New International Laws: the EU Timber Regulation, US

Lacey Act and Australian Illegal Logging Law

Forest Governance ForumKinshasa

11-12 September 2012Emily Unwin

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

EUTR/Lacey Act/Australian LawTaken 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

EUTR Main ProvisionsFrom 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 buyersOperators = those that ‘first place’ timber on the EU market

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

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

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 verificationRisk

Mitigation

Certification & Legality Verification SchemesNot 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

EnforcementMember State Competent Authorities:• Risk and intelligence based checks• Civil society may present concerns about

illegal practicesPenalties• ‘Effective, proportionate, dissuasive’

– Fines proportionate to environmental damage, value of timber, tax/economic loss

– Seizure of timber, suspension of right to trade

Impact of FLEGT licenceTimber 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

US Lacey Act and Australian Illegal Logging

Bill

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

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

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

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

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

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

Thank you

Emily UnwinLawyer, ClientEarth

eunwin@clientearth.org