Understanding the EU Timber Regulation Rachel Butler Advisor to European Timber Trade Federation

European Timber Trade Federation Founded in 2009 after a merger of the European organisations representing hardwood, softwood, panel products, flooring and timber merchants; Membership represents 9 key European importing countries; –Netherlands, UK, Spain, Belgium, France, Germany, Greece, Italy & Denmark Less than 10% EU timber consumption is imported from outside EU –Majority of timber is low risk spp European softwood! In UK less than 5% tropical…..

Forest Law Enforcement Governance & Trade 2003 FLEGT Action Plan Funding Projects EU Timber Regulation Voluntary Partnership Agreements FLEGT Regulation Public Timber Policies

5 EU Timber Regulation: March 2013 It prohibits operators to place on the EU market of illegally harvested timber and products derived from such timber; It requires operators who place timber products on the EU market for the first time to exercise 'due diligence‘; Requires documentation of their suppliers and customers (Operators & Traders).

Applies to Private Sector This law changes fundamentally one concept: the liability is now on the operator and if proven to have placed illegal timber on the market could face criminal penalties i.e. losing right to trade!

EU Legislation Identifies Operators - “first placers” on the market Traders – buying and selling products already placed on the market Monitoring Organisations - provides due diligence systems Competent Authorities - Member State Authorities Due Diligence Systems - required by law by Operators

8 Obligations: Operator & Trader (4 only) Access to Information – spp, country of origin, volume, suppliers, buyers Risk Evaluation – compliance with applicable legislation, spp, prevalence of illegal logging, UN Sanctions, supply chain complexity Risk Mitigation – measures that are adequate and proportionate to minimise that risk and may include additional info/docs or 3 rd party verification Traceability – required to keep records identifying from whom they bought and to whom they sold (i.e Invoices, POs etc)

9 9 Functions: Monitoring Organisation Maintain and regularly evaluate a due diligence system and grant operators the right to use it Check that operators are using its due diligence system properly Take action if an operator is found to not be using the system correctly & obliged to report to Competent Authority

Enforcement Competent authority Risk and intelligence-based approach to enforcement Carry out checks on operators to verify compliance; including examination of due diligence system, risk mitigation measures, documentation and on-site checks Penalties must be effective, proportionate and dissuasive and can include: Fines proportionate to the environmental damage, the value of the timber/timber products concerned, tax losses and any economic detriment resulting from infringement Seizure of timber/timber based products concerned Immediate suspension of authorisation to trade Criminal offences can carry jail time

Not an import restriction Only FLEGT licensed timber & CITES is considered zero risk under EUTR Certification & legality verification are not automatically accepted by the EU Possible changes in timber flows & switching to lower risk producer countries? All buyer’s need it to be simple Implications & Consequences of EUTR

Next steps – EU Delegated Act on Monitoring Organisations : Published Feb 2012 Implementing Regulation on Due Diligence: Due June 2012 Additional Guidance on due diligence: Due Autumn 2012 Regulation effective on 3 rd March 2013

13 Obligations: Operator Access to Information – use of simple forms to record information and all products Risk Evaluation – objective method based on spp/country and what risk mitigation is in place. More evidence of mitigation needed where the risk is deemed higher Risk Mitigation – assesses the suitability of risk mitigation methods and procedures such as supply chain control and certification schemes

Due Diligence: Access to Info Applies to domestic and imports alike and they must have access to the following information: a)Tradename/scientific name b)Country of harvest (sub-national region/concession of harvest) c)Quantity d)Supplier e)Trader to whom timber has been supplied f)Documents/info indicating compliance with applicable legislation

Due Diligence: Risk Evaluation

Due Diligence: Risk Mitigation ClassificationCategory & Evidence RequiredComments Exempt CITES, FLEGT Licensed & Recycled Mitigated & Low Risk Approved certification schemes FSC & PEFC Supply chain control demonstrated; procedures, forestry practices etc Approved Legality Verification Schemes – VLC Low risk species Fraud Country of Origin Legality definition of schemes meets EUTR Some Risk Mitigation in place Other verification & certification schemes GFTN, TTAP, TFT etc Additional evidence/ information is required – not enough on their own High Risk High risk spp and no controls Further risk mitigation required, probably 3 rd party verification

Certification & Legality Verification Issues with certification –Caution 1: This may not give you the information you require e.g source country –Caution 2: Where known or suspected fraud is apparent, additional due diligence is recommended Legality Verification –Several schemes so confusing as some do not meet the regulation

18 Links to other Legislation Buyers in EU, US & potentially in Australia –all carry similar liabilities! Suppliers to EU, US & Australia –Same information/evidence in practice

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