1 EU Timber Regulation VPA Q&A The quiz below presents questions that are designed to elaborate on how the EU Timber Regulation and Voluntary Partnership Agreements (VPAs) will operate and interact in practice. In particular, the questions focus on issues which have been points of confusion or uncertainty to date, where appropriate, giving examples to illustrate the point. 1. What will be the effect of the Timber Regulation on timber harvested before its entry into force (3 March 2013)? Answer: The Timber Regulation will impact any relevant timber/timber product first placed on the EU market from 3 March 2013 even if the timber was harvested before 3 March Example: Timber is harvested in Gabon in February 2013 and placed on the EU market on 3 March The Timber Regulation does apply. 2. What type of timber will the Timber Regulation apply to from 3 March 2013? Answer: The Timber Regulation applies to an agreed, defined list of timber and timber products. This list is set out in the Annex to the Timber Regulation and specifies the relevant HS code of products to which it applies. Example: The Timber Regulation does apply to unprinted paper (HS Codes 47 & 48, with the exception of bamboo-based and recovered (waste and scrap) products)), but it does not apply to printed paper products (HS Code 49). 3. Do the Timber Regulation and the FLEGT VPA apply to the same timber products? Answer: Sometimes. The Timber Regulation sets a list of products which fall under its terms. Any products in this list, if exported to the EU, will have to comply with the Timber Regulation. For VPAs there are two ways that a product may be brought within the scope of the agreement. Some products are automatically incorporated because they are listed in the FLEGT Regulation (Regulation EC 2173/2005), which sets the minimum rules that apply to the licensing scheme in any VPA. In addition, each VPA may list additional products, which fall within the scope of that particular agreement. While there is a lot of overlap, products that are covered by the Timber Regulation are not necessarily covered by VPAs. Equally, the VPAs may apply to products that are not affected by the Timber Regulation.
2 Example: Products falling into HS Code 4409 wood including strips and friezes for parquet flooring when not assembled are included in the scope of the Timber Regulation. These products are not referenced by FLEGT Regulation (EC) 2173/2005, so are not automatically in the scope of VPAs. However, of the VPAs currently agreed, these products are included in the VPAs concluded between the EU and Congo-Brazzaville and the EU and Ghana. 4. Will the Timber Regulation place an obligation on timber suppliers in Gabon? And if so, what kind of obligation? Answer: It depends. The Timber Regulation places direct obligations on organisations that first place timber/products on the EU market. (In particular: operators are (i) prohibited from placing illegally harvested timber on the EU market and (ii) obliged to exercise due diligence.) Whether or not a timber supplier in Gabon is an operator will depend on the circumstances in each case. If a supplier in Gabon is the organisation to first place timber on the EU market it will be the operator and so have to comply with the main provisions of the Timber Regulation. However, a supplier in Gabon may sell timber/timber products to another organisation, which in turn first places the timber on the EU market. In that scenario the Gabonese supplier will not be an operator. Secondly, even if a timber supplier in Gabon is not an operator, if the timber is sold in the EU the operator will need access to particular information about the timber (e.g. timber species), so it is likely that the Gabonese timber supplier will be asked to provide this data. Example: If a supplier in Gabon sells wooden office furniture (HS code within the scope of the Timber Regulation) to an EU-based company and that EU based company places the products on the EU market, the Gabonese supplier is not an operator but can expect to be asked by the EU-based company for details of the timber species used in the furniture. 5. Must an operator, under the Timber Regulation, be an EU-based organisation? Answer: No. An operator can be based in the EU or outside. The operator is the organisation that 'first places' timber/timber products on the EU market. The identification of an operator varies according to the details of each situation. Organisations involved in the timber trade will initially have to assess for themselves whether they are an operator. Member States competent authorities will also assess this. Were there a disagreement about whether or not a particular organisation is an operator, ultimately it would be determined by courts in the relevant Member State. Example: A Chinese company produces wooden furniture, exports it to the EU and sells it to an EU buyer. Ownership of the timber passes to the EU buyer within the EU. In this situation it is likely that the Chinese company will be the operator. 6. Does an operator always have to exercise due diligence as to the risk that timber has been harvested illegally?
3 Even when the operator is certain that timber has been harvested legally (e.g. the operator harvested the timber itself) due diligence must still be exercised in accordance with the framework set out in the Timber Regulation. Further detail: 1. To exercise due diligence operators will need access to specific information about the timber. The information includes: a. the common name of the tree species - and in some cases its full scientific name b. the country of harvest - and in some cases the sub-national region and the concession of harvest; c. documents indicating compliance with applicable legislation in the country of harvest. 2. To prove that due diligence has been exercised, written records must be maintained and made available if checks are carried out. 7. What consequences will the due diligence obligation have on: i. Public authorities in countries exporting timber to the EU? Answer: These public authorities may be approached by EU Member State competent authorities or operators for information. E.g. on: The appearance and specificities of particular certificates of right to harvest (or related documents); or The confirmation that particular certificates of rights to harvest (or related documents) are valid/were issued correctly. ii. Timber harvesting company or a timber supplier (that is not also an operator)? Answer: These organisations may be asked for information including: the species of the timber that it sells; information to evidence that the timber was harvested legally; the country, sub-national region and/or concession where the timber was harvested. 8. Under the Timber Regulation do the same requirements attach to complex products, composed of multiple trees species, when placed on the EU market? The requirement to have access to information about timber, including tree species and country of harvest, applies no matter how many different tree species are in any one product. Where there are multiple tree species/countries of harvest, details of all should be provided. If exact details of all tree species and countries of harvest are not known exactly, it is not yet clear how this requirement will be applied. It is possible that operators will be able to specify all the likely species/countries of harvest and then assess risk on the basis of those different possibilities. This question still needs to be resolved.
4 Example: Paper is typically made from tree fibres from many different tree species, sometimes from different geographic regions. An operator should be able to identify the different tree species and countries of harvest of the timber used to produce paper. As suggested above it may be sufficient to provide a list of likely species/countries of harvest and conduct due diligence on that basis. 9. What degree of risk that timber is illegal is acceptable under the due diligence obligation? Answer: The risk of illegal harvest cannot be more than negligible for timber to be accepted under the due diligence obligation. What negligible is will depend on the context a combination of the information and risk criteria have to be considered. The European Commission is expected to provide further guidance on what negligible means before March Where is the focus of legality for the purpose of the Timber Regulation? Answer: The focus is legality in the country of harvest, in accordance with the relevant laws in that country. If timber is exported from the country of harvest to another country for processing and then exported the EU, the focus remains legality in the country of harvest, not the country where the timber was processed. 11. If products arrive in the EU via a processing country, does the Timber Regulation still apply to them? The Timber Regulation applies to all timber/timber products within its scope that are placed on the EU market, irrespective of whether the timber has been traded through or processed in different countries first. Example: If rough timber is exported from Cameroon to China, processed into a product in China and then sold in the EU, the operator will need information about where the timber was harvested, the species, and to prove that it was harvested legally in Cameroon. 12. Does the Timber Regulation apply to timber harvested in the EU? The Timber Regulation applies to all timber placed on the market in the EU, whether that timber was harvested in the EU or beyond. 13. If a timber producing country is negotiating a VPA but the process is not yet operational (or not yet in force) and FLEGT licenses are not being issued, can timber still be exported to the EU?
5 If FLEGT licences are not being issued yet, timber can be exported to the EU. The Timber Regulation will apply, so an operator placing timber on the EU market will have to comply with its terms. 14. Once FLEGT licences are being issued, can a VPA country export to the EU timber products that should have a FLEGT license but don t, as long as the conditions under the Timber Regulation are complied with? Answer: No. Once a VPA has been negotiated, agreed, and FLEGT licences are being issued, exports to the EU must have a valid FLEGT licence. However, if any timber is not within the scope of the VPA but does fall within the scope of the Timber Regulation, it can be exported to the EU without a FLEGT licence, and operators will have to comply with the terms of the Timber Regulation. Example: Tramway sleepers (HS Code 4406) from Indonesia will not be covered by the EU - Indonesia VPA, as they are outside the scope of products covered by the agreement, but will fall under the terms of the Timber Regulation. 15. Will timber certified by a certification scheme automatically be considered legal for the terms of the Timber Regulation? Answer: No. Certification is a possible tool that operators can use to help them exercise due diligence. Operators must always consider the extent to which a certification scheme is a relevant and credible tool in exercising due diligence. An operator cannot automatically consider certified timber to be legally harvested. Example: Operator buys certified timber from a supplier in Congo. The operator must assess how that certification scheme works what its requirements are and how these relate to the Timber Regulation s requirements. Also how credible the scheme is and so how useful it is as a part of the exercise due diligence. 16. What is the role of certification with relation to VPAs? Answer: For a FLEGT licence to be issued, timber must comply with the requirements of the Legality Assurance System (LAS). The LAS allows the licensing authority to verify that timber has been harvested and produced legally. It includes: a definition of legally produced timber; a mechanism to control the supply chain; and means to verify that the requirements of the legality definition and the supply chain have been met (through audits and other forms of control and monitoring). Certification schemes may be used as a part of the LAS to prove compliance, but for a FLEGT licence, compliance with the LAS is what matters most. Examples: A VPA negotiated between the EU and the Republic of Congo provides that, following an assessment of a certification scheme (and provided it fulfils the requirements of the legality definition), a certified company will obtain a de facto legality certificate for its
6 operations. This means the Inspection Department of Congo will not assess this operator separately from the assessment provided by the certification scheme, with regards to its legality to operate. The timber harvesting, production and supply chain requirements will still need to be verified. A different case is the Ghanaian VPA which does not refer explicitly to any certification scheme and how it will interact with the control and assessment performed. The role of certification schemes is hence likely to be weaker. 17. What will happen to timber/timber products found to be illegal under either the Timber Regulation or the FLEGT VPA? Answer: Timber Regulation: If an operator places illegally harvested timber on the EU market, it will have broken the law in that EU Member State and be subject to enforcement regime in that country. Penalties for infringement of the Timber Regulation have not yet been set. However, one penalty contemplated by the Timber Regulation is the seizure of illegally harvested timber. If seized, what then happens to the timber in question would be at the discretion of the Member State. VPA: If timber does not comply with the requirements of the Legality Assurance System (LAS) it cannot be issued with a FLEGT licence, so cannot be exported from that country to the EU. What then happens to the timber will depend on the enforcement system in that country. 18. What social and environmental safeguards are offered by the Timber Regulation under the exercise of due diligence (i.e. without the need for more stringent obligations such as respecting customary tenure, local communities rights, environmental impact assessment etc.)? Answer: The Timber Regulation is concerned with legality of harvest according to the laws of the country of harvest. The law to be taken into account includes third parties legal rights concerning use and tenure that are affected by the timber harvesting. 19. Will the independent monitor be able to act on information collected in the field to prove that timber is illegal, both in the contexts of VPAs and the Timber Regulation? (See question 14) Timber Regulation: Third parties may present information relevant to the enforcement of the Timber Regulation to EU Member State competent authorities (who are responsible for ensuring compliance with the Timber Regulation). If the independent monitor has proof of illegal timber that falls within the scope of the Timber Regulation and is being placed on the EU market, it can and should present that information to the relevant competent authority. VPA: All VPAs contain provisions for an independent and regular audit of the Legality Assurance System by a government-appointed body. The auditor reports to the Joint Implementation Committee of the VPA and publicises its report. Additionally, some VPAs allow for a formally recognised independent monitor, often a civil society organisation (e.g. in the Republic of
7 Congo has the FLEGT Independent Monitoring conducted by the national NGO CAGDF and assisted by the international NGO REM-Forests Monitor) to monitor and report on the operations of the licensing scheme. Finally, independent observation is envisaged in some countries where the independent monitoring has not been inserted as a component in the VPA. This observation is informal and not part of the LAS. 20. A complaint mechanism is foreseen in most VPAs, in order to receive claims for illegally harvested timber. At this stage, few mechanisms have been fully defined or developed. Where is information (relating to timber and compliance with national legislation) to be found by operators who first place timber on the EU market under the Timber Regulation? Answer: There is no one central point of information for operators. Instead, operators are expected to use multiple information sources, depending on the specifics of the timber in question. For further information, please contact: Emily Unwin Lawyer t +32 (0) Nathalie Faure Law and Policy Advisor t +44 (0) Feja Lesniewska Law and Policy Advisor t +44 (0) ClientEarth Brussels 4 ème Etage 36 Avenue de Tervueren Bruxelles 1040 Belgium London 274 Richmond Road London E8 3QW UK Warsaw Aleje Ujazdowskie 39/ Warszawa Poland ClientEarth is a company limited by guarantee, registered in England and Wales, company number , registered charity number , registered office 2-6 Cannon Street, London EC4M 6YH, with a registered branch in Belgium, N d entreprise , and with a registered foundation in Poland, Fundacja ClientEarth Poland, KRS , NIP Updated August 2012