Q&A

Honduras-EU Voluntary Partnership Agreement

This document provides answers to some common questions about the Honduras-EU Voluntary Partnership Agreement (VPA), FLEGT licensing and the timber legality assurance system Honduras is developing under the VPA.

Part One: Background and basics

What is the Honduras-EU Voluntary Partnership Agreement (VPA)?

The VPA is a legally-binding bilateral trade agreement that aims to improve forest governance and promote trade in legal timber from Honduras to the EU.

  • VPAs are among the key tools of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan of 2003. As of 2018, 15 countries were negotiating or implementing VPAs with the EU.
  • Honduras and the EU began negotiating the VPA in 2013.
  • On 14 June 2018, Honduras and the EU initialled the VPA. Initialling marks the formal conclusion of the negotiations. The Agreement will be initialled in Spanish and English and will then be translated into the EU's other official languages. Before the VPA can enter into force, the EU and Honduras will have to sign and ratify it, in line with their internal procedures.
  • Under the VPA both parties commit to trading only in legal timber products.
  • Among other things, the VPA describes a timber legality assurance system capable of verifying the legality of timber products. When fully operational the timber legality assurance system will issue FLEGT licences to accompany verified legal timber products that Honduras exports to the EU.
  • Honduras will then only export FLEGT-licensed timber products to the EU. The EU will only allow Honduran timber exports to enter the EU if they are accompanied by a valid FLEGT licence. FLEGT-licensed timber is considered as meeting the requirements of the EU Timber Regulation, which prohibits EU importers and domestic producers from placing illegally harvested timber and timber products on the EU market.
  • The VPA also includes a framework for overseeing, monitoring and evaluating implementation of the VPA and the economic, social and environmental impacts of the VPA.
  • The VPA is the first that the EU has ever concluded with a Latin American country.
  • Honduras is the first VPA country to have actively engaged indigenous peoples as a distinct stakeholder group in its VPA negotiation committee.
  • Learn more about VPAs in VPA Unpacked. Learn more about the Honduras-EU VPA in this Background.
     

Is the Honduras-EU Voluntary Partnership Agreement available online?

The full text of the VPA and its annexes is available at this link.

What is the status of the VPA?

On 14 June 2018, the EU and Honduras initialled the VPA. Initialling marks the formal conclusion of the negotiations. The Agreement will be initialled in Spanish and English and will then be translated into the other EU's official languages. Before the VPA can enter into force, the EU and Honduras will have to sign and ratify it, in line with their respective internal procedures. 

How was the VPA negotiated?

The European Commission’s Directorate General for International Cooperation and Development negotiated on behalf of the EU. For Honduras, the negotiation was led by the Honduran Forest Administration (known as Forest Conservation Institute or by its Spanish acronym, ICF), with support from 16 public institutions represented in a dedicated inter-ministerial FLEGT-VPA Steering Committee, which was set up in November 2014. In May 2018, the Steering Committee members signed a joint memorandum of understanding through which they committed to actively participate in the implementation of the VPA. A broad range of Honduran stakeholders also played active roles in the VPA negotiations.

What has been the role of stakeholders in the VPA process?

The VPA has acted as a catalyst for stakeholder dialogue. When negotiations began, coordination among different stakeholder groups, and sometimes even within stakeholder groups, was limited. The political crisis of 2009 had led to broad mistrust and severe polarisation. The negotiations helped overcome such challenges and resulted in constructive dialogue. Stakeholder consultation has included seeking comments on and approval of the VPA text and its annexes. 

Private sector

  • The private sector has been involved on the VPA from the outset, through their main timber trade association, AMADHO (Asociación de Madereros de Honduras). Agro-forestry groups such as the Federation of Honduran Agroforestry Producers (FEPROAH) and the Honduran Agroforestry Cooperatives Federation (FEHCAFOR) have also been actively involved from the beginning of the negotiations. 
  • Engagement has extended to small-scale forest owners, who have used the VPA as a means to start working in a more coordinated manner through the establishment of a professional association. In addition, small-scale producers and entities have also been involved in the process, albeit with more limited participation than other stakeholders.
  • The contribution of these private sector representatives has been particularly key in highlighting challenges they encounter in administrative procedures. More specifically, they have shared reflections on how to eliminate unnecessary bottlenecks that currently hamper the sector.
  • These representatives have also played a key role in defining the VPA indicators related to facilitating trade, and in developing an efficient bureaucratic system to run the sector.

Indigenous peoples

  • Honduras is the only VPA country that actively engaged indigenous peoples as a distinct stakeholder group in the national VPA negotiation committee. 
  • The annex that relates to the definition of timber legality directly addresses issues related to indigenous peoples’ rights. 
  • The VPA also includes a reference to Free, Prior and Informed Consent (FPIC Law) in the legality definition. 

Civil society

  • A broad range of Honduran civil society organisations were formally represented on the VPA negotiation committee. This included those based in the capital, Tegucigalpa, and in timber-producing regions across the country. 
  • Civil society organisations have been instrumental in moving the VPA negotiations forward. This is particularly praiseworthy given the extent of political divisions within Honduras.
  • The commitment to seeing the VPA negotiations through to their conclusion endured following recent political instability in the aftermath of the November 2017 national elections.

 

When will FLEGT licensing start?

After the entry into force of a VPA, there is a period of intense technical work to establish all systems and procedures required for its implementation. FLEGT licensing will begin only after a joint assessment by Honduras and the EU confirms that the Honduran timber legality assurance system has been fully operationalised and fully meets the requirements described in the VPA. 

How do the EU and Honduras oversee VPA implementation?

Once the VPA enters into force, Honduras and the EU will establish a Joint Implementation Committee (JIC) to oversee implementation of the Agreement. Honduras and the EU have agreed interim governance arrangements to maintain their close cooperation before the entry into force of the VPA and to prepare for its implementation.

Active participation of a broad range of stakeholders is key to effective VPA implementation. The VPA text explicitly mentions this ample level of inclusiveness and the need to conduct regular consultations.

What products does the Honduras-EU VPA cover?

Annex I of the VPA lists the products the Agreement covers. They include the five obligatory products under EU FLEGT Regulation (logs, sawn timber, railway sleepers, plywood and veneer) and 14 additional products selected by Honduras and based on a review of data from selected official sources. The Honduran law also prohibits the export of certain timber products, in particular roundwood from broadleaf species. In addition, in 2013, Honduras consulted a range of forestry sector operators about the timber products that should be included in the VPA. Their views have also been taken into account when deciding which products the VPA should cover.

The VPA timber legality assurance system and related regulations will apply to all of these products that Honduras exports (to the EU and other markets) or which are destined for the domestic market. However, only exports to the EU will receive a FLEGT licence.

The timber legality assurance system will not cover timber in transit between Honduras and other countries, or confiscated timber.

How important is the trade in timber products from Honduras to the EU?

The EU is a currently not a major market for timber products from Honduras. However, Honduras has expressed an interest in increasing its exports to the EU and sees the VPA as a good means to achieve this goal.

How much of Honduras’ timber production does the VPA cover?

Once operational, the VPA timber legality assurance system will cover all timber and timber products listed in Annex I of the Agreement, which encompass the large majority of products acquired or in circulation in Honduras (see above). This includes wood and timber products imported into Honduras. 

How useful is the VPA, given that most of Honduras’ timber exports go to markets outside of the EU?

The VPA timber legality assurance system and related regulations will apply to all export markets, as well as the domestic market.

  • With this commitment, the control and verification of operations will be the same for all timber and timber products produced, acquired and/or in circulation in Honduras. FLEGT licences, however, will be only issued to exports destined for the EU market.
  • FLEGT alone cannot stop trade in illegal timber, especially if major markets remain less regulated. Indeed, under the EU FLEGT Action Plan, the EU seeks to work with other major timber consumers to develop a more comprehensive framework to reduce imports of illegally harvested timber.
  • China, which is the world’s largest importer of tropical timber, is developing its own legality assurance system and there are efforts to link it to FLEGT under the EU-China Bilateral Coordination Mechanism on Forest Law Enforcement and Governance (FLEG).
  • Other markets have implemented or are designing measures to eradicate illegal timber from their imports. These markets include the United States, Australia, Japan and South Korea. 
     

Part Two: How will Honduras verify the legality of timber and timber products

What is the Honduras Timber Legality Assurance System?

The core of the VPA describes a national timber legality assurance system (whose Spanish acronym is SALH), which will ensure that timber products are verified to be legal according to specified requirements for all stages of the supply chain, from the forest or the point of import to the point of final sale or export.

The system has five elements:

  1. The definition of legal timber and timber products, which establishes the laws and regulations to observe when issuing a legal compliance certificate, a FLEGT licence or an H-Legal licence
  2. Supply-chain controls to track timber from forest operations or the point of import to the final domestic market or point of export
  3. Verification procedures to ensure and document compliance with all aspects of the legality definition and supply chain controls
  4. Licensing procedures for issuing certificates of legal compliance certificates for national and local markets, and FLEGT or H-Legal licences for export markets
  5. Independent audits to ensure that the system is as effective and efficient as it should be

 

What is a FLEGT licence?

A FLEGT licence is a licence issued by a timber-producing country that has implemented a Voluntary Partnership Agreement with the European Union. The licence attests to the legality of the timber or timber products. When Honduras’s timber legality assurance system is fully working as described in the VPA, Honduras will issue FLEGT licences for timber bound for the EU.

FLEGT-licensed timber products are deemed to meet the requirements of the EU Timber Regulation, which prohibits EU importers and domestic producers from placing illegally harvested timber and timber products on the EU market.

Until Honduras issues FLEGT licences, what requirements must its timber meet to enter the EU market?

Until the start of FLEGT licensing, timber products Honduras exports to the EU will have to go through the normal due diligence process under the EU Timber Regulation (EUTR). The EUTR prohibits the placing on the market of illegal timber and requires companies placing timber on the EU market to assess and mitigate the risk of illegal timber entering their supply chain. Once FLEGT licensing starts, FLEGT-licensed products automatically meet the EUTR requirements, meaning that no due diligence is required.

How does the VPA define legally-produced timber?

The VPA defines "legally produced timber" as timber products harvested or imported and produced in accordance with legislation of Honduras, as set out in the legality definition and other relevant provisions of the VPA. In the case of imported timber, it means timber products harvested, produced and exported in accordance with relevant legislation of the country of harvest (covering rights to harvest, forestry activities, taxation and fees, and trade and customs). The laws that need to be observed include those related to the forest sector, and also those related to environmental, economic and social issues.

The VPA legality definition itself sets out the core requirements of legislation applicable to timber in Honduras in the form of principles, criteria and indicators. Timber and timber products must comply with all elements of the legality definition in order to be considered to have been legally produced.

The principles included in the VPAs are:

  1. Land ownership rights and land tenure of forest areas
  2. Rights of the indigenous and Afro-Honduran peoples living in forest areas
  3. Compliance with the laws and regulations on forest management and the harvesting, transport and industrialisation of, and trade in, timber products by operators in the forestry sector
  4. Labour and occupational health and safety obligations
  5. Rules on international trade in timber products
  6. Tariff and tax-related obligations

 

How does the VPA deal with the timber Honduras imports?

The VPA includes requirements for Honduran operators to exercise due diligence to assess the legality of timber and timber products they import.

What does ‘due diligence’ mean in the context of the VPA?

The concept of due diligence is an important element of the risk-based approach for the implementation of the VPA timber legality assurance system. Honduras will develop dedicated legislation to set out the details of this approach.

For products imported to Honduras, due diligence includes two main elements:

  • The prohibition to import illegal timber into Honduras, that is, timber that breaches the laws of the country of origin.
  • The importer’s responsibility to ensure the timber it is importing is legal. To do that, they must collect information about the timber, analyse the risks associated with it and mitigate them.

 

Do companies that hold voluntary certification (such as FSC or PEFC) also have to follow the VPA timber legality assurance system?

Voluntary certification exists in Honduras in some broadleaved and pine forest areas for both management and chain of custody. 

The Honduran Forest Administration (the ICF) will analyse the guidelines and criteria, and the verification procedures, used by voluntary certification schemes. The result of this assessment will dictate whether or not Honduras recognises these schemes as meeting the VPA legality requirements. 

How does the VPA address conversion of forests, such as for agriculture?

The VPA established that timber products sourced from land subject to a duly authorised change in use may enter the supply chain. Cutting all the trees on any given area is allowed:

  1. In forests affected by natural disasters, pests or diseases.
  2. In areas where public or private infrastructure is being built, subject to an approved Environmental Impact Assessment.
  3. In agricultural lands for which the owner requests a land-use change, subject to an approved Environmental Impact Assessment.
     

Part Three: Outcomes of the VPA

How will the impacts of the VPA be monitored?

The EU and Honduras made a joint commitment to monitor the social, economic and environmental effects of the VPA. Impacts will be assessed so as to minimise any potential negative impacts. Under the VPA, the EU and Honduras commit to take reasonable steps to ensure mitigation is effective and may agree to take additional measures when necessary.

How will the VPA benefit Honduras?

The VPA is expected to bring economic, social and environmental benefits to Honduras.

  • The VPA should strengthen the market position of verified-legal timber products in the EU and elsewhere.
  • FLEGT-licensed timber will automatically meet the requirements of the EU Timber Regulation so will be exempt from any due diligence assessment process, saving time and money. This should increase EU importer confidence in timber products from Honduras and should make their products more attractive compared with equivalent products without FLEGT licences.
  • The VPA will increase government revenues by blocking access to export and domestic markets for illegal operators who do not pay appropriate taxes and fees.
  • The VPA will make it easier for Honduras to manage forest resources in a sustainable way, notably through better monitoring and data for sustaining yield.
  • The VPA will raise the international profile of Honduras as it will highlight its efforts to improve governance in one of its main economic sectors.

 

What benefits have already arisen from the VPA process?

Several positive developments have emerged during the VPA negotiations:

  • Stakeholder participation: Government institutions, civil society organisations, indigenous peoples, agroforestry groups and the private sector were actively engaged throughout the VPA negotiations. This included regular meetings and the establishment of dedicated bodies such as regional consultative platforms. The result has been a process defined by consultation and consensus.
  • Indigenous peoples’ representation: Honduras is the only VPA country in which indigenous peoples were officially represented in the VPA negotiating committee. This has given them an opportunity to express their needs and advocate for their rights.
  • Trust among stakeholders: The VPA has enabled previously-polarised stakeholders to build trust and open an honest dialogue about the challenges facing the forest sector in Honduras. It has instigated them to find common solutions to shared problems.
  • Consolidation of legislation and regulations: Honduras has taken steps to consolidate the legislative and regulatory framework. This has included a review of the forest law to identify elements in it that need amending or strengthening. 
  • Land rights: the Honduras VPA has opened up discussions about land rights and land allocation, a complex and often controversial issue in the country.

 

How can the VPA address corruption?

The VPA establishes procedures for reporting any problems, including corruption, related to the implementation of the timber legality assurance system. 

The VPA proposes the engagement of a broad range of stakeholders in the implementation phase. They will be consulted on a regular basis and all views will be taken into account. Such broad participation will make corruption more difficult as stakeholders jointly safeguard the robust implementation of the VPA and raise concerns to have them jointly addressed.

The VPA also includes a specific mechanism to handle complaints, as well as provisions for access to public information and increased transparency. These elements will jointly contribute to strengthening the rule of law and citizen participation. 

Is the VPA fair to small-scale operators in the sector?

Yes. The definition of operators in the forestry sector includes categories of small-scale operators such as rural communities and community groups. They are recognised as having their own needs and requirements. The VPA is also explicit about the need to create safeguards for vulnerable groups so potential adverse effects are mitigated. Vulnerable groups include small-scale operators, indigenous and Afro-Honduran peoples, local communities and other forest dependent people.

Forest areas on land traditionally owned by indigenous and Afro-Honduran peoples are officially recognised and respected as such by the State. This is in line with national laws and ILO Convention 169, whether or not they hold the title deed.

How does the VPA protect indigenous peoples’ rights?

The Honduras-EU VPA is the first VPA to have recognised indigenous peoples as a distinct stakeholder group. Indigenous peoples were represented in the negotiating committee and put forward their own proposals to address their specific needs and challenges.

One of the principles underpinning the VPA legality definition is specifically related to indigenous and Afro-Honduran peoples. It requires the State of Honduras to comply with ILO Convention 169 in terms of recognising their rights to be consulted about forest-related activity in lands belonging to them.
 

Part Four: FLEGT licensing

What will the FLEGT licence from Honduras look like?

The FLEGT licence looks like the template in Annex IV of the Honduras-EU Voluntary Partnership Agreement (VPA). Download the PDF here.

What is the link between FLEGT licensing and CITES in Honduras?

The Honduran timber legality assurance system will subject timber from species that are subject to the provisions of the Convention on International Trade in Endangered Species (CITES) to the same control and verification procedures as other timber.

The CITES Management Authority of Honduras will issue CITES permits for shipments into the EU that contain only timber that are subject to the provisions of CITES. In line with the FLEGT Regulation, timber and timber products which are subject to the CITES provisions shall be exempted from FLEGT licensing requirements. Shipments which do not contain timber subject to the provision of CITES shall require a FLEGT licence.

How will FLEGT licences be issued?

FLEGT licences shall be granted for each export shipment of timber that is listed under Annex I (i.e. product scope) of the VPA and exported to the EU market, provided that such shipment and the exporter have met with all the requirements set out in Annex II and supply chain control and verification under Honduras’s timber legality assurance system. FLEGT licences shall be granted by a Competent Authority assigned by the Government of Honduras (see below).

What is the Licensing Authority?

The licensing authority in Honduras is the Honduran Forest Administration (known as Forest Conservation Institute or by its Spanish acronym, ICF), through the FLEGT Licensing Unit. The ICF’s Legality Verification Unit is responsible for verifying legal compliance.

Part Five: Ensuring effective VPA implementation

What does VPA implementation entail?

Honduras will need to revise or issue new legislation to realise the commitments of the VPA. It will then need to develop the timber legality assurance system elements and build capacity to operate the system.

Several government agencies will be involved in the enforcement of the timber legality assurance system. They include the Honduras Forest Administration (ICF), the Agrarian National Institute (Instituto Nacional Agrario or INA), the Land Titling Authority (Instituto de la Propiedad), the Ministry of Energy, Natural Resources, Environment and Mines (MiAmbiente), the Revenue Administration System (Sistema de Administración de Rentas or SAR), the Secretariat for Labour and Social Security (Secretaría del Trabajo y Seguridad Social or STSS), the Honduran Institute for Social Security (Instituto Hondureño de Seguridad Social or IHSS) and the regional governments (Municipalidades). Other official institutions, such as the National Police, the Armed Forces, the judiciary or the Ombudsman, will also play a role in ensuring the effective implementation of the VPA.

VPA implementation will also require continuation of consultation with stakeholders in Honduras, continued involvement of the EU delegation, external technical assistance and support, and for Honduras to mobilise resources to implement the timber legality assurance system.

Before the FLEGT licensing scheme can become operational, the EU and Honduras will undertake a joint assessment to confirm that the timber legality assurance system is operating as described in the VPA.

Who has oversight of the VPA? What if problems emerge?

A Honduras-EU Joint Implementation Committee (JIC) will oversee implementation of the VPA and will handle any issues as they arise.

The Honduran Forest Administration (ICF) will also enter into cooperation agreements with civil society organisations interested in the functioning of the mechanism employed by the ICF to handle complaints, follow them up and publish final reports on investigation of the complaints in a coordinated manner.

The JIC will review and approve the reports from the organisation acting as the independent auditor, examine any complaints on the functioning of the FLEGT licensing system, and manage the implementation of the recommendations on the territory of each Party.

If any breaches of the timber legality assurance system occur, a devoted assessment will determine what the nature of the breach is. If it is an administrative breach, the ICF will issue an administrative sanction. If it is a crime, it will follow the penal judiciary channels.

Honduras currently has a number of independent oversight mechanisms in place. These include Forest Consultative Committees and a civil society-led Independent Forest Monitoring initiative. They constitute one important element of a system of checks and balances.

Who is the independent auditor?

Honduras will appoint the independent auditor following discussions with the EU, through the Honduras-EU Joint Implementation Committee.

Are the reports of the independent auditor public?

Once independent auditing starts, summaries of the reports will be made publicly available.

What happens when the legality assurance system fails to detect illegal timber?

If and when illegal timber is shown to have passed through the timber legality assurance system undetected, this will provide opportunities to strengthen the system to avoid a reoccurrence of the breach.

  • The VPA is part of a holistic yet gradual improvement of forest governance in Honduras.
  • The VPA will not eliminate illegal logging overnight.
  • The timber legality assurance system is adaptive and subject to continuous improvement, informed by regular reports from internal controls and evaluations, independent observers and the VPA independent evaluator.
  • The Honduras-EU Joint Implementation Committee oversees the VPA and will take remedial actions if systematic failures are identified.