Assessment of additional measures to exclude illegal timber from EU markets Outline of potential additional measures Duncan Brack Associate Fellow, Energy, Environment & Development Programme, Chatham House Chatham House / European Commission workshop Brussels, 31 January 2006

2 Options for new legislation 1.Ban on import of unlicensed products regardless of origin 2.Prohibition on import (and purchase, sale, possession, transport, etc.) of illegal products (similar to Lacey Act) 3.Improving international cooperation frameworks

3 Problems identified in national studies New legislation only worthwhile if it can help to solve or short-circuit practical problems identified in national studies: Lack of cooperation with foreign enforcement agencies Continuity of evidence Difficulties with showing intent Definition of ‘illegal timber’

4 1 Trade measures Requirement to show proof of legality at the border regardless of origin Or requirement only for high-risk countries Could be significantly disruptive to trade Depends on extent to which existing documentation adequate to indicate legality

5 1 Trade measures: WTO considerations Legality requirement could conflict with GATT: Trade restriction (unless ‘technical requirement’) Possible discrimination between WTO members Possible discrimination between ‘like products’ In all cases, could be saved by GATT Article XX, particularly XX(d), on deceptive practices Unusual – protection of laws in country of export But major problem of discrimination between imports and domestic production – unless domestic products also required to prove legality

6 1 Trade measures: other options Reciprocal export and import bans – e.g. Indonesian request to EU to ban import of logs, sawn timber Most easily applied through FLEGT license scheme Extensive export bans not very realistic Wider use of tracking mechanisms? Would qualify as technical requirement, so WTO problems, as above – unless also applied to domestic products May be longer-term solution

7 2 New criminal legislation Prohibition on import (and purchase, sale, possession, transport, etc.) of illegal products Similar principle as US Lacey Act (mainly fish and wildlife) (highlighted in FLEGT Action Plan)

8 2 US Lacey Act: marking offence Unlawful to falsify labels or records of any fish or wildlife transported in foreign commerce Violation is criminal offence; fine of up to $10,000 or imprisonment of up to five years or both

9 2 US Lacey Act: trafficking offence Unlawful to ‘import, export, transport, sell, receive, acquire or purchase in … foreign commerce … any fish or wildlife taken, possessed, transported or sold … in violation of any foreign law’ Specific intent to knowingly import illegal products: felony (fine up to $250,000, sentence up to 5 years) Should have known that illegal products: misdemeanour (up to $100,000, 1 year) Negligent violation: civil penalty (fine up to $10,000) In all cases: forfeiture of products (no innocent owner defence)

10 2 US Lacey Act: in practice Often used by US prosecutors Proving illegality not always straightforward Does not require cooperation with foreign country (though much easier if does cooperate) Regarded as valuable

11 2 Lacey Act and illegal fishing Lacey Act used widely against IUU fishing Similar principle incorporated in legislation of some south Pacific countries FAO International Plan of Action incorporates principle … … as does EU Community Action Plan (2002) … … and work of High Seas Task Force

12 2 A Lacey Act for the EU? Clear advantages compared with national criminal legislation Wide range of triggers, not restricted to theft Does not require proof beyond reasonable doubt; effectively creates requirement for due diligence Queries over clashes with EU human rights legislation? Legislation at EU and member state level?

13 2 German draft Virgin Forests Act German draft Virgin Forests Act (amendment to federal Nature Conservation Act) Prohibits possession and marketing of timber and timber products illegally logged in virgin forests Applies only to large-scale marketers/processors (but large-scale = >€100,000/year) Effectively requires seller/marketer to provide proof of legality Proof can be required by certifying agency

14 2 A Lacey Act for the EU? Questions to be answered: Definition of relevant foreign laws Degree of intent shown by importer Coverage of products Effectively places onus on importer Likely to lead to attempts to shift risk on to exporter; blacklisting of companies and countries Note: no WTO implications (not border measure)

15 3 International frameworks: WCO World Customs Organisation Customs enforcement network, RILOs Cooperation with UNEP (Green Customs Initiative) Not likely to address problems of lack of cooperation, need to show continuity of evidence, degree of intent

16 3 International frameworks: Interpol International Criminal Police Organisation Working party on environmental crime May help with international police liaison, but limited value

17 3 International frameworks: UNCTOC UN Convention on Transnational Organised Crime Aims to ensure that all parties adopt appropriate legislation, e.g. on money laundering, corruption, etc. Problem with illegal logging is not lack of legislation, but implementation Also aims to improve mutual legal assistance Could be of some value in due course, but not now Indonesia raised illegal logging in two conferences