1. Proposals for improvement of the track-and-trace system and timber origin in Ukraine for EUTR purposes
Pavlo Kravets
ENPI-FLEG II expert,
FSC Ukraine National Representative

2. Regional Forestry and Hunting Administration
Current wood track-and-trace system in Ukraine: electronic account of wood and certificate of origin
Electronic
account
of wood
compart-ment
cutting
area
Sub-FMU
FMU
region
country
Regional Forestry and Hunting Administration
State FMUs
ТТН
waybills
Certificate of origin
waybill
Customs
Exporter
Wood processor 2
Wood processor 1

3. Criticism Electronic account wood system:
Covers reach state FMUs only;
Do not spread to the primary and secondary wood processors;
No efficiency system: high cost (equipment, tags and services) but no influence at illegal logging;
Corruption risks (function of system is no transparent, cost is wrongful).
Certificate of origin:
1. Сovers only the part of harvested wood which was exported (round wood and some timber);
2. Ground for corruption is created within the obligatory permit system;
3. Certificate reflects only one aspect of origin: presence of harvesting permit

4. Study of available timber track-and-trace systems
FSC Online Claim Platform (ОСР)
FSC Standard for Chain of Custody Certification (FSC-STD V 2-1 EN)
SDC (Sweden)
DOF (Brazil)
SUMAL (Romania)
SIPL (Poland)

5. Stages of timber tracing system improvement
First stage – unified system for registration of electronic timber declaration for export (January 2016);
Second stage – online electronic control system of round wood transportation (January 2017);
Third stage – unified system for registration of electronic timber declaration for domestic market (January 2019).

6. Advantages and specifics of an electronic timber declaration
Instrument of EUTR implementation;
Reject waybills without IDs origin for all chain-of-custody;
Bloсked export of round wood designed to process in country;
Minimized corruption risk and state intervention;
Increase responsibility of all chain-of-custody partners;
Increase transparency and openness of forest sector and as a result to increase confidence;
Shift from permit to declaration system;
Differentiation of record and electronic timber declaration from the risk of unreliable data input;
Origin of timber add applicable legislation;
Provide mechanism of verification made by second or/and third parties.

7. Main provisions of electronic timber declaration (1)
Electronic timber declaration includes recording, storage and processing data about origin of logged wood and its transformation to the final product through the entire chain- of-custody.
In the beginning the location of harvesting (at logging area or FMUs level) is wanted.
1. LOCATION
Record manually
GPS identification

8. Main provisions of electronic timber declaration (2)
2. LOGGING
Open the last
Create a document
Register of documents
FMUs are obliged to put the information into the information system software about each timber batch and sale contracts of unprocessed wood.

9. Main provisions of electronic timber declaration (3)
Synchronization with an electronic wood account
Create an invoice
Open an invoice
3. TRANSPORTATION
Registration of information about delivery of timber batch from seller to buyer would provide a link between wood obtained at logging areas (identifier – harvesting permit) and exported timber (unprocessed or processed).

10. Main provisions of electronic timber declaration (4)
Choosing a processing type
Conversion coefficients
4. PROCESSING
Synchronization with an electronic wood account %
Electronic declaration would not be registered for unprocessed wood which is designed for domestic market.
Companies that process wood should enter data into the system using conversion coefficients.

11. Main provisions of electronic timber declaration (3)
Records about the possibility of entering incorrect data are sent to control and law enforcement bodies.
Exporter based on the request of the importer must send him confirmation of registration of declaration to verify the origin of timber batch.
Importer has the right to submit a request for compliance with applicable legislation by exporter, his contractors for all chain-of- custody to FMUs.
Search in the system
5. CONTROL
Declaration history !

12. Main provisions of electronic timber declaration (4)
Electronic timber declaration will cover all products under the EUTR;
Assess to the system is free of charge;
Three methods will be used to keep information about timber origin in processing:
Transfer;
Percentage;
Balance.

13. Country
Stamp
Transfer
Percentage
Balance
FMU
Region
Relations between detailed information of origin and controlling methods
Cutting
area

14. Applicable legislation
Second draft of applicable legislation with comments of law enforcement, risk assessment and risk mitigation was prepared under the FSC RO and FSC Ukraine support;
Method of risk assessment proposed;
24 experts for risk assessment were involved: 10 represent ecological interests; 7 – economic interests; 7 – represent regional state and control function in forestry;
Initial results of risk assessment presented for state and stakeholders

15. Method of risk assessment
characteristics
Applicable law and regulations
No effective
Wanted improvement
Effective
Law enforcement
frequent
violation
rare
absent
In case of answers (red and orange zone):
> 15% “no effective – frequent violation”,
> 25% “wanted improvement – frequent violation”,
> 25% “wanted improvement – rare violation” risk will be identified as “specified”;
In other cases (green zone) risk will identified as “low” or “negligible”.

16. Results Low risk Specified risk 1.1.1 State and tax registration
1.1.2 Land tenure and management rights
1.2 Concession licenses (no applicable)
1.3.1 Management plan and AAC
1.4 Harvesting permits
1.3.2 Annual harvesting planning
2.1 Payment of royalties and harvesting fees
1.3.3 Marking-out and valuation of cutting area
2.2 Value added taxes and other sales taxes
3.1.2 Norms of Technical Equipping of Cutting Area (pre-logging, scheme and methods of logging operation, logging sequence etc.)
2.3 Income and profit taxes
3.2 Protected sites and species
Organization and Technical Elements of Logging (arrangement of coupes, size of cutting area, method of arrangement of coupes, direction of cutting operation, felling face, season of logging)
3.3.1 Environmental requirements for logging

17. Results (continue) Low risk Specified risk 4.1 Customary rights
3.3.2 Maintenance of trees important for biodiversity
4.2 Free, Prior and Informed Consent
3.4 Health and safety
4.3 Indigenous peoples’ rights (no applicable)
3.5 Legal employment
5.1 Classification of species, quantities, qualities
5.2 Trade and transport
5.5 CITES (no applicable)
5.3 Offshore trading and transfer pricing
5.4 Custom regulations

18. Implementation
Detailed proposals for amendments of national law and regulation concerning electronic timber regulation and applicable legislation were submitted to the State Agency of Forest Resources of Ukraine.
Second draft of applicable legislation with risk assessment and risk mitigation is using for development of FSC National Risk Assessment Controlled Wood.

19. Thank you for your attention!