1. New International Laws: the EU Timber Regulation, US Lacey Act and Australian Illegal Logging Law Forest Governance Forum Kinshasa 11-12 September 2012 Emily Unwin

2. Overview EU Timber Regulation – how it works – interaction with VPAs US Lacey Act & Australian Law Common features of these new laws Implications for timber producing countries

3. EUTR/Lacey Act/Australian Law Taken together, these laws represent a new approach. Each law: Focuses on legality in country of harvest Prohibits trade in timber that has been harvested illegally Creates an obligation to actively question the legality of harvest (due diligence/due care) Requires that information about the timber is collected to evidence its legality

4. EUTR Main Provisions From 3 March 2013: Operators are prohibited from placing illegally harvested timber on the EU market Operators must exercise ‘due diligence’ as to the risk that timber is harvested illegally Operators and traders must keep records of suppliers and buyers Operators = those that ‘first place’ timber on the EU market

5. Focus of the EUTR Applies to timber/products listed in Annex, including: – Fuel wood, wood chips, builders joinery, rough wood, sawn wood, plywood, particle board, wooden frames, veneered panels, … Applies whether harvested in EU or beyond Focus is legality in country of harvest – even if timber arrives in EU via a processing country

6. Who is an Operator? Company A in DRC exports timber to Company B in China Company B processes timber, exports the product to EU and sells it in EU. Company B = operator Timber must be harvested legally in DRC Operators = those that ‘first place’ timber on the EU market

7. Due Diligence System Species Country / region of harvest Quantity Supplier Buyer Documents indicating compliance with laws Information Assurance of compliance with legislation Prevalence of illegal harvest of species Prevalence of illegal harvest in country Sanctions by UN/EU on timber Complexity of supply chain Risk Assessment IF risk is greater than ‘negligible’, take steps to reduce risk e.g. Require additional information Third party verification Risk Mitigation

8. Certification & Legality Verification Schemes Not automatic evidence of legality Are possible ‘tools’ for due diligence: Operators must assess how relevant and credible they are Even if a system does provide all information, operators will always retain legal liability and risk

9. Enforcement Member State Competent Authorities: Risk and intelligence based checks Civil society may present concerns about illegal practices Penalties ‘Effective, proportionate, dissuasive’ – Fines proportionate to environmental damage, value of timber, tax/economic loss – Seizure of timber, suspension of right to trade

10. Impact of FLEGT licence Timber with a valid FLEGT licence is automatically considered legal under the EUTR. Reduces business risk for operators: FLEGT licence is considered ‘legally harvested’ and can be use to demonstrate compliance with due diligence obligation No need to request further information

11. US Lacey Act and Australian Illegal Logging Bill

12. US Lacey Act Prohibits trade in illegally sourced forest products – Focus is legality in country of harvest Must submit a declaration giving details of: – Scientific species name, country of harvest, volume & value Must exercise ‘due care’: – Reasonable steps to reduce risk of trading illegal goods – Similar to EUTR ‘due diligence’ obligation

13. US Lacey Act Third party certification – not required - or accepted - as proof of legality First enforcement case (against Gibson’s Guitars) settled in August 2012 – Civil society had raised concerns about legality – Failure to seek information to check legality was a fault – Penalty of over $600,000 including forfeit of illegally imported wood – Improvements to compliance systems required

14. Australian Illegal Logging Bill Passed by House of Representatives in August 2012. Not yet law - still must be passed by Senate. Key provisions: – Prohibits import of illegally logged timber – Due diligence as to risk of illegality must be exercised – Prohibit processing of illegally logged domestic timber

15. Key Overlaps of International Laws Focus on legality in country of harvest Information about timber is important Regulated party must: – take active steps to assess risk of illegality (due care / due diligence) – request relevant information about the timber, its source and legality – maintain records of information

16. Impacts in Timber Producing Countries Timber producers are not directly caught unless selling to EU/US/Australian markets directly Buyers may ask timber producers for information about the timber – and evidence of legal harvest: – Location of timber harvest – Proof of legal right to harvest and transport permits – Proof of legal incorporation and compliance with customs laws Civil society may present information indicating illegal logging to buyers & public authorities in EU/ US/Australia

17. Summary of Key Points From 3 March 2013 timber to EU must comply with EUTR Similar laws exist and are being created internationally (US Lacey Act/Australian Law) Buyers may request information to show legality FLEGT licence reduces risk for EU operators Certification is not a one-stop solution Civil society (in EU and beyond) may play a role in effective enforcement

18. Thank you Emily Unwin Lawyer, ClientEarth eunwin@clientearth.org