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Annual report

EU FLEGT Facility: Highlights and insights from 2015

The EU FLEGT Facility supports implementation of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, which aims to tackle illegal logging. The Facility works in the EU, in countries that are negotiating or implementing FLEGT Voluntary Partnership Agreements (VPAs) with the EU to promote trade in verified legal timber, and at regional scales in Africa, Asia and Latin America. This report summarises progress the Facility made in 2015 and shares the Facility's insights into what is happening in VPA partner countries and the regions where the Facility is active.

1. Key insights

VPAs encourage political dialogue that makes a difference in forest governance

1. FLEGT VPA processes are as much about changing political and institutional dynamics as about developing technical solutions. As such they cannot be compared to technical projects. It is the political dynamic that influences change and brings difficult conversations to the forefront.

2. Often it is political, not technical, issues that block progress. Therefore, national and bilateral political dialogues are needed to influence institutional changes that improve forest governance. VPAs create opportunities for such dialogues by raising the visibility of political issues and creating a space for dialogues to address these issues.

  • In Ghana, there are political barriers to VPA progress – on special permits and timber utilisation contracts. Pressure from all sides, including the EU, is needed to address these issues.
  • In Indonesia, the current blockage is a political tussle between the Ministry of Trade and the Ministry of Environment and Forestry rather than any technical issue.
  • In the Central African Republic, there is a risk that focusing on technical issues, such as funding for the legality assurance system, will overshadow the need for a wider political discussion about the country’s overall vision of how to stabilise and rebuild.
  • In Cameroon, the political agendas being played out are setting back the VPA process. The government has curtailed the involvement of civil society in VPA consultations. Private sector actors feel they can deliver what the EU Timber Regulation (EUTR) demands without a VPA.

3. These experiences demonstrate how VPA processes can help promote difficult political discussions, both nationally and bilaterally. They also point to the importance of political engagement by the EU and EU member states.

Moving logs in Indonesia

Moving logs in Indonesia

Source: EU FLEGT Facility

Moving logs in Indonesia

Source: EU FLEGT Facility

VPAs are in the spotlight as never before, and this is demonstrating how difficult it is to understand and capture all that is happening on the ground

1. Major assessments of the FLEGT endeavour, such as the European Court of Auditors' report, EUTR review and the Independent Evaluation of the EU FLEGT Action Plan, are drawing attention to VPAs.

2. Overall, these assessments support the EU FLEGT Action Plan. The Independent Evaluation of the EU FLEGT Action Plan concludes that the action plan is “fully relevant” and that its design is “innovative, comprehensive and future proof”. It notes that the “EU FLEGT Action Plan is resulting in improved forest governance in all targeted countries, both VPA and non-VPA”.

3. However, evaluations, reports and even different stakeholders often struggle to understand the changes taking place on the ground. This is clearly demonstrated by the first drafts of the country reports developed for the Independent Evaluation of the EU FLEGT Action Plan, which had gaps in the coverage of facts and experiences.

4. Across the FLEGT arena, many important aspects of communication are neglected and uncoordinated. According to the Independent Evaluation of the FLEGT Action Plan: “Communication has initially not been commensurate to the importance of the EU FLEGT Action Plan as an innovative and experimental policy initiative. More attention should be given to internal and external FLEGT communication at all levels.”

5. Reports point to recurring challenges, such as the development of timber legality assurance systems. These challenges should be examined to better understand the contributory factors and options for addressing them. Such factors and options may relate to technology, human and financial resources, procedures in VPA partner countries or the EU, or the scope of VPA processes.

6. These insights underline the need for timely, effective and coherent communication and the production and distribution of accurate, user-friendly information and analysis. These are core functions of the EU FLEGT Facility, which has already accelerated work in this direction.

7. The EU FLEGT Facility, therefore, has the potential to support the EU response to technical and communication challenges outlined by the Independent Evaluation of the EU FLEGT Action Plan, drawing on our technical knowledge and experience on the ground in VPA countries.

Timber verification procedures

Timber verification procedures

Republic of the Congo, 2015

Source: EU FLEGT Facility

Timber verification procedures

Republic of the Congo, 2015

Source: EU FLEGT Facility

Governance gains pave the road to FLEGT licensing

1. While some stakeholders are fixated on if and when FLEGT licensed products will reach the EU market, licensing is not the sole intended outcome of VPA processes.

2. In countries where VPA implementation is most advanced the process has led to concrete governance gains.

3. Major governance achievements related to VPA processes in 2015 include:

  • In Indonesia, independent forest monitors took the Ministry of Environment and Forests to court to demand access to information on forest concessions that, in the VPA, Indonesia had committed to make public. The court ruled against the ministry, upholding the VPA commitment to transparency.

  • Liberia deposited the first USD1 million of funds owed to communities in the National Benefit Sharing Trust. This followed a long campaign by communities and civil society, and sustained pressure at VPA Joint Implementation Committee meetings.

  • Also in Liberia, a former managing director and four other Forest Development Authority staff were found guilty of economic sabotage and theft of property through their involvement in issuing private use permits (PUPs). They face 5–10 years in prison and significant fines. The VPA process gave Liberian civil society an opportunity to challenge the PUP allocations and expose the issue internationally, which led to investigations and this landmark court sentence.

  • In the Central African Republic, the government turned to stakeholders for an open dialogue and collective reflection on accusations regarding conflict timber – this amidst political turbulence. This was a profound move in a broken country that did not usually talk to civil society before and which could have just as easily turned to the pre-VPA norm of unilaterally making decisions.

  • In Ghana, the Timber Validation Department has improved the Forestry Commission’s accountability. The introduction of the audit and the subsequent publication of non-compliant actions by operational staff have stimulated closer adherence to regulations.

SVLK certification

SVLK certification

In 2015, Indonesia launched a programme to accelerate SVLK certification for small and medium sized furniture exporters and other groups.

Source: MFP3

SVLK certification

In 2015, Indonesia launched a programme to accelerate SVLK certification for small and medium sized furniture exporters and other groups.

Source: MFP3

Momentum returned to a number of VPA processes in 2015

1. Two countries are progressing towards FLEGT licensing. In several other countries, VPA processes that were stalled or hampered by crises have regained momentum, particularly in the second half of the year.

  • Indonesia entered the last stage before FLEGT licensing. In 2015, it made significant progress on the national roll-out of its timber legality assurance system, as well as on monitoring, transparency and harmonising VPA commitments with national legislation. However, an unexpected push for deregulation has created a loophole for furniture exports that needs to be addressed before licensing can start.
  • Ghana made progress towards FLEGT licensing following the development of a joint action plan that prioritised work to address the findings of the first joint evaluation of Ghana’s timber legality assurance system. The final phase of the roll-out of the wood tracking system is underway. While the technical issues are advancing, some political barriers to progress remain.
  • Recovering from the Ebola crisis, Liberia made good progress in the second half of 2015. It achieved half of the 56 key activities prioritised by the Joint Implementation Committee.
  • Guyana’s VPA process is now on track, with negotiations set to conclude in 2016, thanks in part to improved stakeholder consultations.
  • Momentum returned to the VPA process in Vietnam, with significant progress on technical discussions of the timber legality assurance system following compromises by Vietnam.
  • There was also progress in the Republic of the Congo, with the mobilisation of a contract to develop national legality-verification software, and resumption of activities including the process for recognising private certification schemes, the development of legality-verification procedures and non-compliance management, and communication.
  • VPA negotiations with Honduras are back on track, with most annexes now drafted.
  • Thailand is making progress on its legality definition, following a hiatus in the formal VPA process caused by the Thai political crisis.
  • VPA activities continued in the Central African Republic despite the ongoing political crisis. Civil society conducted independent observation missions, the government re-established ties with stakeholders and the EU, and legislative reform commitments advanced.
  • In Laos, the Prime Minister’s Office gave the green light to VPA negotiations and multistakeholder negotiating structures were set up.

2. In a number of VPA processes, however, there was less progress.

  • Côte d’Ivoire was pre-occupied with two other processes that would impact VPAs – a new forest law and strategic orientation of the sector.
  • Progress was also limited in Cameroon, where stakeholder consultation has weakened and where private-sector interest in the VPA is waning.
  • There was no progress on VPAs in the Democratic Republic of the Congo, Gabon and Malaysia, with little or no formal exchange between the EC and the partner countries.

3. Myanmar is set to become the latest country to enter VPA negotiations with the EU. Stakeholders there drafted a work plan for the preparation phase of the VPA process. Myanmar has established an interim task force to coordinate this work until a formal multistakeholder group takes over.

Honduras-EU 4th round of VPA negotiation

Honduras-EU 4th round of VPA negotiation

Brussels, October 2015

Source: EU FLEGT Facility

Honduras-EU 4th round of VPA negotiation

Brussels, October 2015

Source: EU FLEGT Facility

Regional consumer markets, exchanges and influence are key to FLEGT's regional success

1. Asia is moving towards greater integration and China is quite assertive in this regard. In 2015, the Trans-Pacific Partnership Agreement was reached and the ASEAN Economic Community for market integration launched.

2. East Asian consumer markets are planning or preparing illegal logging legislation. Japan’s legislation development is most advanced. South Korea is working on making its illegal logging law operational. Taiwan is considering whether to develop legislation in 2016.

3. Ongoing EU-supported dialogue on cross-border trade between China and Myanmar is helping China understand the VPA process in Myanmar. Civil society organisations in Myanmar are calling for this dialogue to be more transparent and participatory.

4. China’s demand for timber is also having a growing impact on Africa’s forests. There have been steep increases in the volume and value of timber exported from Africa to China in recent years. In line with this trend, Chinese imports of roundwood and sawnwood from VPA-implementing countries have risen in recent years (Figures 1 and 2), indicating the important role China will play in the future success of FLEGT.

5. Chinese demand is driving illegal felling of rosewood trees. China’s imports of African rosewood grew by 700 percent between 2010 and 2014. Africa now supplies nearly half of China’s rosewood market, up from 12 percent a decade ago.[1]

6. China is interested in sourcing verified legal timber from Indonesia and the two countries have started a dialogue on cooperation. This could be a game-changer in terms of demand for FLEGT-licensed timber in the global market place.

Figure 1

Figure 1

China imports of roundwood (HS4403) from VPA-implementing countries

Source: ITC based on COMTRADE

Figure 1

China imports of roundwood (HS4403) from VPA-implementing countries

Source: ITC based on COMTRADE

Figure 2

Figure 2

China imports of sawnwood (HS4407) from VPA-implementing countries

Source: ITC based on COMTRADE

Figure 2

China imports of sawnwood (HS4407) from VPA-implementing countries

Source: ITC based on COMTRADE

7. To fulfil the EU-China Bilateral Coordination Mechanism’s role as a policy dialogue and to strengthen ownership on the Chinese side, more strategic consultations between the EU and its member states and China are needed.

8. Getting financial institutions to participate in the FLEGT agenda continues to be difficult.

9. The EU and its member states are strong partners to Latin American countries, supporting national and regional initiatives to improve governance in the forest sector and beyond. However, serious problems of rule of law, governance and illegality in the sector remain. There is both a need and an opportunity for the EU to be more active on a regional scale.

10. In Africa, we note some changing attitudes to VPAs among private-sector actors. Former critics now see the business value of VPAs, particularly for levelling the playing field.

Stakeholder workshop on Myanmar-China timber trade

Stakeholder workshop on Myanmar-China timber trade

September, 2015

Source: U Maung Maung Soe

Stakeholder workshop on Myanmar-China timber trade

September, 2015

Source: U Maung Maung Soe

Small and medium enterprises require further attention and analysis

1. In many Asian countries small and medium enterprises operate in a legal grey area. Promoting legality among such enterprises will require much more understanding of impacts, behaviours and solutions.

2. Timber flow and trade studies of the Greater Mekong countries have been limited by a lack of reliable data on national timber production and consumption. The situation with regard to the domestic and informal sector is worse, with little information on the structure of the sector, its dynamics or its contribution to national economies. Best estimates, however, suggest that many people in the region depend on the forest sector for their livelihoods. The informal sector is thought to employ some 1.6 million people – three times the number working in the formal sector.

3. Women make up a significant portion of the workforce of small businesses in the forest and timber sector in the Mekong region. There are, however, few analyses of gender-differentiation or gender-specific impacts of regulations on women’s participation. 

The EU FLEGT Facility is agile, flexible and responsive

1. In 2015, the Facility again demonstrated a flexible approach to a diverse portfolio, basing priorities on country and regional contexts, and on demand (see box 1).

2. As VPA countries proceed along the path to FLEGT licensing, we see new roles for the Facility emerging:

  • Ensuring that VPA implementation follows the negotiated commitments
  • Supporting the update of VPA annexes to respond to lessons learned in VPA implementation and changes in national legislation
  • Supporting global communication of FLEGT licensing achievements and the sensitivities around such communication
  • Addressing new technical challenges with regard to licensing and non-compliance
  • Undertaking more strategic reflection and providing more guidance
  • Providing knowledge for learning lessons

3. Our technical experience and knowledge of all VPA processes offers the potential for more effective joint work with the EU and EU member states, through supporting the European Union in its response to the Independent Evaluation of the FLEGT Action Plan, for instance.

4. The Facility’s support for the FLEGT Week conference helped to meet the challenge of launching the Independent Evaluation of the EU FLEGT Action Plan, but set back delivery of other communication initiatives and support to VPA countries.

FLEGT Week 2015

FLEGT Week 2015

Plenary session

Source: EU FLEGT Facility

FLEGT Week 2015

Plenary session

Source: EU FLEGT Facility

Box 1

Roles of the EU FLEGT Facility

  • Providing technical guidance and support on different aspects of VPA commitments, such as monitoring systems, legality-verification procedures, independent audit procedures and timber legality assurance system development
  • Helping VPA parties to prioritise work and structure priorities in joint action plans
  • Reviewing consultant reports, evaluations and other documents
  • Linking support projects to VPA objectives
  • Supporting EU delegations, VPA partner countries, EU member states, service providers, FLEGT facilitators and projects by providing the information necessary for advancing together
  • Supporting agenda setting for meetings of joint implementation committees and technical meetings, and identifying key issues for discussion
  • Working behind the scenes to encourage political dialogue on key issues affecting VPA processes
  • Providing communication advice and support to the EC, VPA partner countries and joint implementation committees
  • Producing and distributing accurate, accessible analysis and other information about VPAs
  • Linking VPAs to broader initiatives, such as the Convention on International Trade in Endangered Species (CITES) and Reducing Emissions from Deforestation and Forest Degradation (REDD+)
  • Helping draft technical specifications for contracts where capacity is weak
  • Representing a VPA country in the process of contracting a service provider to develop national legality-verification software
  • Capturing and analysing trends, lessons and challenges to inform VPA countries and the broader FLEGT community, and to improve approaches and systems to make VPAs more effective

On-the-ground presence and facilitators make a difference

1. FLEGT facilitators and the on-the-ground presence of Facility staff or local consultants add great value in VPA processes where they are present: Indonesia, Guyana, Ghana, Liberia, Thailand, Côte d’Ivoire, Laos and Vietnam. Their support helps advance VPA processes by enabling stakeholders to address barriers to progress.

2. In contrast, experiences in countries without facilitator support or an on-the-ground presence show just how difficult it is to help parties move in negotiations or advance on commitments.

3. VPA processes in Cameroon, the Democratic Republic of the Congo and Honduras suffered from having no facilitator or one for only part of the year.

2. Summary of Facility progress

Overall progress is good

1. The Facility’s work was structured into 26 deliverables, covering 112 objectives. Sixteen deliverables support VPA processes. Ten deliverables address regional and cross-cutting commitments.

2. Overall, progress is good (see Figure 3). Objectives that were not achieved mostly encountered political rather than technical obstacles, or resulted from decisions by the EU not to engage.

3. We attribute our progress to:

  • Our strategy of investing our time where we think we can have most impact
  • Contracts on the ground providing additional technical assistance
  • Strong momentum in Ghana and Indonesia as they get closer to FLEGT licensing and have the tools to prioritise their efforts

Figure 3

Progress towards the Facility’s 112 objectives in 2015

Source: EU FLEGT Facility

Progress towards the Facility’s 112 objectives in 2015

Source: EU FLEGT Facility

VPA deliverables

1. The Facility’s deliverables covered all 15 countries that are negotiating or implementing VPAs. 

2. Facility support to VPA implementation in Ghana and Indonesia is speeding the arrival of the first FLEGT licences from these countries. These VPA processes are generating lessons on deciding when FLEGT licensing should begin, how to advance licensing without neglecting other VPA commitments and the need to update annexes, amend FLEGT regulation and establish impact monitoring baselines.

3. The Facility helped Ghana to prioritise actions identified as necessary for FLEGT licensing to begin. We provided technical guidance to support the development of Ghana’s timber legality assurance system, forest management plans and impact monitoring framework.

4. In Indonesia, the Facility acted as ‘guardian of the VPA’, helping both parties ensure that VPA terms reflect the evolving Indonesian legal framework, and that national or joint efforts focus on meeting these terms. The frequent presence of Facility experts and consultants helped strengthen national commitment to VPA implementation, which is generally on track.

5. Facility support contributed to significant progress in other countries implementing VPAs (Liberia, and Republic of the Congo) or negotiating VPAs (notably in Guyana, Honduras and Vietnam). 

6. The Facility played a major role in structuring VPA implementation processes.

7. Political dynamics are very much at the heart of governance change. Facility contributions help isolate political challenges by prioritising technical issues.

8. Facility support will continue as countries proceed to FLEGT licensing. We anticipate new challenges will emerge, such as dealing with non-compliance and contentious issues, and how joint implementation committees manage issues.

9. Key challenges include:

  • Maintaining the focus on VPA aims and commitments as countries get closer to FLEGT licensing
  • Ensuring that political dialogue accompanies technical dialogue
  • Changing support staff, structures and mechanisms in VPA countries.
Shipping timber from the Democratic Republic of the Congo

Shipping timber from the Democratic Republic of the Congo

Source: Jane Boles

Shipping timber from the Democratic Republic of the Congo

Source: Jane Boles

Regional deliverables: Asia

1. The Facility finalised the Sida-funded inception work, which indicated that small and medium forest enterprises in Asia lack capacity, have insecure access to legal, quality raw materials and face demanding yet unclear formal processes to carry out their businesses.

2. The Facility identified opportunities to bring the timber legality dialogue into an ASEAN platform, such as the Asian Region Knowledge Network-Forest Law Enforcement and Governance (ARKN-FLEG), which would allow multistakeholder involvement. Facility inputs to the ASEAN Strategic Plan of Action on Forestry 2016–2025 and the draft ASEAN FLEG work plan have enabled some FLEGT ambitions to be integrated into the ASEAN agenda, such as developing a regional ASEAN common position on legal timber for trade within ASEAN and for timber entering the region.

3. Momentum has been created by setting up a platform to exchange TLAS/VPA experiences among ASEAN member states through training workshops and support to an expert network, but more effort will be needed.

4. Monitoring developments in individual VPA countries is important for the Facility’s regional work, in particular because of ongoing integration between ASEAN countries and the dynamics among countries in the Mekong region.

5. The Bilateral Coordination Mechanism (BCM) has been the main mechanism for implementing EU work in China; most of the BCM-related 2015 work plan activities have been achieved. The Facility has contributed to more appreciation of FLEGT and VPAs in China’s government and private-sector. Chinese initiatives to combat illegal logging and its associated trade increasingly incorporate FLEGT elements. In addition to the BCM work and the DFID International Foreign Investment and Trade (InFIT) programme, the number of grantees working on China under the new DFID Forest Governance, Markets and Climate programme has increased.

Myanmar

Myanmar

Source: EU FLEGT Facility

Myanmar

Source: EU FLEGT Facility

Regional deliverables: Africa and Latin America

1. The Facility shared VPA lessons and challenges in a number of forums, in particular, those targeting the private sector. These events included meetings of the European Sustainable Tropical Timber Coalition, Association Technique Internationale des Bois Tropicaux (ATIBT), Dutch Sustainable Trade Initiative (IDH) Congo Basin Program, FLEGT Week and the Congo Basin Forest Partnership.

2. Through such events, we witnessed growing private-sector understanding of why VPAs take time and what VPAs can accomplish for businesses. For example, some former critics of VPAs now promote VPAs as a means to advance business, in particular, by levelling the playing field.

3. Knowledge of VPAs has improved, stakeholders are using the annexes in VPAs and integrating VPA issues/activities in their work plans. Approaches established in VPAs are becoming common practice in some countries. There is a broader understanding of how VPAs can improve forest governance and on the potential of VPAs to address governance issues beyond the forest sector.

4. Facility expertise in understanding VPA priorities and challenges can be productively used to strengthen understanding in regional institutions and to encourage integration of VPA priorities in regional agendas. However, our experience in Africa shows that our ability to influence regional institutions’ political collaboration is limited.

5. In Latin America, the Facility gathered information and developed an options paper to provide strategic guidance on potential areas of support and how such support could be provided.

LDF training session in Republic of the Congo

LDF training session in Republic of the Congo

Source: EU FLEGT Facility

LDF training session in Republic of the Congo

Source: EU FLEGT Facility

Cross-cutting deliverables

1. Facility highlights under our cross-cutting deliverables include our development of a database to document VPA progress and achievements, and our sharing knowledge through VPA Unpacked and the Map of FLEGT projects. The Facility also built phase one of the FLEGT Knowledge Portal.

2. The Facility organised a successful FLEGT Week conference and supported the Independent Evaluation of the EU FLEGT Action Plan.

3. In 2015 the Facility developed the information technology and systematic approaches required to reach and engage stakeholders through social media and direct outreach. In 2016, the Facility will focus on the ‘soft’ parts of engagement needed to develop a thriving FLEGT knowledge community.

4. We facilitated strategic communication by VPA countries, the EU and influential FLEGT communicators, and have developed a strategy for communicating FLEGT licensing. Support for communication ahead of FLEGT licensing helped Indonesian and Ghanaian stakeholders to consider communication opportunities and risks associated with the later implementation stages, and to visualise success. This support for communication may enhance momentum in both countries. The challenge for the Facility is to deliver effectively on rising demand for communication services from countries pioneering FLEGT licensing.

5. While an effective media response protocol and service are in place, further advanced warning of emerging issues would enhance responsiveness and improve results. The EU and key partners could assist with this.

About the authors

 EU FLEGT Facility

Contact:  info@euflegt.efi.int