Timber Trade Federation. Among other things, federation members are adopting voluntary codes of conduct, developing due diligence systems for EU Timber Regulation compliance, and monitoring EU Timber Regulation impacts.