1. Outline of potential additional measures (second draft)
Assessment of additional measures to exclude illegal timber from EU markets
Outline of potential additional measures (second draft)
Duncan Brack
Associate Fellow, Energy, Environment & Development Programme, Chatham House
Chatham House workshop
Chatham House, 3 April 2006

2. 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’

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

4. 3 International frameworks
CITES: of some use, but limited
WCO, Interpol: may help with international collaboration, but do not provide legal basis for action
UN Convention on Transnational Organised Crime – not likely to be useful
Not covered: ITTO, CBD, WTO, private sector schemes, US Bioterrorism Act

5. 1 Trade measures
Requirement to show proof of legality at the border regardless of origin
Presumably would require certification, FLEGT license, or equivalent documentation (not existing papers)
Similar in principle to procurement policies, but extending economy-wide

6. 1 Trade measures: WTO considerations
Legality requirement could conflict with GATT:
Trade restriction
Possible discrimination between WTO members
Possible discrimination between ‘like products’
In all cases, could possibly 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

7. 1 Trade measures: Civil society initiative
FERN / Greenpeace / WWF proposal, December 2004
Requires ‘valid and verifiable documents’ demonstrating legality
Covers all cases of movement of timber and timber products within the Community
If documentation the same, would possibly survive WTO test

8. 1 Trade measures: conclusions
Still possible WTO challenge as a trade restriction
Would only be saved under Article XX(d) if ‘necessary’ to achieve objectives
WTO dispute panels tended to interpret ‘necessary’ as ‘least trade-disruptive’
Highlights practical problem with proposal – it is highly trade-disruptive
Would require licensing of 85–90% of trade that is not illegal

9. 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

10. 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)

11. 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

12. 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)

13. 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 useful

14. 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 conclusions of High Seas Task Force (March 2006)
UK considering possibility of including legislation in Marine Bill

15. 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
Impact on suppliers: negotiate contracts which shift risk

16. 2 Legislation at EU level
Lacey Act: ‘import, export, transport, sell, receive, acquire or purchase’
Imports and exports can only be regulated at Community level
Community competence probably exists

17. 2 Legislation at member state level
Lacey Act: ‘import, export, transport, sell, receive, acquire or purchase’
Member states can regulate sale, purchasing, etc.
German draft Virgin Forests Act prohibits possession and marketing – though by requiring proof of legality, i.e. not like Lacey Act
Introduction by individual member state – would need to consider whether created barrier to trade within the EU (Article 30 EC Treaty)
Dispute cases suggest would be acceptable

18. 2 Speed of implementation
EU: FLEGT regulation – three and a half years from first idea; two and a half years from Action Plan
Member state, e.g. UK: Inquiries Act 2005 – nine months; Marine Bill – 4–5 years? (but Lacey Act-type legislation much simpler)

19. 2 Issues around Lacey Act (1)
Is Lacey Act restricted to fish and wildlife because of greater volume of timber trade?
No evidence from history; and fish imported in comparable volumes (though timber causes more of a problem with processed products)
Would European courts resist Lacey Act-style legislation because requires interpretation of foreign law?
No; fairly common experience in transboundary disputes

20. 2 Issues around Lacey Act (2)
Clash with European human rights legislation? No
Would Lacey Act-style legislation cause WTO problems?
Not a trade measures, applied at the border; and not discriminatory

21. Conclusions
Existing frameworks: not likely to be useful
Requirement for proof of legality: effectiveness high, but cost of universal licensing scheme also very high
Introduction of Lacey Act-style legislation: does possess advantages, but not panacea – would also impact trade, though much less than previous option
Ideal solution in long-term is world-wide licensing system, but not feasible now
EU legislation modelled on Lacey Act would underpin FLEGT licensing scheme