International Tropical Timber Organization / FLEGT Independent Market Monitor (IMM)

FLEGT VPA Partners
in EU Timber Trade 2018
MAIN REPORT – NOVEMBER 2019

Report authors:
Sarah Storck(IMM Lead Consultant)
Rupert Oliver(IMM Trade Analyst)
Edited by:
Steven Johnson(ITTO Assistant Director
Trade and Industry)

Photo courtesy of Interholco

This report has been produced with thefinancial assistance of the European Union
The views expressed herein are those of the consultant and the IMM anddo not necessarily reflect the official opinion of the European Commission

Contents
		

Executive Summary

5

		
		

Recommendations for FLEGT Licence market development
IMM future monitoring

6
7

		

List of Acronyms

8

1.

Introduction

10

1.1
1.2
1.3
1.4
1.5
1.6
		

Background
Overview
Report Content
Scope and definitions
Data sources
Access to supporting data
Acknowledgements

10
10
10
11
11
12
12

2.

VPA implementation and negotiation – state of play

12

2.1

FLEGT-licensing partner countries

12

2.1.1 		2.2Indonesia

VPA implementing partner countries1213

2.2.1 		Cameroon13

2.2.2 		Central African Republic (CAR)

13

2.2.3 		Republic of the Congo (RoC)

13

2.2.4 		

Ghana

13

2.2.5 		Liberia14

2.2.6 		Viet Nam

2.3

VPA initialed partner countries

2.3.1 		Guyana2.3.2 		Honduras

2.4.

VPA negotiating partner countries

14

14
14
14

14

2.4.1 		Côte d’Ivoire

14

2.4.2 		Democratic Republic of Congo (DRC)

15

2.4.3 		

Gabon

15

2.4.4 		Lao PDR

15

2.4.5 		Malaysia

15

2.4.6 		Thailand15

3.

VPA country export trade – 2018 update

16

3.1
3.2
3.3
3.4

Scope		VPA partner share of global tropical wood-product trade in 2018
Product mix of tropical wood trade
Regional supply of tropical wood products

16
16
17
18

3.4.1 		Asia183.4.2 		Africa19

3.4.3 		Pacific and Latin America

20

3.5

Changes in regional demand for tropical wood products

20

4.

VPA partner country competitiveness

21

4.1
4.2
4.3

Relative international competitiveness of VPA partner countries
Perceptions of VPA partner countries in IMM 2018 surveys and studies
The role of FLEGT Licences in purchasing decisions

21
25
26

2		

Main Report – November 2019

Contents
5

Indonesia: Market position and prospects

27

5.1
5.2

Scope		Indonesia’s timber supply

27
27

5.2.1 		Production

27

5.2.2 		Imports

28

5.3

Indonesia timber product exports

30

5.3.1 		Indonesia timber product export data sources30

5.3.2 		Indonesia timber products export by product31

5.3.3 		Indonesia timber products export by region31

5.3.4 		Third-party certified timber in Indonesia’s exports

5.4

EU timber product imports from Indonesia

31

33

5.4.1 		EU imports from Indonesia by product group33

5.4.2 		Imports from Indonesia by EU Member Countries33

5.4.3 		Indonesia share of EU timber product imports

5.5

Overcoming market constraints to FLEGT-licensed timber

35

36

5.5.1 		Background64

5.5.2 		HS Code harmonisation and other Licence mismatches

64

5.5.3 		Electronic licensing

36

5.5.4 		Communication and marketing

36

5.6
5.7
5.8

Indonesian trade views of the impact of FLEGT licensing
EU trade views of the impact of FLEGT licensing
Price trends for indicator products from Indonesia

37
38
40

6.

EU timber market trends and VPA partner market share

42

6.1
6.2

Overview
Overall market trends

4242

6.2.1 		GDP growth42

6.2.2 		Construction sector

43

6.2.3		

Wood joinery sector

43

6.2.4		

Furniture manufacturing44

6.2.5		

Exchange rates

6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12

VPA partner share of total EU wood product import value
VPA partners in EU log supply
VPA partners in EU sawn wood supply
VPA partners in EU mouldings and decking supply
VPA partners in EU veneer supply
VPA partners in EU plywood supply
VPA partners in EU composite-panel supply
VPA partners in EU wooden window supply
VPA partners in EU wooden door supply
VPA partners in EU supply of modern Engineered Wood Products (EWPs)

44

46
48
49
51
52
53
55
56
58
59

6.12.1		EWP opportunities and challenges

59

6.12.2		

VPA Partners in EU glulam supply

60

6.12.3		

VPA Partners in EU LVL supply

61

6.12.4		

VPA Partners in EU CLT supply

61

6.13
6.14
6.15
6.16

VPA partners in EU real-wood flooring supply
VPA partners in EU wood-furniture supply
VPA partners in EU pulp supply
VPA partners in EU paper supply

62
64
67
68

7.

EUTR Implementation

70

7.1
7.2
7.3
7.4
7.5

Overview
Application of EUTR-compliant due diligence systems by operators in MS
Sanctions imposed on/prosecution of non-compliant operators
Recognition that FLEGT-licensed timber requires no further due diligence
Perceptions of EUTR impact

70
70
71
72
72

Main Report – November 2019

3

Contents
8.

FLEGT-licensing in EU Wood Promotion

72

8.1
8.2
8.3
8.4
8.5
8.6
8.7

Overview
Wood promotion campaigns’ thematic focus
Wood promotion campaigns’ positions on FLEGTTimber Trade Federations’ communication role and position on FLEGT
NGO/CSO communication role and position on FLEGTEU FLEGT Facility – an information hub
Media references to FLEGT VPAs

72
73
73
76
76
77
77

9.

EU Voluntary Private Sector Timber Procurement Policies

80

9.1
9.2
9.3
9.4

Overview
Influences, dominant policy elements and the role of FLEGTHow responsible purchasing policies evolve
Incorporating FLEGT in polices

80
80
81
83

10.

EU Member States’ Public Procurement Policies

83

10.1
10.2
10.3
10.4

Overview
The importance of public procurement for timber markets
The “legal and sustainable” hierarchy and the status of FLEGTFLEGT licensing in public procurement practice

83
84
85
86

11.

Links between FLEGT and voluntary third-party certification

87

11.1
11.2
11.3
11.4
11.5
11.6
11.7
11. 8

Overview
FSC assessment of FLEGT under Controlled Wood criteria
FLEGT as evidence of “negligible risk” with respect to PEFC Due Diligence
VPA partner countries in global forest certification
Share of FLEGT-licensed and other verified timber products in EU trade flows
EU trade perception of links between FLEGT and certification
Synergies between FLEGT licensing and forest certification
Comment on market implications

87
87
88
88
91
92
93
94

12.

FLEGT impact on forest sector investment

96

12.1
12.2
12.3
12.4

Overview
Methodology
Monitoring forest sector investment
FLEGT in the light of investment strategies

96
96
96
97

13.

Policy initiatives in non-EU tropical timber consuming countries

98

13.1
13.2
13.3
13.4
13.5
13.6
13.7

Overview
The US Lacey Act
Japan: Clean Wood Act
Republic of Korea
The Australian Illegal Logging Prohibition Act (ILPA)
Timber import regulations in VPA partner countries
Import regulations in non-EU European countries

98
100
101
102
103
104
104

14.

Recommendations

105

14.1
14.2

Recommendations for FLEGT License market development
IMM future monitoring

105
106

Annex 1: 2018 EU Trade Survey

107

		
		
		
		

107
108
109
110

Methodology and sample
Drivers of the EU tropical timber market
Awareness of the FLEGT VPA process
Detailed country-specific and thematic results

Annex 2: Summary of Ghana 2018 Report

110

		
		
		

110
110
112

Overview
VPA progress
Timber sector and export trends

4		

Main Report – November 2019

Executive Summary
The IMM’s latest Annual Report, “FLEGT VPA Partners in
EU Timber Trade 2018”, shows that the combined share of
the VPA partner countries in global tropical wood products
trade (all products in HS 44 and wood furniture productsin HS 94) was 78.8% in 2018, slightly down from 78.9% in2017 and 79.4% in 2016. This trend is set in the context of
an 8% rise in global tropical wood products trade in 2018,
to US$39.8 billion.
The rise in global trade in 2018 continues the 2017 reboundfrom the dip in 2016, which had occurred during a periodof slowing growth and the end of the speculative rosewood
boom in China. Unlike the 2009 to 2014 period, when rapid
trade growth was driven largely by China’s imports ofprimary wood products, recent growth is mainly due torising wood furniture exports, notably from Viet Nam andIndia destined for the United States. The year 2018 also
saw a big rise in the value of the tropical plywood trade,particularly from Indonesia destined for the US, Japan,
South Korea, the EU, and Australia. Exports from theCongo region of Africa increased 17%, while exports from
East and West Africa declined.
In the EU, timber market prospects deteriorated again
in 2018, after a positive development in 2017. The paceof GDP and construction sector growth slowed, while
activity in the wood product manufacturing sectors
levelled off after trending upwards the previous year.
During 2018, there was some evidence of wood regaining
a little of the share lost to substitute materials in recent
years, although the competitive pressure from thesealternatives was still intense.
The major beneficiaries of a significant rise in EU imports
in 2018 were other European suppliers, notably Russia,
Ukraine and Belarus. The share of VPA partner suppliers
in total EU imports continued to decline in 2018, although
at a slower pace than in the past. In 2018 China’s share in
EU imports fell to the lowest level since 2007.
Overall EU timber trade with VPA partner countries fellin 2018. However, imports from Indonesia, all covered by
FLEGT Licences since 15 November 2016, increased slightly,
by 0.1%, to €815 million in 2018. There was a notable rise inimports of doors and plywood from Indonesia during theyear. There was also a rebound in imports of sawn woodand logs from VPA implementing countries in Africa in2018. EU imports of wood furniture, flooring and glulam
from VPA partners in Asia continued to slide.
IMM surveys of trader opinion in 2018 identified thedrivers of the lasting downturn of EU consumption ofwood products from VPA partner countries including“substitution by other materials”, the main driver,followed by the “economic downturn 2008-2013” and“diversion of supply to other markets”, closely linked
to “competition from China for material access and in
markets for finished goods”. “Environmental prejudice
and uncoordinated marketing” was ranked by respondents
as the fourth most important driver.
Nearly all respondents to the IMM EU trade surveys in2018 said that FLEGT-licensing was making importingwood products from Indonesia easier compared to EUTR
due diligence. The IMM 2018 survey of traders in Indonesia
also confirmed a high overall level of support, with more
Main Report – November 2019than 90% of respondents still fully (56%) or partially(38%) confirming that achieving SVLK certification was
beneficial to their operations.
Despite 40% of EU respondents stating, in the IMM 2017
trade survey, that they would be willing to pay small pricepremiums for FLEGT-licensed timber, the 2018 survey
indicates that in practice no such premiums are being paid.
The perception amongst many importers that licensing is
no more than an assurance of “legality”, which is expectedanyway, continues to limit willingness to pay market
premiums. Some suggested that price premiums might bean option in the future, once FLEGT licensing and its wider
benefits are better understood.
Analysis of trade statistics shows that performance ofIndonesian wood products in the EU market has remained
mixed in 2018. Broadly consistent with the Indonesian
export data, the EU import value of Indonesian timber
and timber products increased by a further 6% to US$1.25
billion in 2018. However, in quantity terms, EU imports
from Indonesia decreased 5% to 678,000 tonnes in 2018.
EU import volume of Indonesian wood (HS 44) products
increased consistently each year between 2014 and 2018,
rising from 277,000 tonnes to 325,000 tonnes during thisperiod. However, import volume of furniture declined
during the same period, falling 2% to 102,000 tonnes in2017 and 3% to 99,000 tonnes in 2018. EU imports of paper
products have been more volatile, rising 15% to 278,000
tonnes in 2017 before falling back 9% to 252,000 tonnes
in 2018.
Overall the data indicates that FLEGT licensing has had
little impact on the market share of Indonesian productsin the EU and has not overridden the on-going effects ordirection of larger economic trends. Equally, licensing
does not seem to have had any detrimental effect onimport share.
The 2018 report provides an update on market constraints
to FLEGT-licensed timber identified in the 2017 report. The
number of both HS code and other FLEGT Licence mismatches
related, for example, to shipments’ weight or volume has
been reduced in 2018 and there has also been progress tointroduce e-licensing, with plans to pilot a tool and makea final decision in 2020. Several organisations stepped up
their communication and marketing of FLEGT Licences inthe EU during 2018, but FLEGT’s profile is still low compared
to forest certification initiatives such as FSC and PEFC.
An analysis of private sector and EU Member States’ public
procurement policies shows that third party certification
initiatives are the preferred mechanism to demonstrate
the “sustainability” of timber products. However, 18 public
procurement policies in the EU analysed recognise FLEGTlicenses in some capacity.
The report finds that acceptance of FLEGT Licences(or equivalent documents issued by FLEGT licensing VPA
partner countries for exports to non-EU countries) as
evidence of legality in non-EU countries has potential toprovide new opportunities for market development, which
are more significant against the background of the EU’s
falling share in VPA partner exports and the emergence ofother dominant consumer markets and processing hubs,
notably China and Viet Nam.
5

The view sometimes expressed that the movement todevelop Timber Legality Assurance Systems (TLAS) in
VPA partner countries may be distracting from efforts
to promote third party certification in these countries
is not supported by data analysed in the report. This
indicates that progress towards certification in mostcases was very slow before VPA implementation began;
by far the most rapid recent progress to achieve third
party certification in the tropics has been made inIndonesia, the one country that was also the first toachieve FLEGT licensing; and there has been no uptick inthird party certification in non-VPA tropical countries,
even where their exports to the EU have been rising inrecent years (as is the case, for example, for furniturefrom India, charcoal from Nigeria, and decking from
Peru and Bolivia).
While there has been a shift in EU trade towards supply
regions with higher identifiable access to various formsof legality verification, there are continuing high levelsof EU import from countries and regions with low access,notably China and India, raising questions relating to theforms and credibility of legality assurances being offeredby suppliers in these regions. IMM survey data suggeststhat much of this may be covered by third party legality
verification systems operated by individual certificationcompanies and agencies, but there is no centralised
and consistent data published on these systems, either
relating to the standards used, the operators covered, orthe costs involved.
Analysis of data on trade flows, access to certification,and feedback from IMM surveys suggests that thechallenges of obtaining reliable legality assurances has
been a contributory factor behind the decline in tropicaltimber’s share of the EU market. It also highlights that
FLEGT licensing has a critical role to play in helping toreverse this trend, particularly for suppliers in Africa
and South East Asia. Furthermore, the FLEGT licensing
process may be particularly beneficial for smaller
operators that have struggled to engage in private sector
certification systems.
There may also be strong opportunities created by the
FLEGT and third party certification initiatives working
more closely together, a fact increasingly recognised
by stakeholders involved in both initiatives, to help
simplify verification, reduce the bureaucratic burden,
limit duplication, improve cost effectiveness, improve
market access, and prevent unnecessary competition
between systems. An immediate market issue, thatcan only be resolved through closer dialogue, is that
the FSC Controlled Wood National Risk Assessment forIndonesia does not acknowledge FLEGT-licensed woodas “low risk“ on the FSC legality criteria with significant
potential to cause market confusion in the EU (wherearound 20,000 companies hold FSC chain of custodycertificates). Ultimately, if the aspiration of VPA partnercountries is to achieve market recognition for TLAS
timber products beyond regulatory compliance to EUTR
and other consumer country laws, the most efficient way
to achieve this may be to find an accommodation with
PEFC or FSC.
The report concludes with a series of recommendations
to build on the market opportunities presented by FLEGT
licenses and to help overcome existing market constraints.

6		

Recommendations for FLEGT Licencemarket development
Drawing on contacts and interviews with a wide
range of interests in government, industry and civilsociety during IMM activities in 2018, the following
observations are made with respect to future strategies
for market development of FLEGT-licensed timber. These
recommendations are directed to the EC and EU member
states, VPA partner country governments, the private
sector, as well (and as relevant) to partners like ITTO,
FAO and others.

• Support the efforts of the private sector within

FLEGT counties, especially those with operational
TLAS systems, to promote the benefits and positive
impacts of these systems. FLEGT licensing and the
supporting TLAS systems are regulatory tools andsystems which presently are not widely understoodand whose benefits are either not known or poorly
communicated. European buyers need to be able
to see and believe the value of processes, but theyneed to hear this message from their peers within
the countries with active TLAS systems. Authentic
communications originating within the VPA countries
designed for a business audience are vital to building
trust in the system.

• Communicate results of independent reviews of

the performance of the systems underlying FLEGT
Licences in a non-technical way. Use reports of VPA
monitoring and evaluation initiatives to identify
the performance and value of FLEGT licensing andaddress the concerns of users and stakeholders withrespect to its real value and impact in-country.

• The private sector both in VPA Partner countries andin the EU needs to be actively engaged in the positivemarket development of FLEGT licensed timber.
Timber trade federations, for example, could play aleading role and have already started doing so in somecountries. ENGOs that are open to supporting the
FLEGT/VPA process and commercial use of tropicaltimber should also be more actively engaged.

• Actively engage those civil society organisations andprivate sector organisations that seek to influence
private sector procurement policies. Whilst many
influential organisations already support FLEGT
licensing many others can be potentially influenced
to be more supportive in their advocacy. Continued
dialogue and trust building based on communicationof the evidence-based benefits and realistic limits tothe value of the VPA process and FLEGT licensing inparticular is essential.

• Encourage EU MS to regularly review their policies

for public procurement of timber and timber
products in the light of developments in the FLEGT
process. Market development for licensed timberwould benefit from more widespread acceptanceof FLEGT-licensed timber as evidence of both“legality” and “sustainability” in EU member statepublic procurement policies, recognising the wider
governance reforms required for licensing. Public
sector policies are important not only for their direct
influence over government procurement but also forthe signal they send out to the wider market.

Main Report – November 2019• H igh political priority (backed by public money) should
continue to be attached to promoting development ofcredible TLAS systems in VPA partner countries. Thereis an underlying frustration within the private sector
that FLEGT-licensed timber from a single country
is insufficient for market needs and insufficient toconvince industry that VPA are successful and that
FLEGT-licensed timber is a serious contender in themarketplace. The wider availability of FLEGT-licensed
timber would build the commercial proposition andoffer choice in the marketplace.

• Concerted efforts should be made to build on thepotential synergies between the development of TLAS
in VPA partner countries and international third
party forest certification systems to help simplify
verification, reduce the bureaucratic burden, limit
duplication, improve cost effectiveness, improve
market access, and prevent unnecessary competition.

• There is a specific need for engagement with FSC

to address the current lack of recognition of FLEGT
licensed timber in the FSC Controlled Wood National
Risk Assessment for Indonesia.

• Some EU MS are imposing fees for processing FLEGT

licenses. While not currently considered a significant
market barrier, they were felt to send a negative
message to the market. Abandoning such fees would
help maximise the benefit of FLEGT licensing.

• E fforts to ensure consistent and effective enforcementof EUTR provide the most immediate, and likely mosteffective, market advantage for FLEGT-licensed timber andshould continue to be prioritised. In a number of countries,
the private sector would still benefit from improved
guidance for complying with EUTR due diligence.

IMM future monitoring
In 2018, IMM widened the scope of its survey work andits information base, through the introduction of special
studies and Trade Consultations. The project also draws on
experience of five years of trade statistics analysis.
Future IMM monitoring priorities are as follows:• IMM will continue to work with a network of

independent country correspondents; the network
will be further expanded as more VPA partnercountries approach the licensing stage. Viet Nam andCongo were identified as priority countries for 2020
and the respective consultancy contracts advertisedin July 2019.

• The 2018 studies confirmed the impression fromprevious years that information on market conditions
and on corporate and other organisation attitudes
to FLEGT licensing is best acquired using semistructured interviews undertaken by nationalcorrespondents using a standard, but flexible
template, prepared centrally by IMM. This approach
will be continued.

• IMM country correspondents in the EU will make acontinuous effort to capture all types of operators –large and small – while at the same time covering asignificant proportion of their countries’ trade in timber
and timber products with VPA partner countries.

• The concept of special studies for monitoring specific
IMM indicators and gaining access to some key

Main Report – November 2019sectors/stakeholders for consumption of VPA Partner
timber in Europe has provided interesting insights
in 2018 and 2019 and will be continued and possibly
expanded in 2020.

• There are still significant gaps in existing data

limiting the ability of IMM to reliably assess the tradeand competitiveness impact of FLEGT licensing and
IMM will continue to liaise, and where possible andappropriate, co-operate with other agencies to help
fill these gaps which include:• Lack of data on the actual value or volume of tradein timber which is independently certified or legally
verified through non-VPA mechanisms;• Lack of systematic, consistent and comprehensive
assessments of forest governance risk in non-VPA
supplying countries;• Lack of centralised and consistent data on the levelof EU market acceptance, the standards used, theoperators covered, and the costs involved in third
party legality verification systems operated byindividual certification companies;• L ack of data on investment flows into the forestry

and forest products sectors in VPA partner countries.

• In the absence of trade data from third-party

certification and legality verification schemes,
IMM’s “exposure to certification/verification”
measure will continue to be used to help assess themarket position of FLEGT-licensed timber relative toalternative assurance mechanisms.

• IMM will continue its efforts to improve thequality, consistency, scope and regularity of accessto reliable timber trade flow statistics for the
purposes of FLEGT market monitoring through the
Sustainable Timber Information Exchange (STIX)
and the development of dashboards and other toolson the IMM website. As a priority, work to extend
data validation routines and to provide standardised
estimates of timber trade quantity, alongside value,in Eurostat COMEXT data will be extended to VPA
partner trade flows with other regions.

• There is ongoing need for IMM to maintain strong

links with other agencies engaged in FLEGT work –most notably EFI, FAO and UNEP/WCMC – as well asagencies doing related work – such as Chatham House
or STTC – to avoid duplication and improve the flowof information.

• The first full cycle of IMM Trade Consultations(one in each key country with the exception of theNetherlands, which “shared” a consultation with
Belgium) will be completed in the first quarterof 2020. The Consultations provided extremely
valuable insights into trade practices and priorities
and a forum for direct exchange of information andopinions among key stakeholders. IMM will continue
the Trade Consultations after completion of the firstcycle, in a modified format to reflect experience
gained in the first cycle and the evolving market for
FLEGT licensed timber.

• IMM will continue monitoring market developments

and market uptake of FLEGT Licences in the UK postBrexit. It will also monitor potential impacts of Brexit
on VPA partner countries.

7

List of Acronyms$

United States Dollar

€

Euro

ATIBT

Association Technique Internationale des Bois Tropicaux

CA

Competent Authority

CIF

Cost, Insurance and Freight (relates to shipping)

CIS

Commonwealth of Independent States

CN

Combined Nomenclature of the EU (relates to trade product codes)

CoC

Chain of custody

COMEXT

Eurostat External Trade database

COMTRADE

UN International Trade Statistics Database

CPD

Construction Products Directive

CPI

Construction Production Index

CPR

Construction Products RegulationCWNRA

FSC Controlled Wood National Risk Assessment

DRC

Democratic Republic of Congo

EDB

Ease of Doing Business Index of the World Bank

ENGO

Environmental non-governmental organisation

EU

European Union

EUTR

European Union Timber Regulation

FAO

UN Food and Agriculture Organisation

FC

Forestry Commission of Ghana

FEP

European Parquet Flooring Federation

FII

Forest Industries Intelligence Ltd

FLEGTForest Law Enforcement, Governance and Trade

FOB

Free On Board (relates to shipping)

FRA

Forest Resource Assessment of the UN FAO

FSC

Forest Stewardship Council

FTA

Free Trade Agreement

GATS

USDA Global Agricultural Trade System database

GCI

Global Competitiveness Index of the World Economic Forum

GFC

Global Financial Crises

GFW

Global Forest Watch

GhLAS

Ghana Timber Legality Assurance System

GTA

Global Trade Atlas

has.

Hectares

HDF

High Density Fibreboard

HS

Harmonised System (relates to trade product codes)

8		Main Report – November 2019

List of Acronyms
IMM

FLEGT Independent Market Monitoring project of the ITTO

ITTO

International Tropical Timber Organisation

JFSQ

Joint Forest Sector Questionnaire (regularly issued by UN)

LAS

Legality Assurance System

LEI

Lembaga Ekolabel Indonesia – sustainable forest management standard

LIU

Licensing Information Unit

LVL

Laminated Veneer Lumberm2

Square metersm3

Cubic metres

MDF

Medium Density Fibreboard

MLH

Mixed Light Hardwood (applied to plywood)

MO

Monitoring Organisation

MoEF

Indonesian Ministry of Environment and ForestryMS(EU) Member StateMT

Metric tonnes (1000 kilograms)

NTFP

Non-Timber Forest Product

OSB

Oriented Strand Board

PEFC

Programme for Endorsement of Forest Certification

PFE

Permanent Forest Estate (defined by ITTO)

PHPL

Indonesian Sustainable Forest Management Standard

PVC

Polyvinyl chloride

RoC

Republic of Congo

RWE

Roundwood Equivalent (relates to wood product volumes)

SFM

Sustainable Forest Management

spp.

Several species within a genus

STTC

Sustainable Tropical Timber Coalition

SVLK

Sistem Verificasi Legalitas Kayu

TLAS

Timber Legality Assurance System

TRAFFIC

Trade Records Analysis of Flora and Fauna in Commerce

UK

United Kingdom

UN

United Nations

UNCTAD

United Nations Conference on Trade and Development

UNEP/WCMC

United Nations Environment World Conservation Monitoring Centre

USA

United States of America

USDA

US Department for Agriculture

VPA

Voluntary Partnership Agreement

WEF

World Economic Forum

Main Report – November 2019

9

1

Introduction
1.1 Background
The Independent Market Monitoring (IMM) mechanism
was established under a project of the International
Tropical Timber Organization (ITTO) funded by theEuropean Union (EU) to support the implementationof bilateral voluntary partnership agreements (VPAs)
between the EU and timber-supplying countries.
VPAs are a key element of the EU’s Forest Law
Enforcement, Governance and Trade (FLEGT) Action Plan,
which defines the EU’s policy for promoting legal logging
and the trade of legally harvested timber. A VPA specifies
commitments and actions by both signatory parties withthe aim of developing a timber legality assurance systemand the issuance of FLEGT Licences that certify the legalityof timber and timber products for export to the EU.
IMM monitors the flow of FLEGT-licensed timber to the
EU and its use and acceptance in the EU market. For moredetails on IMM, visit www.flegtimm.eu.

1.2 Overview
In 2018, the network of IMM country correspondents
continued to monitor market uptake of FLEGT Licences inthe seven “key” EU countries1 accounting for the bulk (i.e.
consistently around 90%) of EU tropical timber and timber
product imports from VPA partner countries. IMM also
continued to employ correspondents in Indonesia, the only
FLEGT-licensing country, and Ghana, the country most
likely to be next to start FLEGT licensing. The two partnercountry correspondents produced update reports on their2017 baseline studies (summarised in Chapter 5 and Annex
2 of this report) and acted as points of liaison between
IMM and partner country authorities and organisations.
The EU trade survey conducted in 2018 again had a broad
scope, in terms both of content and target audience.
European IMM correspondents interviewed 96 (2017: 126)
companies for the general trade survey and an additional
53 furniture importers, retailers and manufacturers, for2
the IMM Furniture Sector Scoping Study. According tocorrespondents’ estimates, respondents to the IMM 2018
trade survey accounted for between 15% and 65% of the
key countries’ total imports of tropical sawn timber,
mouldings, joinery, plywood and decking, with highcoverage (>50%) achieved in Germany, UK, Netherlands,
and France and lower coverage (15% to 40%) in Spain,

Italy and Belgium. Correspondents also interviewed theFLEGT/EUTR Competent Authorities in their respective
countries as well as 10 timber trade federations and EUTR
Monitoring Organisations, representing a total of around2700 companies. The EU trade survey is summarised in
Annex 1 of this report.
Besides continuing and refining work initiated in 2017, IMM
further expanded its scope of activities and outputs in 2018.
Two special studies – the above-mentioned furniture sector
study and a study of EU private sector timber procurement
policies and the role of FLEGT3 – were published during
2018. Two additional studies on EU wood promotion
programmes and their recognition of FLEGT4 and EU public
timber procurement5 were also commissioned in 2018 andpublished early in 2019. Moreover, IMM organised a series
of “Trade Consultations6” in London, Nantes and Berlin in2018 and in Antwerp in early 2019. Both the special studies
and Trade Consultations provided significant contributions
to this report. In order to ensure timely dissemination of
information, IMM decided to include results of studies
and Trade Consultations as well as information gatheredby IMM during meetings up to mid-2019 in the IMM 2018
report. The statistics and market analysis cover the period
up to the end of 2018.

1.3 Report Content
The report is structured as follows:• C hapter 2 summarises the status of VPA implementationand negotiation in all VPA partner countries.

• C hapter 3 provides an update on the share of VPA

partner countries in global tropical wood products tradein 2018.

• C hapter 4 updates the analysis of VPA partnercompetitiveness, taking account of international indicesof competitiveness and IMM EU 2018 trade survey andTrade Consultation results.

• C hapter 5 focuses on Indonesia, updating the analysis ofproduction and trade flows, both imports and exports,
looks at recent trends in certified forest area, assesseschanges in Indonesia-EU trade, and summarises
findings of research undertaken by the IMM Indonesia
correspondent and market perceptions derived from theEU trade survey and Trade Consultations.

1B elgium, France, Germany, Italy, Netherlands, Spain, UK. At the time of writing of this report the UK was still a Member State of the European Unionand its future unclear. It thus continued to be counted among the key EU markets for tropical timber and timber products.
2“ A tabling of views. Scoping study for assessing the impacts of timber legality on the European Union’s wood-furniture sector and the associatedtropical timber trade. G. White. (ITTO/IMM 2018_1) https://www.itto.int/direct/topics/topics_pdf_download/topics_id=5782&no=1&disp=inline
3E U voluntary private-sector timber procurement policies and the role of FLEGT. G.White. (ITTO/IMM 2018_2) http://www.flegtimm.eu/index.php/
reports/105-eu-private-sector-timber-procurement-imm-study-identifies-attitudes-and-priorities
4E
 U Wood Promotion Programmes and their recognition of FLEGT. M. Jeffree/G. White http://www.flegtimm.eu/images/Mikes_folder/IMMPromotion-Report---April-4-2019-ST3.pdf (ITTO/IMM 2019)5A study of EU public timber procurement policies, related guidance and references to FLEGT. G. White (ITTO/IMM 2019_1) http://www.flegtimm.eu/
index.php/reports/special-studies/163-imm-publishes-new-study-on-eu-member-states-green-public-procurement-and-flegt
6T rade Consultations are a series of meetings organised by the IMM programme in the EU key tropical timber consuming countries. The Consultations
aim to gauge the trade’s views and discuss opinions of relevant FLEGT-related topics identified as a part of IMM surveys. IMM also shares latest
survey and study results with trade representatives during the Consultations. Consultations were held in London (March), Nantes (May) and Berlin(November) during 2018 and in Antwerp (Belgium) in April 2019, with more than 150 participants in total.
10		Main Report – November 2019• Chapter 6 updates the analysis of trade flows between

all VPA Partner countries and the EU to the end of 2018
and reports on trends and drivers in the full range of EU
timber market segments.

• Chapter 7 considers EUTR implementation and

The report focuses on the trade between the 28 EU
member countries and the following 15 tropical timbersupplying countries at various stages of the VPA processin December 2018 which are collectively referred to as
VPA partner countries:• Chapter 8 analyses existing EU wood promotion• FLEGT licensing: Indonesia.
• VPA implementing: Viet Nam, Cameroon, Central•• VPA initialed: Guyana, Honduras.
• VPA-negotiating: Côte d’Ivoire, the Democratic

enforcement in the EU Member States.

programmes and their level of recognition of FLEGT,
drawing on the findings of an IMM special study.

Chapters 9 and 10 consider recognition of FLEGT
respectively in private sector and public sector timber
procurement policies in the EU, also drawing on the
results of IMM special studies.

• Chapter 11 analyses the evolving market position of

FLEGT licensing in relation to forest certification andconsiders the implications for strategies to improve
market access for FLEGT-licensed timber in the EU.

• Chapter 12 provides insights into potential impacts of

the FLEGT VPA process and FLEGT-licensing on forest
sector investment based on initial results of researchcommissioned by IMM in 2018.7• Chapter 13 considers the links between the FLEGTVPA process and policy initiatives regulating tradein illegal timber in non-EU countries, consideringboth the content of these initiatives and their relative
importance in VPA Partner trade.

• The Report concludes with recommendations for

FLEGT FLEGT License market development and plans
for future IMM monitoring.

1.4 Scope and definitions
The report covers all products within the scope of existingor potential future VPAs and includes the following chapters(and parts thereof) of the international HarmonizedCommodity Description and Coding (HS) System:• all products in Chapter 44 (Wood);• products identified as containing wood in Chapter 94(Furniture);• virgin wood-based pulp products in Chapter 47 (Pulp);and• all products in Chapter 48 (Paper).
In this report, all the products identified above (wood,
wood furniture, pulp and paper) are referred to collectively
8
as “timber and timber products ”. Wood and wood
furniture, when dealt with separately from pulp and paper,
are referred to collectively as “wood products”.

9African Republic, Congo, Ghana, and Liberia.
10

11

Republic of the Congo (DRC), Gabon, the Lao People’s
Democratic Republic (Lao PDR), Malaysia, Thailand.

1.5 Data sources
Trade flow data for this report is derived from threesources, all providing the raw data ultimately sourced
from customs and other national statistical agencies at thehighest level of HS resolution which is compiled, validated
where possible, and summarised by IMM:

• Trade data for all 28 member states is sourced from the12Eurostat Comext bulk download facility. This datais compiled by IMM every month and cleaned using avalidation routine developed by IMM.

• Trade data on an additional 16 leading timber trading

countries (Australia, Brazil, Canada, Chile, China,
Hong Kong, Indonesia, Japan, Malaysia, New Zealand,
Norway, Switzerland, Taiwan, and United States)
is purchased from BTS Ltd, a UK based company
specialising in bulk provision of raw national trade flow
data. IMM acquires and summarises this data monthly.

• Trade data on an additional 14 tropical trading countries(Bolivia, Côte d’Ivoire, Ecuador, Ghana, Guatemala,Honduras, India, Mexico, Panama, Paraguay, Peru,
Philippines, Singapore) is purchased from HIS Markit,
the company that now owns the Global Trade Atlas.
IMM acquires and summarises this data annually.

IMM’s analysis of global trade flows involves combining datafrom all these sources into a single standardised database.
Since 2018, the process of combining, validating andstandardising data for IMM reports and other data sources isbeing managed through the Sustainable Timber Information
Exchange (STIX), which links IMM work in this area withdata validation routines developed as part of a project hosted
13
by the Global Timber Forum in 2017 (see Section 1.6).
Where necessary, additional data (structured using
product categories of the Joint Forest Sector Questionnairerather than the HS system) is derived from the ITTO

7T
 o be addressed in more detail in an IMM special study to be published in 2019T his aligns with usage of the term “Timber and Timber Products” in the FLEGT Action Plan and EU Timber Regulation.
9F or purposes of statistical analysis and charting in this report, the five African implementing countries are referenced collectively as “Implementing(Af)” and Viet Nam is referenced separately as “Implementing (As)”.
10
Countries that had negotiated and initialed a VPA in 2018 but yet to reach the implementing stage before the end of the year. For purposes ofstatistical analysis, and to provide a baseline for future monitoring, these countries are referenced separately as “Implementing (Am)” in this report.
11For purposes of statistical analysis and charting in this report, the three African countries are referenced collectively as “Negotiating (Af)” and thethree Asian countries are referenced collectively as “Negotiating (As)”.
12
https://ec.europa.eu/eurostat/estat-navtree-portlet-prod/BulkDownloadListing?sort=1&dir=comext
13Data sourced from the STIX database is identified in this report as “IMM-STIX”.
8Main Report – November 2019

11

Biennial Review 14 and FAOSTAT15. Some data on additionalcountries is also sourced from the UN COMTRADE
database.16 Occasionally data not regularly available
through any of these international sources is derived fromnational sources, notably for Viet Nam.17
In addition to insights from IMM trade surveys,
Trade Consultations, and IMM Special Studies, IMM
interpretation of trade data and the commentary on market
trends draws heavily on regular review of the ITTO Tropical
Timber Market (TTM) Report,18 published every two weeks.

1.6 Access to supporting data
The market and trade flow analysis contained in thisreport may be read in conjunction with the IMM Data
Dashboard (http://www.stats.flegtimm.eu/). The
dashboard provides data visualisations and full access tostatistics on EU imports of timber, paper and pulp fromthe 15 VPA partner countries. For broader market insights,
the dashboard also provides statistics on other countries
which are leading suppliers of tropical timber into the EU
and detailed technical explanation of data sources andvalidation procedures used by IMM.
Alongside the dashboard, IMM is developing a series of VPA
Partner pages on the website (see www.flegtimm.eu for
updates), providing comprehensive data both on imports

2and exports, and market share by product group in the EU
for each individual VPA partner country. The VPA Partner
pages will also include details of the current status of
VPA implementation and negotiation in each VPA partnercountry (drawing on Chapter 2 of this Report) alongsidecommentary of recent trade flow trends.
The IMM dashboard and VPA partner pages use trade
flow data from the STIX database which is being regularly
updated drawing on the most recent monthly data from the
COMEXT bulk download facility for the EU and suppliedby BTS Ltd for the additional 16 leading timber trading
countries. Together these 44 countries are estimated toaccount for at least 90% of the total value of global timber
products trade. A dashboard is being developed through the
STIX initiative to provide more flexible and comprehensive
access to this full data set.19 A key focus of work by STIX,
supported by ITTO and IMM, is to progressively extend
country coverage and to standardise reporting of data on
trade quantity alongside trade value.

Acknowledgements
The authors thank the companies, organisations andinstitutions across Europe, Indonesia and Ghana whogave their time to provide some of the insights presented
in this report.

VPA implementation andnegotiation – state of play
In 2018, the EU FLEGT VPA process involved programmes
in 15 tropical countries, which together supplied around
80% of the international tropical timber trade by value.
While the time taken by countries to reach the licensing
stage has been a focus for criticism, a long lead time isinevitable given that the process aims to create robust
and reliable Timber Legality Assurance Systems (TLAS),
to engage with and secure the support of a wide rangeof stakeholders and to deal with complex political andtechnical issues. Progress varies between countries but
there are many encouraging developments.
Indonesia remained the only FLEGT-licensing partnercountry in 2018, but Ghana signalled readiness forlaunching the Final Joint Assessment of its GhLAS
during the year. The Assessment has since been brought
underway and Ghana is expected to be the next country
to start FLEGT-licensing. Moreover, after Viet Nam in
2017, two additional countries, Honduras and Guyana,initialled their VPAs in 2018 and will soon officially reach

implementing stage. There follows a summary of where
VPA negotiations or implementation stood in each partnercountry in 2018.

2.1 FLEGT-licensing partner countries
2.1.1 Indonesia
In 2016, Indonesia became the first country to start
FLEGT licensing, having signed its VPA with the EU in
2011. Indonesia’s established SVLK framework became
the VPA timber legality assurance system. The V-Legaldocumentation and label was retained as legality assurance
validation for exports to non-EU countries and thecivil society organisation network, JPIK, was officiallyrecognised as independent monitor. Under scrutiny by JPIK
and EU and Indonesian authorities, the Indonesian licensing
and assurance system has continued to evolve. Most
recently, the EU FLEGT and REDD facilities have produced aworking paper looking into the feasibility of amending the14

 ttps://www.itto.int/biennal_review/hhttp://www.fao.org/faostat/en/#data/FT16https://comtrade.un.org/data/
17
Viet Nam trade data is derived from http://goviet.org.vn/bai-viet/viet-nam-xuat-nhap-khau-go-2018-mot-nam-nhin-lai-va-xu-huong-2019-8947, anannual analysis of Viet Nam timber trade prepared by Forest Trends supported by various agencies.
18https://www.itto.int/market_information_service/19
A pilot version can be reviewed at https://www.stix.eco/shiny/app/stix/.
15

12		

Main Report – November 2019

SVLK to apply to customary forests to support livelihoods
and forest protection.20 To date only a limited area has
been recognised as customary forest, but it could extend
up to 2 million ha. Since 2016 more than 50,000 FLEGT
Licences have been issued by Indonesia’s 25 independent
licensing authorities. EU Competent Authorities andimporters say, generally, the system has worked effectively
and efficiently. One issue has been mismatches in HS
customs codes between those applied on licences andthose used by EU customs. However, this seems to havebeen largely resolved in 2018 through dialogue between EU
and Indonesian authorities. The number of licences issued
after consolidation of shipments, which tended to lead toerrors, has also been reduced. To further streamline licenceadministration, the EU and Indonesia are also looking at thefeasibility of implementing e-licensing.

2.2 VPA implementing partner countries
2.2.1 Cameroon
Cameroon started VPA negotiations in 2007, signed theagreement in 2010 and ratified it in 2011. However, thepace of VPA implementation has been slow in recent
years. In January 2019 the Joint Annual Report (JAR) for2017 on the VPA’s development was released. In May 2019,
both parties agreed to stop implementation of the SIGIF2
software, which was supposed to underpin the Legality
Assurance System, and launch a new initiative as a part of
the PAMFOR initiative (EDF programme). Revision of thelegality definition is also underway. Moreover, the Ministryof Forest and Wildlife issued 18 certificates of legality
to 16 timber processing unit operators and published adocument explaining its system for collating certification
documentation. Information about legal compliance with
VPA legality requirements by logging companies can now
also be accessed online through the Open Timber Portal(OTP) platform (https://opentimberportal.org).

2.2.2 Central African Republic (CAR)
VPA implementation in CAR regained some momentum
in 2015-16 after democratic elections restored somestability. In February 2019, the 2017 joint EU-CAR Annual
Report on VPA implementation was released.21 Amongdevelopments highlighted were; sanctions for mandated
independent observation of forest law enforcement;
further support for the WWF’s private sector VPA capacitybuilding project; reinstatement of the Mobile Inspection
Brigade, which controls forest, wildlife and fishingactivity; launch of a collaborative database within the VPA
Permanent Technical Secretariat (STP) to monitor timbertransport from the forest and tax payment; and missions
by FAO-EU FLEGT Programme consultants to support
the STP in developing a VPA information website andtimber monitoring database. As far as the fragile politicalsituation is concerned, the CAR government concluded an
accord with 14 armed groups in February 2019, leading toa peace agreement and appointment of a new ‘inclusive
government’ on 24 March 2019. However, commentators
say the security situation remains precarious.

2.2.3 Republic of the Congo (RoC)
The RoC has made significant steps towards completing
implementation of the VPA over the last few years. By 2018,
29 forest concessions out of 60, comprising 10.4 million
ha, or 68% of forest allocated to commercial use, had
implemented or were developing sustainable management
plans as a part of VPA implementation, according to theforest management stock study elaborated by TEREA
in 2018. In 2018, the EU and RoC released a 2018-22
22
implementation strategy, including VPA communicationplans, and renewed focus by the Ministry of Forest
Economy on ‘optimising forest revenue collection’ as partof reforms. Stakeholder engagement was strengthened by
the country’s Sustainable Forest Management Platform
and a new Congo VPA Facebook page. A meeting of the JIC
in November 2018, included a presentation on the status of
the VPA’s legality verification framework. Of 29 indicatorsfor monitoring implementation of the system, six are in
progress, with work on the others at an early stage or not
started. The FLEGT VPA unit urged allocation of more
funds to the process. There were also reports on forest coderevision and the computerised legality and traceability
verification system, which was ready for deployment.
Ongoing problems with legality verification system (SVL)
compliance due to regulatory capacity issues were reportedby the Independent Auditor, (contract managed by the
French auditing company SOFRECO). It also highlighted
that many forest operations still lacked management
plans. A new call to tender for the next independent audit
contract will be published in 2019. The JIC meeting did
underline continuing support for the VPA process fromgovernment ministries, with representatives highlighting
potential outcomes, including tax gains and EU market
development for further processed wood products.

2.2.4 Ghana
Ghana is widely expected to be the next VPA country afterIndonesia to start FLEGT licensing. Ghana and the EU
announced the launch of the Final Joint Assessment of
Ghana’s Timber Legality Assurance System in January
2019. Consultants carrying out the assessment have met
with Ghana’s Ministry of Lands and Natural Resources
and representatives of other government divisions
involved with the Ghanaian Legality Assurance System(GhLAS). The Ghana Forestry Commission’s (FC) Timber
Industry Development Division (TIDD) and the UN Foodand Agriculture Organisation (FAO) also signed an MOU
in March 2019 on funding for the project ‘Enhancing
Stakeholders interest in the Domestic Timber Trade Network(DOTTNET) Process to assess demand and supply of legal
timber in the Ghanaian domestic market. The project ispart of the FC’s strategy to ensure wider internationalrecognition and acceptance of Ghana’s VPA and ultimately
its resulting FLEGT-licensed timber and wood products.
This, it says, requires a ‘well-structured, regulated
domestic market’, which will also ‘propel development andgrowth of the timber industry’. The DOTTNET process willbring together players across the domestic market supply
chain, including loggers, sawmills and sellers to promote

20http://www.euflegt.efi.int/documents/10180/463214/Working+paper+-+Implementing+SVLK+in+customary+forests.pdf/
8b9e3034-1b11-c0c9-e4b5-2b68d3ab5891
21http://www.euflegt.efi.int/documents/10180/463576/CAR-VPA-AR-2017-EN.pdf/142aca6c-836e-806d-5aa8-72bac25e208422http://www.euflegt.efi.int/documents/10180/438736/Congo+-+Rapport+annuel+conjoint+2017+.pdf/68e22f04-12d5-47ed-1157-3c06ced39023
Main Report – November 201913

trade in legal timber, backed by a platform providing
traceability of timber sources. The preparation phase will
examine trade access to legal material and communication
to the market on the GhLAS.

if necessary. It is thought this could create a legality
assurance ripple effect across the range of countries
supplying Viet Nam.

2.2.5 Liberia

2.3. VPA initialled partner countries

Liberia started VPA negotiations in 2009, agreed andsigned the VPA in 2011 and ratified and brought the VPA
into force in 2013. In 2018, EU and Liberian representatives
met for a briefing on the latest state of the VPA and torelaunch talks on implementation. Among discussion
topics were Liberia’s system for tracing timber fromforest to point of export. It is acknowledged that the
VPA process has increased stakeholder participation,
including via the multi-stakeholder monitoring and JIC.
The Liberian government is now in the process of taking
over management of the Legality Verification Department(LVD) and the timber tracking system called LiberTracefrom Société Générale de Surveillance (SGS) the service
provider. The JIC, comprising government, private
and civil society representatives met in February 2019.
Discussions covered the government’s delay, attributed tobudgetary constraints, in disbursing the legally required
share of land rental fees to the National Benefit Sharing
Trust Board (NBSTB). EU representatives described
Liberia’s legal framework for sharing benefits withlogging-affected communities as ‘exemplary’ and said
stakeholders should cooperate in implementing it. The JIC
concluded that a new mechanism was needed to expedite
payments. The Liberian Forestry Development Authority(FDA) committed to make more information available tothe public and the JIC also endorsed a communications
strategy targeting forest stakeholders and the public about
VPA-related issues, including progress achieved and areas
for improvement.

2.3.1 Guyana

2.2.6 Viet Nam
Viet Nam began VPA negotiations in 2010 and agreed
a VPA in 2017. The agreement was signed in 2018 andratified by the EU and Viet Nam in April 2019. The termsof the VPA were enshrined in Viet Nam’s new forestry
law which came into force in January 2019. The new law
includes a commitment from the government to further
increase cooperation in forestry with foreign partners
to strengthen environmental protection and help meetsustainable development goals, climate change and otherinternational commitments. Viet Nam published a planin December 2018 with the objective of implementing
a fully operational Timber Legality Assurance System(VNTLAS) by 31 December 2020. The plan is acknowledged
to be ambitious and time scales and activities may need
to be adjusted with experience. However, the initial plan
envisaged completion within only 2 years of all required
activities under the following headings: development oflegislative documents and guidelines; establishment oftechnical infrastructure for VNTLAS operation; capacity
building for relevant stakeholders; communications;
implementation, monitoring and evaluation of theAgreement; and connecting activities supporting the VPA/
FLEGT implementation regionally and internationally.
Viet Nam is not only a significant timber producer in its
own right but is also a major regional processing hub,importing wood from over 80 countries, tropical andtemperate. VNTLAS will cover not only domestically
produced wood, but also imports. Vietnamese operators
will have to undertake due diligence on imports, assess
the risk of illegality and undertake mitigation measures14		

Guyana initialled the VPA agreement with the EU in2018, with one emphasis being its role in upholding
indigenous Amerindian people’s rights and interests.
At the same time, a final draft of Guyana’s Green State
Development Strategy (GSDS) was developed with an
aim to make the country a ‘de-carbonised, resource
efficient economy’. However, the GSDS had yet to bepassed into law by the end of 2018. To help progress its
VPA, Guyana launched formal consultations on new
Forestry Regulations to receive input from private sector
and civil society. In 2018, Guyana also formalised a
compulsory Code of Practice for forest operations which
is now incorporated into the legal framework. The newRegulations and Code of Practice allow for a more robust
system of monitoring. As well as clarifying legal andadministrative requirements applicable to the forest
sector, the VPA process has led to other governance gains.
It has strengthened government institutions responsible
for forestry, tax, customs, environment, labour and landuse, and improved coordination between them. And, in aboost for transparency, the Guyana Forestry Commission
now publishes information about allocation of logging
concessions on its website.

2.3.2 Honduras
Honduras was the first Latin American country to initial
a VPA with the EU in 2018; implementation will begin
once the Agreement has been ratified. The VPA has beencharacterized by broad stakeholder engagement, including
public and private sectors, civil society and, in a FLEGTVPA first at the time, indigenous peoples’ groups. The
VPA includes in its legality definition an indicator statingthat the Forest Institute will respect the right to freeprior and informed consultation in the territories of the
Indigenous and Afro-descendant Peoples of Honduras
where commercial timber harvesting is intended to takeplace and by which those Peoples are directly affected.
The timber legality assurance system will be based on
Honduras’ existing national strategy against illegal
logging (ENCTI). Honduras has expressed an explicit desire
to use the VPA to increase transparency in the forest sector.
The Honduras VPA includes an annex on public disclosureof information that lists the information the government
commits to making publicly available.

2.4. VPA negotiating partner countries
2.4.1 Côte d’Ivoire
Côte d’Ivoire entered VPA negotiations in 2013 as part ofa strategy, also including governance reform, to combat
serious deforestation, which has seen forest cover decline
by 80% over the last century. In March 2017, Côte d’Ivoire
updated its VPA Roadmap, with the government focusedon harmonizing agricultural and forest policy. The Prime
Minister proposed a ‘pragmatic policy’ to improve control
of forestry activities. As a result of this, a new forest code
was adopted by the National Assembly in July 2019, withthe objective to accelerate the reforestation of the country
by encouraging partnerships between small holders,
Main Report – November 2019private sector and public sector. Sanctions are reinforced
and new issues such as agroforestry, forest concession,
independent observation and a participatory approach are
introduced. The Code also clarifies customary rights in theland tenure context.

2.4.2 Democratic Republic of Congo (DRC)
Discussion about the VPA between the EU and DRC
were brought back into focus late 2016, with thecountry’s FLEGT Technical Commission continuing
work on its legality definition. The draft of the latterfor industrial forest concessions was produced in 2017
and was field-tested in December 2018. The FLEGTTechnical Commission presented the results of thatfield-test during a consultation and information
workshop in June 2019. In 2018 a national strategy on
community forestry was adopted. Otherwise, the DRC
has engaged more with the EU REDD initiative. Some ofthis engagement, including action on sustainable forest
management, conservation and strengthening of forest
carbon stocks, has seen the country progress towards
FLEGT objectives. Pilot projects have included the Mai
Ndombe Province Emission Reduction Program, which istrialling a legality strategy and compliance standard formonitoring logging companies with a view to rolling it
out to the rest of the country. Work on updating legality
grids was reported in 2016 and 2017 and the EC wasplanning to restructure FLEGT working groups and to
focus not just on VPA specific issues but to participate innational forest policy development.

2.4.3 Gabon
Two VPA negotiations have been organised by Gabon
and EU. The first was in September 2010 and the secondin October 2011. In May 2012 a bilateral technical session
was organised but then there was very little VPA-related
activity until 2015 when the EU and Gabon agreed toa roadmap. However, no further negotiations havetaken place since then and the road map has yet to be
implemented. In the meantime, the Gabonese government
has continued with legal reforms in the forestry sector,
notably revision of the forestry code. This latter process
started in 2011 and in 2016 a final version was submitted tothe parliament for approval. Another action to reform theforest sector is the creation of the National Action Plan toFight against Illegal Forestry Exploitation (PANEFI) in May
2013. This action plan is seen as a concrete measure to fightillegal logging through investigations, arrest operations
and strict legal follow up with active cooperation between
the Ministry of Forestry and the justice system. In 2018 ascandal related to the disappearance of several containersof CITES-listed kevazingo timber and subsequent
government investigations led to the dismissal of theminister in charge of forest. A new minister, formerly thehead of Gabon’s National Parks Agency, was appointed
in June 2019 and prioritised renewed efforts to stamp out
illegal logging.

2.4.4 Lao PDR
Lao PDR began VPA negotiations in 2017 after first voicing
interest in 2012 and opening a FLEGT standing officein 2013. The aim is to develop the forest sector and its
skills levels and encourage technology transfer to theindustry. Currently Lao PDR’s main source of timber isMain Report – November 2019

forest clearing for conversion to plantation and non-forest
use, including hydropower generation and agriculture.
Underlining its commitment to reform, in January 2019 anational consultation workshop was held to discuss the
final draft of the Ministry of Industry and Commerce’s
policy for monitoring input and output across the woodprocessing and trade sectors. The aim of the latter issystematic timber supply chain monitoring and control
to ensure legality. Lao PDR delegations have also joined
study trips to other VPA countries, including Indonesia
and Ghana, to see how timber legality assurance systems
operate on the ground.

2.4.5 Malaysia
Formal VPA negotiations have been on hold in Malaysia
since 2015 as further movement is not possible without afirm commitment and a defined timeline from Sarawak to
be party to the VPA. No TLAS in Malaysia can be evaluatedor accepted for FLEGT licensing until this situation is
resolved. However, pending the eventual conclusion ofa VPA, Peninsular Malaysia has implemented a TLAS
(known as MYTLAS), beginning in February 2013, tofacilitate timber industry compliance to the due diligencerequirements of their customers. This system is subject toan Annual Compliance Audit by a third party monitor. Over60,000 MYTLAS licenses had been issued by the Malaysian
Timber Industry Board (MTIB) for products exported to
the EU market by 31st May 2018. As part of MYTLAS, after a
two year development process, Peninsular Malaysia began
to fully enforce a timber import legality requirementfrom July 2017. A TLAS has also been implemented in
Sabah since 2016 involving auditing against a TLAS
standard by a third party appointed by the Sabah Forestry
Department. The Sabah TLAS is itself assessed andmonitored through internal audits conducted by othergovernment implementing agencies. The Sarawak state
government has also committed to implement a timber
legality verification system (STVLS) requiring mandatorycompliance from 2020 and involving auditing of forest andtimber trade operators by a third party appointed by thestate government.

2.4.6 Thailand
Thailand started VPA negotiations with the EU in 2017.
Like Viet Nam, it is a significant regional wood products
manufacturing hub and a major importer from othersuppliers in the area including neighbouring countries
with higher deforestation rates; Cambodia, Malaysia(Sarawak) and Myanmar. Thailand and the EU held theirsecond round of VPA negotiations in mid-2018, the Thaigovernment having initiated constitutional reform to
introduce forest governance improvements, including
public consultation for legal reforms, gender equality,
public information access and a public right to participate
and benefit from natural resource management. Thailand
also reported progress on its TLAS through broad
stakeholder engagement. An EU-Thai video conference
took place in May 2019 for technical discussion andupdates on the development of FLEGT VPA annexes. The
third round of formal negotiations was scheduled forsummer 2019.

15

VPA country export trade – 2018 update
3.1 Scope

VPA partners in total tropical wood trade was 78.8% in
2018, a marginal decrease compared to 78.9% in 2017.

The section considers the relative contribution of VPA
Partners in total global trade in tropical wood products
in 2018. It considers the changing composition of
products in this trade and changing regional supply anddemand during the year. This is to ensure that tradeflows between VPA Partner countries and the EU areconsidered in their appropriate global context.

Indonesian wood products exports increased 9% to close to
US$6.5 billion in 2018 (Figure 3.2.2), with significant growth inexports to Japan, South Korea, Australia and the Netherlands,
in addition to the US. Indonesia overtook Malaysia to become
the second largest tropical wood product exporter in 2018,
although now some way behind Viet Nam. Indonesia’s shareof global trade in tropical wood products increased slightly
from 16.1% in 2017 to 16.2% in 2018.

The section builds on and does not repeat the moredetailed analysis of long-term trends covered in previous
23
IMM reports.

In the closing months of 2018, Viet Nam became thesecond country in Asia, after Indonesia, to sign a VPA andenter the TLAS implementation stage. Viet Nam exported
tropical wood products with total value of US$11.6 billion
25
in 2018, an increase of US$1.4 billion (14%) compared toa year earlier. Viet Nam’s share of global trade in tropical

3.2 VPA partner share of global tropical wood
product trade in 2018
Global trade in tropical wood products (all products in
HS 44 and wood furniture productsin HS 94) increased 8% to US$39.8
billion in 2018 (Figure 3.2.1). This
continues the rebound from the dip in
40
2016, which occurred during a periodof slowing growth and the end of the35
speculative rosewood boom in China.
30
Unlike the 2009 to 2014 period, when
rapid trade growth was driven largely
25
by China’s imports of primary wood
products, particularly rosewood,
20
recent growth is mainly due to risingwood furniture exports, notably from
15
Viet Nam and India destined for the10
US. There was also a notable rise inwood products exports by Indonesia,
5
particularly plywood for the US.

No VPA
Negotiating (As)Value (US$ billion)

3

The 15 VPA partner countries together
accounted for US$31.4 billion of wood
products exports in 2018, up from
US$29.1 billion in 2017. The share of

23L onger-term trade trends are analysedin more depth in the ITTO-IMM reports‘Europe’s changing tropical timber trade2004 to 2014’ published in 2015, ‘FLEGT VPA
Partners in EU Timber Trade 2014 to 2016’
published in 2017, and FLEGT VPA Partners in
EU Timber Trade 2017 published in 2018. All
IMM reports are available at:
http://www.flegtimm.eu/index.php/reports
24
The Sustainable Timber Information Exchange(STIX) is a joint initiative of the International
Tropical Timber Organization (ITTO) andGlobal Timber Forum (GTF), co-fundedthrough IMM, to collect, organise, visualise,
disseminate, and exchange data on global
trade flows of timber and forest products,
alongside the contextual information needed
to monitor the impact of measures to promotelegal and sustainable trade. STIX currently
provides access to data on timber products
trade as reported by the statistical agenciesof 44 countries including nearly all the world’s
largest exporters and importers.
16		

0

Negotiating (Af)
Implementing (As)Implementing (Am)
Implementing (Af)
Licensing (Indonesia)

2015

2016

2017

As=Asian partners, Af=African
partners, Am=Latin American
partners

2018

Figure 3.2.1: Global tropical wood-product trade, by FLEGT VPA status,
2015 to 2018. Source: IMM-STIXNo VPA
Negotiating (AsNegotiating (Af)
Implementing(As)
Implementing(Am)
Implementing
(Af)

2018

2017

Licensing(Indonesia)
0

2

4

6

8

2016

2015

Value (US$ billion)
1012

As=Asian partners, Af=African partners, Am=Latin American partners

Figure 3.2.2: Tropical wood-product trade, by FLEGT VPA status,
2015 to 2018.24 Source: IMM-STIX

Main Report – November 2019

wood products increased from 27.6% in 2017 to 29.1%
in 2018. Nearly 50% of Viet Nam’s exports in 2018 weredestined for the United States, while nearly a third weredestined for other Asian markets, mainly Japan, China andSouth Korea. Viet Nam’s exports to the EU increased 5%
to US$ 997 million in 2018 when they accounted for 9% ofViet Nam’s total exports.
In 2018, the five VPA implementing countries in Africa
together exported US$1.7 billion of wood products, 11%more than in 2017, and accounted for 4.3% of total global
tropical trade, up from 4.2% in 2017. Exports increased
sharply in Cameroon, RoC, CAR and Liberia and there wasa small uptick in Ghana. The overall rise in exports was
driven mainly by logs destined for China and, to a lesser
extent, Viet Nam and India.

into the US and China in 2018, Guyana lost sales in India
while Honduras exports declined to neighbouring Latin
American countries.
Exports by the three VPA negotiating countries in Africa
increased 11% to US$822 million and accounted for 2.1%of total global tropical wood products trade in 2018, up
from 2.0% in 2017. All the gains were in Gabon, where
exports of sawn wood and veneer increased sharply
during the year (log exports have been banned since2010), with most growth destined for China and India.
Exports from DRC and Côte d’Ivoire continued a longerterm decline during 2018.
In 2018, the three VPA negotiating countries in Asia
together exported US$10.6 billion of wood products,
a slight rise (+0.7%) compared to 2017. Share of thesecountries in total global tropical wood trade declined
from 28.6% in 2017 to 26.7% in 2018. Malaysia’s exports
increased 2% during the year, with rising shipments
to the EU, US, Japan and South Korea offsetting asignificant decline (mainly of logs from East Malaysia)
to India. Exports by Thailand and Lao
PDR were flat during the year.

The two VPA implementing countries in Latin America
exported US$140 million of wood products in 2018, adecline of 1% compared to the previous year. Their shareof total global tropical wood product exports remained
stable at 0.4%. While both countries sold more product100%

Share of value USD value

90%
80%

Logs &
fuelwood

70%

Sawnwood &mouldings

60%
50%

Plywood,panels & veneer

40%

Joinery & othervalue-added

30%
20%
0%

2015

2016

2017

3.3 Product mix of tropicalwood trade
The most notable change in productmix of tropical wood in international
trade in 2018 was a slight easing in theshare of sawn wood and higher valueadded products such as wood furnitureand joinery at the expense of logs andplywood (Figure 3.3.1).

Furniture10%

In 2018, countries not engaged in the
VPA process exported US$8.5 billionof tropical wood products, up 9% on
the previous year, and accounted for
21.2% of total global trade, up from
21.1% in 2017. Most of the growth was
due to a big rise in log exports by
Papua New Guinea and the Solomon
Islands to China.

2018

Figure 3.3.1: Share of global trade in tropical wood-products,
by product group, 2015 to 2018. Source: IMM-STIX

Between 2017 and 2018, the shareof sawn wood declined from 17.1%
to 16.1%, the share of furniture fell
from 37.8% to 37.3%, while the shareof joinery and other valued-added

Logs & fuelwood
25

Sawnwood &mouldings

2018

2017

2016

2015

Plywood, panels &veneerJoinery & othervalue-added

Value (US$ billion)

Furniture
0

2

4

6

8

10

12

14

Figure 3.3.2: Global trade in tropical wood-products, by product group,2015 to 2018. Source: IMM-STIX

Main Report – November 2019F igures reported here for trade by Viet Namand several other tropical countries arehigher than reported by national authorities
in those tropical countries. This is mainly
because the data used in this analysis is
primarily derived from “mirror statistics”,
that is imports reported by major trade
partners rather than exports reported bytropical countries, the latter being lessreadily available on a regular basis. Unlike
export data, which is usually based on FOBvalues, import data is frequently reported
in CIF values (i.e. also including freight cost)which will be higher. It is also not unusualfor ownership of shipments to change hands
during transit with the new owner adding amarkup in the price. This also contributes tofigures for import value tending to be higher
than figures for export value.

17

products fell from 9.1% to 8.6%. In
contrast share of logs increased from
20.1% to 20.7% and share of plywood
increased from 15.9% to 17.3%.

18		

Value (US$ billion)

Africa (East)

50%

America (Central)
America (South)

40%

Pacific

30%

Asia (India)

20%

Asia (South East)
Asia (Mekong)

0%

2015

2016

2017

2018

Figure 3.4.1.1: Share of global trade in tropical wood-products,
by region of supply, 2015 to 2018. Source: IMM-STIX

18
2015

16

2016

2017

2018

14
12
10
8
6
4
2
0

MekongSouth East Asia

India/South Asia

Figure 3.4.1.2: Tropical wood-products exports, by Asian region of supply,
2015 to 2018. Source: IMM-STIX

12.0
2015

10.0

2016

2017

2018

8.0
6.0
4.0
2.0

Ko

ng

ia
Ho

ng

bo
d

ar
m
ya
n

m
Ca

os
M

La

es

a

pp
in

In

di

Ph
ili

nd
la

sia

Th
ai

ay
al

M

ne

sia

0.0

do

In the four years between 2015 and2018, total wood product exportsby the five countries of the Mekong
region (Cambodia, Lao PDR, Myanmar,
Thailand, Viet Nam) increased from
US$13.7 billion to US$16.5 billion. The
Mekong region has emerged as thelargest source of tropical wood productsupply, overtaking South East Asia
where exports were relatively flat,
fluctuating around US$14 billion,
during the same period. While theIndian sub-continent now exports
more tropical wood products thanin the past, rising to US$1.4 billion
in 2018, it remains a comparatively
smaller supplier to the rest of the world(Figure 3.4.1.2).

60%

In

In terms of value, Asian countries
have dominated the tropical woodtrade for many decades, a result of
more rapid economic development andfar-reaching steps up the value chain
compared to other tropical countries.
But while the overall share of Asian
countries in global trade has remainedlevel at around 82% in last half decade(Figure 3.4.1.1), significant changes areunderway in the mix of countries andproducts involved in the trade.

Africa (West)

et
Na
m

3.4.1 Asia

Africa (Central)

70%

Vi

3.4 Regional supply of tropicalwood products

80%

10%

Value (US$ billion)

The year 2018 also saw a big rise in
the value of the tropical plywood
trade, particularly from Indonesia
destined for the US, Japan, South
Korea, the EU, and Australia.
With new investment in plywood
manufacturing in the Mekong regionof Asia, and partly in response to theon-going trade dispute between the
US and China, the US was importing
significantly more plywood from
Viet Nam, Cambodia, Thailand, andMalaysia during the year.

90%

Value (US$ billion)

Although these shifts in product mix
in 2018 are relatively minor, and may
not be sustained, they do reflect aslight reversal of the longer-term
trend of wood furniture becoming
more prominent in global tropicalwood trade flows. While global exportsof tropical wood furniture continued
to rise in 2018, particularly driven by
Viet Nam, there was also a significant
recovery in log exports, notably to
China, after two slower years in 2016
and 2017 (Figure 3.3.2).

100%

Figure 3.4.1.3: Trade in tropical wood-products, by Asian exporters,
2015 to 2018. Source: IMM-STIX

Main Report – November 2019

Trade by countries within the Mekong region itself isalso shifting. Previously driven by a large and often
unregulated trade in logs and rough sawn timberinternally and to China and India, much comprising
teak and rosewood, and by rising exports of plantation
rubberwood and acacia from Thailand to China, recent
growth is mainly due to Viet Nam’s rising exports offurniture and plywood to the US and of biomass and chips
to Japan, China and South Korea.

and charcoal. Exports from Lao PDR, comprising logs andsawn wood destined principally for China and Viet Nam, fell
dramatically in 2016 and remained at a lower level of around
US$320 million in 2017 and 2018 (figure 3.4.1.3).
In South East Asia, exports from Indonesia recovered
ground in 2018, rising 9% to US$6.5 billion, mainly due torising sales of plywood, and to a lesser extent furniture,joinery and charcoal, destined for the US, Japan, South
Korea and Australia. Malaysia’s exports also gained a little
ground in 2018 after a dip in 2017, rising 2% to US$6.2
billion, with growth in exports of furniture and plywood to
the US, Japan, South Korea and the EU offsetting declining
log exports to India.

Thailand’s exports, primarily of sawn wood fromplantations, levelled off at a record level of just over US$4
billion in 2017 and 2018. Cambodia, which previously
exported large quantities of sawn wood to Viet Nam andChina, is becoming more dependent on exports of plywood
and furniture to the US. Cambodia exported around US$327
million of wood products in 2018, slightly more than theprevious year despite a continuing decline in exports to
China and Viet Nam. In Myanmar, where forests are heavily
degraded and log exports were banned in 2014, exports
fell 4% to US$308 million in 2018, still destined mainly for
China and India but now focused on sawn wood, veneer

3.4.2 Africa
Exports from Central Africa increased 17% in 2018,
to US$2.13 billion (Figure 3.4.2.1), with exports from
Cameroon rising 22% to US$690 million, Gabon rising
25% to US$572 million, RoC rising 27% to US$359, and CAR
rising 94% to US$72 million. These gains offset declining
exports from Equatorial Guinea, down 21% to US$ 353
million, Nigeria, down 8% to US$ 340
million, and DRC, down 7% to USD 63
million (Figure 3.4.2.2).

2.2
2015

2.0

2016

2017

2018

Value (US$ billion)

1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0

Africa (Central)

Africa (East)

Africa (West)

Figure 3.4.2.1: Tropical wood-products exports, by African region of supply,
2015 to 2018, 2015 to 2018. Source: IMM-STIX

700
2015

Value (US$ million)

600

2016

2017

2018

500
400
300
200

Figure 3.4.2.2: Trade in tropical wood-products, by African exporters,
2015 to 2018. Source: IMM-STIX

Main Report – November 2019

be
ria
Li

DR
o

ng

.A
fr.

Co

nt

te
Cô

Ce

a
an
Gh

b.
am

a

ia

oz

er

M

Ni
g

o

ui
ne

.G

ng

Eq

Co

bo

n
oo

er
m
Ca

Ga

0

n

100

These trends were significantly
influenced by demand in China which
accounted for 62% (US$ 1.32 billion)of all wood products exports fromCentral Africa in 2018. While demand
for rosewood in China has fallen,
and controls on the trade in Africanrosewood increased following the
CITES listing in 2016, China’s importsof all wood products from Central
Africa increased 22% in 2018.
Exports from Central Africa to the
EU also increased in 2018, by 7% to
US$637 million, recovering someground lost the previous year due toserious delays shipping out of Douala
port in Cameroon, overstocking in
the EU at the end of 2016, and delayed
payment of VAT refunds by some
African governments, partly linked to
low oil prices.
In contrast to Central Africa, exports
from both East and West Africa
declined in 2018 (Figure 3.4.2.1). In
East Africa, exports from Mozambique
fell 12% to US$281 million as thegovernment imposed higher reference
prices for logs at the start of 2018,
reduced legally sanctioned harvest
levels, and totally banned harvestingof several species including
Pterocarpus tinctorius and Swartzia
madagascariensis (ironwood).
Falling exports from West Africa
during 2018 were driven by Côte
d’Ivoire where trade was down 9% to
US$157 million, continuing a long-term
trend. After several years of decline,
Côte d’Ivoire’s exports to the EU
increased 2% in 2018, to US$77 million,
but this gain was offset by falling19

exports to Senegal and India. Ghana’s exports increased
1% to US$ 271 million in 2018, with exports of logs, mainly
plantation teak, rising to India, and exports of sawn woodrising to the US and Viet Nam. Liberia’s exports increased
57% to US$51 million, all comprising logs with over 90%
destined for China.

in 2018. Exports from Honduras, the only VPA country in
the region, declined 1% to US$88.7 million (Figure 3.4.3.2).
Exports from Honduras to the US, the largest destinationaccounting for around 40% of total exports, fell back in2018 after rising the previous year. Honduras’ exports also
fell to other leading markets in El Salvador and Nicaragua
but increased to Guatemala. A large proportion of Honduras
exports comprise sawn softwood.

3.4.3 Pacific and Latin America
Tropical wood product exports from the Pacific region
are dominated by logs from Papua New Guinea and theSolomon Islands destined almost exclusively for China,
with the remainder destined for India, Japan, South Korea
and Taiwan. After two slower years in 2016 and 2017,
due to slowing demand in China, total exports from the
Pacific region rebounded 31% to US$1.62 billion in 2018
(Figure 3.4.3.1). Papua New Guinea exports increased 25%
to US$919 million in 2018 while Solomon Islands exports
increased 15% to US$662 million (Figure 3.4.3.2).

3.5 Changes in regional demand for tropicalwood products
After several years of zero growth, the value of EU importsof tropical wood products increased 7% to US$4.5 billion in
2018. However, due to larger increases in imports in North
America and North East Asia, the EU’s share of total world
trade fell slightly, from 11.4% to 11.3% (Figures 3.5.1 and 3.5.2).
Imports in North America increased 11% to US$10.4 million
in 2018, mainly driven by the increase in US furnitureimports from tropical countries, particularly Viet Nam
and India, and plywood from Indonesia and other Asian

Tropical wood products exports by South Americancountries increased 13% to US$1.37 billion in 2018 (Figure
3.4.3.1), with exports rising from several of the leading
supplying countries including Ecuador,
Brazil, Suriname, and Paraguay(Figure 3.4.3.2). Exports from Ecuador
increased 12% to US$460 million in
1.8
2018. Ecuador exports an increasingly
1.6
diverse range of wood products
including logs, sawn wood, plywood,
1.4
and panels destined mainly for the
1.2
US, China and neighbouring SouthAmerican countries. Exports from
1.0
26
Brazil increased 11% to US$335
0.8
million, with significant gains madein exports to the US and several EU
0.6
countries including France, Belgium
0.4
and Spain. Exports from Guyana, the

2016

2017

2018

Value (US$ billion)

2015

20		

America (South)

America (Central)

Figure 3.4.3.1: Tropical wood-products exports, by Pacific and American regionof supply, by smaller VPA partner exporters, 2015 to 2018. Source: IMM-STIX

2016

2017

as

2015

800

y

900
2018

700
600
500
400
300
200

a
ya
n
Gu

nd
ur

gu
a

Ho

a

ra

al

Pa

ru

at
em

Pe

Gu

e
am

zil

Su
rin

Br
a

r
do

Ec
ua

m

on

N.
G.

lo

0

Is.

100

So

 ue to the large proportion of Brazilian woodDand wood furniture exports composed ofsoftwoods and eucalyptus from plantations
outside the tropical zone, unlike for mostother tropical countries (where it is assumed
all wood and wood furniture products are“tropical”) the data reported for Brazil refers
only to sawn wood, veneer, and plywood
specifically identified as composed of tropical
hardwood in the HS system of product codes.
Trade data for all other product groups does
not separate tropical from non-tropical woodand is therefore excluded. In practice thismeans that there may be significant underreporting of Brazilian exports of tropical
products, particularly of mouldings (HS4409)
and furniture (HS94).

Pacific

pu
a

26

0.0

Pa

Tropical wood products exports by
27
Central American countries fell 2% to
US$439 million in 2018 (Figure 3.4.3.1).
Exports from Guatemala, the largest
tropical wood exporter in Central
America, were level at US$97 million

0.2

Value (US$ million)

only South American country engaged
in the VPA process, declined 1% to
US$51.7 million in 2018 with a rise inexports to China and the US offset by afall to India. Most exports from Guyana
comprise logs and sawn wood destinedfor China, the US, and India.

Figure 3.4.3.2: Trade in tropical wood-products, by Pacific and American
exporters, 2015 to 2018. Source: IMM-STIX

Main Report – November 2019

countries. The trade disputes between
the US and China and the US and
Mexico may encourage more US buying
of furniture and plywood from tropicalsuppliers in Asia during 2019.

100%

Share of US$ value

90%
80%

Other

70%

South East Asia

60%

Middle East

50%

India/South Asia

40%

North East Asia

30%

China

20%

North America

10%

EU

0%

2015

2016

2017

2018

Figure 3.5.1: Trade in tropical wood-products, by region of import,
2015 to 2018. Source: IMM-STIX

10.0
2015

9.0

2016

2017

2018

8.0
Value (US$ billion)

7.0
6.0
5.0
4.0
3.0
2.0
1.0

on

g

sia

Au

So

st

ut

M

h

ra

ek

la

Ea

as
eE

id

dl

So
M

a/
di
In

st

t

h
ut

EU

ia
As
st

No

No

rth

rth

Ea

Am

Ch

er

in

ica

a

0.0

Figure 3.5.2: Trade in tropical wood-products, by region of import,
2015 to 2018. Source: IMM-STIX

10.0
2015

9.0

2016

2017

2018

Value (US$ billion)

8.0
7.0

Tropical wood products imports inNorth East Asia increased 16% to
US$7.6 billion in 2018. Japan’s importsof biomass and chips, wood furnitureand plywood from Viet Nam, plywood
from Indonesia and Malaysia, andjoinery products from the Philippines
all increased sharply in 2018. There
was also significant growth in South
Korea’s imports of biomass andplywood from Viet Nam and plywood
from Indonesia in 2018.
Imports of tropical wood products in
China continued to recover in 2018,
although at a slower pace than theprevious year, rising 4% to US$9.3
billion. During 2018, there was a risein China’s imports of logs from Papua
New Guinea, the Solomon Islands,
Cameroon and Equatorial Guinea, of
sawn wood from Gabon, and biomass
from Viet Nam. These gains offset a
decline in China’s imports of “othernot elsewhere stated” wood products
from Indonesia, logs (likely comprised
mainly of rosewood) from Nigeria andMozambique, logs (primarily okoume)from RoC, and plywood from Malaysia
and Indonesia.
The trade dispute between the US andChina contributed to a significant
slowdown in China’s imports of US
hardwood in the last quarter of 2018, a
trend which intensified in the opening
months of 2019. This may increase
China’s reliance on imports of tropical
hardwoods, notably from the Pacificand Congo regions, in the future.
Tropical wood product imports in theSouthern Asian region, dominatedby trade with India, increased 3% to
US$1.88 billion in 2018. While India’s
imports of tropical logs from Malaysia
and Papua New Guinea declined during
the year, and imports of veneer from

6.0
5.0

27

4.0
3.0
2.0

y
an
rm

Ge

Vi
et

Na
m

s

Ne

th
e

rld

lia
st
ra

Au

UK

di
a
In

a
re

S.

Ko

pa
n
Ja

a
Ch
in

US

0.0

A

1.0

Figure 3.5.3: Top 10 importers of tropical wood-products, 2015 to 2018.
Source: IMM-STIX

Main Report – November 2019Due to the large proportion of Mexican woodand wood furniture exports composedof temperate hardwoods and softwoods,
including both domestic wood and imports
from the US, the data reported for Mexicorefers only to logs, sawn wood, veneer andplywood specifically identified as composedof tropical hardwood in the HS system of
product codes. In the case of Mexico, theseexports are negligible and represent only
a tiny percentage of Mexico’s total exportsof wood and wood furniture which were inexcess of US$7.5 billion in both 2017 and2018, the vast majority destined for the US(94%) and Canada (4%).
21Myanmar also weakened, this wasoffset by a rise in India’s imports ofplantation teak logs from Ghana andBrazil, of other tropical logs from
Solomon Islands and Surinam, and ofveneer and plywood from Indonesia.
Tropical wood products imports in theSouth East Asian region increased 10%
to US$1.46 billion in 2018, driven byrising imports by Malaysia, Thailand
and the Philippines. An indication of
Malaysia’s declining competitivenessin the international plywood trade isthat the country was importing more
plywood from both Viet Nam andIndonesia in 2018.

North America
China
North East Asia
EU
India/South Asia
South East Asia
Middle East
Australasia/Pacific
Mekong0%

20%

Logs & fuelwood
Joinery & other value-added

40%

60%

Sawnwood & mouldings
Furniture

80%

100%

Plywood, panels & veneer

Tropical wood product imports in
the Mekong region declined 2% to
US$1.1 billion in 2018. While Viet Nam’s
Figure 3.5.4: Product mix of tropical wood-products trade in 2018,
imports from Cameroon, RoC andby region of import, 2015 to 2018. Source: IMM-STIX
Papua New Guinea increased during
the year, imports continued to decline
from Cambodia and Lao PDR, andexporting countries. Rising processing costs in China
also dipped from Equatorial Guinea and Gabon after a
are also making imports of sawn wood more attractive
significant rise in 2017.
in that region. Imports of tropical wood products in
The mix of tropical wood products varies widely in eachNorth America are dominated by wood furniture. A largeof the import regions (Figure 3.5.4). Imports into China,
proportion of tropical wood products imports in the
India, and the Mekong region continue to be led by logs
Middle East are of sawn wood (and much is lower grade
although there are signs of increasing willingness tojudging from relatively low unit values). The EU, North
import more sawn wood and veneer in all regions as log
East Asia, South East Asia and Australasia import aavailability has declined and controls on logs exports
more diverse range of tropical wood products, from logs
have been progressively tightened in some tropicalthrough to finished furniture.

4

VPA partner competitiveness4.1 Relative international competitivenessof VPA countries
Previous IMM Annual Reports28 observed that several
VPA partner countries ranked highly in international
competitiveness indices and that there is correlation
between the ranking in these indices and the developmentof countries’ wood processing industries. VPA partnercountries that are poorly connected to international traderoutes and are rated as challenging places in which to dobusiness tend to be more focused on the export of primarywood products. Indonesia, Malaysia, Thailand and Viet
Nam have the most developed wood-processing sectors
among the VPA partner countries and are significant
exporters of value-added wood products to the EU.
The previous IMM reports used three indices, namely the29
World Bank’s “Ease of Doing Business ” (EDB), the World
Economic Forum Global Competitiveness30 (GC) Index,

and the UNCTAD Liner Shipping Connectivity Index31 to
identify trends in VPA partner country competitiveness.
Among the Asian VPA partner countries (Figure 4.1.1),
Malaysia has performed best by far for several years,
outranking not only the other VPA partner countries
but also China on all indices except the Connectivity
Index. Among the Asian VPA partner countries, Lao PDR
is the only one with weak competitiveness ratings byinternational standards.
The African VPA partner countries all ranked much lower
on all three indices. Some of the countries even dropped
entirely out of the GC and Connectivity indices. Indonesia
and China are included in Figure 4.1.2 for comparison.
The rankings achieved by the Latin American VPA partnercountries in the international competitiveness indices
are more comparable to the African than to the Asian VPA
partners. And like the African partners, sawn wood and28

 ttp://www.flegtimm.eu/index.php/reports/annual-reports (IMM/ITTO 2015; IMM/ITTO 2017; IMM/ITTO 2018)hWorld Bank, Ease of Doing Business http://www.worldbank.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_webversion.pdf (WB 2019)30
World Economic Forum, Global Competitiveness Report (WEF 2018) http://www3.weforum.org/docs/GCR2018/05FullReport/
TheGlobalCompetitivenessReport2018.pdf
31
UNCTAD Liner Shipping Connectivity Index (UNCTAD 2018) https://unctadstat.unctad.org/wds/TableViewer/tableView.aspx
29

22		

Main Report – November 2019

180

EBD

160

GC

140

Connectivity
Index

120

logs are dominant product groups
supplied by Guyana and Honduras
to the EU.32 In Figure 4.1.3, Brazil is
included for comparison as a regional
competitor and Indonesia and Chinaas other international suppliers oftropical wood products.
The analysis against the three
indicators by country is updated to2018 below:

10080• Indonesia’s position on the GC Index

6040

was 45th in 2018, with slightly
higher scores than in 2017. It
retained third place among the VPA
partner countries, behind Malaysia(25th) and Thailand (38th). Of two
main Asian non-VPA competitor
countries, China (28th) ranked
higher and India (58th) lower. On the
EDB Index Indonesia ranked 73rdin 2018, after 72th place the year
before. Malaysia (15th), Viet Nam(69th) and China (46th) all ranked
higher than Indonesia, with India(77th) coming out lower. Indonesia’sconnectivity remains a problem(36th), being considerably lower
than key competitors including
China (1st), Malaysia (5th), and Viet
Nam (19th). Indonesia’s rating in
the Connectivity Index continued to
improve in 2018 when it was almost
at the same level as Thailand (35th).
However, Malaysia, China, Viet
Nam, and India (25th) are all much
more connected.

20
0

Malaysia

Thailand

VietnamIndonesia

Laos

India

China

Figure 4.1.1: 2018 Ranking on competitiveness indices. Asian VPA partnercountries vs regional competitors India, China.
Source: IMM 2018 analysis of EBD, GC and UNCTAD indices

EBD

200
180
160
140
120
100
80
60
40
20
0

GC

China

Indonesia

Liberia

Congo Republic

CAR

DRC

Cote d'Ivoire

Ghana

Cameroon

Gabon

Connectivity
Index• Malaysia remained by far the top

performer amongst VPA partnercountries across the indices in 2018.
It was one of the world’s five mostconnected countries and ranked
15th on the EDB index, a significant
improvement from 23rd in 2017.
On the GC Index Malaysia retained
the 25th position, as in 2017, andnot only scored best amongst
VPA partners but was also ranked
higher than China.

Figure 4.1.2: 2018 Ranking on competitiveness indices. African VPA partnercountries vs Indonesia and China. Source: IMM analysis of EBD, GC and UNCTAD indices

160

EBD

140

GC

120

Connectivity
Index• Thailand slipped slightly on the

EBD in 2018 - from 26th to 27th.
This is still the second-best
ranking for a VPA partner country.
Thailand’s Connectivity Index
ranking was also stable, improvingfrom 36th to 35th in 2018. Thailand
was also the second highest ranked
VPA partner country on the GC
index (rank 38), after Malaysia.

100
80
60
40
20
0

Honduras

GuyanaBrazilIndonesia

China

Figure 4.1.3: 2018 Ranking on competitiveness indices. Latin American
VPA partner countries vs Brazil, China, Indonesia.
Source: IMM analysis of EBD, GC and UNCTAD indices

Main Report – November 2019• Viet Nam’s ranking on the GC index
increased from 70th in 2013 to 60thin 2017 but subsequently dropped

32

I MM Data Dashboard.
http://www.stats.flegtimm.eu
23

again to 77th in 2018. On the
GC, Viet Nam scored lower than
Malaysia, Thailand and Indonesia.
On the EBD, Viet Nam (69th) scoredslightly higher than Indonesia(73rd) but significantly lower than
Malaysia (15th) or Thailand (27th).
Viet Nam’s Connectivity ranking(19th), remained unchanged in 2018;significantly lower than China andMalaysia but clearly higher thanIndia, Thailand or Indonesia.

Liberia
Congo Republic
Central African Republic
Cameroon• Lao PDR’s overall performance was

weak compared to other Asian VPA
partner countries. The country’s
ranking on the GC index fell from
93rd in 2017 to 112th in 2018.
Ranking on the EDB increased from159th in 2013 to 139th in 2016 before
falling again to 141st in 2017 and154th in 2018. Lao PDR is not listedon the Connectivity Index.

Ghana
Vietnam0%

Figure 4.2.1: In which countries would FLEGT-licensing be particularly
important? Source: IMM 2018 Trade Survey• Cameroon slipped from 114th to• Côte d’Ivoire’s international

C
m AR
er
or oo
yC n
oa
A st
Co ngo
ng la
o
Re
p
DR
C
Gh
an
Ga a
bo
Li n
be
ria
Br
az
il
Pe
Gu ru
ya
n
Bo a
Co livlu ia
mVi bia
et
M nam
ya
nm
a
Ch r
In in
do a
n
M esiaalaysiarank) was the second highest of
African VPA partner countries in2018. The country isn’t listed on
the GC index and was 180th of 190
countries in the EBD ranking.

20
18
16
14
12
10
8
6
4
2
0

Ca

• RoC’s Connectivity Index (65thWhich will be the most important supplier countries of tropicaltimber products five years from now?

Iv

119th rank in the GC Index between
2015 and 2017 and then again to
121st in 2018. The EBD ranking also
continued to weaken from 163rd
to 166th place. On the other hand,
Cameroon is comparatively wellconnected, ranking higher (64th) on
the Connectivity Index than any other
African VPA partner country in 2018.

10% 20% 30% 40% 50% 60% 70% 80% 90%

competitiveness remains low. The
country’s ranking on the GC index
Figure 4.2.2: Future tropical timber supply. Source: IMM 2018 Trade Survey
fell back to 114th, after improvingfrom 126th to 99th between 2013
and 2017. However, it gained someground on the EBD index, whereT here was little or no change in the very weak rankings
it ranked 122nd, after 139th in 2017. Côte d’Ivoire’sof
the remaining African VPA partner countries.
connectivity is low by international standards (78th)
CAR
and DRC were ranked 183rd and 184th (of 190
but better than that of some other African and Latincountries), respectively, on the EBD index and Gabon
American VPA partner countries.
was ranked 169th. CAR didn’t feature on the GC
Ghana slipped sharply down the EDB index from 67th inindex or the Connectivity index, while DRC ranked
2013 to 108th in 2016 and then further to 120th in 2017. In
135th out of 140 countries on the GC and 160th on the2018 it recovered slightly to rank 114. The country gained
Connectivity index. Gabon wasn’t included in the GC
some ground in “dealing with construction permits” andindex, but ranked 90th on the Connectivity index.
“trading across borders”, two of the indicators that had
Honduras’ranking on the GC index fell from 88th
previously been responsible for the deteriorating rankings.
in 2017 to 101st in 2018. Honduras EDB ranking also
Ghana’s ranking on the GC also improved slightly to 106th
continued to fall to 121st (2017=115th, 2016 = 105th).
(from 114th in 2017). On the Connectivity Index, Ghana
The country’s connectivity is low, ranked 93rd on the(75th) remained below RoC (64th) and Cameroon (63rd) but
Connectivity Index.
was ahead of Côte d’Ivoire (77th) and Gabon (89th) in the

•

•

•

2018 ranking.

•Liberia’s international competitiveness remains low
both according to the EBD (174th) and the GC (132nd).
The country’s Connectivity Index ranking (115th) issimilarly weak.

24		• G uyana’s hasn’t been listed on the GC since 2017, afterslipping through the ranks in previous years. Ranking
on the EDB fell from 126th in 2017 to 134th in 2018. The
country has the second lowest connectivity of all VPA
partner countries, ranking 131st.

Main Report – November 2019

How difficult is procuring information indicating compliance of timber productswith legislation applicable to EUTR in the African VPA partner countries?
Liberia
Ivory Coast
DRC
CAR
Congo Republic
Cameroon
Ghana
Gabon
0%

20%

40%
Very difficult

60%
Difficult80%
Rather easy

100%
Easy

Figure 4.2.3: Conducting EUTR due diligence for timber from African VPA
partner countries. Source: IMM 2018 Trade Survey (figures rounded)

How difficult is procuring information indicating compliance of timber
products with legislation applicable to EUTR in the following countries?

India
RussiaBrazilChina
Vietnam
0%

20%

40%

60%

Very difficult

Difficult

Figure 4.2.4: Conducting EUTR due diligence.
Source: IMM 2018 Trade Survey (figures rounded)

4.2 Perceptions of VPA partner countries
in IMM 2018 surveys and studies

The survey question on relevanceof completing VPA implementation
for EU markets (Figure 4.2.1) has its
limitations, especially where Viet
Nam is concerned. Viet Nam supplies
primarily furniture to the EU markets,and furniture traders were notstrongly represented in the general
2018 IMM trade survey as the majority
had been contacted separately for the
IMM furniture sector scoping study.
In relation to African countries,
survey respondents were hoping for
FLEGT-licensed timber to become
available in Cameroon and Congo
Republic, in particular. More than
40% of respondents also said that thestart of FLEGT-licensing in Ghanawould be very beneficial.
Cameroon was expected to be the mostimportant tropical timber supplier for
the EU markets five years from now,
followed by Brazil, Congo Republic,
Malaysia, Indonesia and Gabon(Figure 4.2.2). The low rating for Viet
Nam may be due to lack of furnituresector respondents in this survey.

Several respondents forecast that
securing tropical timber supplies
will become increasingly difficultin the next five years. The following
80%100%
reasons were mentioned: strong
and still growing competition forRather easy
Easy
resources from China and other Asian
countries; demographic trends andthe related expected rise in domestic
timber consumption especially in
the African supply countries; anda perception in tropical countries
that Europeans have become moredemanding than customers in otherregions due to both EUTR and very specific quality andtechnical requirements.

In 2017 and early 2018, the IMM EU trade survey and the
IMM Furniture Sector Scoping Study asked respondents
to rate the competitiveness of VPA-implementing and
FLEGT-licensing countries using a variety of indicators
including product range, quality, lead times and price.
Results from these surveys were included in the IMM 2017
Annual Report. This exercise was not repeated in the 2018
trade survey, as no major changes were expected to haveoccurred in such a short time. However, it will be repeatedand extended as a part of the 2019 survey.
Instead of looking directly at indicators ofcompetitiveness, the 2018 survey contained questions
relating to: firstly, the VPA implementing countries forwhich the start of FLEGT licensing would be particularly
important to respondents; secondly, respondent’s views
on countries most likely to be important suppliersof tropical timber to the EU in five years’ time; andthirdly, the ease of obtaining information to satisfy
Main Report – November 2019

EUTR due diligence requirements
in VPA partner countries compared
to several other competing timber
supplier countries.

On the supply side, limitations in infrastructuredevelopment as well as political instability and conflict
were mentioned as other factors likely to impact tropicaltimber supply in the next five years, especially in Africa.
Some respondents expected a greater focus on SouthAmerican suppliers, including in Bolivia, Peru, Guyana andColumbia – besides Brazil. Indonesia and Malaysia were
widely expected to remain important sources of supply.
To establish how challenging it is for European buyers
to source timber from VPA partner countries and several
other important competing countries, the 2018 survey
asked respondents about their experience of obtaining
relevant information to demonstrate negligible risk ofillegality in those countries. Russia was included in therating as Russian birch plywood was frequently cited as a
substitute for tropical plywood products, especially fromIndonesia, in the 2017 survey.
25

Where the African VPA partner countries are concerned,
Gabon was found to be the country where correspondents
could most easily obtain information indicatingcompliance with the EUTR, followed by Cameroon and
Ghana (Figure 4.2.3). Liberia and Central African Republic
were perceived as most difficult.
For comparison, respondents were asked the same question
with reference to Viet Nam, Brazil, China, India and Russia(Figure 4.2.4). India was considered the most challenging
supplier by respondents, with credible evidence of legality
more difficult to obtain even than in Liberia or Central
African Republic. Brazil, Russia and China, by contrast,
were perceived to be less challenging and Viet Nam wasplaced roughly at the same level as Gabon.

4.3 The role of FLEGT Licences inpurchasing decisions
All four IMM Trade Consultations33 organised in 2018 andearly 2019 featured workshops on “Priorities and purchasedynamics for tropical wood products – development of supply
chain relationships and the relevance or impact of FLEGT
licensing”. Participants at all four Consultations agreed
that while FLEGT can play a role, it is not a leading factor
impacting purchasing decisions.
Participants identified a combination of price, technicalperformance/quality and availability/logistics as criticalcommercial considerations. For retailers, fashion trends
were also considered of primary importance. Issues likelegal compliance or environmental and social criteria
were considered only after these other commercial issues
were resolved.
When comparing the Indonesian timber industry
against direct competitors, participants highlighted ascommercial advantages the comparatively high quality
and reliability of Indonesian suppliers. The risk ofintellectual property theft was also believed to be lower
in Indonesia than in some other countries, notably China.
There was almost unanimous agreement at all
Consultations that FLEGT licensing has made importingfrom Indonesia easier compared to exercising due
diligence. However, delegates also unanimously voiced
criticism of the flow of information, particularly on the
broader benefits of FLEGT licensing for forest and timbertrade regulatory reform in VPA partner countries.
The consensus across the range of timber and wood33

products businesses participating in IMM Trade
Consultations was that the EUTR has shaken up EU
importers’ supplier selection process, with long-term
relationships with suppliers having become even more
important than before in order to build mutual trust andunderstanding of one another’s requirements. On thesignificance of FLEGT licensing to a supply relationship,
importers said it was constrained by the fact thatthe variety and availability of licensed products wascurrently restricted to Indonesia.
To demonstrate consideration of social andenvironmental criteria when sourcing in high-riskcountries, most delegates said they would, where
possible and if not too expensive, give preference to FSCcertified timber. Compared to FLEGT-licensed timber,
FSC certification was said to have the advantage ofavailability from a variety of countries, plus widespreadbrand awareness and acceptance, including among
European end-consumers.
To elevate FLEGT licensing as a purchasing preferenceor priority, the consensus was that more concerted
efforts were required by all parties, including the EU andIndonesian authorities and Indonesian exporters and
EU importers associations, to communicate the role andbenefits of FLEGT licensing throughout the EU supply
chain. A clear, consistent and widely agreed message
on FLEGT’s sustainability credentials in terms of wider
environmental, economic and social impacts was required.
Key findings from the workshops included:• I mporters place tropical timber supply relationships
under greater scrutiny post EUTR.

• T he tropical timber supply pool and product variety
has reduced as a result.

 arket competitiveness and environmental•M

requirements place even greater stress on maintaining
strong, long-term supply relationships.

• F SC/PEFC certification remains a greater purchasing
preference than a FLEGT Licence.

• I mporters are not switching from other suppliers toIndonesia solely due to FLEGT licensing.

• T here is still lack of awareness of FLEGT down the
supply chain in the EU.

• S uppliers of FLEGT-licensed products must still compete
on price, availability, quality and consistent delivery.

 rade Consultations are a series of meetings organized by the IMM programme in the EU key tropical timber consuming countries.
T
The Consultations aim to gauge the trade’s views and discuss opinions of relevant FLEGT-related topics identified as a part of IMM surveys.
IMM also shares latest survey and study results with trade representatives during the Consultations. Consultations were held in London (March),
Nantes (May) and Berlin (November) during 2018 and in Antwerp (April) and Barcelona (October) during 2019, with more than 180 participants in total.

26		Main Report – November 2019

Indonesia: Market position and prospects
5.1 Scope
The section considers timber production in Indonesia andanalyses trends in Indonesia’s timber and timber products
trade spanning the period 2015 to 2018, covering two years
before and after FLEGT licensing began in November 2016.
Analysis of Indonesian production and export data places
the EU in the wider market context for Indonesian timber
products. EU import data is used to assess the changing
scale, direction and share of Indonesia’s trade in timber
and timber products in the EU market.
The section also summarises the results of surveys oftimber traders in Indonesia and the EU during 2018
to assess their views of the market impact of FLEGT
licensing. It reports on steps taken during the year to
overcome administrative and communication constraints
to market development of Indonesian licensed timber andconsiders price trends for Indonesian timber products inthe context of FLEGT licensing.

5.2 Indonesia’s timber supply
5.2.1 Production
After declining 3% to 48.4 million m3 in 2016, log supply inIndonesia increased 12% to 54.3 million m3 in 2017 and by afurther 7% to 57.9 million m3 in 2018. Much of the increasein supply in 2017 and 2018 was due to a continuing rise inproduction from industrial plantations and, to a lesser
extent, community forests. In 2018, 70% of Indonesia’s log
supply came from industrial plantations, up from 61% in2014, while 15% came from community forests, the same
proportion as in 2014. Between 2014 and 2018, the share of log
supply from land clearing declined from 7% to 1%, and theshare from natural forest concessions
fell from 11% to 9% (Figure 5.2.1).

60
Other
50
Log imports
million m3

40
Community
forests

30

Land clearing
for plantation

20

Industrial
Plantation

10
02009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Natural forest
concession

Figure 5.2.1.1: Indonesia log production, by forest type - Years 2009-2018.

Source: IMM analysis of Indonesian Ministry of Environment and Forestry data from RPBBI website

12.0

2015

2016

2017

2018

Quantity (million m3)

10.0
8.0
6.0
4.0
2.0
0.0

Capacity Production
Plywood/LVL

Capacity Production
VeneerCapacity Production
Sawnwood

Figure 5.2.1.2: Capacity of reporting production units and production quantityof primary timber products in Indonesia, by product type – Years 2015-2018.
Source: IMM analysis of Indonesian Ministry of Environment and Forestry data from RPBBI website

Main Report – November 2019

Production from industrial
plantations, mainly to supply the pulp
and paper sector, increased 15% to 37.8
3
million m in 2017, and by another 7%
in 2018 to 40.4 million m3. Production
from community forests increased 11%
to 7.8 million m3 in 2017 and by 10%
in 2018 to 8.6 million m3. Production
from natural forest concessions
declined 11% from 5.5 million m3 in2016 to 4.9 million m3 in 2017 before
recovering 3% to 5.0 million m3 in
2018. Production from land clearance
operations has fallen to negligible
levels, only around 700,000 m3 in 2018.
Log imports only contribute a small
proportion to total log supply, around
800,000 m3 in 2018, 1.4% of the total.
Data on timber production publishedby the Indonesian Ministry ofEnvironment and Forestry needs
careful interpretation as it is notalways clear the extent to which trends
are due to changes in installed capacityand production levels or in the range ofcompanies captured by the reporting
process. The progressive roll-out of
SVLK in Indonesia has coincided with,and is likely partly driving, a rise in thescope of the production units capturedby the data.
The data indicates that the capacityof reporting timber production
units in Indonesia increased for all
the main primary timber productgroups between 2014 and 2018, with aparticularly dramatic increase in thesawn wood sector (figure 5.2.1.2). The
sawmilling sector tends to be more
highly fragmented, and challenging
to monitor, compared to the plywood,
veneer, and pulp sectors, so the rollout of SVLK is likely to have played a27

5

particularly significant role to improvedata capture in this sector.

Data on the production andconsumption value of wood
furniture in Indonesia is not readily
accessible from official sources.
Estimates from unofficial sources
vary widely, probably due to thehigh degree of fragmentation in
the sector and differences in thescope of products covered by theestimates. Annual revenue from salesof all furniture in Indonesia during
2018 has been variously estimated34
at US$779 million and US$1,243
35
million, implying that domestic
sales are smaller than export salesof around US$2 billion. In contrast,a large-scale multi-client study ofIndonesia’s furniture sector projects
that Indonesia’s domestic market
for all home and office furnishings
will exceed US$5 billion by 2021,36
implying that the domestic market
may already be significantly larger
than export sales.

34

 tatista Revenue,
S
https://www.statista.com/outlook/255/120/
furniture-homeware/indonesia
35
Cekindo (consulting company),
https://www.cekindo.com/sectors/
handycraft-furniture36
Ken Research, https://www.kenresearch.
com/consumer-products-and-retail/homeand-office-furnishings/indonesia-homefurniture-market/141094-95.html.
28		

2016

2017

2018

Quantity (million air dried tons)

8.0
6.0
4.0
2.0
0.0

Capacity

Production
Pulp

Figure 5.2.1.3: Capacity of reporting production units and production quantityof wood chips and wood pulp in Indonesia, by product type – Years 2015-2018.
Source: IMM analysis of Indonesian Ministry of Environment and Forestry data from RPBBI website

1.8

2015

2016

2017

2018

1.6
Quantity (million tonnes)

Data capture for pulp production
appears already to be more stable, with
figures for the three years 2016-2018
seemingly derived from the same groupof (relatively large) production plants
with total capacity of 11.33 million
tons. During this period, recorded pulp
production increased from 5.99 million
tons to 7.62 million tons (Figure 5.2.1.3).
The rising trend in Indonesian pulp
production aligns with the increase inplantation log production.

2015

10.0

1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0

Wood (HS 44)

Wood furniture(HS 94)

Wood pulp(HS 47)

Paper (HS 48)

Figure 5.2.2.1: Indonesia timber import quantity, by product group– Years 2015 -2018. Source: IMM STIX

1.8

2015

2016

2017

2018

1.6
1.4
Value (billion)

Given the data indicates a large rise indata capture in the timber sector during
the 2014 to 2018 period, it may be too
early to assign any great significance tothe figures showing rising production
during this same period. However,
the rise in data capture implies moreaccurate monitoring of production
trends in the future. For now, the data
indicates total Indonesian production
3
in 2018 of 4.31 million m for plywood/
3
LVL, 1.26 million m for veneer, and2.65 million m3 of sawn wood. For all
products, production was significantly
less than 50% of total installed capacity
during 2018.

12.0

1.2
1.0
0.8
0.6
0.4
0.2
0.0

Wood (HS 44)

Wood furniture(HS 94)

Wood pulp(HS 47)

Paper(HS 48)Figure 5.2.2.2: Indonesia timber import value, by product group– Years 2015 -2018. Source: IMM STIX

Main Report – November 2019

2018

Other

2017

Plywood &similar2016

Particle board &similarFibreboard

Fuel wood

Sawnwood

2015

Logs

Quantity (1000 tonnes)

5.2.2 Imports
1,000
900
800
700
600
500
400
300
200
100
0

In value terms, the increase inIndonesia’s imports between 2015 and2018 was led by wood pulp and paper.
There was only slow growth in importvalue of HS 44 wood products andimport value of wood furniture was flat
during this period (Figure 5.2.2.2).

Figure 5.2.2.3: Indonesia import quantity of wood (HS 44) products,
by product type – Years 2015 -2018. Source: IMM STIX

1,200

2015

2016

2017

2018

800
600
400

Other

USA

China

EU

ThailandNew
Zealand

Australia

Viet Nam

200

Malaysia

Quantity (1000 tonnes)

1,000

0

Figure 5.2.2.4: Indonesia import quantity of wood (HS 44) products,
by supply country – Years 2015-2018. Source: IMM STIX

700

2015

2016

2017

2018

Quantity (1000 tonnes)

600

The growth in the quantity of HS 44
wood products is driven by logs andfuel wood of low unit value. Imports ofsawn wood and fibreboard were risingslowly between 2015 and 2018 but
total volumes are still very restricted.
Imports of particle board and plywood
were declining during this period.
Indonesia’s rising imports of logs
between 2015 and 2018 were derived
almost exclusively from Malaysia andcomprised plantation logs destined
mainly for the pulp sector. Chip andfuel wood imports derived from
Malaysia, Viet Nam, with a smaller
volume from Australia. Sawn wood
imports comprised mainly hardwoodsfrom the USA, France and Germany,and softwoods from New Zealand.
Panel products were sourced almost
exclusively from Thailand, Malaysia
and New Zealand (Figure 5.2.2.4). Thereis little or no evidence to support
anecdotal claims of wood fromthird countries (e.g. in Africa) beingtransited through Indonesia to obtaina FLEGT licence.
The rise in Indonesia’s wood pulp
imports between 2015 and 2018 camemainly from Canada and the USA,the two countries together supplying
nearly 1 million tonnes of pulp toIndonesia in 2018. Indonesia’s importsof wood pulp from the EU have fallen
sharply in recent years and were no
more than 155,000 tonnes in 2018
(Figure 5.2.2.5).

500
400
300
200
100
0

While still dwarfed by domestic
production and exports, Indonesia’s
imports of timber and timber products
are rising in several product groups.
Total Indonesian imports of timber
and timber products increased 35%
to 4.23 million tonnes between 2015
and 2018. In value terms, imports
increased 16% to US$1.52 billion. Muchof the growth in import quantity has
been concentrated in wood (HS 44)
products, with a particularly dramaticincrease during 2017 (Figure 5.2.2.1).

Canada

USA

EU

South
AfricaN. ZealandBrazilFigure 5.2.2.5: Indonesia wood pulp (HS 47) import quantity,
by supply country – Years 2015-2018. Source: IMM STIX

Main Report – November 2019

Other

Indonesia’s imports of paper products
are sourced from a wide variety ofcountries, although only in relatively
small volumes. The EU was formerly
the largest external source, supplying
around 150,000 tonnes per year

29

2017

2018

Other

2016

Malaysia

2015
200
150
100

USA

SingaporeJapan

ThailandEU0

S. Korea

50

China

China is the leading external supplierof wood furniture to Indonesia, withsales of $128 million in 2018, 25% morethan in 2017 but a decline compared to2015 and 2016. Other leading external
suppliers are Thailand and Japan,
although neither country supplied inexcess of $40 million to Indonesia in
2018. Total wood furniture imports
from the EU were €26 million in 2018
and showed no discernible upward or
downward trend in the 2015 to 2018
period (Figure 5.2.2.7).

250

Quantity (1000 tonnes)

between 2015 and 2018, but recently
has been overtaken by China, which
supplied 200,000 tonnes in 2018. Only
two other countries - South Korea andThailand – supply in excess of 50,000
tonnes of paper to Indonesia each year
(Figure 5.2.2.6).

Figure 5.2.2.6: Indonesia paper import quantity, by supply country- Years 2015-2018. Source: IMM STIX

5.3 Indonesia timber productexports
180

5.3.1 Indonesia timber productexport data sources• while data on Indonesian exportsof V-legal timber is publishedon-line by the Timber Legality
Information System (SILK) at
https://silk.dephut.go.id, there isno comparable on-line system forregular publication of harmonizeddata on FLEGT-licensed imports inthe EU;38• c ustoms data is fully disaggregated

2016

2017

2018

140
Value (US$ million)

This analysis of Indonesian wood
product exports and of EU trade withIndonesia draws on customs data37
in preference to data compiled from
V-legal certificates in Indonesia and
FLEGT Licences in the EU for thefollowing reasons:

2015

160

120
100
80
60
40
20
0

China

Thailand

Japan

EU

Malaysia Viet Nam

Other

Figure 5.2.2.7: Indonesia wood furniture (HS 94) import value,by supply country – Years 2015 -2018. Source: IMM STIX

by both country and product groupat the highest level of HS resolution;
6

Indonesian customs data is supplied to IMM
by BTS Ltd, a UK-based company specialisingin sourcing global trade flow data. EU customs
data is derived by IMM from the Eurostat
COMEXT system.
38
That is not to say there is no reporting system,
only that the system that exists is designed toassess regulatory conformance and not market
impacts. Article 8(1) of the EU FLEGT Regulation
requires all Member States to submit an annual
report including information on importsof FLEGT-licensed products (quantity andnumber of licenses received) by HS headings
specified in the VPAs (not necessarily at thehighest level of HS resolution). Based on theinformation submitted, Article 8(3) of theRegulation requires the EC to prepare andmake public a synthesis report covering theprevious calender year by 30 June.
30		

2016

2017

2018

5
Quantity (million tonnes)

37

2015

4
3
2
1
0

Wood (HS 44)

Wood furniture(HS 94)

Wood pulp(HS 47)

Paper (HS 48)

Figure 5.3.2.1: Indonesia export quantity of timber and timber products
by product group – Years 2014-2018. Source: IMM STIX

Main Report – November 2019• customs data provides a continuous time series, incontrast to the SILK data on V-legal exports which isavailable only from 2017 onwards;• customs data covers all Indonesian exports, in contrast
to the SILK data which doesn’t capture all trade during
the period of SVLK roll-out;• customs data allows assessment of Indonesia’s share of

total EU imports relative to competing supply countries.

With completion of the SVLK roll-out, the SILK data shouldin time match Indonesia’s customs data for product groups
requiring V-legal certificates and may be used to help
inform market monitoring in future IMM reports.

5.3.2 Indonesia timber products export by productIndonesia’s worldwide exports of timber and timber
products totaled 15.0 million tonnes in 2018, a slight fallcompared to 15.2 million tonnes in 2017 but still higher
than 13.7 million tonnes in 2016.
Indonesia’s exports were dominated formerly by wood (HS44) products, but export quantity of these products has been

2015

5.0

2016

falling in recent years, while exports of wood pulp and paper
have been rising. Wood (HS 44) product exports were 5.3
million tonnes in 2018, down 5% compared to the previous
year. Indonesia’s total exports of pulp and paper were 9.4
million tonnes in 2018, only 1% more than in 2017 but a 22%
gain compared to 2017. Indonesia’s worldwide exports ofwood furniture were flat in quantity terms between 2015 and2018 at around 400,000 tonnes (Figure 5.3.2.1).
In value terms, Indonesia’s worldwide exports of timber
and timber products increased dramatically in the twoyears following FLEGT licensing. Total export value
increased 13% to US$11.4 billion in 2017 and by another 13%
to US$12.9 billion in 2018.
While the quantity of Indonesia’s worldwide exports ofwood (HS 44) products declined in the last two years,
export value increased, rising 3% to US$4 billion in 2017and a further 12% to US$4.4 billion in 2018. The rise inexport value of pulp and paper products was even more
pronounced, increasing 24% to US$6.2 million in 2017and a further 15% to US$7.1 billion in 2018. Export value ofwood furniture also increased between 2016 and 2018, but
at a slower pace, rising 2% to US$1.29
billion in 2017 and a further 4% to
US$1.34 billion in 2018 (Figure 5.3.2.2).
2017
2018

5.3.3 Indonesia timber products
export by region

4.5

Value (USD billion)

4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

Wood (HS 44)

Wood furniture(HS 94)

Wood pulp(HS 47)

Paper (HS 48)

Figure 5.3.2.2: Indonesia export value of timber and timber products
by product group - Years 2014-2018. Source: IMM STIX

4.0
2015

3.5

2016

2017

2018

2.0
1.5
1.0

Figure 5.3.3.1: Indonesia export value of timber and timber products
by destination - Years 2014-2018. Source: IMM STIX

Main Report – November 2019

Pacific

AfricaIndia/South
Asia

MiddleEast

EUSoutheast
Asia

North
America

Northeast
Asia

0.5
0.0

The value of Indonesia’s timber andtimber product exports to the EU
increased 2.1% to US$1.03 billion in 2017and by a further 8.6% to US$1.12 billion
in 2018. In quantity terms, exports
to the EU increased 5% to 732,000
tonnes in 2017 but declined 3% to713,000 tonnes in 2018. In 2018, the EU
accounted for 9% of Indonesia’s totalexport value and 5% of export quantity.
The total share of Indonesia’s export
value in 2018 destined for countries withsome form of regulation to mitigate therisk of illegal wood imports was 47%,
including Japan (12%), the United States(11%), South Korea (6%), Malaysia (3%),
Australia (3%), and Viet Nam (3%),
alongside the EU (9%).

2.5

China/HK/
TaiwanValue (USD billion)

3.0

The value of Indonesia’s timber andtimber product exports increased to
all regions in 2017 and 2018, but wasmost pronounced to China, the primarydestination for Indonesia’s pulp andpaper products (Figure 5.3.3.1). The total
value of exports to China increased
39% to US$3.3 billion in 2017 and by anadditional 9% to US$3.6 billion in 2018.
In 2018, China accounted for 28% ofIndonesia’s total export value and 36%
of export quantity.

5.3.4 Third-party certified timber
in Indonesia’s exports
IMM monitors the proportion of forestand plantation area covered by FSC,PEFC or other independent forest
certification framework in each VPA
Partner country where FLEGT licensing
is operational. The aim is to assess the31extent to which licensing might provide preconditions forindependent certification, and thereby encourage greater
uptake or, alternatively, discourage further investment inforest certification by providing an effective alternative
assurance mechanism.
An assumption behind this monitoring is that the timber
legality assurance system developed as part of the VPA
is something distinct from private sector certification
initiatives. However, in the case of Indonesia, there
is no clear distinction and some overlap between thegovernment legality assurance framework and private
sector certification.
In practice the SVLK system, on which FLEGT licensing isbased and is required by law for all Indonesian wood productexporters, adopts many of the procedures pioneered byprivate sector forest certification. It requires, for example,
on-site audits of forest management operations and chainof custody by third-party verifiers that are accredited byIndonesia’s National Accreditation Committee (KAN) which
operates under the guidance of the ISO/IEC 17011, the sameprocedure as required by PEFC certification.

Forests for which PHPL is mandatory can
initially be certified to the SVLK legality
standard only. The SVLK certificate isvalid for 3 years and concessions must
now demonstrate conformance to the
PHPL standard by the end of that period.
Both the PHPL and the SVLK’s forest
legality standard are subject to annual
audit by KAN accredited independent
verification body.
While certification to SVLK and PHPL
does not preclude voluntary adoption ofprivate sector initiatives by individual
forest operators, the existence of a large
and expanding mandatory frameworkraises questions relating to the costs andefficiency of other forms of certification inIndonesia. At this stage, there is no clear
evidence from analysis of certification
trends in Indonesia to indicate that thepresence of the SVLK-PHPL frameworkhas either encouraged or discouraged
other forms of certification in the country(Figure 5.3.4.1).

32		

2007

2010

2014

2016

2017

2018

20
Million hectares

Originally launched in 1998, the PHPL
was made mandatory for commercial
logging concessions, industrial timber
plantations, state-owned community
forests and private community forest
in 2003. However, in practice, PHPL
certificates only began to be issued ona large scale with the development andnationwide roll-out of SVLK.

Despite efforts to promote FSC certification in Indonesia
for over 20 years, FSC-certified area amounted to only 2.5
million hectares in November 2016 at the start of licensing.
By the end of the following year, it had risen to 3.1 million
hectares in 39 concessions but by December 2018 had
fallen again to 2.6 million hectares in 36 concessions.
LEI, a national forest certification system which began
operations in the late 1990s (and for the five year period
2000 to 2005 was affiliated to FSC) had certified 2.6
million hectares by the end of 2016, declining to 2.5 million
hectares in 2017, and to 2.3 million hectares in 2018.

25

15

10

5

0

PHPL

FSC

PEFC

LEI

Figure 5.3.4.1: Indonesian certified forest area, by scheme, selected years
2007 to 2018. Source: Ministry of Environment and Forestry, FSC, IFCC/PEFC, LEI

2015

700

2016

2017

2018

600
Value (USD million)

SVLK is also regarded by the Indonesianauthorities as a key policy measure toensure implementation of sustainable
practices at national level in allcommercial forest operations and forest
types. In line with this objective, a specificstandard for sustainable managementof Indonesian production forest –Pengelolaan Hutan Produksi Lestari(PHPL) – has been integrated into SVLK.

Now driven by the SVLK framework, PHPL-certified forest
area increased sharply from around 12 million hectares atthe end 2016 to 22.16 million hectares at the end of 2018.
With recent uptake of PHPL certification in Indonesia,
it is not surprising that PHPL-certified wood alreadydominates in export supply. Of 16 respondents to the IMM
2018 survey in Indonesia, 6 claimed already to be using
100% PHPL-certified wood in their production. On average,
64% of all fibre sourced by respondents was PHPL-certified.
All the remainder was, of course, SVLK-certified.

500
400
300
200
100
0

HS 44 Wood

HS 94 Woodfurniture

HS 48 Paper

HS 47 Wood pulp

Figure 5.4.1.1: EU import value of timber and timber products
from Indonesia, by product type – Years 2014-2018. Source: IMM STIX

Main Report – November 2019

Meanwhile, the Indonesian Forest Certification Cooperation(IFCC) launched in 2011 and endorsed by PEFC in 2014, had
certified 1.8 million hectares in 2016, rising to 3.7 million
hectares in 2017 and 3.9 million hectares in December 2018.
Unlike LEI and FSC, for which certification is concentrated
in natural forest, all PEFC certification to date in Indonesia
is of plantations to supply the pulp and paper sector.

5.4 EU timber product imports from Indonesia
5.4.1 EU imports from Indonesia by product group
Broadly consistent with the Indonesian export data, theEU import value of Indonesian timber and timber products(derived from Eurostat COMEXT) increased 6% to US$1.18
billion in 2017 and by a further 6% to US$1.25 billion in
2018.39 In quantity terms, EU imports from Indonesia
increased 4% to 710,000 tonnes in 2017 but decreased 5% to678,000 tonnes in 2018.
The value of EU imports of wood (HS 44) products increased
3% to US$549 million in 2017 and by a further 10% to
US$603 million in 2018. Import value of wood furniture also

2015

350

2016

increased during this period, but at a slower pace, rising 5%
to US$349 million in 2017 and 3% to US$359 million in 2018.
Paper import value increased 15% to US$272 million in 2017and 6% to US$288 million in 2018. EU imports of pulp fromIndonesia are negligible and have declined in recent years,
down 28% in 2017 to US$9 million and falling a further 90%
to only US$1 million in 2018 (Figure 5.4.1.1).
The trends differ in quantity terms. EU import volume ofIndonesian wood (HS 44) products increased consistently eachyear between 2014 and 2018, rising from 277,000 tonnes to325,000 tonnes during this period. However, import volume
of furniture declined during the same period, falling 2% to102,000 tonnes in 2017 and 3% to 99,000 tonnes in 2018. EU
imports of paper products have been more volatile, rising 15%
to 278,000 tonnes in 2017 before falling back 9% to 252,000
tonnes in 2018. EU imports of Indonesian wood pulp were no
more than 1,000 tonnes in 2018, having fallen from 26,000
tonnes in 2016 and 16,000 tonnes in 2017 (Figure 5.4.1.2).

5.4.2 Imports from Indonesia by EU Member Countries
Imports trends for Indonesian timber and timber products
varied widely between EU member
countries (Figure 5.4.2.1).
2017

2018

Quantity (1000 tonnes)

300
250
200
150
100
50
0

HS 44 Wood

HS 94 Woodfurniture

HS 48 Paper

HS 47 Wood pulp

Figure 5.4.1.2: EU import quantity of timber and timber products
from Indonesia, by product group – Years 2014-2018. Source: IMM STIX

200

2015

2016

2017

2018

180
Quantity (1000 tonnes)

160
140
120
100

In 2018, the UK accounted for 25% of
total EU import value and 27% of EU
import tonnage of timber products fromIndonesia. Imports in the UK increased
rapidly from 106,000 tonnes in 2014 toa peak of 187,000 tonnes in 2017 before
falling back to 182,000 tonnes in 2018. In
value terms, the rise in UK imports fromIndonesia showed no signs of slowing in
2018, increasing 8% to US$311 million. UK
import value of Indonesian products in2018 was 34% more than in 2014. In 2018,the value of UK imports of Indonesianjoinery products, mainly doors, increased
14% to US$98.3 million while imports ofplywood were up 19% to US$52.6 million.
These gains in 2018 offset a 4% decline
in UK import value of Indonesian wood
furniture to US$58.6 million and a 3%
decline in UK imports of mouldings/
decking to US$12.1 million. The UK is
the largest single EU importer of paper
products from Indonesia. In this sector
during 2018, a 52% increase in UK importvalue of sanitary papers from Indonesia,
to US$32.2 million, offset a 11% decline
in imports of uncoated writing/printing
papers, to $37.6 million.

Netherlands

80

In 2018, the Netherlands accounted for
21% of total EU import value and 15% of

60
40

39

Figure 5.4.2.1: EU import quantity of timber and timber products
from Indonesia, by destination – Years 2014-2018. Source: IMM STIX

Main Report – November 2019

Other

Spain

FranceGreece

Italy

Belgium

Germany

Netherlds.

UK

20
0

United Kingdom

 he higher import value reported by EurostatTcompared to the export value reported inIndonesian export statistics is expected as theformer is a CIF value, including freight costs,
while the latter is an FOB value, excluding thesecosts. Differences in annual exports reported byIndonesia and annual imports reported by the
EU are also partly due to the time lag between
departure of shipments from Indonesia andarrival in the EU.
33

EU import tonnage of timber products from Indonesia. There
has been a strong and consistent increase in EU imports ofIndonesian timber products in the Netherlands, from 81,000
tonnes in 2014 to 104,000 tonnes in 2018, with particularly
strong gains of 9% in 2017 and 7% in 2018. In value terms,
the increase in the Netherlands was even more dramatic,with a total gain of 40% from US$183 million in 2014 to
US$256 million in 2018, including increases of 17% in 2017
and 12% in 2018. Netherlands import value of wood furniturefrom Indonesia increased 8% to US$81.7 million in 2018,
building on a 32% gain the previous year. The import valueof Indonesian joinery products increased 7% to US$63.2
million in 2018, around half comprising doors and most of
the remainder consisting of laminated window scantlings,
kitchen tops, and flooring. There was a 61% increase in thevalue of Netherlands imports of Indonesian S4S sawn woodin 2018, to US$25.8 million. Netherlands imports of paper
from Indonesia were stable at around US$11.6 million in 2017and 2018.

Germany
In 2018, Germany accounted for 16% of total EU importvalue and 15% of EU import tonnage of timber products
from Indonesia. Imports of Indonesian timber productsin Germany were flat in quantity terms at around 100,000
tonnes per year between 2014 and 2018.40 Import value
declined from US$208 million in 2014 to US$181 million
in 2016, but then rebounded 6% to US$192 million in 2017and by a further 5% to US$202 million in 2018. Germany’s
import value of Indonesian wood furniture increased 5% to
US$50.1 million in 2018, while import value of mouldings/
decking increased 6% to US$46.7 million, plywood importvalue increased 6% to US$25.8 million, and charcoal importvalue increased 18% to US$15.4 million. These gains in2018 offset a 26% fall in import value of joinery products to
US$10.8 million. Germany’s import value of paper products
from Indonesia increased 17% to US$18.2 million in 2018.

Belgium
In 2018, Belgium accounted for 8% of total EU import value
and 9% of EU import tonnage of timber products fromIndonesia. Imports of Indonesian timber products into
Belgium have been very volatile in recent years, fallingfrom 77,000 tonnes in 2014 to 69,000 tonnes in 2016, before
rebounding sharply to 90,000 tonnes in 2017 and thendeclining to only 61,000 tonnes in 2018. In value terms,
imports declined from US$129 million in 2014 to US$104
million in 2016, rebounded to US$124 million in 2017 andthen fell to US$103 million in 2018. The sharp spike in
Belgian imports in 2017 is more likely related to supply sideand stockholding issues than to changes in consumption
in Belgium given the country’s key role as a stockholder
and distributor of timber products to other parts of the EU.
The spike was particularly evident in paper products trade(mainly uncoated for printing/writing), for which imports
increased 69% to US$38.1 million in 2017 before fallingback 44% to US$21.1 million in 2018. Belgium’s imports ofIndonesian plywood were also volatile, rising 37% to US$22.9
million in 2017 before falling 14% to US$19.6 million in 2018.
Belgium’s imports of Indonesian wood furniture continued
to decline at around 2% per year during this period, from
US$39.3 million in 2016 to US$37.2 million in 2018.
40

FranceIn 2018, France accounted for 6% of total EU import value and
7% of EU import tonnage of timber products from Indonesia.
France’s imports of timber products from Indonesia declined
22% to 34,000 tonnes in 2017 and by a further 7% to 32,000
tonnes in 2018. In value terms, there was a 13% decrease to
US$76 million in 2017 followed by a 3% rise to US$78 million
in 2018. Despite a decline in trade in recent years, nearly
two thirds of France’s import value of timber products
from Indonesia comprised wood furniture in 2018. France’s
imports of this commodity from Indonesia declined 15%
to US$47.0 million in 2017 and by a further 3% to US$45.6
million in 2018. France’s imports of paper products fromIndonesia also declined during this period, from US$12.2
million in 2016 to US$8.0 million in 2018. However, theselosses were partly offset by a gain in France’s imports ofjoinery products from Indonesia, which increased 50% to
US$11.68 million in 2018. The upward trend affected a range
of joinery products including flooring, doors, and various
laminated products for window frames and kitchens.

Italy
In 2018, Italy accounted for 6% of total EU import value and6% of EU import tonnage of timber products from Indonesia.
Italy’s imports of timber products from Indonesia increased
sharply from 30,000 tonnes in 2015 to 57,000 tonnes in
2016, but then fell 3% to 55,000 tonnes in 2017 and by 19%
to 45,000 tonnes in 2018. The trend in value terms was lessvolatile; after a 36% rise to US$70 million in 2016, there wasa slow increase to US$71 million in 2017 and to US$72 million
in 2018. Most of the recent increase in import value has
been due to paper products, which increased 30% to US$27.5
million in 2017 and by a further 14% to US$31.3 million in
2018. Italy is the only EU country that has imported anythingother than negligible quantities of Indonesian wood pulp inrecent years. Italy’s imports of this commodity increased
from US$1.4 million (2,400 tonnes) in 2015 to US$8.8 million(19,000 tonnes) in 2016, before declining to no more than
US$380,000 (500 tonnes) in 2018.
Italy’s imports of wood furniture from Indonesia increased
13% to US$18.9 million in 2017 before declining 2% to
US$18.5 million in 2018. Italy’s imports of plywood fromIndonesia declined 35% to US$3.8 million in 2017 but thenrebounded to US$6.5 million in 2018.

Spain
In 2018, Spain accounted for 4% of total EU import value and5% of EU import tonnage of timber products from Indonesia.
Spain’s imports of timber products from Indonesia increased
by around 2% each year in 2017 and 2018 to close to 25,000
tonnes. The increase in import value was greater during
this period, rising more than 13% to US$47 million. Spain’s
timber imports from Indonesia are dominated by furnitureand paper products. The value of Spain’s imports of wood
furniture from Indonesia increased 26% to US$17.9 million in2017 and remained at this level in 2018. In contrast, Spain’s
imports of paper products were flat in 2016 and 2017 at
US$17.6 million, but then increased 14% to US$20.0 million
in 2018. The total value of Spain’s imports of wood (HS 44)
products from Indonesia was less than US$9.3 million in 2018,
unchanged from the previous year, and consisted mainly of
marquetry, charcoal and flooring.

 hese figures may underestimate the actual quantity of Indonesian timber porducts imported into Germany. Based on more detailed analysis ofT
German trade data at national level, there is strong evidence to suggest that an increasing proportion of tropical hardwood product entering thecountry comes indirectly via other EU countries, particularly Belgium and the Netherlands.

34		

Main Report – November 2019

Greece
In 2018, Greece accounted for 4% of total EU import value and
4% of EU import tonnage of timber products from Indonesia.
Greece’s imports of timber products from Indonesia declined
12% to 30,000 tonnes in 2017 but then rebounded 36% to41,000 tonnes in 2018. In value terms, imports were flat
between 2016 and 2017, at US$30 million but increased 60%
to US$48 million in 2018. The upward trend was nearly all due
to a six-fold increase in the value of imports of Indonesiansanitary paper, from US$2.2 million in 2017 to US$16.3 million
in 2018. Imports of Indonesian wood furniture also increasedby 82% from a small base, to US$5.9 million. Greece’s importsof other Indonesian timber products were stable in 2018,
including uncoated writing paper (US$13 million), charcoal(US$6 million) and kaolin coated paper (US$2.7 million).

Other EU countries
Imports of timber products from Indonesia by the otherMember States outside this core group of eight are relatively
limited, accounting for no more than 10% of total EU importvalue and 13% of EU import tonnage. It is notable that of

35%

2015

5.4.3 I ndonesia share of EU timber product imports
While the value of EU imports of Indonesian timber
products increased overall in the two years immediately
after licensing began, Indonesia’s share of total EU timber
imports (Figure 5.4.3.1), and of EU tropical timber imports(Figure 5.4.3.2), did not increase for most product groups
during this period. For most products, the increase in
the value of Indonesian timber products was matched byequivalent rises in imports from othertimber supplying countries.
2017

2018

25%
20%
15%
10%

Wood pulp

Woodfurniture

Mouldings

Plywood

Paper

Marquetry

GlulamFlooring

0%

Doors andframes5%
Charcoal% share of import value

30%

2016

the total US$130 million imported from Indonesia by theseother 20 EU countries in 2018, over half (US$67 million)
comprised paper products. The rest was split evenly between
wood furniture (US$33 million) and wood (HS 44) products(US$30 million). Significant trends in these countries’ tradewith Indonesia in recent years include: a 95% increase in
the value of Slovenian imports from Indonesia in 2018, to
US$19.8 million, all due to a big increase in imports of sanitary
papers; a 25% increase in Romanian imports from Indonesia,
to US$18.1 million, mainly driven by rising trade in uncoatedprinting/writing papers; and a 38% increase in Ireland’s
imports from Indonesia to US$9.7 million, driven mainly byrising imports of doors and uncoated printing/writing papers.

Figure 5.4.3.1: Indonesia’s share of total EU imports,
by timber product type – Years 2014-2018. Source: IMM STIX

80%

2015

2016

2017

2018

60%
50%
40%
30%
20%

Figure 5.4.3.2: Indonesia’s share of EU tropical imports,
by timber product type – Years 2014-2018. Source: IMM STIX

Main Report – November 2019

Wood pulp

Woodfurniture

Mouldings

Plywood

Paper

Marquetry

GlulamFlooring

0%

Doors andframes10%
Charcoal% share of import value

70%

Despite relatively slow economic andconsumption growth in the EU, 2017 to2018 was a period of rising import growthin the EU, mainly driven by imports fromneighboring countries in the European
region, notably Ukraine, Russia, Belarus,
Serbia, Bosnia and Turkey.
This was partly currency related.
Slowing economic growth fed throughinto a fall in the value of the euro andthe British pound in 2018, both ofwhich weakened against the US dollar
by around 8% during the year (in fact,
in the months immediately following
licensing, the British pound fell to close
to the lowest ever level recorded against
the US dollar since the currency was firstissued in 1775).
However, EU currencies remained
strong relative to currencies in several
key Eastern European supply countries,
including Ukraine, Russia, and Turkey.
Both the euro and British poundstrengthened by around 7% against theRussian rouble in 2018 and by over 25%
against the Turkish lira. These exchange
rate fluctuations generally favoredEU imports from Eastern Europe andacted as a drag on imports from North
America and Asia.
Overall the data indicates that FLEGT
licensing has had little impact on themarket share of Indonesian productsin the EU and has not overridden theongoing effects or direction of larger
economic trends. There is only one
timber product, charcoal (HS 4402),
for which Indonesia has increased
share of the EU market since licensing
was introduced, and this is one of the
few products for which licences are not35

actually required. Indonesia’s share in this sector was
also expanding well before licensing began.
Equally, licensing does not seem to have had any
detrimental effect on import share. Where there has
been loss of share for Indonesian products in the years
2017 and 2018 - for example for wood furniture, flooring,
glulam, and mouldings - this is a continuation of alonger-term trend and is explicable by referring to othercompetitiveness factors, such as exchange rates, fashion
trends, logistics, inward investment in neighbouring
European countries, and technical development ofcompetitors (such as thermally and chemically modified
temperate timbers and wood plastic composites).

5.5.3 Electronic licensing
The EU and Indonesia decided to pilot an e-licensing tool;a final decision on using the e-licensing system will be
42
made in early 2020. Bilateral work, with additional
support of some individual EU Member States, ondeveloping this system has been on-going for some time.
The fact that the process wasn’t fully electronic had been
the major general point of criticism raised by EU traders of
the administrative procedures of importing FLEGT-licensed
timber in 2017. IMM 2018 trade survey assessments of theadministrative process are discussed in more detail below(sections 5.6 and 5.7).

5.5.4 Communication and marketing

5.5 O vercoming market constraints to
FLEGT-licensed timber
5.5.1 Background
The first IMM EU trade survey in 2017 identified several
administrative issues that may have had an impact on
the market for FLEGT-licensed timber in the early stages
after implementation. First and foremost, there were
delays in clearance of shipments for circulation on theEuropean markets due to FLEGT Licence mismatches.
Some companies also had difficulties adapting to the newadministrative procedures involved in importing FLEGTlicensed timber and called for a fully electronic process to
reduce administrative effort. Besides these administrative
issues, lack of awareness of the Indonesian FLEGT VPA andwhat it means on the ground was frequently mentioned asundermining market development.

5.5.2 H S Code harmonisation and other
License mismatches
The number of both HS code and other FLEGT Licencemismatches related for example to shipments’ weightor volume has been reduced in 2018, according to bothIndonesian sources (such as an early 2019 Joint Expert
41
Meeting statement) and to respondents to the IMM trade
survey and IMM Trade Consultation delegates. The EU andIndonesia have worked bilaterally on further harmonising
HS codes for certain product groups since the issue firstcame up as a part of validation of FLEGT Licences.
Interviews conducted by the European IMM
correspondents with ten European timber-sector
associations and Monitoring Organisations representing
more than 2700 companies confirm this assessment. Only
one of the ten organisations flagged up a recent significant
issue with FLEGT Licences from Indonesia. The case did
not refer to a license mismatch but to a FLEGT-licensed
shipment that had overstayed the original expiry date of
the licence in a bonded warehouse. Obtaining an extension
for the FLEGT Licence was described as difficult and timeconsuming. This organisation also criticised and called fora change of the fact that FLEGT licensing currently doesn’ttake account of the timber trade’s practice of keeping
imported stock in bonded warehousing and breaking up
shipments into individual lots as orders are placed. Thatway importers spread the cost of customs duty, whicheases cashflow.

In terms of promoting Indonesian timber with a
FLEGT Licence to the EU market, the UK Department
for International Development (DFID)’s latest phase of
the Multi-Stakeholder Forestry Programme (MFP4),
launched in 2018, contains a component that will provide
background assistance to the MoEF and Indonesian
stakeholders in “building confidence and demand” forIndonesian FLEGT timber.
One aspect of MFP4 will be a project in collaboration with43
the Global Timber Forum to identify how best to promote
specific FLEGT-licensed wood products within the EU. MFP4
will also examine prospects for a central online resource for
information on Indonesian FLEGT achievements and news.
The website www.legalwoodmarket.com was established
as a market for legal and sustainable Indonesian timber
and wood products under the previous project phase, MFP3,
and a new Indonesian Wood Association platform is now
currently being developed.
The Indonesian MoEF and the MFP3 programme also
supported the UK Timber Trade Federation in developing
and hosting the Timber Transformer exhibition,
dedicated to the Indonesian FLEGT VPA and with a focus
on environmental, social and economic benefits on the
ground. The exhibition ran for four months in London andattracted hundreds of visitors, including journalists, timberbusinesses, NGO representatives, end users and membersof the public. With the exception of the UK Timber Trade
Federation, European associations interviewed by IMM in2018 said they did not formally promote FLEGT-licensed
timber. However, some had delivered training courses
or were “encouraging” members to use FLEGT-licensed
timber. A detailed analysis of timber association attitudes
to FLEGT and their level of engagement in promotion can befound in Chapter 8 of this report.
44

The EFI FLEGT Facility launched a new website
dedicated to timber buyers, which provides timber traders,specifiers, architects and retailers with information on
business benefits of trading in FLEGT-licensed timber. It
also demonstrates social, environmental and economic
benefits that such trade brings to producer countries. The
new resource explains what FLEGT licences are, how they
benefit timber buyers in the EU, and how the advantagesof FLEGT licensing extend beyond legality to encompass
social, economic and environmental gains in producer
countries. It includes links to multimedia stories that41

I ndonesia Joint Expert Meeting Minutes of 29 March, 2019.
Indonesia Joint Expert Meeting Minutes, 29 March, 2019.
43
w ww.gtf-info.com
44http://www.timberbuyers.flegtlicence.org
42

36		

Main Report – November 2019highlight the benefits of FLEGT licensing,and to downloadable resources that canhelp timber buyers to communicate
about FLEGT-licensed products with
their customers.

Type of companies interviewed

6%

When trying to evaluate the levels ofawareness and acceptance of FLEGTlicensed timber, it is useful to bear inmind that FLEGT licensing is a newconcept, that has been available in themarketplace for less than three years
and from only one country. Consideringthat private sector certification, forexample, as a concept is now 25+ years
old and yet, as demonstrated by the IMM
private sector procurement study, it is
not universally advocated or specified,
FLEGT licensing can be expected to still
have some way to go to achieve similarlevels of acceptance.

Manufacturer& Exporter

31%

Exporter

63%

Exporter &TraderFigure 5.6.1: Companies interviewed, by company type.

Number of companies

Source: IMM Indonesia follow-up study 2018

16

Paper

14

Pulp
Pellets

12

Windows/
Joinery
Doors

10
8

Flooring

6

Moulding

4

Handycraft

20

Decking
Frequently

Occasionally

Plywood

RarelyFigure 5.6.2: Products manufactured/traded by survey respondents.
Source: IMM Indonesia follow-up study 2018

Indonesian Trade Perceptions of FLEGT-licensing
Company has been able to raise export
prices due to FLEGT-licensing

250%

FLEGT has made exporting easier
Exports to the EU have increased
due to FLEGT

200%

Getting SVLK certified has been
worth the effort
FLEGT is helping to improve governance

150%

100%

50%

0%

Chapter 8 of this report takes a closer
look at EU Wood Promotion campaigns
and influencers and their support of
FLEGT-licensed timber and the FLEGTVPA programme.

Agree

Agree

2017

2018

Partially agree Partially agree
2017

2018

Figure 5.6.3 Indonesian trade perceptions 2017/2018.
Source: IMM Indonesia 2017/2018 reports

Main Report – November 2019

DisagreeDisagree

2017

2018

5.6 Indonesian trade views of the
impact of FLEGT licensing
To follow up a pilot survey the previous
year, in 2018, the IMM Indonesia
Correspondent undertook interviews with
16 timber processing companies, exporters
and timber traders to gain insights fromthe Indonesian side on the trade impact of
FLEGT licensing following its introductionin November 2016. Interviewees included
manufacturers with their own directexport activities, specialist timber
exporters and companies that were both
exporters and trading on the domestic
market (Figure 5.6.1).
Respondents to the survey in 2018
produced and exported to the EU a wide
variety of products, with a focus on
furniture and furniture components aswell as plywood. Other important export
commodities were joinery products and,at a smaller scale, pulp and paper (Figure
5.6.2). Respondents exported timber
and timber products to a total of 18 EU
countries, the important EU destinations
being the Netherlands, Belgium, the UK,
Germany, France, and Denmark.
Comparing 2017 and 2018 trade
perceptions of the VPA impacts has its
limitations, as the survey samples differ
in size and composition. However, Figure
5.6.3 shows that the overall level of
support of the FLEGT VPA remained highin the Indonesian trade in 2018, withmore than 90% of respondents still fully(56%) or partially (38%) confirmingthat achieving SVLK certification was
beneficial to their operations. An even37higher proportion in 2018 than in 2017
found that implementation of the VPA
had improved governance in Indonesia(75% fully agreed, 25% partially and nodisagreement). But companies were still
divided on whether FLEGT licensing hashelped boost export volumes or prices
and whether FLEGT has made exportingto the EU easier.

5.7 EU trade views of the impactof FLEGT licensing
The IMM 2017 trade survey produced abaseline for EU trade perceptions of theIndonesian FLEGT licensing system andday-to-day management of importing
licensed timber. Repetition of the samequestions in the IMM 2018 survey allows
for some initial comparison over time.45
The results shown in Figure 5.7.1
is encouraging, given that a muchhigher proportion of respondents
found the administrative process ofimporting FLEGT-licensed timber easily
understandable and manageable in 2018
than in 2017. This confirms expectations
from 2017 that the process would not
be considered a major challenge once
importers got used to it.
Results shown in Figure 5.7.2 support
this assessment. In 2018 practically all
respondents said that FLEGT licensing
was making importing wood products
from Indonesia easier compared to
EUTR due diligence. In 2017, a significant
number of respondents had still
partially (12%) or fully (20%) disagreed
with this statement.
Responses to the question whether
companies would give preference to
FLEGT-licensed timber from Indonesia
over unlicensed timber from competing
sources remain more mixed (Figure 5.7.3).
Respondents to the survey remarked that
FLEGT licensing was a factor that could
impact purchasing decision, but only
where other product criteria were equal.
As a part of its Trade Consultations,
IMM holds workshops on purchasing
dynamics, decision making processes
and where FLEGT licensing sits withinthese processes. At all 2018 Trade
Consultations, participants remarked
that they would consider business andcommercial considerations first andforemost. Top of the list, alongsideprice, was ensuring that the suppliercan deliver the product in the timeframe required and in consistentquality and specification.

Agree

Partially agree
The administrative
process ofimporting
FLEGT-licensed
wood is easily
understandable andmanageable

NeutralPartially disagree

Disagree20170% cope and methodology of the IMM surveys inS
the EU is described in Annex 1

38		

10%

15%

20%

25%

30%

35%

40%

Figure 5.7.1: EU trade perceptions of importing FLEGT-licensed timber.
Source: IMM 2017&2018 EU trade surveys

Agree

Partially agree

FLEGT Licences aremaking importingwood fromIndonesia easier

NeutralPartially disagree

2017
2018

Disagree
0%

10%

20%

30%

40%

50%

60%

Figure 5.7.2: EU trade perceptions of importing FLEGT-licensed timber.
Source: IMM 2017&2018 EU trade surveys

Agree

Partially agree

Where possible I give
preference to FLEGTlicensed timberfrom Indonesia overunlicensed timberfrom competing
sources as thisreduces my own
risk to zero

NeutralPartially disagree

2017

Disagree
0%

45

5%

2018

2018
10%

20%

30%

40%

50%

Figure 5.7.3: EU trade perceptions of importing FLEGT-licensed timber.
Source: IMM 2017&2018 EU trade surveys

Main Report – November 2019

With respect to FLEGT licensing in Indonesia, to what extent are you aware that:
For the Indonesian authority to issue a FLEGT Licence,
all suppliers in the exporter's supply chain must have been coveredby a valid legality or sustainable forest management certificate,or a Suppliers Declaration of Conformity

35%

36%

The system requires universal nationwide conformance to a legality
standard developed through participatory processes involving
stakeholders from government, the private sector and civil society

32%

44%

FLEGT licensing authorities in Indonesia are independent organisations
registered with the Ministry of Environment and Forestry and accredited
by Indonesia's National Accreditation Committee (KAN)

26%

Indonesia follows the same procedure to issue legality certificates(known as V-Legal Documents) for exports to non-EU markets
for the products covered in the VPA

Fully aware

Partially aware

Not aware

31%

36%

32%

43%
0%

20%

24%

43%

32%

The FLEGT Licence indicates that products comply with a broad rangeof laws and regulations including those relating to forest management,
environment, labour rights, community benefits, import and export,
and payments of fees and taxes

28%

34%
40%

60%

24%
80%

100%

Figure 5.7.4: Awareness of the Indonesian FLEGT licensing system. Source: IMM 2018 EU trade survey (figures rounded)

Is FLEGT licensing making imports from Indonesia cheaper?

30%
Yes

50%

No
No Change

20%

Figure 5.7.5: Cost impact of FLEGT licensing.
Source: IMM 2018 EU trade survey

Only once buyers are satisfied on all these points does
the focus move more to chain of custody, sustainability
certification, legality verification and capacity to provide
EUTR due diligence information. As a result, FLEGT
licensing can be considered a factor that can positively
impact purchasing decisions, but only if several otherrequirements are being met as well.
The 2018 EU trade survey looked in more detail into thelevel of information and awareness of the Indonesian
FLEGT licensing system than the 2017 survey. Figure
5.7.4 shows that there is a definite need for additional
information on certain aspects, including the wider
environmental, social and economic benefits of the VPA
and the way it is implemented and monitored.
Roughly half of the respondents (46%) stated that theywould be interested in receiving additional or different
information. Where different information was requested,companies typically asked for simpler formats, ideally
videos or animations.
Some of the companies that were not interested offered an
explanation for their disinterest, with the main one being
Main Report – November 2019that they were not importing from Indonesia and there
was no licensed timber from other countries.
Only a small number of IMM 2018 trade survey respondents(20 of 96) commented on the question whether FLEGT
licensing was making importing from Indonesia cheaper ormore expensive compared to exercising EUTR due diligence(Figure 5.7.5). One or two of the companies replying “no change”
commented that fees for processing licences were levelling out
the small cost advantages achieved through licensing.
Other companies said that their supply chain managementin Indonesia had been very well established before theEUTR entered into force and hence EUTR compliance cameat very small extra costs; as a result, they didn’t register
any significant cost benefits from licensing. One or two
companies commented that their administration costs had
increased due to FLEGT licensing.
The above-mentioned fees, which currently range between€11 and €105.90/licence, unchanged from the last IMM
report, continue to be charged by a number of EU Member
States. The lowest fees are charged in the UK (£9.60 roughly €11 - per license), followed by Italy (€50), Belgium(€50), Finland (€70), Greece (€100) and Austria (€105.90).
All other Member States process FLEGT Licences for free.
IMM survey respondents typically didn’t perceive the fees
as a serious market barrier, due to the relatively modest
amounts. It must be noted, however, that the countries
charging the highest fees – Finland, Greece and Austria –are not included in the IMM survey.
Participants in the IMM 2017 EU trade survey were asked
whether they would be prepared to pay a price premium
for FLEGT-licensed timber and whether their customers
would be willing to pay such a premium. Both questions
were answered by 50 of the 126 survey respondents.
The question whether they would be willing to pay a
price premium themselves was answered affirmatively
by 19 companies, i.e. roughly 40% of respondents to thequestion. Suggested premiums typically ranged around
5% or below. However, the vast majority of respondents
said their clients further down the supply chain would not
be prepared to pay a premium for FLEGT-licensed timber.
39

The 2018 survey did not repeat this question as very littlechange was expected to have occurred over such a limited
period. However, the question was discussed during all
four IMM Trade Consultations in 2018 and early 2019. In
direct dialogue, participants unanimously said that no
price premiums were currently being paid for FLEGTlicensed timber from Indonesia.

business” and not something they would be prepared to
pay a premium for. Some delegates suggested that pricepremiums might be an option in the future, once FLEGT
licensing and its wider benefits are better understood.

The main reason given was that legality was considered
a “minimum standard” or “precondition for doing

Monitoring price trends is always difficult, as fluctuationsin prices can potentially be caused by a large variety

5.8 Price trends for indicator products
from Indonesia

Case Study 1 -Trend in Indonesian plywood prices46

120
110
100
90
80

Index

70

Nov-18

Oc-18

Sep-18

Jul-18Jun-18Dec 17

Nov-17

Oct 17

Figure 5.8.1: Price trend for Meranti plywood (film-faced, 18/21mm). Source: IMM

130
120
110
100
90

Oct-18

Sep-18

Jul-18Jun-18Apr-18Mar-18

Feb-18Dec 17

Nov-1760

Oct 17

Index US$
Sep-1770
Jul-17Index

Feb-1780

Figure 5.8.2: Price index for Meranti plywood (18 mm, BB/CC) Source: IMM

The start of FLEGT licensing was mentioned by aseveral media sources as having had – to some extent– a positive impact on demand for Indonesian plywood
in 2017 and 2018. “Lower reputational risks” and “costadvantages compared to EUTR due diligence” were46

Sep-17

Jul-17

Feb-1760

Index US$Nov-16

One of the most frequently
mentioned reasons was trends
in competing Russian birch
plywood assortments. Rising
prices and supply shortages
in Russia caused first demand
and then prices for Indonesianplywood to rise too. The indicesbelow demonstrate that whileremaining stable or softening
slightly on US$-basis and risingslightly in Euros immediately
after the start of Licensing,purchasing of Indonesian plywood
for companies in the Eurozone
became cheaper in early/mid-2017,giving Indonesian material an
exchange-rate related competitive
advantage. Another significant
factor that drove prices upwards
in 2017 and 2018 was overall
growth in European demand forplywood, primarily due to morebuoyant construction activity.
Increased buying competition
from the US was also mentioned
as a factor that limited supply andpushed prices upwards. US buyers’
increased focus on Indonesia was
attributed to the US-China trade
conflict, coupled with strong
demand from the US construction
sector, which led US buyers to
explore new supply sources.

130

Nov-16The increase in Indonesian plywood
prices for exports to Europe
observed from late 2017 to mid-2018
was attributed by timber-sector
media and by respondents to the
IMM survey to a range of supply
and demand factors, but generally
not specifically to the start of
FLEGT licensing.

mentioned as FLEGT-licensed timber’s advantages
over unlicensed material by such reports. But noneof the reports reviewed by IMM mentioned a direct
impact on prices or price premiums being paid for
FLEGT-licensed plywood.

The trend lines are indexed and based on analysis of ITTO data and timber-sector media reports. November 2016 = 100.

40		Main Report – November 2019

130
120
110
100
90
80

Index US$70

Dec-18Index
Oct-1860

Figure 5.8.3: Price trend for Meranti window scantlings. Source: IMM

150
140
130
120
110
100
90

70

Index

60

Dec-18Index US$

Oct-1880

Jun-18The price indices in Case Studies
1 and 2 show that prices forthese indicator products fromIndonesia have increased since
the start of FLEGT licensing.
However, the price rises were notdirectly related to the beginningof FLEGT licensing. For mostproducts, the strongest increases
occurred in the first half of 2018
or in late 2017 at the earliest.
Prices slipped again slightly
towards the end of 2018.

140

Apr-18A small number of suchproducts, including raw andfilm-faced plywood in standard
dimensions, Bangkirai decking(standard+better) and Meranti
window scantlings were identified
by IMM for price monitoring.

FLEGT licensing wasn’t mentioned
as a factor impacting the above pricetrends by media sources reviewed
by IMM.

Apr-18Moreover, given the growing
levels of specification anddiversification in several VPA
partner countries’ timberindustries – including Indonesia– and increasingly specificrequirements and needs of clientsin consumer countries, only
a limited number of products
are still being traded as bulk
commodities in comparable
qualities and specifications fromcountries like Indonesia.

Prices for window scantlings inIndonesia increased especially inthe first half of 2018. This was also
mainly supply-side related, withproducers of window scantlings
competing for raw material withplywood producers and related raw
material price hikes and restrictionsof production.

Mar-18licensing).

and supply shortages of Bangkiraidecking in Europe.

Jan-18(including FLEGT• Other

Feb-18(freight capacities and prices)

Nov-17• C urrency exchange rate trends• T ransport-related issues

Sep-17

weather related, suppliers’changing trading patterns andpriorities etc.)

Sep-17• S upply trends (capacity andJul-17and prices for substituteproducts

Jul-17• D emand trends, availability

Timber sector media attributed the
sharp price increases for Bangkiraidecking in late 2017 and early 2018
primarily to strong procurementcompetition in raw material
sourcing between Indonesian
manufacturers and buyers from
India, in particular, and related rises
in raw material prices, which werepassed on to finished product prices.
Moreover, competition and weatherrelated raw material shortages
also resulted in limited availabilityof finished goods. Especially inthe spring of 2018, timber trade
journals reported delayed deliveries

Feb-17

under observation and incompeting markets (includingchanges in fashion trends,
emergence of new products, etc.)

Case Study 2: Trend in Indonesianjoinery product prices47

Nov-16• D emand trends in markets

Nov-16of factors including but notnecessarily limited to:

Figure 5.8.4: Price trend for Bangkirai decking. Source: IMM

47

The trend lines are indexed and based on analysis of ITTO data and timber-sector media reports. November 2016 = 100.

Main Report – November 2019

41

6

EU timber market trends and VPA
partner market share
6.1 Overview
This Chapter extends the analysis contained in Chapter 5
on FLEGT-licensed timber from Indonesia, to consider
economic and timber sector trends in the EU and theirimpact on the competitiveness and imports of timber
products from all VPA partner countries. Using various
economic indices, the Chapter considers growth in theoverall EU timber products market in 2018, the effectof exchange rate trends on the competitiveness of VPA
partners relative to other supply countries, and VPA
partner share of total EU wood product imports during
the year. It then looks in more detail at the changing
share of VPA partner countries in supply of products
to each individual timber productsectors, where possible identifying the
key factors driving recent trends.
After positive developments in
2017, European market prospects
deteriorated again in 2018. The paceof GDP and construction sector
growth slowed, while activity in thewood product manufacturing sectors
levelled off after trending upwards
the previous year. During 2018, there
was some evidence of wood regaining
a little of the share lost to substitutematerials in recent years, although
the competitive pressure from thesealternatives was still intense.
The major beneficiaries of a significant
rise in EU imports in 2018 were other
European suppliers, notably Russia,
Ukraine and Belarus. The share oftropical suppliers in total EU imports
continued to decline in 2018, although
at a slower pace than in the past. In 2018
China’s share in EU imports fell to thelowest level since 2007.
Overall EU timber trade with VPA
partner countries declined in 2018.
However, imports from Indonesia, allcovered by FLEGT Licences since 15
November 2016, increased slightly, by
0.1%, to €815 million in 2018. There
was a notable rise in imports of doors
and plywood from Indonesia during
the year. There was a rebound inimports of sawn wood and logs from
VPA implementing countries in Africa
in 2018. Imports of wood furniture,
flooring and glulam from VPA
partners in Asia continued to slide.
There was an increase in total
EU imports of tropical hardwood
plywood and decking in 2018, but forthese products most of the gains weremade by non-VPA products (Chinese
plywood and Brazilian decking).
42		India also continued to take a rising share of EU wood
furniture imports from the tropics.

6.2 Overall market trends
6.2.1 GDP growth
According to Eurostat, the EU economy grew 1.9% in 2018,
still robust but a slowdown in pace compared to 2.4% in 2017
when growth was at the highest level in 10 years. As in theprevious year, economic growth was widespread throughout
the EU during 2018 with robust growth in all seven of the large
EU economies that together account for 90% of all EU wood
product imports from VPA partner countries (Figure 6.2.1.1).

115

EU28
UnitedKingdom

110

Germany
105

Belgium
France100

Netherlands
95

90

Spain
Italy
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 6.2.1.1: Change in GDP in the EU and selected EU countries(chain linked volumes index 2008=100) Source: ITTO IMM analysis of Eurostat

120

EU28

110

Germany

100

UK

90

Netherlands

80

Belgium

70

France

60

Spain
Italy

50
40

Portugal2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 6.2.2.1: Change in construction production value in the EU andselected EU countries (2008 = 100)Source: ITTO IMM analysis of Eurostat

Main Report – November 2019

6.2.2 Construction sector
The construction sector in the EU continued to growin 2018 but at a much slower pace than the previous
year. The Eurostat Construction Production Index(CPI) increased 1.8% in 2018, down from 4.4% in 2017.
While growth remained robust in the Netherlands,
and recovered in Belgium, Spain and Portugal in 2018,it slowed dramatically Germany, the UK, and France.
Construction sector growth in Italy remained consistent
but very slow at 1% in 2018 (Figure 6.2.2.1).
The independent research group Euroconstruct estimatedthat the value of construction activity increased 3.1% to€1,610 billion in its 19 focus European countries during
2018, a slowdown compared to 3.5% growth in 2017.
After five years of continuous growth, the total valueof construction sector activity in the Euroconstructcountries is still far below peak levels prevailing before
the financial crises in 2007.

first half of 2019 in the context of weakening economic
expansion. In June 2019, Euroconstruct forecast that the
EU building sector will grow by a total of 3.4% in 2019 and2020 (compared to 6% expansion forecast in June 2018).
Euroconstruct forecast that civil engineering projects andrefurbishment and maintenance sectors will take overfrom residential and non-residential building in providing
most market momentum in 2019 and 2020.
During this period construction activity is expected to
grow more rapidly in Eastern Europe (+4% per annum)
compared to Western Europe (+1% per annum). In Western
Europe, construction growth is forecast to remain
relatively robust (+4% per annum) in the Netherlands,
Belgium, Spain, and Portugal, but to be very slow (lessthan 1% per annum) and with a risk of slight decline in the
UK, Germany, France and Italy.

6.2.3 Wood joinery sector

Growth in the EU wood joinery sector stalled in 2018.
Eurostat PRODCOM data shows that the production
value of wood joinery and related
products48 in the EU increased only
0.3% to €35.1 billion in 2018 following
growth of 2.4% in 2017. Although 2018
marked a high point for EU joinery
Windows
Kitchens
sector activity in the last 10 years,
activity was still down more than 20%
compared to the period before theglobal financial crises.

The Euroconstruct forecast for future growth up to 2021
was progressively downgraded during 2018 and the

45
Other

billion (constant 2018 prices)

40

Doors

35
30
25
20
15
10
5
0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 6.2.3.1: EU kitchen furniture and wood joinery production(excluding floors and shuttering) Source: ITTO IMM analysis of Eurostat

The trend in wood joinery activity
varied widely between EU countries in2018 (Figure 6.2.3.2). After levelling off
in 2017, growth in joinery activity in

10billion at constant 2018 prices

9

Germany

8

Italy

7

UK

6

Scandinavia

5France4Austria
Spain

3

Netherlands

2

Belgium

1
2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Poland2007

0

The value of production in the EU
kitchen furniture sector increased 1.7%
to €12.96 billion in 2018, rebounding
after a 1.4% decline the previous
year. However, this was offset by a
1.7% decline in the wood window
manufacturing sector, to €6.14
billion, in 2018 and a 0.1% decline
in manufacturing of “other” (nonspecified) joinery products, to €9.01
billion. The value of production in the
EU wood door sector was €7.00 billion
in 2018, no change on the previous year
(Figure 6.2.3.1).

Figure 6.2.3.2: Kitchen furniture and wood joinery production (excluding floors
and shuttering) in selected EU countries. Source: ITTO IMM analysis of Eurostat

Main Report – November 2019

48

I ncludes windows, doors, “other (notelsewhere stated)” joinery products (suchas fitted cabinets and kitchens, staircases,
conservatories, skirtings and panelling),
and kitchen furniture. The latter is included
because, unlike other forms of furniture, only
a negligible proportion of kitchen furniture isimported by EU countries and distribution ismore closely related to the national joinery
trades than the retailing sector. Often there
is no clear distinction between “kitchen
furniture manufacturers” and “joinery
manufacturers”. Concrete shuttering is
excluded because it is primarily low-grade
softwood and not relevant to the market for
products from VPA partner countries. Woodflooring is excluded due to significant gaps in
PRODCOM data for this product group.
43

In the UK, joinery production increased
2.6% to €4.71 billion after slowing morethan 5% the previous year. Joinery
production declined in Scandinavia,
by 5.6% to €3.57 billion in 2018. Joinery
production in France increased only
0.3% in 2018, to €3.25 billion, afterrising 3.7% the previous year.
However, there was more consistent
growth in joinery production in several
other EU markets in 2018 including
Austria (+3.3% to €2.03 billion), Spain(+3.6% to €1.75 billion), the Netherlands(+8.5% to €1.17 billion), and Belgium(+1.5% to €0.95 billion).

14

billion (constant 2018 prices)

Germany resumed last year, rising 3.3%
to €8.70 billion. After a brief bounce
in 2017, joinery production in Italy fellback 6% to €5.52 billion in 2018, only
just above the historically very low
levels recorded in 2015 and 2016.

2014

2015

2016

2017

2018

12
10
8
6
4
2
0

Wood

Plastic

Steel

Aluminium

Figure 6.2.3.3: Total EU door and window consumption by material,
2014 to 2018. Source: ITTO IMM analysis of Eurostat

Part of the explanation for the slow
increase in wood joinery activity inthe EU compared to growth in thewider construction sector and economy is substitution byalternative materials. However, there is some evidence tosuggest that the pace of substitution slowed in 2017 and2018. This is revealed by comparing the total EU apparent
consumption value of doors and windows in various
49materials (Figure 6.2.3.3).
Since 2014, while the value of wood door and window
consumption in the EU has risen slowly, the value ofsteel and aluminium door and window consumption has
increased dramatically. Overall, the total share of wood inthese sectors decreased from 30.2% in 2014 to 28.3% in 2017.
During this period, the share of steel increased from 14.2%
to 16.2% and share of aluminium increased from 24.8% to28%. Plastics, like wood, also lost share in terms of total
consumption value, from 30.8% in 2014 to 27.5% in 2017.
Between 2014 and 2017 total EU consumption value fordoors and windows increased 26% in aluminium and
28% in steel. The consumption value for wood increased
only 4% during this period, while consumption of plastic
stagnated. Overall the share of wood in the total value of
EU door and window consumption fell from 30% to 28%
between 2014 and 2017, while the share of aluminium
increased from 25% to 28%, steel increased from 14% to16%, and plastic decreased from 31% to 27%.
During this period, the growth in aluminium
consumption in the EU windows and doors sector wasparticularly dramatic. Aluminium has always remained
the default windows product in the commercial market
but has enjoyed considerable resurgence within theresidential window and door market. An important driverbehind this has been aluminium bi-fold and sliding doors
as consumers demand greater space and light within

living areas. Another factor is the demand for lower
maintenance and greater strength in light weight frames
for high energy efficiency double and triple glazed units.
However, in 2018, the growth in consumption of steel andaluminium appears to have stalled. Wood even regained
a little share, rising from 28% to 29%, at the expense of50
plastic for which share fell from 28% to 27%.

6.2.4 Furniture manufacturing
The Eurostat furniture production index indicates that
manufacturing activity across the region increased only
slightly in 2018 and at a slower rate than the previous
year. The total volume of furniture manufacturing in
the EU increased 0.3% in 2018 compared to a 1.9% rise
the previous year. Manufacturing volume was still down
more than 10% compared to the period before the global
financial crises. (Figure 6.2.4.1).
The index also highlights shifts in the overall locationof European furniture manufacturing, with much recent
growth in activity concentrated in Eastern Europe, notably
in Poland and Lithuania. Activity in Italy, still the largest
European furniture manufacturing country, declined 3.5%
in 2018, while activity in Germany, the second largest
manufacturing country, fell 1.3%.

6.2.5 Exchange rates
Slowing economic growth fed through into a fall inthe value of EU currencies against the US dollar in
2018. After making gains of around 15% in 2017, theeuro, British pound, Danish krona and Polish zloty all
declined against the US dollar by around 8% during 2018.
The Swedish krona fell even further against the dollar
during 2018 and was down 4% against the euro by theend of the year.

49 erived by IMM through analysis of PRODCOM data (NACE Revision 2 codes) on production, import and export value of doors and windows for woodD
(16231150, 16231110), steel (25121030), aluminium (25121050) and plastics (22231450).
50
The Eurostat data has limitations and the suggestion that wood may be regaining some market share is contradicted, at least in the window sector,
by other more detailed studies (for example www.interconnectionconsulting.com/news/fenstermarkt-westeuropa/). A constraint of the PRODCOM
data is that it does not distinguish products made wholly in wood or metals from those that are composites of both materials. The developmentof wood-aluminium composite window frames has been a key growth area in the EU in recent years. These products combine the strength andefficiency of aluminium with the thermal insulation and aesthetic properties of wood.
44		Main Report – November 2019

250

EU28

225

Lithuania

200

Poland175

UnitedKingdom
Germany

150
125
100

Italy

75

France

50

Spain

25

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 6.2.4.1: Change in furniture production volume in selected EU
countries (2008= 100). Source: ITTO IMM analysis of Eurostat

1.3
1.2
1.1

US dollar

1

Chineseyuan

0.9

British
pound

0.8
0.7

Japanese
yen

0.6
0.5

Russianrouble0.4
0.3
01-Jan-19

01-Jan-18

01-Jan-17

01-Jan-16

01-Jan-15

01-Jan-14

01-Jan-12

01-Jan-13

Ukrainian
hryvnia

0.2

Figure 6.2.5.1: 7-year trend in Euro exchange rate, Jan 2012 to June 2019, 1 unitof currency = X € (Jan 12 = 100%). Source: ITTO IMM analysis of www.oanda.com

The currencies of several large
tropical wood exporters - including
Brazil, Indonesia, Malaysia andIndia – dipped against the euro in
the first half of 2018 but recovered
ground in the second half of the year.
However, after suffering significant
declines in the period 2014 to 2017,all these currencies were still tradingat relatively low levels against theeuro in 2018. The continuing relative
weakness of the Indonesian rupiah
and Brazilian real against the euro isparticularly pronounced.
Having lost ground against the euro
in 2016 and 2017, the Vietnamese dong
gradually strengthened against theEuropean currency in 2018
(Figure 6.2.5.2).
In Africa, the Ghanaian cedi was at ahistorically low level against the dollar,
euro and other internationally tradedcurrencies and slipped even further
during 2018. All the other leading
African timber supplying countries use
the euro-linked CFA currencies andhave stable exchange rates relative to
EU currencies. Like these currencies,
the CFA was weakening against the
dollar in 2018.
The trade effects of exchange rate
trends during 2018 include:• to ensure continuation of relatively

1.3
1.2
1.1

Vietnamesedong

1

Indian
rupee

0.9
0.8

Malaysian
ringgit

0.7
0.6

Indonesianrupiah0.5

Brazilianreal

0.4
01-Jan-19

01-Jan-18

01-Jan-17

01-Jan-16

01-Jan-15

01-Jan-14

01-Jan-13Ghana cedi
01-Jan-12

0.3

However, EU currencies remained
strong relative to currencies inseveral key Eastern European supply
countries, including Ukraine, Russia,
and Turkey. Both the euro and British
pound strengthened by around 7%
against the Russian rouble in 2018 andby over 25% against the Turkish lira.
The Chinese yuan weakened against
the US dollar but was more stableagainst the euro during 2018
(Figure 6.2.5.1).

Figure 6.2.5.2: 7-year trend in Euro exchange rate, Jan 2012 to Jun 2019, 1 unitof currency = X € (Jan 12 = 100%). Source: ITTO IMM analysis of www.oanda.com

Main Report – November 2019lower EU import prices for Russian,
Ukrainian and Belarusian timber
products, such as birch plywood,oak sawn timber, veneer andfurniture;• to slightly increase the global

competitiveness of finished timber
products manufactured in the EU
and of tropical wood products from
central African countries using
euro-linked currencies (and where
invoicing is usually in euros);• to slightly increase EU importprices for timber products invoicedin dollars, including from North
America and South East Asia;• to facilitate the rise in exports from
Brazil to the EU.

45

6.3 VPA partner share of
total EU wood productimport value
billion (constant 2018 prices)

The total value of EU imports of wood
products was €19.33 billion in 2018,
5.2% more than in 2017. This followed
an increase of 2.3% to €18.38 billion in2017 (Figure 6.3.1). In 2018, EU importvalue was at the highest level since2008 just before the global financial
crisis. In quantity terms, imports
increased 14% to 45.6 million tonnes in
2018, following an 8% decline to 40.12
million tonnes in 2017.

20
18
16

Panels/ veneer

14

Sawn

12

Logs

10

Energy wood

• i n contrast to value, furnitureimport quantity increased 5%
to 2.36 million tonnes. This was
mainly due to a sharp rise inimports of relatively low value
products from Ukraine, Belarus,
Turkey and Russia during the year.
The unit value of products sourced
from Viet Nam and Malaysia also
declined in 2018.

• the value of EU imports of sawn

wood increased 9.8% to €3.59
billion in 2018 and import quantity
increased 15% to 6.95 million
tonnes, driven mainly by rising
imports from Russia, Belarus, andUkraine in response to tightening
controls on log exports andweakness of national currencies
relative to European currencies.

Flooring

4

Furniture

2
0

2014

2016

2017

2018

7
2014

2015

2016

2017

2018

Other
Other
Energyjoinery processed wood

Logs

Sawn

Panels/veneer

6
5
4
3
2
1
0

Furniture Flooring

Figure 6.3.2: Value of EU imports of wood products, by product group,2014 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT• t he value of EU imports of panels(mainly plywood) increased 7.7% to €3.06 billion
in 2018 and quantity increased 7% to 4.78 million
tonnes, with imports rising from all the leading
suppliers including Russia, China, Brazil, Chile,
Indonesia, Belarus, and Ukraine.

• t he long-term rise in EU imports of energy wood

accelerated in 2018, import value increasing 20.5%
to €2.49 billion and quantity rising 26% to 19.8
million tonnes. Imports of energy wood increased
particularly sharply from the US and Belarus in
2018, but there were also gains from Russia, Canada,
Ukraine, Uruguay and Brazil.

• EU imports of other joinery products (includes doors
and glulam for window frames and kitchen tops but
excludes flooring) increased 0.7% to €710 million in2018 while import quantity increased 6% to 406,000
tonnes. Rising imports from China, Indonesia andRussia offset declining imports from Malaysia.

46		

2015

Figure 6.3.1: Value of EU imports of wood products, by product group,2014 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

billion (constant 2018 prices)

the value of EU imports of wood
furniture decreased 0.9% to €6.21
billion in 2018, mainly due tofalling import value from China,
Viet Nam, Indonesia and Malaysia.

Other joinery

6

The gain in total EU imports of wood
products during 2018 hides variations
between product groups (Figure 6.3.2):• following a 7.2% increase in 2017,

Other processed8• t he value of EU imports of wood flooring increased 2.8%
to €579 million in 2018 while import quantity increased
5% to 247,000 tonnes, with imports from China andUkraine, the largest external suppliers, recovering
ground after two slow years in 2016 and 2017.

• t he value of EU imports of “other processed products”
increased 0.1% to €1.97 billion in 2018 while quantity
increased 11% to 1.56 million tonnes. These products,
classified under HS 442190 without being separately
identified, were formerly sourced mainly from China
and Norway but rising quantities are now being
imported from Ukraine, Belarus, and Russia.

The total value of EU imports of tropical timber products(including direct imports and imports via third countries
such as China) increased 2.1% to €3.85 billion in 2018. This
follows a 2.7% fall in import value in 2017 (Figure 6.3.3).
Imports from Indonesia increased only slightly, by 0.1%,
to €815 million in 2018. Indonesia accounted for 21.2% of

Main Report – November 2019

4.0

No VPAbillion (constant 2018 prices)

3.5

Negotiating(Asia)

3.0
2.5

Negotiating(Africa)

2.0

Implementing(Asia)

1.5

Implementing(America)

1.0

Implementing(Africa)

0.5

Licensing(Indonesia)

0.0

2013

2014

2015

2016

2017

2018

Figure 6.3.3: Value of EU imports of wood products from the tropics,
by VPA status, 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

100%
90%

Other

Share of value in

80%

North
America70%
60%

Non-EU
Europe50%

Russia/CIS

40%
30%

China/HK/
Taiwan POC

20%

Tropical
2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

0%

2004

10%

imports in 2018, down from 21.7%
the previous year.
The value of EU imports from the two
VPA countries in South America that
initialled a VPA in 2018 is negligible but
rising, up 7.0% to €4.8 million in 2018,
following a similar increase in value theyear before. These countries accounted
for 0.1% of the total value of EU tropicalwood-product imports in 2018.
EU import value from the three
VPA negotiating countries in Africa
declined 4.9% to €255 million in
2018. These countries accounted for
6.6% of the total value of EU tropicalwood-product imports in 2018, downfrom 7.1% the previous year. In 2018
there was a significant decline in EU
imports of veneer and plywood from
Gabon, and imports of sawn woodfrom Côte d’Ivoire continued to slide.
These losses were only partly offset
by rising imports of sawn wood anddecking from Gabon and veneer from
Côte d’Ivoire.
EU import value from the three VPA
negotiating countries in Asia fell
4.4% to €609 million in 2018. Shareof these countries in the total valueof EU tropical wood-product imports
fell from 16.9% in 2017 to 15.8% in
2018. EU wood furniture import value
declined from both Malaysia andThailand in 2018 while there was also
a significant fall in the import valueof Malaysian plywood. However, there
was some recovery in imports of sawn
wood from Malaysia during the year.
Imports from Lao PDR were negligible.

EU imports from non-VPA tropicalcountries increased 11.2% to €975
million in 2018. Share of total tropicalwood product imports from nonVPA countries increased from 23.3%
in 2017 to 25.4% in 2018. This was
mainly due to rising tropical hardwood plywood imports
from China, wood furniture imports from India, decking
imports from Brazil, Peru and Bolivia, and charcoal from
Cuba and Venezuela. Imports of charcoal from Nigeria also
continued at a high level in 2018.

Figure 6.3.4: Share of EU import value of wood products, by source of
supply, 2004 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

the total value of EU tropical wood-product imports in
2018, down from 21.6% the previous year. After making
gains in 2017, the value of EU imports of wood furniturefrom Indonesia fell back in 2018, while imports ofmouldings also declined. However, these declines wereoffset by rising EU imports of plywood, doors, charcoal andS4S sawn wood from Indonesia.
After a 20% fall in 2018, EU imports from the five African
VPA-implementing countries increased 6.6% to €374
million in 2018. The share of these countries in total EU
tropical import value increased from 9.3% in 2017 to 9.7%
in 2018. This was mainly due to recovery in EU imports ofsawn wood from Cameroon during the year.
The value of EU imports from Viet Nam declined 0.4%
to €813 million in 2018 after falling 1.5% in 2017. A
decline in the value of EU wood furniture imports from
Viet Nam was only partly offset by rising imports ofjoinery products and plywood. Viet Nam accounted for
21.1% of the total value of EU tropical wood-product

Main Report – November 2019

The share of tropical timber in the total value of EU
wood product imports declined from 21.5% in 2017 to
20.8% in 2018. Although 2018 was the third straight yearof declining share for tropical timber, the rate of decline
is now much slower than in the decade prior to 2014
when share fell continuously from around 36% to 22%(Figure 6.3.4).
China’s share in total EU import value of timber products
fell from 29.4% in 2017 to 27.2% in 2018, the lowest level
since 2007. The share of Russia and other CIS countries
increased from 21.0% to 23.9%. In 2018, there was aslight decrease in share of EU import value from nonEU European countries (from 11.1% to 10.6%) and North
America (from 11.7% to 11.6%).

47

There was a small rebound in EU
imports of tropical logs in 2018 after
a sharp decline the previous year.
3
Imports totalled just 129,000 m
during the year, 6% more than in2017 (Figure 6.4.2).
In 2018, there was a significant
increase in EU log imports from CAR,
3
up 76% to 24,000 m following a 40%
decline the previous year. Imports
from the Congo Republic also bounced
back 7%, to 33,000 m3 in 2018, after
a 25% fall in 2017. Similarly imports
from DRC recovered 18% to 23,000 m3
after a 47% drop in 2017. Imports from
Liberia increased 79% in 2018, to 7,000
m3, following a 48% decline in 2017.
However, imports from Cameroon fell
3
8% in 2018, to 21,000 m , following
a 29% decline the previous year.
Imports from Equatorial Guinea werealso down 41%, to 7,000 m3, rising
15% in 2017. Imports from Suriname,which briefly surged in 2015 to 18,000
m3, were at negligible levels between
2016 and 2018.

6.5 VPA partners in EU sawn
wood supply
The supply of sawn wood in the EU
increased 3.7% to 123.7 million m3
in 2018, comprising 101.6 million m3(82%) domestic softwood, 10.6 million
m3 (9%) domestic hardwood, 9.3
48		

260
240
220
200
180
160
140
120
100
80
60
40
20
0

Imports

14
20
15
20
16
20
17
20
18

13

Hardwood

20

12

20

11

20

10

20

09

20

08

20

07

20

06

20

05

20

20

20

04

Softwood

Figure 6.4.1: EU supply of saw logs and veneer logs, by species type,2004 to 2018. Source: ITTO IMM analysis of FAOSTAT and Eurostat COMEXT

1000 cubic meters

The 7% decline in EU saw and veneer
log imports in 2018 followed a 39%
fall the previous year. Most of thedecline in imports during 2017 and2018 comprised logs from Russia,
Belarus and Ukraine and was driven
by rising controls on log exports
and efforts to boost domestic woodprocessing in these countries. In
2018, imports constituted only 1.1%
of EU saw log and veneer log supply,
down from 2.1% in 2016.

200

Other

180

Gabon

160

Suriname

140

Guyana120

Paraguay

100

Liberia80

Eq. Guinea

60

Cameroon

40

DRC

20

CAR

0

2013

2014

2015

2016

2017

2018

Congo

Figure 6.4.2: EU imports of tropical sawlogs and veneer logs, by country oforigin, 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

1 million cubic meters

The total supply of saw logs and veneer
logs to the EU increased 5.5% to 221
million m3 in 2018, not far short of
the highest levels achieved before thefinancial crisis in 2007-2008 (Figure
6.4.1). A 5.8% rise in production ofsoftwood logs to 189 million m3 and a
4.2% rise in hardwood log production
to 29 million m3 were sufficient tooffset a 7% decline in log imports to
3
2.5 million m . Much of the increase in
EU log production in 2018 comprised
softwoods in Germany and Finland.
The largest increases in hardwood log
production were in Germany
and Romania.

1 million cubic meters

6.4 V
 PA partners in EU
log supply

130
120
110
100
90
80
70
60
50
40
30
20
10
0

Imports

2013

2014

Hardwood production

Softwood production

2015

2017

2016

2018

Figure 6.5.1: EU supply of sawn wood, 2013 to 2018.

Source: ITTO IMM analysis of Eurostat PRODCOM and COMEXT

Main Report – November 2019

EU imports - tropicalEU imports - temperate

EU production

share of volume in cubic meters

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

2013

2014

2015

2016

2017

2018

Figure 6.5.2: Share of EU supply of sawn hardwood, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat PRODCOM and COMEXT

1 million cubic meters

2.5

Other
temperate
Russia2.0

Ukraine
1.5

USA
Other tropical

1.0

Brazil
0.5

Malaysia

0.0

2013

2014

2015

2016

2017

2018

Cameroon

Figure 6.5.3: EU imports of sawn hardwood, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT1200
No VPA

1000 cubic meters

1000

Negotiating
(As)

800

Negotiating
(Af)

600

Implementing
(As)

400

Implementing
(Am)

200

Implementing(Af)0

Licensing(Indonesia)

2013

2014

2015

2016

2017

2018

Figure 6.5.4: EU imports of sawn hardwood from tropical countries,
by VPA status 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019

million m3 (7%) imported softwood,and 2.2 million m3 (2%) imported
hardwood. In 2018, EU productionof both sawn softwood and sawn
hardwood, and total sawn wood
imports, were at the highest level since2007 (Figure 6.5.1).
Although still limited overall, theshare of imports in total supply
increased slowly from 8% in 2015
to 9% in 2018, mainly due to rising
softwood imports from Russia,
Belarus and Ukraine in response
to currency weakness and tighter
controls on log exports in thosecountries. EU sawn softwood imports3
of 9.3 million m in 2018 were 19%
more than the previous year and thehighest level since 2004.
In EU sawn hardwood supply,
the share of domestic production
increased from 81.0% in 2016 to 83.3%
in 2017 before falling to 82.9% in 2018.
The share of tropical wood fell from
9.0% in 2016 to 7.4% in 2017 before
recovering to 7.7% in 2018. The shareof imported temperate hardwood
declined from 10.0% in 2016 to 9.3%
in 2017 and then recovered to 9.5% in2018. (Figure 6.5.2).
Sawn hardwood production in the
EU has been rising, up 2.0% to 10.6
3
million m in 2018 following a 2.4%
increase the previous year. The supply
constraints and rise in prices for oak,which is strongly favoured in the EU
market for furniture, joinery andother finishing applications, began toease in the second half of 2018.
Nevertheless, according to theEuropean Organisation of the
Sawmill Industry (EOS), in 2018 lackof hardwood saw logs, particularly
oak, remained a problem in Germany,
France, Belgium and Romania. EU
sawmills were still struggling withthe high prices for hardwood logs in
response to strong demand in China
and Viet Nam. The EU exported 1.64
3
million m of hardwood saw logs in
2018, 7% more than in 2017, of whicharound 50% was oak, mostly destinedfor the two Asian markets.
In 2018, the EU also exported 2.38
3
million m of sawn hardwood tocountries outside the region, 3% lessthan the previous year, but still at ahistorically high level. While sawn
hardwood exports were formerly
focused on beech, particularly from
Romania and destined for Egypt
and other markets in the eastern
Mediterranean, the majority now
comprises oak destined for China
and Viet Nam.
49

2018

250
200
150
100

Other

Ecuador

DRC

Indonesia

Ghana

Côte d'Ivoire

Congo

Gabon

BrazilMalaysia

0

Cameroon50

Figure 6.5.5: EU imports of sawn hardwood from tropical countries,
by country of origin, 2014 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

400
2014

350

2015

2016

2017

2018

300
250
200
150
100

Other

IrelandDenmark

Portugal

Germany

Spain

UK

0

Italy

50

Figure 6.5.6: EU imports of sawn hardwood from tropical countries,
by destination, 2014 to 2018. Source: ITTO IMM analysis of Eurostat COMEXTFollowing a sharp decline in 2017, EU
imports of sawn hardwood from Africa
made a partial recovery in 2018. Imports
increased by 5% from Cameroon to339,000 m3, 13% from Gabon to 114,000 m3, 8% from RoC to
61,000 m3, 8% from DRC to 17,000 m3, and 15% from Ghana
to 24,000 m3. However, imports from Côte d’Ivoire fell 18% to41,000 m3, continuing a long-term decline (Figure 6.5.5).
Feedback gathered by IMM from EU importers indicatesthat the 2017 decline and 2018 rebound in EU imports ofAfrican hardwoods is less due to changes on the demandside in the EU and more due to supply side factors whichhave led to very volatile trading conditions. There wasoverstocking of African sawn wood in the EU at the startof 2017 following arrival all at once of a large volume ofdelayed shipments from Africa, this contributed to a sharp
decline in trade in 2017, and a rebound in 2018 when landed
stocks were much lower.
Exports out of Douala port in Cameroon, the principaltransport hub for the wider Congo region, have become
extremely erratic due to reliance on old and unreliableequipment, management problems, and silting up of

50		

2017

300

FranceVPA partner countries accounted for
79.5% of EU tropical sawn imports in
2018, down from 80.8% the previous
year (Figure 6.5.4). The decline in share
of VPA countries is mainly due to arecovery in imports of sawn hardwood
from Brazil in 2018.

2016

350

Netherlands

EU imports of sawn hardwood fromIndonesia have been limited since2004 when the country restricted
exports to “surfaced four sides”(S4S). The EU imported 20,000 m3 of
FLEGT-licensed S4S sawn wood fromIndonesia in 2018, 37% more than theprevious year but still down compared
to 22,000 m3 in both 2015 and 2016.

2015

400

Belgium

In 2018, EU imports of temperate sawn
hardwood increased 4% to 1.21 million
m3. The more rapid pace of increase inimports from the tropics meant thatthe share of tropical in total EU sawn
hardwood imports increased from 44%
in 2017 to 45% in 2018, a slight reversal
in the long-term downward trend.

2014

450

1000 cubic meters

EU imports of sawn hardwood
increased 5% to 2.20 million m3 in2018 following a 13% decline theprevious year (Figure 6.5.3). In 2017 EU
imports of tropical sawn hardwood
declined 19% to 922,000 m3, thelowest level ever recorded. In 2018
imports rebounded 7% to 984,000 m3
but were still below the previous lowof 1.03 million m3 recorded in 2013 at
the height of the euro currency crises.

500

1000 cubic meters

While typically regarded as a consuming
market for sawn hardwood, it is notable
that, since 2015, the EU has been runninga surplus in this commodity as exports
from the EU to other regions haveexceeded imports.

access channels which means that larger, deep-draft
vessels can’t dock. Some shippers are exploring thepossibility of using the new, Chinese-funded, deep-water
port at Kribi, but this also has teething problems. Other
problems include the diminishing commercial availabilityof tropical hardwood species of interest to European
buyers, and delayed payment of VAT refunds by African
governments, partly linked to low oil prices, which createdsevere financial challenges for operators in the region.
In 2018, prices for the African hardwoods preferred in
the EU market, including sapele, sipo/utile, iroko andframire/idigbo were all rising against firm demand from
Asia, the EU, and the USA, and supply shortages.
The problems in Africa contributed to rising EU sawn
hardwood imports from Malaysia and Brazil in 2018.
Imports from Malaysia increased 2% to 151,000 m3 despite
rising prices, limited supply, and contrary exchange rates.
There was an even more dramatic 23% increase in imports
from Brazil during the year, to 143,000 m3, encouraged

Main Report – November 2019

350

Softwood

Other hardwood

Tropical hardwood

1000 metric tonnes

300
250
200
150
100
50
0

2013

2014

2015

2016

2017

2018

Figure 6.6.1: EU imports of continuously shaped wood, by species type2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

6.6 VPA partners in EU mouldings and decking supply

180

No VPA

160

1000 metric tonnes

significant and growing competition
from a range of chemically andthermally modified temperate woodspecies. Branded softwood-based
products such as Accoya and Kebony
have become ‘staples’ in certain EU
markets. Wood-plastic composites
continue to gain in popularity,
particularly for external applications,such as cladding, decking and outdoor
furniture. The American Hardwood
Export Council is marketing a range ofthermally modified timber species thatare of low natural durability and also
lower value such as tulipwood, soft
maple and red oak for use in exterior
applications formerly dominatedby tropical hardwoods. EU demandfor Eucalyptus grandis from SouthAmerican plantations is also rising inboth sawn and engineered form.

140

Negotiating
(As)

120

Negotiating
(Af)

100

Implementing
(As)

80
60

Implementing
(Am)

40

Implementing
(Af)

20

Licensing(Indonesia)

EU imports of “continuously shaped”
wood (HS code 4409) include bothdecking products and interior
decorative products like moulded
skirting and beading. Total EU
imports under this heading increased
10% to 307,000 tonnes in 2018
following a 6% gain the previous
year. Most of the import gain was insoftwood, which increased 21% to99,000 tonnes in 2018, mainly from
Russia and, to a lesser extent, Belarus
and Ukraine (Figure 6.6.1).

Imports of “continuously shaped”
tropical hardwood were 172,000 tonnes
in 2018, 9% more than in 2017 (Figure
6.6.2). In 2018, tropical hardwood
Figure 6.6.2: EU imports of continuously shaped wood, by species typeaccounted for 56% of all imports of2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT“continuously shaped” wood into the
EU. However, imports of FLEGT-licensed
products from Indonesia fell 12% to62,000 tonnes in 2018 and Indonesia’s
by the relative weakness of the Brazilian currency, slow
share of tropical imports declined from 45% to 36% during
domestic demand in Brazil, and supply problems elsewhere.
the year. The trend was partly supply driven with prices
The rebound in imports of tropical sawn hardwood during
for Indonesian bangkirai rising sharply during 2018 due tolimited availability.
2018 was concentrated in Belgium and the Netherlands
3
where imports increased 10% to 301,000 m and 21%
While imports from Indonesia declined, imports from non
to 179,000 m3 respectively (Figure 6.5.6). This trend
VPA countries increased 31% to 90,000 tonnes in 2018,
reinforces comments made at IMM Trade Consultations
driven mainly by a 27% increase in imports from Brazil,that trade is increasingly concentrated in the hands of a
to 72,000 tonnes. Imports also increased 68% from Peru,
few larger importers close to the major ports in the EU.
to 9,000 tonnes, and nearly doubled to over 5,000 tonnes
This is driven both by logistics and the increasing focus
from Bolivia (Figure 6.6.3). There are several Amazonian
on just-in-time trading, which is discouraging smaller
species, including ipe, garapa and massaranduba, that
distributors and manufacturers from sourcing direct
perform well as decking timbers and, encouraged by lackfrom the tropics, and the wider range of services offeredof supply in Asia and currency movements, these increased
by larger importers, such as kilning, grading, finishingshare in the EU market during 2018.
and taking responsibility for EUTR due diligence.
China’s trade in this commodity with the EU has been
Feedback from IMM Trade Consultations and surveys
declining in recent years owing both to rising costs ofindicates that a major reason for tropical wood’s loss of
production in China and declining availability of raw
material. Imports from China fell a further 20% tomarket share in the EU is substitution by other materials.
14,000 tonnes in 2018 and were only half the volume of
In the sawn wood sector, tropical hardwood faces
0

2013

2014

2015

Main Report – November 2019

2016

2017

2018

51

three years before. China depends
on imported tropical timber witha strong preference for teak in thedecking sector. China also supplies
small quantities of interior hardwood
mouldings to the EU market.

70
601000 metric tonnes

While total EU trade in decking andsimilar garden products has been
gradually increasing in recent years
due to a slow improvement in EU
construction activity, tropical timber
faces intense competition fromsubstitute materials in this sector,
notably wood-plastic composites(WPC), thermally and chemicallymodified European hardwoods andsoftwoods, and preservative-treatedsoftwoods. Tropical hardwood
decorative mouldings for interior use
are also being replaced by European
timbers and MDF.

80

EU veneer imports from Indonesia
3
were stable at around 5,500 m in2016 and 2017 but fell 20% to 4,500
m3 in 2018 when they accounted
for only 1.5% of all tropical veneer
imports. Imports from the five VPA
implementing countries in Africa
increased 22% to 72,000 m3 in 2018.
Imports from VPA-negotiating
countries in Africa decreased 6% to216,000 m3 in 2018. Imports fromother VPA partner countries were
negligible during the year. Imports
from non-VPA tropical countries
increased 5% to 18,000 m3 in 2018 due
to a rise in direct imports from Brazil,
Guinea and Nigeria and indirect52		BrazilIndonesia

Malaysia

Peru

Bolivia

Other

30
20

0

2013

2014

2015

2016

2017

2018

Figure 6.6.3: EU imports of continuously shaped wood, by main supply countries
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

2000

Production

1800

1000 cubic meters

Imports

Exports

Apparent consumption

1600
1400
1200
1000
800
600
400
200
0

2013

2014

2015

2016

2017

2018

Figure 6.7.1: EU production, trade and consumption of veneers
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT and FAOSTAT350
No VPA
300

1000 cubic meters

After making gains in the previous 2
years, EU imports of veneer from the3tropics fell 6% to 312,000 m in 2017 andwere static at this level in 2018 (Figure
6.7.2). The share of tropical veneer intotal EU veneer import volume fell from
57% in 2016 to 51% in 2017 and 2018. In
2018, EU imports of tropical veneer were
well below volumes (of close to 500,000
m3 per year) prevailing before the global
financial crises.

40

10

6.7 VPA partners in EU
veneer supply
EU veneer consumption, which had
been rising slowly since 2013, peakedin 2017 at 1.79 million m3 and declined
0.6% to 1.78 million m3 in 2018. EU
veneer production fell 1.1% to 1.33
million m3 in 2018 following a veryslight (0.2%) increase the previous
year. After several years of strong
growth, imports increased only 0.3%
in 2018, to 610,000 m3. The share ofimports in all veneer supplied into the
EU was 34.2% in 2018, a marginal gain
compared to 33.9% in 2018 (Figure 6.7.1).

50

Negotiating
(As)

250

Negotiating
(Af)

200

Implementing
(As)

150

Implementing
(Am)

100

Implementing
(Af)

50
0

Licensing(Indonesia)
2013

2014

2015

2016

2017

2018

Figure 6.7.2: EU imports of tropical veneers, by VPA status 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019

180

Gabon

1000 cubic meters

160
140

Côte
d'Ivoire120

Cameroon

100

Congo

80
60

Equatorial
Guinea

40

Ghana

20

DRC

0

2013

2014

2015

2016

2017

2018

Figure 6.7.3: EU imports of tropical veneers, by main supply countries
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Other
temperate

600

USA

1000 cubic meters

500

Russia400

Ukraine300

Other
tropical200

Cameroon100
0Côte d'Ivoire
Gabon
2013

2014

2015

2016

2017

2018

Figure 6.7.4: EU imports of veneers, by main supply country 2013 to 2018.

imports (all in relatively small
volumes) from Turkey, Ukraine,and Russia.
EU imports of veneer from Gabon, theleading tropical supplier, declined 12%3
to 135,000 m in 2018. This followed
a 9% fall the previous year and islinked to the financial difficulties andrestructuring plan of the French-owned
company Rougier, which is a leading
player in the EU market for this productwith large operations in Gabon.
After two years of decline, EU veneer
imports from Côte d’Ivoire increased
3
11% to 77,000 m in 2018. Imports
also increased 33% to 42,000 m3 from
Cameroon and 14% to 20,000 m3 from
RoC. These gains were offset by declining
imports from Equatorial Guinea (-2% to10,400 m3), Ghana (-1% to 10,000 m3) andDRC (-35% to 4,600 m3) (Figure 6.7.3).
In 2018, imports of tropical veneer inFrance fell a further 8%, to 104,000
3m , after a 17% decline the previous
year. However, this decline was offset
by a 4% increase in imports in Italy, to
72,000 m3, and a 21% increase imports
in Spain, to 60,000 m3. Imports in
Greece, the next largest EU market,
were 25,000 m3 in 2018, the same level
as the previous year.
Following average growth of 15%
year-on-year between 2014 and 2017,
EU imports of temperate hardwood
veneer increased only 1%, to 299,000
3m in 2018 (Figure 6.7.4). Imports from
Ukraine fell 11% to 95,000 m3 in 2018, but
this was partly offset by a 12% increase inimports from Russia to 68,000 m3, a 16%
increase from Serbia to 45,000 m3, and a
49% increase from Turkey to 12,000 m3.

Source: ITTO IMM analysis of Eurostat COMEXT

6.8. VPA partners in EU
plywood supply
EU production

10

Imports

9
Quanitity in 1 million m3

8
7
6
5
4
3
2
1
0

2013

2014

2015

2016

Figure 6.8.1: EU supply of plywood, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT and PRODCOM

Main Report – November 2019

2017

2018

There has been an extraordinary
resurgence in the EU plywood market
in recent years, driven both by domestic
manufacturers of mainly softwoodand birch plywood, and by imports,
particularly from Russia, China andBrazil. The total supply of plywood in
the EU increased 4.6% to 9.50 million
m3 in 2018, a level which exceeds theprevious high-water mark in 2007
before the global financial crisis.
In 2018, while EU domestic production
3levelled off at 4.99 million m , imports
increased 10% to 4.52 million m3.
Imports increased share of total
plywood supply from 45% in 2017 to
48% in 2018 (Figure 6.8.1).
In 2018, EU imports of hardwood
plywood increased 9.8% to 2.90
3million m , regaining ground lost in53

In addition to imports, someplywood with a tropical hardwood
face continues to be manufactured
in the EU. Although EU production
fell sharply in the 2005-2015 period
as controls on log exports wereintroduced in Gabon and other Africancountries, and with the influx of large
volumes of cheap product from China,
there is evidence of a small upturn inproduction since 2015.
According to Eurostat, EU productionof tropical hardwood plywood
3
increased from 315,000 m in 2016,
to 409,000 m3 in 2017 and 446,000 m3
in 2018. This comprised 177,000 m3
in Spain (10% less than in 2017),
114,000 m3 in France (+6%), 123,000
m3 in Italy (+54%) and 31,000 m3 in
Estonia (+32%).

Import quanitity in 1 million m3

EU imports of tropical hardwood
plywood increased 2.4% to 588,000
3m in 2018 following a 2.4% gain
the previous year (Figure 6.8.3). This
includes 250,000 m3 imported from
China, the EU’s largest single supplierof plywood products with a tropical
hardwood face. Imports of tropical
hardwood plywood from China
increased 16% in 2018 following
a 73% gain the previous year. In
contrast to the upward trend in thewider market, the EU’s direct importsof hardwood plywood from tropicalcountries declined 6% to 349,000 m3
in 2018 following a 7% increase theprevious year.

54		

Other softwood

4.5

China softwood

4.0

Russia softwood

3.5

Chile softwood

3.0

Brazil softwood

2.5

Other hardwood

2.0

Russian birch

1.5

Other Chinese hardwood

1.0

Tropical face from China

0.5

Tropical face from other

0.0

2013

2014

2015

2016

2017

Tropical face from tropics

2018

Figure 6.8.2: EU imports of plywood by product type, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT650

No VPA

600
550

Negotiating
(As)

500

Negotiating
(Af)

450
400

Implementing
(As)

350
300

Implementing
(Am)

250
200

Implementing
(Af)

150
100

Licensing(Indonesia)

50
0

2013

2014

2015

2016

2017

2018

Figure 6.8.3: EU imports of tropical plywood (both direct and indirect),
by VPA status 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Altogether, including EU production
and direct and indirect imports, 1.04
3
million m of tropical hardwood faced
plywood was delivered to the EU market
in 2018, 5% more than the previous
year. This follows a 27% gain in 2017.

250
2013

2014

2015

Indonesia Malaysia

Gabon

Viet Nam

2016

2017

2018

200
1000 m3

In 2018, imports of FLEGT-licensed
plywood from Indonesia increased
3
7% to 170,000 m (Figure 6.8.4). This
followed a 24% increase the previous
year. Indonesia’s share of total EU
imports of tropical hardwood plywood
was 27.2% in 2018, up from 26.1% in2017 but still below 27.3% achievedin 2016. Indonesia’s share of total
tropical hardwood plywood supplied
to the EU (including EU production)
was 16.2% in 2018, up from 16.0%
in 2017 but below 16.3% achievedin 2016. The lack of any increase inshare is due the combined effects of

5.01000 cubic meters

2017 when imports fell 6%, mainly
due to a short-lived downturn intrade in Chinese hardwood plywood.
In 2018, EU imports of softwood
plywood increased 10.2% to 1.61
million m3, building on a 4.4% rise
the previous year (Figure 6.8.2).

150

100

50

0

China

BrazilOther

Figure 6.8.4: EU imports of tropical plywood (both direct and indirect),by supply country, 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019

Other softwood

90%

China softwood

80%

Russia softwood

70%

Chile softwood

60%

Brazil softwood

50%

Other hardwood

40%

Russian birch

30%

Other Chinese
hardwood
Tropical facefrom China
Tropical facefrom other
Tropical facefrom tropics% of import quanitity in m3

100%

20%

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2004

0%

2005

10%

Figure 6.8.5: Share of EU imports of plywood by product type, 2004 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT

supply constraints in Indonesia and intense competitive
pressure from alternatives, particularly Russian birch
plywood and Chinese products.
While Indonesia at least maintained share in the EU
plywood market, EU imports from Malaysia fell 23% in
32018, to 90,000 m , the lowest level recorded since at least
1997. Imports from Gabon are also falling, down 21% to26,500 m3 in 2018, following a 15% decline the previous year.
Imports from the five VPA implementing countries in Africa
are negligible, totalling no more than 3,160 m3 in 2018, 2%
less than the previous year. In contrast, EU imports from
Viet Nam are rising rapidly, although still small relative tothe leading tropical suppliers. Imports from the country
increased nearly three-fold in 2018, to over 21,000 m3.
Between 2017 and 2018, the share of total EU plywood
imports from outside the region changed as follows:
direct imports from tropical countries decreased from
9.0% to 7.7%; tropical hardwood faced product from China
increased from 5.2% to 5.5%; other Chinese hardwood
product (including birch, eucalyptus and poplar) decreased
from 19.8% to 19.7%; Russian birch plywood decreased
marginally from 24.5% to 24.3%; other hardwood products
from other non-tropical countries increased from 5.4% to6.5% (mainly due to a rise in birch plywood imports from
Belarus and Ukraine); and softwood products (mainly
Brazil, Chile, Russia and China) increased from 35.5% to35.7% (Figure 6.8.5).
2018 was a year of two halves for the international and EU
plywood market. A period of sharply rising prices due tolimited supply in Russia, China, Malaysia and Indonesia
and good demand in the first half of the year was followed
by a period of sharply falling prices as the supply problems
eased and market sentiment deteriorated.
The initial trigger for the change in mid-2018 was a sharp
slowdown in demand in Turkey and other parts of the
Middle East which led to more product being pushed onto
51

the EU market, particularly from
Russia, at much lower prices. This inturn encouraged prices for products
from other regions to be cut back.
Prices for Indonesian film-faced
shuttering plywood, which competes
directly with Russian film-faced birch
plywood, were forced down to theirlowest point for several years by theend of 2018. Malaysian prices wereeven lower, although the cheaper
prices were only achieved by somemills substituting tropical timbers forrubberwood for core veneer.
By the end of 2018, prices seemed tohave bottomed out and there weresigns of strengthening across theboard for tropical, Russian birch andChinese hardwood plywood which
encouraged more orders to be placedfor 2019 shipment.51

EU demand for plywood has been given
added impetus by a design trend to use
plywood as the sole manufacturing
material, with faces and edges expressed, even unfinished,
to reveal its structure and achieve an ‘industrial look’.
Birch is the favoured species in these applications, butthere are reports of manufacturers exploring the use of
darker-faced tropical species.
Feedback from traders in IMM surveys and during IMM
Trade Consultations suggests that EU plywood importers
have generally responded to EUTR by narrowing the
supply base and relying on more limited range ofexporters more willing and better placed to meet theirdue diligence requirements.

6.9 VPA partners in EU composite panel supply
The composite panels sector in Europe is mainly of interest
to VPA Partner countries for the important role it has played
to drive development of tropical wood substitutes. The sector
remains a key source of innovation in the international forest
products industry and continues to extend applications into
new areas, often at the expense of tropical wood products.
After a dip in 2012 when total production of composite
panels in the EU fell to 51.5 million m3, production
increased consistently in the following five years to 58.4
million m3 in 2017. During this period, particle board
production increased from 35.8 million m3 to 39.8 million
m3 while fibreboard production increased from 15.8
million m3 to 18.6 million m3. In 2018 production of bothparticle board and fibreboard was stable at this higher
level (Figure 6.9.1).
EU imports of composite panels also increased rapidly
between 2013 and 2017 before stabilising at the higher
level in 2018 of just over 3 million m3 (Figure 6.9.2). The
share of imports in total supply increased from lessthan 2% in 2013 to 5.4% in 2018. The increase in volume
and share of imports is due to rising trade with Belarus,
Russia and Ukraine.

 owever, this optimism proved to be short-lived – there was a strong rise in EU imports in the first quarter of 2019 at a time when the market wasHslowing, leading to another downturn in prices.

Main Report – November 2019

55

65

Fibreboard

Particle board

60
55
50
45
1 million m3

EU imports of composite panelsfrom all countries engaged in the
VPA process are negligible; no morethan 11,000 m3 per year between
2013 and 2015, rising to 15,000 m3 in2017 but falling to 7,400 m3 in 2018.
This consisted almost exclusively offibreboard, mainly from Malaysia andThailand, with a very small volume(less than 500 m3 per year) fromIndonesia and Viet Nam. Imports
from Thailand were level at 5,000 m3
in 2018, but imports from Malaysia
crashed from 9,000 m3 to less than
2,000 m3 in 2018.

40
35
30
25
20
15
10
5
0

6.10 V PA partners in EU
wooden window supply

Italy has maintained its position as thelargest wood window manufacturer inthe EU, although production fell 2.7%
to €1.46 billion in 2018. Productionin Germany increased 4% in 2018, to€850 million, rebounding after a 0.9%
decline the previous year. Production
in Sweden also rebounded in 2018, up
5.4% to €440 million, after declining
2.4% the previous year. Production in
Poland continued to rise in 2018, by
2.9% to €740 million.
However, wood window production
declined in most other leading EU
producer countries in 2018 includingFrance (-7.2% to €500 million),
Denmark (-9.2% to €440 million),
Austria (-2.2% to €420 million), UK(-10.8% to €270 million), and theNetherlands (-5.9% to €240 million)(Figure 6.10.2).
EU imports of wood windows fromoutside the EU increased by 13.1% in2018 to €36 million, recovering groundlost in the previous two years. Imports
increased 19% to €14 million from
Norway, 8% to €4 million from Bosnia
Herzegovina, and 154% to €4 million
from Belarus (Figure 6.10.3).

56		

2015

2016

2017

2018

Source: ITTO IMM analysis of Eurostat PRODCOM and COMEXTVPA fibreboard
VPA Particle Board

3.5

Non VPA fibreboard
Non VPA Particle Board

3.0
2.5
million m3

Supply of wood windows to the EU isoverwhelmingly dominated by domestic
production, which fell 1.7% to €6.14
billion in 2018. Imports from outside theEU accounted for only 0.6% of total EU
wood window supply in 2018, the same
proportion as the previous year.

2014

Figure 6.9.1: EU production of composite panels, 2013 to 2018.

2.0
1.5
1.0
0.5
0.0

2013

2014

2015

2016

2017

2018

Figure 6.9.2: EU imports of composite panels from VPA and non-VPA
countries, 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

7
billion at constant 2018 prices

The total value of wood windows
supplied to the EU fell 1.6% to €6.18
billion in 2018 following a 2.8%
increase the previous year (Figure
6.10.1). EU consumption of wood
windows in 2018 was €6.14 billion,
the second lowest level recorded in
the last twenty years (when adjusted
for inflation), only just exceeding therecord low of €6.07 billion in 2016.

2013

Imports
Other production

6

Netherlands

5

UK
Austria4

Denmark
3

SwedenFrance2

Poland10Germany
Italy
2013

2014

2015

2016

2017

2018

Figure 6.10.1: EU supply of wood windows, by country of production2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019

1.70

Italy

billion at constant 2018 prices

1.50

Germany

1.30

Poland

1.10

France0.90

Sweden0.70

Denmark

0.50

Austria
UK

0.30
0.10

Netherlands
2013

2014

2015

2016

2017

2018

million at constant 2018 prices

Figure 6.10.2: Production of wood windows in selected EU countries,
2013 to 2018. Source: ITTO IMM analysis of Eurostat PRODCOM

40

Tropicalcountries

35

Other nontropical

30

China

25

Serbia20

Turkey15

Switzerland

10

Belarus5

BosniaHerz.
Norway

0

2013

2014

2015

2016

2017

2018

million at constant 2018 prices

Figure 6.10.3: EU imports of wood windows, by country of origin
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

8

Other
tropical

7

Malaysia

6

Viet Nam

5

India

4

Brazil3

Belize2
Philippines

10Indonesia
2013

2014

2015

2016

2017

2018

Figure 6.10.4: EU imports of wood windows from tropical countries,
by country of origin 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019

Only a very limited, and declining,quantity of wood windows isimported into the EU from tropicalcountries. After imports from tropicalcountries spiked at €7 million in 2015,
mainly from the Philippines, imports
fell continuously to only at €1.8
million in 2018 (Figure 6.10.4). Of VPA
Partner countries, only Indonesia,
Malaysia and Viet Nam supply wood
windows to the EU. Imports fromIndonesia increased 68% in 2018
but, with value of €548,000, have anegligible share of the total market.
The EU imported windows with avalue of only €28,000 from Viet Namand €9,000 from Malaysia in 2018.
Most EU wood window imports fromtropical countries are destined forFrance and Belgium.
While VPA partner countries are notengaged in the EU market for finishedwindows, this sector is of interest as
a source of demand for tropical woodmaterial. From this perspective, anotable trend in the EU window sector
is towards use of engineered wood inplace of solid timber. This is particularly
true of larger manufacturers producing
fully factory-finished units that buy
engineered timber by the container load.
Increased use of engineered woodis closely associated with efforts
by window manufacturers to meetrising technical and environmental
standards, provide customers withlong lifetime performance guarantees
and recover market share from othermaterials. Increased focus on energy
efficiency means that triple-glazed
insulating window units with very low
U-factors are now more common thandouble-glazed units in Europe. These
units demand thicker, more stableand durable profiles that in practice
can only be delivered at scale using
engineered wood products.
The quality and engineering of wood
windows has undergone a revolution
in the EU in recent years so that
manufacturers are now able to deliverproducts with many of the benefits
previously reserved only for the best
quality tropical hardwood frames
using softwoods and temperate
hardwoods. Factory-finished timberwindows are given a specialist
spray-coated paint finish for evenand durable coverage, which might
only need redoing once a decade. The
lifespan of factory-finished engineered
softwood frames is now claimed to
be about 60 years, while thermally or
chemically modified temperate woods
can achieve around 80 years.

576.11 VPA partners in EU wooden
door supply
Apart from Indonesia and Malaysia,
which have successfully penetrated theEU market for door panels and finishedwood doors, the EU door sector is mainly
significant to VPA countries as a driver ofimports of wood raw materials.
The value of wood doors supplied to
the EU (EU-produced and imports)
increased 0.1% to €7.36 billion in 2018.
Most new wood door installations in the
EU comprise domestically manufactured
products. The EU’s production was static
at €7.0 billion in 2018 (Figure 6.11.1).
There was significant variation in theperformance of the wood door sector
in EU countries in 2018. Productionin Germany, the largest wood door
manufacturing country, increased
1.9% to €1.35 billion during the year.
Production in the UK fell back a further
4.5% to €810 million in 2018 after
declining 2% the previous year, thevolatility being partly due to Brexit
and partly to changes in the EUR-GBP
exchange rate.
Door production in Italy has also
been volatile, declining 7.5% to €940
million in 2018 after a 22% increase
the previous year. Production in
France fell 2.5% to €640 million
after a 5% rise in 2017. Production
in Sweden fell nearly 8% to €240
million. Elsewhere there were
solid gains during 2018, with door
production rising 6% to €580

58		billion at constant 2018 prices

8

Imports

7

Other
Sweden6

Netherlands

5

Austria

4

Poland3

Spain
France2

United Kingdom

1

Italy

0

2013

2014

2015

2016

2017

2018

Germany

Figure 6.11.1: EU supply of wood doors, by country of origin 2013 to 2018.
Source: ITTO IMM analysis of Eurostat PRODCOM and COMEXT

1.4
billion at constant 2018 prices

Furthermore, some suppliers oftropical timber – notably in Indonesia
and Malaysia – have exploited thetrend towards engineered wood andsupply laminated window scantlings,
particularly to the Netherlands andBelgium. However, in this market they
face stiff competition from treatedEuropean softwood scantlings,
oak scantlings, and Siberian larch
scantlings. Wood generally, andtropical wood specifically, has alsocome under significant competitive
pressure from non-wood materials in
the wood window sector.

Germany

1.2

Italy

1.0

UnitedKingdom
France

0.8

Spain

0.6

Poland0.4Austria

0.2
0.0

Netherlands
2013

2014

2015

2016

2017

2018

Figure 6.11.2: Production of wood doors in main EU producer countries
2013 to 2018. Source: ITTO IMM analysis of Eurostat PRODCOM

350
million at constant 2018 prices

Nevertheless, smaller independent
joiners, producing bespoke products inlow volumes, still tend to rely on solid
timber purchased from importers andmerchants to manufacture window
frames. Tropical woods such as
meranti, sapele and iroko continue tosupply a high-end niche in this market
sector, competing directly and often
successfully with oak, Siberian larch,
and western red cedar.

Other

300

South Africa

250

Norway

200

China

150

Other tropicalBrazil

100

Malaysia
50
0Indonesia
2013

2014

2015

2016

2017

2018

Figure 6.11.3: EU imports of wood doors, by principal supply country
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019million at constant 2018 prices

100%
90%

Other

80%

South Africa

70%

Norway

60%

China

50%
40%

Other tropical

30%

Brazil

20%

Malaysia

10%

Indonesia

0%
2013

2014

2015

2016

2017

2018

Figure 6.11.4: share of EU imports of wood doors, by principal supply
country 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Share of value at constant 2018 prices

100%
No VPA

90%
80%

Negotiating
(As)

70%

Negotiating
(Af)

60%
50%

Implementing
(As)

40%

Implementing
(Am)

30%
20%

Implementing
(Af)

10%

Licensing(Indonesia)

0%

2013

2014

2015

2016

2017

2018

Figure 6.11.5: EU imports of wood doors from tropical countries,
by VPA status 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

million in Spain, 7.4% to €560 million in Poland, 5% to€290 million in Austria and 9% to €280 million in the
Netherlands (Figure 6.11.2).
Wood door imports into the EU increased by 1.5% to €352
million in 2018. Imports accounted for 4.8% of the total
euro value of wood door supply to the EU in 2018, the same
proportion as the previous year (Figure 6.11.3).
Tropical countries took a larger share of the EU market forwooden doors in 2018, largely at the expense of China (Figure
6.11.4). Total EU imports from the tropics were €175 million in
2018, 8.6% up on the previous year and enough to offset a 6%
decline in 2017. In 2018, wooden door imports increased fromIndonesia by 7.8% to €112 million, Malaysia by 7.1% to €41
52

million, and Viet Nam by 134% to €6.5
million. Imports from Brazil, the only
significant non-VPA tropical supplier,increased 1.7% to €13 million. With
imports from China falling 14% to €97
million in 2018, China was overtaken byIndonesia as the largest external supplierof wood doors to the EU.
Indonesia’s share of total EU door
imports from the tropics decreased
from 64.2% in 2017 to 63.7% in 2018.
The share of imports from Viet Nam
increased from 1.7% to 3.7%. The sharefrom VPA negotiating countries, nearly
all Malaysia, decreased from 24.0%
to 23.6%. The share from non-VPA
countries, mainly Brazil, decreased
from 10.1% to 9.0%. (Figure 6.11.5).
The European wood door industry is now
dominated by products manufactured
using engineered timber, driven byrequirements to comply with higher
energy efficiency standards and efforts
to provide customers with more stableproducts and long-lifetime guarantees.
Another key trend is towards composite
doors with a steel-reinforced uPVC
outer frame with an inner frame
combining hardwood and otherinsulation material. These new products
are designed to combine strength,
security, durability, high energy
efficiency, with a strong aesthetic.
There may be a place for tropical
hardwoods in the design of theseproducts, with manufacturers
looking to combine high quality,
consistent performance, regularavailability, and good environmental
credentials with a competitive price.

6.12 VPA partners in EU supply ofmodern Engineered Wood
Products (EWPs)

6.12.1 EWP opportunities and challenges“Modern” engineered wood products (EWP) include gluelaminated lumber (glulam), laminated veneer lumber(LVL), and ‘massive’ or cross-laminated timber (CLT),
which are becoming more widely available in the EU.52
Modern EWPs have numerous advantages compared toother traditional building materials. The defects, due
to knots and other internal variations, are removed andrandomized within layers so that EWPs are stronger,
straighter, more uniform and less prone to shrinkage andsplitting than traditional sawn timber. EWPs can also carryloads over longer spans.

 he term “modern” is used here to distinguish between older EWPs, such as plywood and OSB, developed many decades ago which are now wellTestablished in the global timber market. The modern EWPs covered in this section are all those most relevant to the EU market. Other modern EWPs
- such as parallel strand lumber (PSL), laminated strand lumber (LSL), and prefabricated I-beams – are sourced mainly from North America and,
although used quite widely for timber building systems in parts of the EU, have recently become less widely available in the EU due to a preference
for LVL and supply chain considerations. A more detailed description of modern EWPs of most relevance to the EU and their market prospects is
included in the 2015-2016 IMM report.

Main Report – November 2019

59Modern EWPs offer significant
potential to expand the market
for wood, add value to wood fibre,
contribute to sustainable forest
management and efficient use ofwood, and minimise environmental
impacts, particularly those
associated with material and energy
consumption in construction.
Developing demand for EWPs, bothin the EU and wider global markets, islikely to offer specific opportunities
for VPA partner countries. These mayarise in the supply of raw material
to EWP manufacturers in the EU andother industrialised countries and,even better for adding long-term value,
through further development of EWP
manufacturing capacity and demand in
the VPA partner countries themselves.

700

Intra-EU exports

600
1000 metric tonnes

EWPs also deliver higher yields andallow transformation of smaller
dimension and lower grade wood inhigh quality structural products. Yields
are further enhanced by manufacturers
through a focus on accurate moisture
content and visual defect andultrasound wood grading to ensureeach individual timber board or veneer
is utilised for the most appropriatecomponent or product application.

800

500
Extra-EU exports

400
300
200
100
0

Extra-EU imports
2013

2014

2015

2016

2017

2018

Figure 6.12.2.1: EU internal and external trade in glulam, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT

60

1000 metric tonnes

When integrated with other woodand non-wood components into
prefabricated building systems,
EWPs offer numerous commercial
advantages. Rising interest in using
engineered wood for high density
urban construction is driven mainly
by cost-savings and reduced timeof construction.

No VPA

50

Negotiating
(As)

40

Negotiating
(Af)

30

Implementing
(As)

20

Implementing
(Am)

10

Implementing(Af)0

Licensing(Indonesia)

2013

2014

2015

2016

2017

2018

Figure 6.12.2.2: EU imports of glulam from tropical countries,

While the opportunities exist,
by VPA status 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT
there are significant challenges
for tropical producers seeking toaccess EU markets for modern EWPs,
6.12.2 V PA Partners in EU glulam supply
whether to supply wood materials
to EWP manufacturers or finished products to the
Glulam is at present the largest volume modern EWP
building sector.
supplied into the EU market. Recent production is notavailable, but estimates by the ECE Committee on Forests
EWP manufacturers tend to prefer utilising local timbers
and the Forest Industry indicate EU annual production inthat are readily available in consistent volumes andthe region of 2.5 million m3 and that the EU accounts for
qualities. CLT manufacturers in the EU will purchase only
50% to 60% of global consumption of glulam.
square-edged, fixed-width timber which is often notsupplied as standard in the hardwood industry, unlike
Anecdotal reports indicate that the glulam sector in
the softwood sector which is more accustomed to supply
Europe has struggled with over-supply and low margins inlarge volumes in fixed dimensions.
recent years. This is also indicated by data on EU trade inglulam (Figure 6.12.2.1). Intra-EU trade in glulam remained
Bringing EWP products to market requires a heavy capitalflat at around 750,000 tonnes per year for the whole period
investment, not only in plant, machinery and new skills,
between 2007 and 2018. Exports of this products from thebut also in technical testing and a commitment to working
EU were rising until 2017 but fell 4% to 468,000 tonnes inwith standards bodies to ensure that individual species are
2018. Imports into the EU, which increased slowly between
accepted for use in specific products and applications.
2013 and 2016 to peak at 129,000 tonnes, fell back 4% toNevertheless, the technical advantages of tropical
123,000 tonnes in 2017 and remained at this level in 2018.
hardwood EWPs may be considerable and offer potential
Taken together, these trends suggest relatively poor
to develop specialist grades of EWPs where high strength,
durability or aesthetic character are needed.
prospects for external suppliers to expand glulam sales
60		Main Report – November 2019

in imports from China, to 6,300 tonnes(Figure 6.12.2.3).

40
Russia1000 metric tonnes

35

Malaysia

30

Indonesia

25

Viet Nam

20

Brazil15

Belarus
China

10

Bosnia Herz.

50

Ukraine
2013

2014

2015

2016

2017

2018

6.12.3 VPA Partners in EU LVL supply
According to machinery manufacturer
Raute, global LVL production
increased from 2.5 million m3 in 2014
to around 2.8 million m3 in 2016.
Most production is in North America.
However, the EU had at least 690,000
m3 of operational LVL capacity in
2018, with another 65,000 m3 underdevelopment.53 The majority of
production is softwood, but there isa large 180,000 m3 plant in Germany
utilising beech.

At least three VPA Partner countries Indonesia, Malaysia and Thailand - areknown to be producing small volumes of
Figure 6.12.2.3: EU imports of glulam from main supply countries, 2013 to 2018.
LVL utilising a range of species, notably
Source: ITTO IMM analysis of Eurostat COMEXT
rubberwood, meranti, and sengon.54
Work to test the technical performanceof LVL manufactured in a wide range oftropical species – both from plantations and natural forestsin the EU market. Due to the investments required, the– has been undertaken in South East Asia. This work ischallenges of complying with EU standards for structuralgenerally highlighting the strong potential for LVL to extend
products, and competition from domestic manufacturers,
the range of applications for tropical hardwood, particularly
most glulam products imported from outside the EU are
fast-growing plantation species for structural applications.55
more specialised small-dimension products for nonstructural applications.
EU trade statistics indicate that some tropical LVL may beentering the EU market, although the volumes are certain
Demand for tropical glulam is concentrated in a few specific
to be small. In 2018, imports from tropical countries
niche sectors, notably for durable laminated windowof “other veneered panels” covered under HS/CN code
scantlings in the Netherlands and kitchen worktops in
441290/441299 into the EU – which includes LVL alongside
several European countries. After rising to 58,000 tonnes in
products like blockboard, laminboard, and battenboard
2016, EU imports of tropical glulam were stable in 2017 but– were 16,300 m3, 35% less than in 2017. Nearly all was
fell 4% to 56,000 tonnes in 2018 (Figure 6.12.2.2).
derived from Thailand (6,200 m3), Malaysia (5,600 m3),
Of VPA Partner countries, only Indonesia, Malaysia andIndonesia (2,100 m3) and Viet Nam (1,500 m3).
Viet Nam are significant suppliers of glulam products to6.12.4 V PA Partners in EU CLT supply
the EU. Small and irregular quantities (much less than
1000 tonnes in each case) are imported from Côte d’Ivoire,
Nearly all global CLT production is in the EU where capacity
RoC, Ghana, and Cameroon each year with no clear sign ofis estimated at around 1 million m3 in 2018. All commercial
a long-term trend, either upward or downward.
volume production is softwood. To date only a very small
volume of hardwood CLT has been manufactured in the EU
EU imports of glulam from Indonesia fell 19% to 16,500
to supply high-end bespoke projects, notably a health centre
tonnes in 2018 following a 10% fall the previous year.
completed in the UK in 2017, claiming to be the world’s first
This downturn is at least partly due to the classification
hardwood CLT building.
of products imported from Indonesia previously
identified as glulam as plywood following introduction
While at present only temperate hardwoods are beingof FLEGT licensing.
considered for use in CLT in the EU, some larger tropicalsuppliers have expressed interest in exploring theImports of glulam from Malaysia fell 19% to 20,000 tonnes
opportunities for tropical hardwood in this sector, given
in 2018, reversing gains made the previous year. However,
the high strength to weight ratio of many tropical species,
imports from Viet Nam increased 51% to 9,200 tonnes inand their durability (implying competitive advantages for2018 after a 4% decline in 2017.
tropical hardwoods in CLT elements exposed to the weather).
In 2018, EU glulam imports increased 4% from Russia to
Preliminary research work to assess the potential for tropical
37,000 tonnes, 79% from Brazil to 6,500 tonnes and 21%
wood species in CLT has been initiated in Malaysia focusingfrom Belarus to 6400 tonnes. But there was a 9% decrease
53

I n 2018, known LVL capacity in the EU included 230,000 m3 operated by Metsa in Finland, 100,000 m3 capacity operated by Stora Enso in Finland,
80,000 m3 operated by Steico in Poland, 180,000 m3 operated by Pollmeier in Germany. In June 2019, Metsä inaugurated a new line with additional
65,000 m3. In addition, MLT in western Russia had 150,000 m3 of installed capacity in 2018.
54
Paraserianthes falcataria, a fast-growing timber species native to Indonesia
55For example: (a) Laminated Veneer Lumber (LVL) Sengon: An Innovative Sustainable Building Material in Indonesia, International Journal of
Integrated Engineering, Vol. 10 No. 1 (2018) p. 17-22, Corresponding author: ali.awaludin@ugm.ac.id; (b) Physical-Mechanical Properties of Glued
Laminated Timber Made from Tropical Small-Diameter Logs Grown in Indonesia, Rahma Nur Komariah, Article in Journal of the Korean Wood
Science and Technology, March 2015; and (c) Structural Characteristic Laminated Timber of Indonesian Timber, Sri Handayani et al, International
Journal of Innovative Research in Advanced Engineering (IJIRAE), Issue 12, Volume 2 (December 2015).
Main Report – November 201961

on sesenduk (Endospermum malaccense),a fast-growing native pioneer species(Hamdan et al, 201656) and Acacia
mangium, a leading plantation species in
Malaysia (Yusof et al, 201957).

No VPA

4.5

Negotiating
(As)

4.0
million square meters

According to Yusof et al (2019),
developing CLT products from tropicaltimber requires “extensive research
and works comprising raw materials
screening, manufacturing process,testing, manual development, standard,and certification as well as design
and prototyping”. However, based on
analysis of the density and mechanicalproperties of Acacia mangium wood, it
is concluded that “this species offers
great potential as raw material for CLT
manufacture” and “it is anticipatedthat CLT from A. mangium would givesuperior strength values”.

5.0

3.5

Negotiating
(Af)

3.0

Implementing
(As)

2.5
2.0

Implementing
(Am)

1.5

Implementing
(Af)

1.0
0.5

Licensing(Indonesia)

0.0

2013

2014

2015

2016

2017

2018

Figure 6.13.1: EU imports of real wood flooring from tropical countries,
by VPA status 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

6.13 V PA partners in EU
real-wood flooring supply
100%

Other
tropicalViet Nam

90%
Share of imports in m2

80%
70%

Brazil60%

Indonesia

50%

Malaysia

40%

Other
non-tropicalUkraine

30%
20%
10%
2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

China
2005

0%

2004

After nearly two decades of almost
continuous decline, the real-woodflooring sector in the EU is now anegligible market for VPA partner timber
products. EU imports of real-woodflooring from tropical countries fell
again in 2018, by 13% to 2.68 million m2(Figure 6.13.1). In 2018, imports fell 7%
from Indonesia to 812,000 m2, 8% from
Malaysia to 927,000 m2, and 29% fromThailand to 45,000 m2. A 6% increasein imports from Viet Nam, to 252,000m2 was insufficient to offset the wider
decline. Imports from other VPA Partnercountries were insignificant. Imports
from Brazil, by far the largest non-VPA
supplier of tropical flooring to the EU, fellby 27% to 435,000 m2 during the year.

Figure 6.13.2: Share of EU imports of real wood flooring, by main supply

countries 2004 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT
Total imports of real-wood flooring
into the EU increased 6.1% to 28.90
million m2 in 2018. Tropical countries
accounted for only 9.3% of total
using significant volumes of hardwood for which there isimports in 2018, down from 11.5% the previous year andreliable data on the usage of different species in finishedfrom close to 50% before the financial crises. EU imports
products. Flooring is also a high visibility product whichof real-wood flooring from China increased 9% to 17.99
impacts significantly on the look and feel of a room. The
million m2 in 2018. China’s share of total imports increased
consumer choices made in the selection of flooring arefrom 60.9% in 2017 to 62.3% in 2018, regaining some of thelikely to be strongly correlated with choices of othershare lost between 2012 and 2016. The biggest increase inproducts, such as furniture, kitchens, doors and panelling
imports in 2018 was from Ukraine, up 28% to 4.47 million
which are all more important markets for VPA Partner
m2. Ukraine’s share of total imports increased from 12.8%
countries and for which there is little or no data on woodin 2017 to 15.5% in 2018 (Figure 6.13.2).
species preferences.
Despite the shrinking share of VPA partners in the EU
market for real-wood flooring, analysis of this sector
is worthwhile for the insights it provides into wider
market trends more directly relevant to VPA countries.
Due to the efforts of the European Association of Parquet
Flooring Manufacturers (FEP), this is the only sector

The real-wood flooring sector highlights the significanceof fashion trends in driving demand for different wood
products. A complex mix of forces is at play in setting thesetrends. Fashion is itself an iterative process driven by theinteraction, through the media and other communication
channels, between designers, manufacturers and retailers56 amdan et al, 2016, Cross-laminated Timber: Production of Panel Using Sesenduk Timber Species, FRIM Timber Technology Bulletin No. 59, 2016, https://H
www.researchgate.net/publication/332009399_CROSS-LAMINATED_TIMBER_PRODUCTION_OF_PANEL_USING_SESENDUK_TIMBER_SPECIES
57
Mohd Yusof, N., Md Tahir, P., Lee, S.H. et al. J Wood Sci (2019) 65: 20. https://doi.org/10.1186/s10086-019-1799-z.
62		Main Report – November 2019

100%
90%
Tropical

80%
70%

Other

60%

Pine

50%

Maple

40%

Beech

30%

Ash

20%

Oak

10%
0%

2008

2010

2013

2016

2018

Figure 6.13.3: Share of species used for real-wood flooring surfaces
by FEP members, 2008 to 2018. Source: ITTO IMM analysis of FEP

100

FEP Countries

EU outside FEP“traditional” product in the European
market. The fashion has focused verymuch on European oak due to its
distinctive grain and colour, although
American white oak is widely used as
an alternative. As it is perceived to beless attractive to European customers,
manufacturers have been much lessinclined to use American red oak,despite this being the staple wood for
flooring in North America.
Over time, European manufacturers
have extended the range of looks thatcan be achieved with oak throughdevelopment of new stains and otherfinishes and broadened applications with
development of new surface coatings.
The appeal of European oak to customers
has been further boosted by it being
widely portrayed as an environmentallybenign material, widely available either
FSC or PEFC certified, contributing todevelopment of rural livelihoods andwith a low carbon footprint.

However, this level of market
dominance of a single, relatively slow
80
growing and naturally constrained,
hardwood species, has created its own
70
problems for the European hardwood
60
sector. Demand for other hardwoods,
including other temperate species such50
as beech as well as tropical timbers
40
have declined. Prices for European oak
have risen dramatically in recent years,
30
particularly since manufacturers in
20
China and other Asian countries havealso followed the fashion for oak. Under10
normal circumstances, this might be0
expected to encourage manufacturers to
2013
2014
2015
2016
2017
2018
look for and switch to cheaper hardwood
alternatives. However, indications so
Figure 6.13.4: EU production of real wood flooring, 2013 to 2018.
far are that there has been enormous
Source: ITTO IMM analysis of FEP
resistance to this. The only species otherthan oak to have seen any recent growthin usage has been ash, primarily because
on the one hand, and their customers on the other. In their
it can most closely match the grain
designs and material choices, manufacturers and designers
and look of oak. Availability of ash may also be increasing,both respond to signals from their customers and thetemporarily, due to the spread of ash die-back in Europe andwider socio-economic environment, and some of the larger
the emerald ash borer in North America.
and more influential can themselves reinforce consumer
The reasons for the resistance amongst European
attitudes and preferences. The smaller, less influential andmanufacturers to switch away from European oak, despite
innovative, or simply more risk-adverse, will follow the leadhigh material prices, are not entirely clear and may be varied.
of larger manufacturers and also reinforce the trend.
To some extent the rising oak prices have been mitigatedAnalysis of the real-wood flooring sector suggests this process
through innovation in the hardwood processing sector byhas been a powerful force in reducing demand for tropicalsome of the larger operators to increase yield, for example
timber products in the EU. FEP data shows how one single
through CT scanning of logs and use of increasingly thin
species – oak – has come to dominate surfaces in this sector.
face veneers alongside new impact resistant layers. The
The share of oak surfaces in European real-wood flooringwood flooring sector in Europe is also highly fragmented,
production was 80.7% in 2018, up from 71% five years earlier
dominated by many smaller manufacturers, which lack theand 58% in 2008. During the same period, the share of tropicalresources to develop and market innovative new products
timber fell from 15% to less than 4% (Figure 6.13.3).
using different wood species. In this sector, there are many
more followers of fashion than operators willing and able to
The initial preference for oak amongst manufacturers
shift customers’ entrenched attachment to oak.
was due to the species being readily available fromregional sources in Europe, the species attractive grain
The ability of real-wood flooring manufacturers inand good working properties, and oak’s strong appeal as aEurope to influence the market is further constrained
million square meters

90

Main Report – November 2019

63

The real-wood flooring sector
faces particularly fierce directcompetition from Europe’s laminate
flooring industry, which is large andsophisticated with sales dwarfing
those of the real-wood sector. Throughscale and innovation, this industry has
become increasingly capable to supply
products which mimic the look and feelof real wood, while offering superior
technical performance and lower
maintenance at a fraction of the cost.
According to the Association European
Producers of Laminate Flooring, total
European sales of laminate flooring2
were 334 million m in Europe in
2018, around 4% less than in 2017 andthe second straight year of decline.
While sales in Eastern Europe wereflat at 128 million m 2 in 2018, sales inWestern Europe declined 6% to 206
million m 2. This shows that even thelaminates industry is now losing sharein the EU to a range of non-woodflooring products such as luxury vinyl
tiles, porcelain tiles, and products
made of recycled materials and otherrenewables like bamboo and cork.

EU wood furniture consumption was€39.5 billion in 2018, a gain of only 1%
compared to 2017. This compares toan average annual increase of 4% in
the previous four years. During 2018,64		

billion at constant 2018 prices

Belgium

35

Austria30

Sweden25

Netherlands

20

PolandSpain

15

France

10

Italy

5
0

UK
Germany
2013

2014

2015

2016

2017

2018

Figure 6.14.1: EU consumption of wood furniture, by main consumer
country 2013 to 2018. Source: ITTO IMM analysis of Eurostat PRODCOM and COMEXT

Othertropical

6.0

Malaysia

5.0

India

4.0

Indonesia

3.0

Viet Nam

2.0

Other
non-trop

1.0
0.0

China
2013

2014

2015

2016

2017

2018

Figure 6.14.2: EU imports of wood furniture, by main supply country
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

6.14 V PA partners in EU
wood-furniture supply

1.8

No VPA

1.6
value at constant 2018 prices

Furniture suppliers in VPA partnercountries face intense competitionin the EU market from domestic
manufacturers and exporters inEastern European countries outside
the EU, as well as in China and India.
This competition intensified in 2018 as
the rate of growth in wood furnitureconsumption in the EU slowed while
production continued to increase insome EU countries, notably Poland andSpain. Total imports into the EU dippedin 2018, with both tropical countries
and China losing market share.

Other

40

billion at constant 2018 prices

by the intense competition in the
sector, not only from other real-wood
manufacturers, but from the wideand expanding range of producers oflaminates and non-wood products.
Margins have been severely squeezed
by this competition. An indication ofthis is provided by FEP data whichshows that after reaching a decadalhigh in 2017, real-wood production in
FEP countries fell 1.3% to 75.3 million
m2 in 2018 (Figure 6.13.4). Total realwood flooring consumption in FEP
countries also fell in 2018, by 2.3% to79.9 million m2.

Negotiating
(As)

1.4
1.2

Negotiating
(Af)

1.0
0.8

Implementing
(As)

0.6

Implementing
(Am)

0.4

Implementing
(Af)

0.2
0.0

2013

2014

2015

2016

2017

2018

Licensing(Indonesia)

Figure 6.14.3: EU imports of wood furniture from tropical countries,
by VPA status 2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019billion at constant 2018 prices

0.8

2013

2014

2015

2016

2017

2018

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

Viet Nam Indonesia

India

MalaysiaBrazilThailand

Other

Figure 6.14.4: EU imports of wood furniture from leading tropical countries,
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

12

billion at constant 2018 prices

2013

2014

2015

UK

Spain

2016

2017

2018

10
8
6
4
2
0

Italy

Germany Poland

France Romania Lithuania

VPA countries increased 8% to €416
million in 2018, mainly driven by a
11% rise in imports from India, to €238
million. Imports from Brazil, the only
other significant tropical supplier not
engaged in the VPA process, were down
7% to €112 million.
EU imports of wood furniture fromIndonesia declined 2% to €301 million
in 2018. In tonnage terms there wasa 3% fall, to 99,000 tonnes. The
relative lack of growth in EU furnitureimports from Indonesia since thestart of FLEGT licensing in November
2016 is disappointing, but the trend
is influenced by wider stagnation in
EU furniture market growth and byintense competition in the sectors
targeted by Indonesian manufacturers.
Indonesia’s furniture exports tothe EU are dominated by outdoor
products, particularly due to relatively
abundant plantation teak supplies.
There is now intense competitionin this sector from a wide range ofmodified temperate wood and nonwood products which are taking sharefrom tropical hardwoods. Indonesia’slong woodworking tradition has also
encouraged a focus on high quality
specialist hand-made furniture tosupply a niche market in the EU. In
this market, Indonesia competes mostdirectly with India which is currently
increasing market share despite
the lack of any comparable timber
legality assurance system in India orwidespread availability of third-party
certified wood in the country.

Of tropical countries, Viet Nam is theleading supplier of wood furniture to
Figure 6.14.5: Production of wood furniture in main EU producer country
the EU. In value terms, EU imports
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT
from Viet Nam were flat in 2018, at€723 million, but in tonnage terms
imports increased 6%, to 233,000
there was strong consumption growth in Spain (+28% to €1.9
tonnes. The Vietnamese furniturebillion), the Netherlands (+7% to €2.4 billion), and Poland
sector has gained a reputation in the EU for supply of(+6% to €1.6 billion). However, this was offset by declining
large volume mid-range products, both for exteriors and,
consumption in the UK (-6% to €6.2 billion), Italy (-13% to €5.3
increasingly, for interior use. IMM survey work indicatesbillion) and France (-2% to €4.3 billion). Consumption was flatthat the Vietnamese furniture industry is regarded by EU
in Germany at €9.6 billion (Figure 6.14.1).
importers as technically more evolved than most other
Asian producer countries and increasingly able to supply
The slow development of the EU wood furniture market inproducts to high European quality standards.
2018 is also apparent in the import data. After rising 7%
in 2017, the value of EU imports of wood furniture from
Imports of wood furniture from Malaysia in 2018 fell
non-EU countries fell 1% to €6.21 billion in 2018. Imports
1% in value terms to €197 million but increased 5% infrom China, by far the largest external supplier, fell 4%
tonnage terms to 101,000 tonnes. Malaysia is supplying
to €3.1 billion in 2018 and imports from tropical countries
the EU market with high quality furniture products, but
fell 0.5% to €1.69 billion. However, continuing the trend
in a much smaller range than Viet Nam with a heavy focusof recent years, there was a 7% rise in imports to €1.46
on rubberwood and other plantation species.
billion from temperate countries mainly bordering the
EU imports of wood furniture from Thailand fell 5%EU, notably Ukraine, Belarus and Turkey (Figure 6.14.2).
to €56 million in 2018, the lowest level for at least 15
EU imports of wood furniture from VPA partner countries
years. IMM survey work has highlighted that furniture
declined 3% to €1.28 billion in 2018. VPA partner share of
suppliers in Thailand are rated by EU buyers as relatively
furniture imports from tropical countries fell from 77.4%
uncompetitive both in the range of products offered andin 2017 to 75.4% in 2018 (Figure 6.14.3). Imports from nonin lead times and logistics.
Main Report – November 2019

65

Despite only slow production growth,
EU manufacturers are maintaining
their hugely dominant position in the
EU wood furniture market. In 2018,87.0% of all wood furniture sales inthe EU market comprised products
manufactured within the EU, amarginally higher percentage than in
the previous year (86.8%).

billion at constant 2018 prices

The value of EU wood furnitureproduction was €41.4 billion in 2018,
only 0.8% more than the previous year.
This continues the trend of slow, but
consistent, annual growth of around
1% in the last 5 years. In 2018, slowing
wood furniture production in France,
Romania, and Sweden offset gains
made in Poland, the UK, Lithuania andthe Netherlands. Production in Italy
and Germany, the two largest wood
furniture manufacturing countries inthe EU, was flat in 2018 (Figure 6.14.5).

7.5

Extra-EU exports

7.0
6.5
6.0

Extra-EU imports

5.5
5.0
4.5
4.0

2013

2014

2015

2016

2017

2018

Figure 6.14.6: EU external trade in wood furniture, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT

50

40
million tonnes

EU imports of wood furniture from all
VPA partner countries in Africa had atotal value of only €670,000 in 2018,
12% less than the previous year. EU
importers believe it is highly unlikelythat producers in the African VPA
countries will evolve into suppliers
for the furniture market due to thespecies available and especially a lackof the required technical capacity.
There were no EU imports of wood
furniture from either Guyana or
Honduras in 2018.

30

20

Imports chemical
Imports mechanical
Production chemical
Production mechanical

10

Production recovered fibre
The EU has maintained a trade surplus
in wood furniture since 2011 when
0
2013
2014
2015
2016
2017
2018
exports to non-EU countries overtook
imports from outside the EU. This
surplus narrowed sharply between
Figure 6.15.1: EU supply of wood pulp, by main product and source,
2013 and 2017, from €2.22 billion toand production of recovered fibre, 2013 to 2018.
€890 million as exports were broadly
Source: ITTO IMM analysis of Eurostat PRODCOM and COMEXT
flat and imports increased, particularly
from neighbouring European
countries. In 2018, the downturn in EU
and reducing the relative labour cost advantages ofimports was mirrored by a similar downturn in exports socompetitors, such as those in the Far East.
that there was only a minor adjustment in the surplus to€780 million (Figure 6.14.6).
The relative high degree of fragmentation in the European
retailing sector tends to complicate market access for overseas
There are many reasons for the continuing dominance of
suppliers who are often reliant on agents and lack direct
domestic manufacturers in the European wood furnitureaccess to information on fashions and other market trends.
sector. Although labour costs are quite high in Europe relative
The progressive migration of European furniture sales online
to China and South East Asia, furniture manufacturers in theis also tending to favour local manufacturers better placed
EU are making a virtue of their shorter supply chains which
to meet the demand for customisation, short lead times andnot only reduce transport costs but also allow products to be
returns policies from internet retailers and consumers.
customised and delivered more rapidly.
To overcome these hurdles, some Chinese companies have
The large investment by Western European furniture
engaged in “branding/know-how” acquisitions and othermanufacturers in Eastern European countries, particularly
agreements or mergers with leading European furnituresince their accession into the EU from 2004, is now maturing.
manufacturers. This reflects a strategic decision by
From being principally production satellites for large western
Chinese companies to invest closer to major western
European brands, Eastern European manufacturers are now
consumers and to add high-end and mid-high-end
developing their own identity and market momentum.
brands to their product portfolio. Examples of Chinese
Increasingly advanced computer-controlled andacquisitions in Europe include the 2018 acquisition by the
Chinese furniture giant Kuka of the German upholsteredautomated manufacturing has also benefited European
furniture manufacturer Rolf Benz and the acquisition by
producers, boosting their productivity, cutting overheads

66		

Main Report – November 2019

9
Other

8

Indonesia

million tonnes

7

Thailand6

South Africa
Russia5

Norway4

Canada

3

Chile

2

Uruguay1

USA

0Brazil
2013

2014

2015

2016

2017

2018

Figure 6.15.2: EU imports of wood pulp, by country of origin 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT

350

1000 tonnes

300

Other

Thailand

250
200
150

Indonesia

supply in 2018, up from 17.7% in 2017. In
the EU, around 50% of the fibres usedby the paper industry now come frompaper for recycling. EU production ofrecovered fibre was stable at just over
20 million tonnes in 2018. (Figure 6.15.1).
According to the Confederation ofEuropean Paper Industries (CEPI),
output of market pulp in the EU
increased by nearly 5% in 2018, much
more rapidly than integrated pulp,58
as a consequence of substantial
investments in new capacities andgrowing demand. In real US$ terms,
prices for market pulp in the EU
in 2018 were at their highest level
since 2001. Although partly due tostrong EU demand for packaging
board and hygiene paper grades,
high prices for market pulp in 2018
were driven more by changes in thewider global market, particularly the
Chinese ban on imports of mixed,
unsorted, recycled waste papers from31 December 2017 which increased
Chinese demand for market pulp
during the first three quarters of
2018. Prices for market pulp in the
EU began to weaken again in the lastquarter of 2018, primarily due toshrinking demand in other regions,with China again leading the trend.

EU imports are almost all from Southand North America, with a negligible
volume from the tropics. Brazil’s pulp
supplies are derived from plantations
50
mostly located in sub-tropicalregions of the country. Brazil’s share02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018of EU wood pulp imports was 49.1%
in 2018, up from 48.5% the previous
year. The share of Uruguay increased
Figure 6.15.3: EU imports of wood pulp from tropical countries, 2004 to 2018.
from 14.9% in 2017 to 15.7% in 2018.
Source: ITTO IMM analysis of Eurostat COMEXTUS share declined from 17.1% to 16.1%
and Chile’s share fell from 9.1% to8.4%. The rise in share of Uruguay
Qumei Home Furnishings of the Norwegian furniture
and Brazil at the expense of the US in 2018 continues acompany Ekornes.
long-term shift from supplies in North to South America(Figure 6.15.2).
100

6.15 VPA partners in EU pulp supply
Wood pulp supply to the EU increased 0.7% to 47.0 million
tonnes in 2018, following a 1.3% increase the previous year.
In 2018, EU pulp production increased 0.1% to 38.5 million
tonnes, with production of mechanical pulp unchanged
at 8.4 million tonnes and chemical pulp production rising
0.2% to 30.1 million tonnes. EU imports of wood pulp,
consisting almost exclusively of chemical pulp, increased
3.4% to 8.6 million tonnes in 2018, following a 1.2% fall theprevious year. Imports accounted for 18.2% of total EU pulp

58

Indonesia and Thailand are the only VPA partnercountries supplying pulp to the EU and the volumes
involved are extremely low. EU pulp imports fromIndonesia, consisting entirely of chemical hardwood
pulp, declined 94% to less than 1,000 tonnes in 2018.
Indonesia’s pulpwood plantations consist primarilyof Acacia mangium with smaller quantities of Acacia
crassicarpa, Gmelina arborea and Eucalyptus deglupta.
The negligible level of EU pulp imports from Indonesia
is due to nearly all the available supply being absorbed
by paper, board, and tissue mills in both Indonesia and arket pulp is supplied to the EU by specialist pulp producers in the EU, as imports from outside the EU, and by companies that use the bulk of theirMpulp output in their own integrated paper production while selling the remaining part on the open market. Of the 47 million tonnes of pulp supplied to
the EU in 2018, around half (23.6 million tonnes) was market pulp including 15 million tonnes produced domestically and 8.6 million tonnes imported.
EU market pulp is mainly produced by mills in Finland, Sweden, France, Portugal, Spain, Austria, Germany, and Poland. Finland and Sweden are major
producers of softwood and hardwood pulps, with Portugal and Spain also providing significant amounts of hardwood pulp grades to the market.

Main Report – November 2019

67

In 2018, the EU’s export of wood pulp
to VPA partner countries exceeded
imports from those countries. In total,
the EU exported 218,000 tonnes ofwood pulp to VPA partners in 2018,
12% less than in 2017. 146,000 tonnes
were destined for Indonesia and 46,000
tonnes for Thailand.
The EU’s total exports of wood pulp,
mainly comprising softwood chemical
product, fell 2% to 4.37 million tonnes
in 2018, with over half this volume
destined for China. Indonesia iscurrently the EU’s fourth largest wood
pulp export destination after China,
Turkey and India.

120

80

There have also been significant
changes in the composition of products
manufactured in the EU. According
to CEPI, the divergence in European
production trends of graphic grades
against packaging grades continued
in 2018. A decline in the productionof graphic grades was mirrored by
growth in the output of packaging
grades (Figure 6.16.2).
Packaging grades accounted for
54.2% of total European paperand board production in 2018, up
from 51.7% in 2017 and only 47.9%
five years before. In the packaging
sector, production growth has been
68		

40

EU exports

20

EU imports

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 6.16.1: EU production, consumption and trade in paper and board,
2004 to 2018. Source: IMM analysis of FAO and Eurostat COMEXT

55
50
45
Packagingand board
Othergraphics

million tonnes

40
35
30
25

Sanitary andhousehold
Newsprint
Other

20
15
10
5
0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 6.16.2: Production of paper and board in CEPI member countries,
2004 to 2018. Source: Confederation of European Paper Industries (CEPI)

8
Other

7

million tonnes

However, the overall stasis in EU paper
production, trade and consumption
hides significant structural changes.
CEPI observe that paper production
measured in tonnes under-estimates
the actual level of market improvement
in recent years due to the ongoing
trend towards light-weighting in
response to efforts to improve resource
efficiency in the sector.

EU consumption

60

06.16 VPA partners in
EU paper supply
In 2018, there was little change intotal EU paper and board production,
consumption and trade. This continues
a period of apparent stability on-goingsince 2010 (Figure 6.16.1). EU paperand board production in 2018 was
92.8 million tonnes, exactly the sameas the previous year. Imports into
the EU increased 2% to 7.41 million
tonnes in 2018, while exports to otherregions fell 0.4% to 19.6 million tonnes.
Overall consumption throughout the
EU increased just 0.3% to 80.6 million
tonnes in 2018.

EU production

100

million tonnes

China. EU pulp imports from Thailand
increased 17% to 33,000 tonnes in2018. Thailand’s pulpwood plantations
comprise mainly Eucalyptus
camaldulensis (Figure 6.15.3).

Serbia6

Indonesia

5

Brazil4

TurkeyCanadaRussia

3

China

2

Norway1
0

Switzerland
USA
2013

2014

2015

2016

2017

2018

Figure 6.16.3: EU imports of paper, by main supply country, 2013 to 2018.
Source: ITTO IMM analysis of Eurostat COMEXT

Main Report – November 2019

400

No VPA

1000 tonnes

350
300

Negotiating
(Af)

250

Negotiating
(As)

200

Implementing
(Af)

150

Implementing
(Am)

100

Implementing
(As)

50

Licensing(Indonesia)

0

2013

2014

2015

2016

2017

2018

Figure 6.16.4: EU imports of paper from tropical countries, by VPA status2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

300
250

1000 tonnes

Indonesia
India

200

Thailand
Malaysia

150

Viet Nam
100

Singapore

50
0

2013

2014

2015

2016

2017

Figure 6.16.5: EU imports of paper from main tropical countries,
2013 to 2018. Source: ITTO IMM analysis of Eurostat COMEXT

strongest in case materials (mainly used for transport
packaging and corrugated boxes), followed by cartonboard, with only slow growth in wrapping grades (usedfor paper bags production).
Graphic grades accounted for 35.0% of total European
paper and board production in 2018, down from 36.3% in
2017, and from 39.8% five years before. Within the graphics
59
sector, production of higher quality coated woodfree
paper (for magazines, catalogues and similar) was risingslowly, but this was offset by larger falls in production of
uncoated office papers and newsprint.
Sanitary and household grades are estimated by CEPI tohave accounted for 6.7% of European paper and board
production in 2018, down from 7.9% in 2017 and from
8.5% in 2014. All other grades of paper and board mainly for industrial and special purposes – accounted
59

2018

for 4.2% of European paper andboard production in 2018, the same
proportion as the previous year but arise from 3.8% five years earlier.
The 2% rebound in EU imports ofpaper products in 2018 was driven
mainly by a 26% increase from Turkey,
a 16% increase from Canada, anda 13% increase from Brazil. Thesegains offset an 11% decline in imports
from Switzerland, the second largest
external supplier after the USA. Imports
from other large external supply
countries – including the USA, Norway,
China, and Russia – were either stableor slightly rising in 2018 (Figure 6.16.3).
EU paper product imports fromtropical countries decreased 2% to389,000 tonnes in 2018 when they
represented just 5.3% of total imports(5.5% in 2017) and 0.4% of total
paper supply to the EU (0.4% in 2017).
EU imports from all VPA partnercountries decreased 7% to 302,000
tonnes in 2018 (Figure 6.16.4).
The trend in EU imports of paper
products from tropical countries
is driven primarily by Indonesia,
by far the largest supplier amongst
tropical countries. EU imports fromIndonesia decreased 9% from arecord level of 279,000 tonnes in 2017
to 253,000 tonnes in 2018.
In 2018, Indonesia accounted for
65% of all paper products importedby the EU from tropical countries,
down from 70% in 2017. Products
imported from Indonesia consist
primarily of uncoated papers forwriting and printing, together withkaolin-coated papers for a variety ofprinting applications.

The only other tropical countries
supplying non-negligible quantitiesof paper to the EU are India, Thailand, Malaysia, Viet Namand Singapore (the latter most likely re-exports fromother Asian countries). In 2018, EU imports of paper from
India increased 28% to 73,000 tonnes and India’s share ofimports increased from 14% to 19%. Imports also increased
86% to 13,000 tonnes from Viet Nam in 2018. However,imports decreased 10% to 19,000 tonnes from Thailand, 3%
to 18,000 tonnes from Malaysia, and 12% to 3,100 tonnes
from Singapore. (Figure 6.16.5).
As in the pulp sector, EU paper exports to VPA partnercountries exceeded imports in 2018, although the volumes
involved were still quite limited. In 2018, the EU exported
734,000 tonnes of paper to VPA partner countries, 8% lessthan the previous year. The EU exported paper to all VPA
partner countries, although the majority went to Malaysia(165,000 tonnes), Thailand (146,000 tonnes), Indonesia(139,000 tonnes), and Côte d’Ivoire (92,000 tonnes).

 oodfree paper is created exclusively from chemical pulp rather than mechanical pulp. Although chemical pulp is usually derived from wood,Wmost of the lignin is removed and separated from the cellulose fibres during processing and therefore the paper is described as woodfree.

Main Report – November 2019

69

7

EUTR Implementation
7.1 Overview
Consistent and effective enforcementof the EU Timber Regulation (EUTR)
continued to be mentioned during
IMM European surveys and Trade
Consultations as a means to provide an
immediate market advantage for FLEGTlicensed timber. The rankings of the EUTR
as a fairly significant driver of decline ofcurrent European imports of timber from
VPA partner countries by the Berlin60
and Antwerp61 Trade Consultations62
and the IMM 2018 trade survey63,
combined with even higher rankingsof the Regulation as a future market
opportunity for timber from VPA partnercountries, demonstrate that the EUTR isconsidered a powerful instrument thatis having market impacts.64

900

June-Nov. 2017

800

July-Dec. 2018

700
600
500
400
300
200
100
0

Checks conducted

Due diligence satisfactory

Due diligenceunsatisfactory

Figure 7.2.1: Operators with satisfactory/unsatisfactory due diligence systems.
Source: IMM analysis of UNEP/WCMC data

It is an encouraging sign thatcompanies represented in Berlinand Antwerp unanimously felt that the EUTR should
be maintained, in spite of its making timber sourcing
more challenging for them at the moment. Even moreencouraging is that both Trade Consultations selected “aregulatory approach involving increased supply of FLEGTlicensed tropical timber linked, to consistent and effective
enforcement of EUTR to remove illegal wood”, as thenumber one opportunity for future market development oftimber from VPA partner countries in the EU.
However, trade representatives continued to place emphasison the relevance of consistent and effective enforcementof the EUTR throughout the EU as a basic condition for
its positive impacts to fully materialise. The following
sections look in more detail into the state of play of EUTR
implementation against the IMM set of indicators.65

7.2 Application of EUTR compliant due diligencesystems by operators in MS
Since the preparation of the previous IMM Annual Report,66
UNEP/WCMC updated information on EUTR Competent
Authority checks on operators and check results in two

Overview Reports67 published in mid-2018 and early 2019,respectively. According to the two reports, Competent
Authorities in EU Member States conducted a total of 7,172
checks on operators between December 2017 and December
2018. The bulk of checks (5,750) targeted domestic
operators, reflecting the importance of domesticallyproduced timber for EU markets. However, for IMM theinspections referring to timber imported from non-EU
countries are particularly relevant, which is why only
checks on operators importing timber from outside the EU
will be considered in the following analysis.
The most comparable reports in terms of length andseasons covered are the reports for the periods JulyDecember 2018 and June-November 2017.68 The following
analysis therefore draws on these reports.
The number of checks targeting operators importing timberfrom outside the EU more than doubled at 805 (JuneNovember 2017: 388) in the 2018 reporting period compared
to 2017. At the same time, the number of countries69
reporting checks increased from 21 to 26. Of the EU Member
States, Hungary was the only country that reportedly did
not undertake checks in the 2018 period, while Greece and60http://www.flegtimm.eu/index.php/newsletter/flegt-market-news/80-risks-and-opportunities-drivers-of-the-eu-tropical-timber-market
 ttp://www.flegtimm.eu/index.php/20-news/project-news/143-dutch-and-belgian-trade-comment-on-drivers-of-tropical-timber-demandh62
Trade Consultations are a series of meetings organized by the IMM programme in the EU key tropical timber consuming countries. The Consultations
aim to gauge the trade’s views and discuss opinions of relevant FLEGT-related topics identified as a part of IMM surveys. IMM also shares latest
survey and study results with trade representatives during the Consultations. Consultations were held in London (March), Nantes (May) and Berlin(November) during 2018 and in Anterp (April) and Barcelona (October) during 2019.
63http://www.flegtimm.eu/index.php/newsletter/imm-surveys-interviews/110-flegt-licensing-and-eutr-impact-on-european-tropical-timber-procurement64
It is not the objective of the FLEGT Action Plan or EUTR to increase or decrease imports from a particular region. However, delegates at IMM Trade
Consultations felt that, while currently making importing more difficult because of due diligence obligations, the EUTR was helping to address
reputational issues of the tropical timber sector in the long term, which is considered essential for the market development of tropical timber.
65
IMM Global Indicators I EU Timber Regulation http://www.flegtimm.eu/images/imm_indicators/IMM_Meth_Annex1_Indicators_global.pdf
66
FLEGT VPA Partners in EU Timber Trade 2017. Sarah Storck/Rupert Oliver. (IMM/ITTO 2017) http://www.flegtimm.eu/images/annual_reports/VPAPartners-in-EU-Timber-Trade-2017-1.pdf
67
Overview of Competent Authority EU Timber Regulation Checks for the period December 2017-June 2018 (UNEP/WCMC 2018_2) and Overview ofCompetent Authority EU Timber Regulation Checks July 2018-December 2018 (UNEP/WCMC 2019)68
Overview of Competent Authority EU Timber Regulation Checks for the period June 2017-November 2018 (UNEP/WCMC 2018_1)
69
Norway, Lichtenstein and Iceland are covered by the Overview Reports, in addition to the 28 EU countries.
61

70		

Main Report – November 2019

Unsatisfactory
due diligence

160
140

Satisfactory
due diligence

120
100
80
60
40

Belgium

FranceGermany

Italy

Netherlands

Spain

Jul-Dec 2018

Jun-Nov 2017

Jul-Dec 2018

Jun-Nov 2017

Jul-Dec 2018

Jun-Nov 2017

Jul-Dec 2018

Jun-Nov 2017

Jul-Dec 2018

Jun-Nov 2017

Jul-Dec 2018

Jun-Nov 20170

Jul-Dec 201820
Jun-Nov 2017

Number of checks on operators

180

UK

Chart 7.2.2: Checks on operators in IMM key countries June-November 2017
and July-December 2018. Source: IMM analysis of UNEP/WCMC data

100

June-Nov. 201790

July-Dec. 2018

80
70
60
50
40
30
20
10
0

Belgium

FranceGermany

Italy

Netherlands

Figure 7.3.1 Enforcement action in IMM key countries.
Source: IMM analysis of UNEP/WCMC data

Spain failed to make data available, along with the non-EU
countries Iceland and Lichtenstein.
In the 2018 period, 21 of the 26 countries that reported
checks identified operators with unsatisfactory
due diligence systems. The total number of cases of
unsatisfactory due diligence systems amounted to 217,
which is 26% of all companies checked. In the 2017
period, 17 of the 21 countries identified operators with
unsatisfactory due diligence systems. The total number of

Spain

UnitedKingdomcases of unsatisfactory due diligencesystems was 156, or 40% of allcompanies checked.
As demonstrated in figure 7.2.1, theproportion of satisfactory due diligencesystems has thus increased sharply
between 2017 and 2018, which may
indicate that EU-wide improvements in
EUTR implementation identified bothby the European Commission’s Biennial
70
Report on EUTR Implementation forthe period March 2015-2017 and IMM’s
2017 Annual Report are continuing.
Similarly, the much higher number ofchecks on operators undertaken in alarger number of countries indicates thatenforcement of the Regulation is being
stepped up further throughout the EU.
A closer look at the seven major EU
tropical timber importing countries
reveals that Spain was the only one
not to report data on checks in both71
reporting periods (Figure 7.2.2).

7.3 Sanctions imposed on/prosecution of
non-compliant operators
According to COM 2018, all EU
countries had established penalties
for potential infringements of the
EUTR by March 2017. These range fromnotices of remedial action, seizure oftimber and fines to imprisonment. The
number of cases of enforcement action
almost doubled from the 2017 to the2018 reporting period, from 128 cases
to 242, according to UNEP/WCMC’s
Overview Reports.

In the 2017 period, activities focusedstrongly on notices of remedial action(88), 5 of which resulted in penalties.
Financial penalties without notice were
imposed in 20 cases, other penalties in
19 cases and there was one court case.
Notices of remedial action remained thedominant action also in 2018, with a total of 128. However,a much higher number resulted in penalties (65). Moreover,the number of financial penalties imposed directly
increased to 90 – almost exclusively due to Italy –, otherpenalties to 21 and court cases to 3.
Among the key EU countries, Italy and Germany wereparticularly active when it comes to imposing sanctions(figure 7.3.1). Italy started to step up action more recently,
with a much higher level of activity in 2018 than in 2017.

70

 EPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Regulation (EU) No 995/2010 of the European ParliamentRand of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (the EU Timber
Regulation) Biennial report for the period March 2015 - February 2017. (COM 2018) https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=15387465726
77&uri=COM:2018:668:FIN
71
Further information on EUTR enforcement can be found on UNEP/WCMC’s website: https://www.unep-wcmc.org/featured-projects/eu-timberregulations-and-flegt
Main Report – November 201971

7.4 Recognition that FLEGTlicensed timber requires nofurther due diligence
The IMM 2018 surveys of trading
companies, associations, Monitoring
Organisations and government
agencies confirmed a clear
understanding by interviewees that
FLEGT-licensed timber covered by avalid FLEGT Licence does not require
any further due diligence.

To what extent has the share of tropical timber andtimber products in your imports changed due to:
Big decrease
Small decrease

The market introductionof FLEGT-licensed timber
The introduction of EUTR

No change
Small increase

While the focus of the 2018 survey
Big increase
was again on companies currently
engaged, or likely to be engaged, in
0%
20%
40%
60%
80%
100%
trade with Indonesia and importing
secondary wood products, more
Figure 7.5.1. EUTR/FLEGT impact on tropical timber imports.
extensive interviews than in 2017
Source: IMM 2018 Trade Survey
were conducted with the furnituresector. This was undertaken as apart of the IMM Furniture Sector
Scoping Study, and a wider audience
FLEGT-licensed tropical timber linked to consistent andapproached during IMM Trade Consultations; neither
effective enforcement of EUTR to remove illegal wood”
gave indications that this wider range of operators wasfeatured on the top of the list of market opportunities
having a different perception of FLEGT Licences.
for timber from VPA partner countries in the EU both in
Future IMM surveys and activities will continue to look into
Berlin and in Antwerp Consultations. This, participants
this, as widespread recognition and awareness of the green
felt, should go hand in hand with the introduction oflane benefits of FLEGT-licensed timber are crucial for its
better organised and targeted marketing campaigns,
market development.
involving considered analysis to match specific VPA
partner timbers and products to niche markets, and
7.5 Perceptions of EUTR impact
backed by widespread certification and/or licensing, andconcerted efforts to explain the narrative behind legal
As a part of the IMM 2018 trade survey, 35% of survey
and sustainable timber products to customers.
respondents indicated a negative impact of the EUTR on theshare of tropical timber in their imports “The challenge ofParticipants also strongly endorsed the view that NGOs
obtaining assurances of non-negligible risk for EUTR” wasneed to be actively engaged in efforts to improve therated the third and fifth most important driver of tropicalmarket position of VPA partner timber in the EU. The
timber market decline in Europe at the IMM Berlin andcombined regulatory approach of EUTR and FLEGT was
Antwerp Trade Consultation, respectively.
perceived as a potential means to counter environmental
prejudices related to tropical timber, which was
At the same time, however, as indicated above, “aconsidered crucial for market recovery.
regulatory approach involving increased supply of

8

FLEGT licensing in EU Wood Promotion
8.1 Overview
Improved communication and promotion were flagged
up by IMM’s 2017 and 2018 trade surveys and during
all four Trade Consultations as key elements of market
success for tropical timber in general and FLEGT-licensed
timber in particular. A number of recommendations
made by IMM survey respondents and Trade Consultation
participants highlight this issue.
In 2018 and early 2019, IMM undertook a baseline studyof the level of support for FLEGT licensing in EU Wood
Promotion Campaigns. To include results of this study inthe most timely way possible, its results are being reported
in the 2018 IMM Annual Report, which is being preparedfollowing conclusion of the wood promotion study.

72		The study is based on a series of interviews and a literature
review. In total, twenty-five interviews were conductedacross a range of EU member states and from a variety ofperspectives – including wood promotional campaigns,
timber trade federations, civil society organisations,companies and other industry commentators.
A reason commonly cited for the comparatively low
profile of FLEGT in timber marketing is the slow progressof supplier countries through the FLEGT VPA process
en-route to FLEGT licensing. With just Indonesia so far
providing licensed goods, and with the subsequent limits
on range and availability of product, the consensus
from the interviews undertaken as a part of the IMM
promotion study is that the FLEGT VPA process has
initially been “a difficult sell”. It is also a prevailing

Main Report – November 2019

3
6

Carbon dioxide/climate
benefits

4

Sustainable forest
management
Life-cycle impacts
All three focii10
Figure 8.2.1: Focal areas of the campaigns and promotional platforms.
Source: IMM Wood Promotion Study (IMM 2019)3
5

Positive towards
FLEGT-licensing
Neutral towards
FLEGT-licensing or
not mentioned
Campaign/platform
scope not applicable
to FLEGT-licensing

8

Figure 8.3.2: Wood promotion campaigns’ position on FLEGT.
Source: IMM Wood Promotion Study (IMM 2019)

performance, in recognition that its
key markets, notably construction, butalso government decision makers are
increasingly environmentally aware
and informed and addressing climatechange issues ever more urgently.
Campaigns incorporate latest findings
on wood’s carbon and climate
mitigation benefits, its life cycle analysis
performance in relation to competing
man-made materials and its potential
role in developing a circular bioeconomy.
There is also a stress on timber’s
renewability and sustainability and therole sustainable forest management canplay in maintaining the forest resource,with the carbon and biodiversity gains
that entails. The stress here is verymuch on third-party forest and chain ofcustody certification as assurance thattimber is sustainable.
Figure 8.2.1 gives an overview of the focal
areas of 23 assessed campaigns andpromotional platforms (see table 8.3.1) in
broadest terms. Aspects of sustainable
forest management and its benefits to
producers, communities, the forest itself
or to the buyer or consumer is the mostcommon theme. Climate benefits, suchas reduced carbon dioxide footprint, isthe second most common focus. Only
three of the campaigns assessed focus
on all three aspects.
The emphasis on sustainability intimber sector marketing is made all
the more important given that its rival
man-made materials sectors - steel,concrete, plastics and composites - arealso ever more focused on presenting agreen image and developing their own
sustainability stories. These efforts
are backed with significant budgets,high level research and are perceived
as gaining increasing credibility,
according to the IMM study.

opinion of those interviewed that the FLEGT VPA processuntil now has also been communicated in a rather
technocratic way and principally on its legality assurance
credentials, rather than on the wider on-the-ground,human and environmental impacts, which is the main
focus of modern wood promotion campaigns.

At the same time the tropical timber
sector, particularly in Europe, is also facing growing
competition from the wood-plastic composite andmodified wood producers, which make sustainability and,indeed, their capacity to substitute tropical timber, core to
their marketing.

8.2 Wood promotion campaigns’ thematic focus

8.3 Wood promotion campaigns’ positions
on FLEGTThe study revealed that Europe’s timber and wood
products sector has stepped up the level of its marketing
and advertising activity and the clarity, cohesion andeffectiveness of its communications in recent years. It hasdeveloped a range of national and international marketing
programmes and campaigns. In particular it has focusedpromotion and communications on timber’s environmental

72
73

Perhaps surprisingly the two pan-European promotionaland communication programmes dedicated to growing theEuropean tropical timber market do not commend a FLEGT
licence as a procurement criterion. Both the Sustainable
Tropical Timber Coalition (STTC)72 and creator of the Fair &Precious73 campaign, the ATIBT, support the aims of thehttp://www.europeansttc.com
 ttps://www.fair-and-precious.orghMain Report – November 2019

73

FLEGT initiative and recognise its role in providing legality
assurance, but for various reasons neither is willingcurrently to depart from exclusive advocacy of third party
forest certification by FSC or PEFC.

terms of definitive levels of requirement, which makes
it difficult to generalise about FLEGT; and• There are differences in terms of transparency andreporting between certification and FLEGT VPAs.

The key reasons set out by STTC for not being able toaccept FLEGT Licencing include:•• There is currently no homogeneity between VPAs in

Table 8.3.1 gives an overview of current wood promotion
campaigns in key EU member states, their thematic andcampaign focus and their positions on FLEGT.

The fear that FLEGT-licensed timber will be seen as‘sustainable’ and therefore ‘good enough’; and• FLEGT is considered an important stepping-stone

towards sustainability, but timber trading companies
need clarity on how to sell it, to avoid FLEGT-licensed
replacing certified tropical timber.

Key reasons set out by ATIBT / Fair & Precious for not being
able to accept FLEGT Licencing include:• Common elements and goals between the VPA process

As Figure 8.3.2 illustrates, thirteen of the sixteen
campaigns assessed potentially have scope to makereference to FLEGT licensing. Five of the campaigns
make clear reference to FLEGT licensing and overall
can be described as being positive towards it. Eight ofthe campaigns make no reference or, where they makereference, they are not able to support it for the reasons
identified in table 8.3.1.

and voluntary third-party certification have been
identified, with the former seen as a ‘first step’ to thelatter, but these need further clarification;

Campaign /Communication
platform

Theme/objective

Campaign focus

FLEGT position

BudgetPour moi, c’est le bois
(For me it’s wood)https://franceboisforet.fr

National campaign toincrease consumptionof timber in France withfocus on home-grownmaterial

All wood types.

None as no reference toimported wood

€10 million overthree years

Bois.comwww.bois.com

General site forprofessionals and generalpublic to gain knowledge
about the use of wood.

All wood types.

No reference.

Undisclosed

Sustainable Tropical Timber
Coalitionwww.europeansttc.com

Growing EU sales ofverified sustainabletimberTropical wood.

Neutral. Focus is on
sustainability verification.
Urges clarification of
FLEGT’s status relative tocertification

Undisclosed

ATIBT-led campaign
to grow EU certified
sustainable tropicaltimber sales

Tropical wood.

Neutral. Mentions FSC andPEFC certification only.
Also wants clarification
on FLEGT’s status vis a vis
certification

Undisclosed

Campaign to growcertified sustainable
share of Dutch timbermarketAll wood types.

Positive. Focus onsustainably certified,but 2020 target for 95%
certified tropical timbermarket share states that
FLEGT- licensed timber
can account for 25% ofeach shipment

Undisclosed

To increase use oftimber, notably tropical,
in Dutch civil/hydraulicengineering projects

Tropical wood.

None, as little if any
Indonesian licensed
timber used in thisapplication. But couldchange if other countries,
like Ghana, start licensing

Undisclosed

To grow all wood use
in UK construction anddesign

All wood types.

Positive. Website includes
background information
on FLEGT and Indonesianlicensing. Could increase
coverage given more
information on social,environmental andeconomic aspects£215,000
per yearbudget, plus
contributions
from 20
supportersfrom £1,000 to£30,000

FranceEU
Fair & Precious
www.fair-and-precious.org
EU
Green Deal
www.vvnh.nl
Netherlands

Hout in de GWW / wood in civil
and marine engineeringwww.centrum-hout.nl
Netherlands
Wood for Good
https://woodforgood.com/
United KIngdom

74		Timber and forest’s CO2,
energy and wellness benefits“I say YES to wood and say
NO to CO2”

Role of strong EU demand
for sustainable timber inincentivising SFM uptake

How healthy tropical timbermarket supports forest
maintenanceValue of growing certified
timber market share intropical forest maintenance

Underlines tropical timber
performance but also its CO 2
and LCA benefits

Focuses on renewability
and wood’s carbon merits,
especially in building. Has
LCA data base on website

Main Report – November 2019

Campaign /Communication
platform

Theme/objective

Campaign focus

FLEGT position

Budgetwww.mytropicaltimber.org

Website created by ATIBT
listing EU tropical timber
suppliers and giving
timber performance

Tropical wood.

Neutral. No directreference, but VPA statusof supplier countries
given on linked Timber
Trade Portal website.
Considering providing
more backgroundinformation.

Undisclosed

ETTF/ATIBT joint venture
website to support EU
trade in legal timber,providing details on
legality verification in 24
mainly tropical suppliercountries and businesscontacts.

Tropical wood (primarily).

Positive.
Includes information on
VPA status of suppliercountries and FLEGT
licensed product fromIndonesia. May increase
background information
on FLEGT

Undisclosed

Ongoing promotional
initiative to drive use ofdomestic timber, primarily
in construction. Focused
campaign Holz ist genial(Wood is genius) aims togrow awareness of timbersustainability and carbon
benefits

All wood types.

None / Not applicable

Undisclosed

UK campaign to increaseuse of home-grown
timber across all
applications

All wood types.

None / Not applicable

Undisclosed

Aims to increase
European use of US
hardwoods and grow its
applications

American hardwoods.

None / Not applicable

Undisclosed

None

All wood types.

None / Not applicable

Undisclosed

FLEGT process
and Licencing

Tropical wood.

Positive.

Undisclosed

Wood Window Alliance(British Woodworking
Federation)

Environmental benefitsof choosing wood as araw material

All wood types

None

Undisclosed

Nordic Swan eco-labelling
initiativewww.svanen.se

Product labellingbased upon lifecycle
assessment

All wood types(excludes most tropical
species)

None

Undisclosed

EU

Timber Trade Portal
www.timbertradeportal.com
EU

proHolzwww.proholz.at/Austria / Germany (Bavaria)/ Switzerland

Grown in Britain
www.growninbritain.org
United Kingdom

American Hardwood
Export Council
www.americanhardwood.org
EU

Le Bois Oxygène campaign
of Belgian trade federation
Fedustria
www.fedustria.be

Basis is communication on
legal tropical timber. Links
to ATIBT/ETTF site www.
timbertradeportal.com for
information on legality andwww.fair-and-precious.
org on sustainability.

Legality verification

Timber sustainability andcarbon/climate mitigation
benefits

Sustainability of managed
woodlands and their timber
output. Supports FSC andPEFC certification

Legality and sustainabilityof US hardwoods, withfocus on its carbon and LCA
performance

Belgium
Timber Transformer
www.ttf.co.uk
United Kingdom

Sole focus of the campaign
was FLEGT licensing

Environmental benefits ofchoosing wooden windows
compared to uPVC windows.

Nordic countries

Table 8.3.1: Wood promotion campaign themes, focus and position on FLEGTMain Report – November 2019

75

Position on FLEGT licensing

Organisation

Mentioning FLEGT as evidence of legality and possibly sustainability(i.e. there are potentially aspects going beyond legality mentioned)· Fedustria· UK Timber Trade Federation

Promoting EUTR compliance advantages / Promoting FLEGT as evidence of legality· AEIM· CEI-Bois· Le Commerce du Bois
· Fedecomlegno· Fedustria· GD Holz· UK Timber Trade Federation· VVNH· Le Commerce du Bois

Promoting EUTR compliance advantages though cautious that FLEGT Licences might gain
share from third party certification
Promoting third party certification· AEIM· CEI-Bois· Le Commerce du Bois
· Fedecomlegno· Fedustria· GD Holz· UK Timber Trade Federation· VVNH

Table 8.4.1: European Timber Trade Federations’ position on FLEGT and certification. Source: IMM Wood Promotion Study (IMM 2019)

8.4 T imber Trade Federations’ communicationrole and position on FLEGTFLEGT licensing as an equivalent of certification for
public procurement.

In terms of European market influencers andcommunicators for the timber industry, a key role is playedby national timber sector associations and federations.
They are involved in wider promotion campaigns and also
relay their messaging through their own communications
channels. They also conduct their own campaigns andhighlight the industry’s efforts to assure legality oftimber placed on the European market and combat illegal
logging, with the main focus in this area on the EU Timber
Regulation and associated due diligence.

Some other associations can be typified as being
more cautious. Many have invested their energies incertification or domestic production. Promoting a conceptthat that might make imported timber more attractive isunlikely to feature high on their agenda.

They are also providing guidance on wider industrial
environmental impact issues, with the increase in targets
set in legislation and standards on emissions, energy andclimate change mitigation, plus growing governmental andindustry focus on circular and bioeconomic development.
In an increasingly competitive market, with othermaterials sectors developing their sustainability
arguments, market promotion and communication are
also increasingly important trade body roles. Within
this context, sustainable sourcing is a key topic forfederations, but there is variation between the emphasis
they place on certification and the EU FLEGT initiative, as
there is in their views on communication of the latter andinterest they report in it from members (Figure 8.4.1).
What is clear from the study’s analysis of EU-based tradeassociations is that there is no consistency regarding
attitudes to FLEGT licensing and the wider VPA process.
Generally, all of the associations can be said to besupportive of the wider FLEGT VPA process and benefits
that will accrue. Beyond this the level of tangible support
around communicating the message is hugely variable.
The UK perhaps represent one extreme, the mostpro-FLEGT association with the Timber Transformer
74
campaign (see also chapter 5.5.4), and promotion of72

Other associations remain unconvinced of the merits of
FLEGT licensing, willing to accept that it might equate
to “legal compliance” in the country of production, but
so far unwilling to consider that it might mean much
more of this in terms of environmental (or silvicultural)performance.

8.5 NGO/CSO communication roleand position on FLEGTNGOs and CSOs, some of whom were interviewed for the
IMM study, are key market influencers and clearly vitalto be kept in the FLEGT communications loop. They can,of course, be critical, but where they see positives in theinitiative, the organisations interviewed for the IMM
study said they are keen to promote them and help inform
industry and public opinion.
Initially some in the EU trade took a ‘wait and see’attitude before putting their trust in the FLEGT initiative.
They were concerned NGOs would find fault with thesystem and that they could lay themselves open to
attack if they imported licensed goods without further
due diligence. But the criticism at the level anticipated
did not materialise. The interviewed NGOs are clearly
willing to highlight flaws in the FLEGT process and thesystem’s operation where they identify them. But their
tone is broadly supportive. Delegates at IMM Trade
Consultations also advocated bringing the NGOs more
into the FLEGT community to support the initiative’scommunication and development.

http://www.flegtimm.eu/index.php/newsletter/flegt-market-news/90-uk-ttf-flegt-exhibition-nets-environmental-award76		

Main Report – November 2019

NGO / CSO

Summary of position

WWF· Describes legality assurance as prerequisite of timber and forest sustainability.
· Stresses that differentiation between FLEGT and sustainability certification should be made clear.
· Questions whether FLEGT in current form is sufficient to address sustainability holistically.
· Cites governance improvement and stakeholder engagement as FLEGT major achievements.
· Sees opportunities for advocating FLEGT more via social media· Recommends supplier countries consider joining the VPA process.
· Urges communication of the FLEGT initiative outside the EU.

FERN· Describes FLEGT as most effective functioning process to increase forest governance and combat illegal logging.
· Recommends EU bring together NGOs to coordinate and support their FLEGT communications.
· Backs proposition that FLEGT is more than just proof of legality.

Earthworm(formerly TFT)

· Describes legality assurance as prerequisite of timber and forest sustainability.
· Feels FLEGT initiative has ‘stalled’ since Indonesia started licensing.

Greenpeace· Says continued uneven implementation of EUTR could undermine FLEGT process.
· Warns EU against taking shortcuts in VPA process to get more countries to licensing stage.

Environmental
Investigation
Agency· Commends FLEGT as template for other forest commodities industries legality assurance.
· Questions aspects of Vietnam’s VPA timber legality assurance system.
· Backs VPA for Vietnam as likely to incentivise it to regulate its timber import/export trade.
· Sees Vietnamese VPA as ‘significant precedent’ for timber legality assurance in China.

Table 8.5.1: European NGO/CSOs positions on FLEGT. Source: IMM Wood Promotion Study (IMM 2019)
Figure 8.5.1 summarises the positions of five leading NGOsinterviewed for the IMM study. Whilst not an exhaustive
sample, it is clear that generally the NGO/CSOs operatingwith interests in the FLEGT process are supportive inprinciple. Given their remit it should be no surprise that they
welcome the implementation of the rule of law in a sector
where many NGO have highlighted illegality for decades.
What is also clear from the sample is that those NGOs
close to the process in a range of countries do not have anappetite to embrace the environmental or social impactsof FLEGT-licensing and the VPA at the same level as they
do with forest certification.

disconnect between buyers and the wider impacts andsignificance of the FLEGT programme.
The EU FLEGT Facility communications is not a wood
promotion programme per se. The site explains how
Indonesia’s licensing system works, plus the role of national
competent authorities policing and administering FLEGT
Licences in the EU. In addition, it links to a section detailingproducts covered by Licences and those that are not. It
also explains the FLEGT procedure for timber and wood
products from other producers which transit via Indonesianbusinesses to the EU. The FLEGT communication package
is designed to reach as wide an audience as possible and to“speak in language people understand”.

8.6 EU FLEGT Facility – an information hub
The EU FLEGT Facility is the primary agency supporting
implementation of the FLEGT Action Plan to combat
the illegal timber trade. Hosted by the European Forest
Institute (EFI), it works with governments, industry, civilsociety and other stakeholders in countries, negotiating
or implementing a FLEGT Voluntary Partnership
Agreement (VPA).
The EU FLEGT facility is the principal communications
hub for FLEGT VPAs and FLEGT licensing. Its website
carries extensive background information, technicaldetails, news on countries’ progress through their VPAs
and general interest stories geared to a wide audience,
including the media. It produces newsletters and press
releases on key FLEGT events.
Significantly for the market profile of the VPA initiativeand FLEGT-licensed products, it launched a new satellite
site specifically targeting the timber trade – www.
timberbuyers.flegtlicence.org in 2018. Among othertopics, this describes the business case for suppliers andbuyers to trade in FLEGT-licensed timber products. It
is also designed to help timber traders relay the wider
story of what FLEGT licensing is about to their customer
base. The site was created as there was still felt to be a
Main Report – November 2019

8.7 Media references to FLEGT VPAs
IMM has started monitoring media coverage of the FLEGTVPA process, the EUTR and more generally of forest
law enforcement and forestry practices in VPA partnercountries through a media monitoring service from mid2018, with retroactive analysis of one year being possible.
The media monitoring programme takes both print andall types of online/social media into account. IMM has
split monitoring into three different topics:• FLEGT VPAs; keywords: “Voluntary Partnership

Agreement”, “FLEGT VPA”, “FLEGT”, “Forest Law
Enforcement, Governance and Trade”• EU Timber Regulation; keywords: “EUTR” and “EU
Timber Regulation”• F LEGT Independent Market Monitoring; keywords:“FLEGT Independent Market Monitoring”, “FLEGT
IMM”, “Voluntary Partnership Agreement”, “FLEGT
VPA”, “FLEGT”, “Forest Law Enforcement, Governanceand Trade”, “Timber Legality Licensing”, “International
Tropical Timber Organization”, “EUTR” and “EU
Timber Regulation”, “illegal logging”, “illegal timber”,“sustainable forestry and tropical”, “forest certification”.
77Results over timeby Topics

Figure 8.7.1: Media mentions FLEGT VPAs and EUTR June 2018-May 2019. Talkwalker Media Monitoring
The third search topic is primarily
used for daily press clipping. As in thelast IMM Annual Report, topics 1 and
2 are considered in the analysis below.
The period covered by this report
is June 2018 to May 2019. The Media
Monitoring services recorded 14,900
hits for the two topics in the twelvemonth period, around 10,000 of whichwere accounted for by FLEGT VPAs
and 4,900 by EUTR (Figure 8.7.1).
Figure 8.7.2 shows that mentions of
FLEGT VPAs have increased by 79.6%
compared to the previous year, while
mentions of EUTR were up by 23.6%.

Mentions FLEGT VPAs

Mentions EUTR

Figure 8.7.2: Year-on-year increase in mentions of EUTR and VPAs.

Source: Talkwalker Media Monitoring

FLEGT VPAs

EU Timber Regulation

Figure 8.7.3: Global distribution of media records. Source: Talkwalker Media Monitoring78		

Main Report – November 2019

VPA Share of Sentiment

EUTR Share of Sentiment

3.8% 15.1%

81.1%

Positive

Neutral

FSC Share of Sentiment

10% 9%

5.2%

81%

78.9%

Negative

Figure 8.7.4: Media sentiment expressed towards VPAs and EUTR.
Source: Talkwalker Media Monitoring

Positive

Neutral15.9%

Negative

Figure. 8.7.5: Media sentiment
expressed towards FSC.

Source: Talkwalker Media Monitoring

The bulk of mentions – constant at
7,000 compared with the previous
year – was again recorded in Europe(Figure 8.7.3). However, the priorityof mentions in Europe shifted alittle more towards EUTR, whereas
mentions had been evenly distributed
the year before (IMM/ITTO 2018).
The sharp increase in overall media
mentions was primrily due to muchstronger coverage in South-East
Asia, where mentions doubled withroughly 4,000 compared to the June
2017-June 2018 period. In South-East
Asia, media coverage focussed almost
exclusively on VPAs.

Figure: 8.7.6: Top influencers EUTR 2018/2019 Source: Talkwalker Media Monitoring

When it comes to media sentiment,
coverage of VPAs was again slightly morepositive in tone than that of EUTR (Figure
8.7.4). However, sentiment towards EUTR
also improved, with just under 10%
of references to EUTR being negative(2017/2018: 15.7%). However, the share of
explicitly positive references also fell to
8.5% (10.9%), which means that only theshare of neutral sentiment increased.
In relation to VPAs, the share ofnegative sentiment expressed bymedia reports dropped significantly
to 3.9% (9.8%) and positive sentiment
increased to 14.9 (11.9%). The share ofneutral mentions was also slightly up
at 81.2% (78.3%).

Figure 8.7.7 Top influencers FLEGT VPAs 2018/2019: Source: Talkwalker Media Monitoring

Main Report – November 2019

Closer analysis of the automatic
assignments of references reveals
that the media monitoring systemtends to assign too many references
to the “neutral” category. However,as this is true for both negative andpositive references the proportions
for positive and negative should tendin the right direction.

79

When repeating last year’s comparison of sentiment
about VPAs with that of FSC, the monitoring systemshows a surprising shift in media sentiment in relation to
FSC (Figure 8.7.5). The number of positive mentions of FSC
declined significantly in the 2018/2019 period comparedto the 2017/2018 period and was replaced by much moreneutral overall coverage. Only 15.7% of references to FSC
were explicitly positive in the 2018/2019 period compared
to 32.3% in the previous twelve-month period. The
overall sentiment expressed towards FSC in the 2018/2019
period was similar to that towards FLEGT VPAs.
An analysis of the most relevant “influencers” regarding
EUTR and FLEGT VPAs shows not only who is driving
the discussion but also the main sentiments expressedby the different stakeholders. Figure 8.7.6 shows that for
EUTR media references the Twitter account of@EUTimberRegulat played a leading role in driving

9communications as it had the year before. However, thenews service Fordaq was much stronger represented in
the 2018/2019 period, whereas the previous year had been
more dominated by European NGOs, PEFC, and the UK
Timber Trade Federation.
Media references and sentiment for FLEGT VPAs (Figure
8.7.7), on the other hand, were dominated by FAO, as in
the previous reporting period, followed by the UK Timber
Trade Federation. Besides the fact that it runs a large
programme to provide funding and capacity building
assistance to VPA partner countries, FAO’s leading role
here is due to the large number of followers, with the“FAO Forestry” Twitter account alone reaching more than
53,000 followers. EFI played a much stronger role in the
2018/2019 period than the year before and Fern retained aleading position in communicating about FLEGT VPAs.

EU Voluntary Private Sector Timber
Procurement Policies
9.1 Overview
IMM produced a special study of private sector timber
procurement policies and their recognition of FLEGTLicences75 in 2018. The following analysis is a summaryof the findings.
Since the early 1990s, private sector actors have been
taking steps to ensure that they exclude unsustainable
and illegal wood from their supply chains. Private sector
procurement policies are now prominent in the global
North and among companies with global reach. With
time, these purchasing practices have become more
widely integrated in corporate business practices andcontained within a larger sustainability and/or corporate
responsibility policy often covering several other aspects.

9.2 Influences, dominant policy elements
and the role of FLEGT
Responsible purchasing policies are influenced by a vastarray of organisations (Figure 9.2.1). A literature review
undertaken as a part of the IMM Special Study identified
over 100 organisations, tools, initiatives, templates andsets of guidance which might have an influence on a
private sector company policy.
A sample of 65 influences was assessed in the study toidentify attitudes and support for key indicators such as
certification, legal compliance, and support for FLEGT
licensing. In addition, the responsible purchasing policies
of 17 large EU based companies from across a range ofsectors, from retail to timber importing, were assessed
to identify the contents of their policies and the levels of
support for FLEGT licensing.
The analysis indicated that support for FLEGT licensing
has yet to reach the same level as forest certification.
75

Over 70% of the influential sources analysed are positiveand explicit in their support of some or all forms of forest
certification, compared to around 40% supporting FLEGT
licensing or the VPA process.
A closer look at the different types of influential
sources reveals that references to FLEGT licensing varysignificantly across the range of influences (Figure 9.2.2).
Both certification and FLEGT were referenced by all fourof the private sector initiatives analysed in the study. CSO
led initiatives were more varied, but overall the eighteen
initiatives analysed in the study were more inclined tosupport certification than FLEGT licensing. Only two of six
certification and verification systems assessed included apositive reference to FLEGT licensing. Interestingly, few ofthe private sector legality verification systems assessed in
the IMM study make explicit reference to FLEGT processesor FLEGT licensing.
The discrepancy between support for certification and
FLEGT licensing is even greater in companies’ responsible
purchasing policies: 16 out of 17 company policies
analysed explicitly promote certification, whereas only
two explicitly mention FLEGT-licensing (Figure 9.2.3).
FLEGT licensing, when considered as a brand, has certain
disadvantages compared to forest certification. Certification“brands” have been communicated widely with considerable
backing from the retail sector and international NGOs.
FLEGT licensing, on the other hand, remains an unproven(in terms of value or performance on the ground) or evenunobtainable assurance mechanism for many of thecompanies and organisations interviewed or analysed.
The content of 13 timber procurement policies of someof most influential European companies was analysedin the IMM study in more detail, against a definedframework of policy elements. Nearly all the companies

EU Private Sector Voluntary Timber Procurement Policies and the Role of FLEGT-licensing. Report author: George White80		

Main Report – November 2019

Figure 9.2.1: The web of influences and drivers impacting responsible purchasing policies.
Source: IMM 2018 Private Sector Timber Procurement Policy Study(with one exception) have clear policy
elements specifying or promoting
third party certification – typically
FSC or PEFC. It was also common forpolicies to state a requirement for
legal harvesting and trading of forest
products – with 10 of the 13 companies
including a specific commitment tolegal sourcing (Figure 9.2.4). However,
only two policies explicitly support
FLEGT licensing.

18
Number included
in analysis

16

Positive to
FLEGT licensing

Positive toforest certification

14
12
10
8
6
4
2
0

Privatesectorinitiatives

Private sector Certification
Privateled ratings and verification sector led
systems
systemsresources

CSO ledratingsystems

CSO ledinitiatives& others

Public sector
instruments& guidance

Figure 9.2.2: References to FLEGT licensing and certification across a range
of influencers. Source: IMM 2018 Private Sector Timber Procurement Policy Study

Based on this analysis, a typical
EU company policy contains thefollowing elements:• A preference for certified materials• A clear statement regarding thelegality of raw materials• A clear statement regarding
traceability of materials

20• A positive stance towards chain of18

custody certification

16• References to respect for traditional

14

and workers’ rights

12• A commitment to public reporting10of progress towards compliance ortargets.

86

9.3 How responsible purchasing
policies evolve

4
2
0

Number ofcompanies

Policy identified Policy accessed
as existing& assessed

Policyspecificallypromotes
certification

Policy specifically
Policyrefers to
specificallylegality / legal refers to FLEGT
compliancelicensing

Figure 9.2.3: Number of company policies promoting certification / FLEGT
Source: IMM 2018 Private Sector Timber Procurement Policy Study

Main Report – November 2019In addition to considering the current
content of procurement policies
in the EU private sector, the study
also considered the longevity ofthese policies and the factors thatencourage change.

81Promotes periodic review of policy / policies
Promotes communication within supply chain
Promotes public reporting
Excludes genetically modified fibre
Promotes inclusion of recycled fibre / material
Broad – to include ALL operations & product types
Pro chain of custody
Pro traceability
Pro 3rd party verification of legality / legal compliance
Pro 3rd party verification of basic environmental criteria
Pro 3rd party verification of basic social criteria
Pro 3rd party certification
Reference to EUTR compliance / due diligence
Pro FLEGT Licensing (explicitly mentioned)
Promotes legal trading
Promotes legal harvesting
Avoidance of breaches of workers rights
Avoidance of breaches of traditional rights
Avoidance of breaches of human rights
Avoidance of breaches of civil rights
Avoidance of armed conflict
Reference to production efficiency / pollution / toxicity
Reference to climate impact / carbon
Reference to CITES
Avoidance of forest conversion
Avoidance of loss of High Conservation Values (HCVs)

0

2

4

6

8

10

12

Figure 9.2.4. Frequency of inclusion of policy elements in analysed procurement policies.
Source: IMM 2018 Private Sector Timber Procurement Policy Study

Whilst the IMM study only considered a modest sample of
20 corporate polices in detail, the analysis and interviews
indicated that the typical cycle of policy amendment,
where the detail is reviewed, is in the range of 2-4
years. For the 12 policies accessed that carry the dateof implementation, the average date of publication was
during 2017. It might be concluded that this sample ofprivate sector purchasing policies are frequently reviewed.
In total, 61 of the sources of influence that have been includedin the IMM study have implementation or revision dates.
Whilst some were updated in 2018, there is a wide range ofadoption dates, with the oldest identified as 2003. On averagethough, 2014 is the most common year of implementation.
In this context, it should be noted that FLEGT-licensed
timber products were first identified with the FLEGT
Action Plan of 2003 and the first physical products only
entered the European market in 2017 with the first licences
issued on November 15th 2016.
It is possible to conclude that the private sector is generally
more active in reviewing policy content than the othersources considered. From the perspective of increasing
demand for FLEGT-licensed timber, the frequency ofchanges to private sector purchasing policies provides anopportunity to increase demand and recognition.
The interviews conducted as a part of the IMM study revealed
that companies and trade associations are sensitive to82		changes in the trading environment and political context.
Policies are seen by many as a tool that can be adjusted to suitthe current circumstances. Changes to certification scheme
standards, for example, may have a bearing on a company
and require a policy change to bring them into line.
Other companies adjust their policies over time to reflect
the latest thinking and trends. The “deforestation-free
supply chain” agenda has influenced some to re-evaluate
their policies and to focus on a broader agenda, rather
than one focused on promoting certification of forest andlegality of wood supply.
The larger, more multinational companies tend to have awider range of stakeholders and to attract the attentionof more of the influences identified in the study. They
are required to balance a diverse range of influenceswith their business needs when developing theirpurchasing policies. Some choose to engage more widely
than others and actively cultivate wide stakeholder
engagement and others choose a small range ofstakeholder influences to cooperate with. One Dutch
timber trader summed it up: “the content of our policy is
influenced by our clients, timber federation, governmental
and non-governmental organisations”.
Smaller companies tend to use a smaller range ofinfluences in developing their policies, often relying on
trade association guidance or templates.
Main Report – November 2019

What is clear from the interviews is that the issues oftrust and credibility are important. Policies are seen as
important statements on a company’s character and they
only contain elements which the company believe to betrue and valid. Therefore, any new content or revisions
requires those that set the policies to be able to argue thatnew content is both valid and credible.

Whilst statistically unproven, the interviews undertaken as apart of the IMM private sector procurement study do indicatethat those companies buying licensed timber from Indonesia
are generally satisfied with the Licence – contrasting withthose sourcing from other VPA countries who remain either
doubtful of the potential value or generally underwhelmed
by a lack of progress in the VPA negotiations.

The analysis of company policies also shows some direct
or indirect influence from third party organisations.
Some of those interviewed acknowledge the input fromcivil society organisations and their trade associations.
Others assert that the policies are their own and reflect
their own values and aspirations.

When compared to a survey undertaken as a part of the76
IMM Furniture Sector Scoping Study, involving fortyseven companies within the EU, the views from themodest sample of interviewees in the IMM Private Sector
Procurement Study are strikingly similar in both tone
and level of support for FLEGT licensing. The furnituresector review and interviews indicated that around 45% of
those interviewed saw a role for FLEGT licensing in theirpurchasing strategy or were positive towards the process.

9.4 Incorporating FLEGT in polices
Some of the companies interviewed simply saw no reason
to include FLEGT licensing within their policy. For them
it is an irrelevance, they have simply “moved on” beyond
the perceived value of licensed timber. Some work within
business cultures where discussions around legality
are seen as unnecessary – “in our sector no one wants totalk about legality of wood – it is taken for granted that all
our products are legal”. Many others simply see licensed
timber as synonymous with OLB and other types oflegality verification. They see OLB and similar verification
processes as a product they trust and are familiar with.
Some equate FLEGT licensing in terms of performanceand value offered with the likes of OLB and other verified
materials. Others do not purchase any products from VPA
countries and therefore have little interest in the process.

The IMM 2018 EU trade survey produced similar results(see Annex 1 of this report for more details). A number of
the 96 respondents said they were open to considering
including FLEGT Licences in some capacity into theirprocurement policies in the future, with some saying they
were now looking into the potential of FLEGT Licences
as proof of sustainability. Most companies, however, said
they were currently using third-party certification –typically FSC or PEFC – as proof of sustainable sourcing
and were planning to continue focusing on thosecertification schemes due to their comparatively highlevel of consumer recognition. None of the respondents
confirmed that FLEGT Licences had yet been assigned an
explicit role in in their procurement policy.

EU Member States’ Public
Procurement Policies
10.1 Overview
IMM produced a study of EU Member State public
procurement and their recognition of FLEGT Licences77
in early 2019. To include results of this study in the mosttimely way possible, its results are being reported in the2018 IMM Annual Report, which is being prepared following
conclusion of the public procurement study. The following
analysis is a summary of the findings.
Twenty-two EU member states now possess some formof public procurement policy for products containing or
made from wood. They vary significantly in terms of theirdefinition of criteria, coverage of products, applicability
to different levels of government and whether they arevoluntary or mandatory. However, they all require, or atleast encourage, government buyers to source legal andoften sustainable, timber.
Public procurement policies can play an important rolein encouraging trade in legal and sustainable timber.

10

Government purchasing of timber can account for asignificant proportion of all timber purchasing in a given
country, and therefore has considerable potential toinfluence buying practices and to promote good businesspractices across the timber market as a whole.
The importance of public procurement to themarketplace makes government procurement policya key instrument in attaining the vision set out in theEurope 2020 Strategy (the 10-year strategy proposed by
the European Commission in 2010 for advancement of
the economy of the EU). It aims at “smart, sustainable,
inclusive growth”, with greater coordination of national
and European policy.
Sustainable procurement is therefore about using public
spending to achieve social and environmental objectives,
and to strategically use the public sector’s economic
power to catalyse innovation in the private sector.

76

I MM Furniture Sector Scoping Study. Author: George White. https://www.itto.int/direct/topics/topics_pdf_download/topics_
id=5782&no=1&disp=inline
77
A study of EU public timber procurement policies, related guidance & reference to FLEGT. Author: George White (IMM/ITTO 2019)
Main Report – November 2019

83

A theory of change for public procurement policies
was characterised in 201578 as follows:
1. T he large share of government expenditure in
GDP will create a market for sustainable goods.
The direct market effect.
2. 	Government should play a leadership role ininspiring consumers and responsible players in
the private sector. The leadership effect.
3. The	actions of government have knock-on
effects, causing suppliers to simplify their
supply chains around sustainable products.
The supplier consolidation effect.

Within the EU, public procurement policy is a matterof member state competence, although generalprocurement rules are set at the EU level and the EC has
tried to encourage member states to adopt broad green
procurement policies. In pursuit of this aim, and to open
up procurement contracts to companies across the EU,
the EC has implemented a programme to develop
common government (GPP) criteria. The adoption of thecurrent GPP criteria is voluntary for EU member states.
As of February 2019, GPP criteria had been agreed for
19 product groups/end uses, including Copying andGraphic paper, Office Building Design, Construction
and Management and Furniture. The legality andsustainability requirement for timber within the relevant
product group criteria are the same in all cases. They
include the requirement that any virgin timber used mustbe legal and in conformance to EUTR; with acceptable
forms of proof including FSC or PEFC or equivalent; or
FLEGT Licences; or a declaration of legality, accompanied
by a chain-of-custody tracking system.
There are no absolute requirements for “sustainability”
in the GPP criteria, but there is recognition of
the desirability of evidence of sustainable forest
management. Acceptable evidence of sustainability
includes the EU Ecolabel, other national type I ecolabels,
chain-of-custody certificates such as FSC, PEFC or
equivalent; and ‘any other appropriate means of proof,
such as a technical dossier of the manufacturer or a test
report from a recognised body’.

10.2 The importance of public procurement
for timber markets
The IMM study found that public policies and the public
sector are perceived to play a significant role in the EU
market for forest products, though the exact contributionis hard to define. Many member states have invested
heavily in setting policies through complex processes
with great consideration paid to policy content. Most
EU member states have mandatory purchasing policies
for central government departments and voluntarypolicies for local authorities and other agencies. The
majority of public spending is undertaken at a local
government level though and little monitoring of policy

77
78

Excluded

Included

28

9

10
21

13

15

14

18

19

7

0

Paper

Furniture

15

Timber used insome formsof construction

13

Comprehensive(all 3 categories)

Figure 10.2.1 Public procurement policy coverage
across the EU. Source: IMM 2019 Public Sector Timber
Procurement Policy Study

compliance has been directly observed. Most EU member
state governments do not know how much wood theypurchase and therefore have no indication of how muchsustainable, legal or FLEGT-licensed material might be
included within their procurement.
In total, the analysis indicates that 22 EU member states
have some form of public procurement policy. Six currently
have no policy – Estonia, Greece, Hungary, Poland,
Portugal and Romania. Poland has developed a National
Action Plan, but no specific criteria have been identified
for wood-based products. Portugal has indicated that it
will potentially include all EC GPP product/use categories
in future policy. Estonia, Greece, Hungary and Romania
remain the only EC member states without a policy or any
identified plans to develop such policies.
Figure 10.2.1 indicates that the range of end-uses andproduct types covered by the policies scrutinised isvariable. Only 13 of the 28 states appear to have whatmight be termed comprehensive coverage in theirprocurement policies. Eighteen make reference to office
and/or graphic papers and 19 make specific reference
to furniture. Fifteen policies make reference to thetimber used within “construction”, though this varies,
with those countries using the EU GPP criteria only
applying the policy for “timber in office building design,
construction and management”.
Thirteen countries appear to have comprehensive policies
that in theory apply to all purchases of timber products.
Of these, Luxemburg’s policies (alone in this case) apply
to all products that are within the scope of the EUTR.
Germany and the UK’s policies apply to all products that
contain virgin wood fibre.
Figures 10.2.2 and 10.2.3 contrast the balance between
mandatory and voluntary applicability for central andlocal government departments with respect to thepolicies. At central government level, 18 of the EU’s

A study of EU public timber procurement policies, related guidance & reference to FLEGT. Author: George White (IMM/ITTO 2019)T he impact of timber procurement policies: an analysis of the economic effects of governmental procurement policies in tropical timber markets.
ITTO Technical Series No. 44. International Tropical Timber Organization, Yokohama, Japan. Authors: Martin, R.M. & Ghazali, B.H. (ITTO 2015)84		Main Report – November 2019

1
8

8

Mandatory

Mandatory

Voluntary

18

2

No data /No policy

Figure 10.2.2: Mandatory vs voluntary nature of central
government department PP across the EU.
Source: IMM 2019 Public Sector Timber Procurement Policy Study

member states are known to have mandatory policies
with two having voluntary status. Unfortunately, the1study was not able to identify
the status of the remaining
eight member states. On the other hand, the vast majorityof member states allow local governments to voluntarily
apply green procurement policies.

8

Voluntary

Mandatory

Figure 10.2.4 indicates that the policies of the member
states contain a variety of means of verification of
Voluntarycompliance. The most common, in fact universal,
acceptable means of proof of legality and sustainability is
19 FSC or PEFC. No data /through certification, usually

No policy

The second most common acceptable form of verificationis that of FLEGT Licences, mentioned by name within
the policies of 18 countries. Twelve countries also allow
for other forms of verification, ranging from third-party
verification of legal compliance, through to forms ofself-declaration. Ecolabels, in particular the EU Ecolabel
and the Nordic Swan Ecolabel, also feature in thepolicies of 11 countries.

10.3 The “legal and sustainable” hierarchy
and the status of FLEGTIn terms of their definitions of ‘legal’ and ‘sustainable’, theprocurement policies can be divided into four broad groups.79
1) Those that take their definitions from the EU’scommon GPP criteria, where compliance with the
EUTR is a basic condition.80
2) Those that use the terms ‘legal’ and ‘sustainable’
without setting out detailed definitions of exactly
what these terms mean.
3) Those that have developed detailed sets of criteria
for ‘legal’ and ‘sustainable’. The criteria derive froma variety of sources and inputs, including, generally,a multi-stakeholder consultation process, and they19

No data /No policy

Figure 10.2.3: Nature of PP that apply to local
government agencies across the EU.

Source: IMM 2019 Public Sector Timber Procurement Policy Study

21

14

22
18

7

0

Accepts
certification

Accepts
FLEGT
Licences

1211

Accepts other Accepts
forms of legal ecolabels
verification

Figure 10.2.4: Accepted forms of verification ofcompliance across the EU.

Source: IMM 2019 Public Sector Timber Procurement Policy Study

can be subject to revision in the light of developments.
81
As reported by the Standing Forestry Committee, inalmost all cases certain social criteria are included andthere is a focus on origin and production of wood andtimber products, as opposed to life-cycle performanceoverall. All these countries have learned from one
another’s experiences, and, sometimes, adapted theirdefinitions accordingly.824) T he fourth group is just one country: Germany. It accepts
only products certified by the two main global forest
certification schemes, FSC and PEFC, or “equivalent”.

79

 rack, D. (2014) Promoting Legal and Sustainable Timber: Using Public Procurement Policy. Chatham House
B
Van Bueren, E.L. (2016) Comparison of selected TPP’s. I S A F O R, Netherlands Ministry of Infrastructure & Environment81https://ec.europa.eu/agriculture/sites/agriculture/files/forest/publications/pdf/sfcci-report_en.pdf
82
For a detailed analysis see: Van Bueren, E.L. (2016) Comparison of selected TPP’s. I S A F O R, Netherlands Ministry of Infrastructure & Environment
80

Main Report – November 2019

85

There are three different scenarios evident across themember states when it comes to acceptance of FLEGTlicensed timber:
1. .accepting FLEGT-licensed timber on equal footing withsustainably produced timber, or,2. accepting FLEGT-licensed timber second to sustainably
produced timber (for example: “if sustainable is notavailable”) or,
3. accepting FLEGT-licensed timber as legal timber
Policy makers in a number of EU member states haveflagged up difficulties with acceptance of FLEGT licensing
on an equal footing to “sustainable”, partly as VPA-related
legislation varies from country to country and the absolutelevels of silvicultural performance almost certainly will
not stand comparison from VPA partner country to country(i.e. forest practices that are legally allowed in one country
may not always be considered as “sustainable” in another).
Another practical difficulty raised is lack of a FLEGT
chain-of-custody system once the timber is placed on the
EU market.
Accepting FLEGT timber as being second to sustainably
produced/certified timber, or even less, merely as “legal
timber”, is almost certain to cause additional hurdles in themarket. In practice, it means that FLEGT-licensed timberis unlikely to be specified in public projects in those EU
countries with detailed criteria for “sustainable timber”
not recognising FLEGT. It also means that FLEGT-licensed
timber is unlikely to benefit from leadership or supplierconsolidation effects.
For the purpose of their timber procurement policies, theUK regards a FLEGT Licence as evidence of `sustainability’on equal footing with FSC and PEFC certification, andLuxembourg treats a FLEGT Licence as equivalent to ‘legal
and sustainable’. A number of other member states with
policies aiming at sustainability, but without detailed
definitions, including Austria, Finland and Lithuania, also
list FLEGT Licences as acceptable means of verification ofsustainability. Belgium, Denmark, Italy, the Netherlands
and Sweden, however, treat FLEGT Licences as adequate
proof of legality, but not of sustainability (or, in Sweden’scase, of general ‘acceptability’).
The UK does not provide an explanation of why it treats
83
FLEGT Licences as evidence of sustainability, but thereport84 that formed the basis for Luxembourg’s policy
included the following argument: ‘It is generally believedthat FLEGT Licences are stand-alone tools and thus haveto be differentiated from those means directly addressing
sustainability at a forest management unit level, e.g.
certification. It is important that the Member States provide
incentives for joining the FLEGT process and this can be done
through public procurement policies. It is therefore suggested
that the Luxembourg Government also explicitly accept FLEGTlicensed timber as meeting the government requirements.’
Most countries have not yet formally stated what status
they will grant FLEGT-licensed timber in their procurement
policy hierarchy.

10.4 F LEGT licensing in public
procurement practice
As indicated above, there is very little government
reporting of compliance with their own purchasing policies
or monitoring of volumes of certified, FLEGT-licensed orotherwise verified timber involved in public procurement.
Belgium is one country that has tried to measure the impact
85
of its timber procurement policy. A 2017 study of 140,000
tender notifications issued between 2011 and 2016 revealed
that specification of FSC and PEFC was evident with over
1,800 specific mentions within tender documents. The same
study indicated that FSC was specified within contract
notifications on 88 occasions and PEFC in a single contract.
It also revealed that FLEGT Licences were not specified
at all. The study could not reveal the volumes of material
involved or whether the policy had been complied with.
The findings of the study are in line with the results of aworkshop on FLEGT-licensed timber in public procurementthat took place during the IMM Trade Consultation in
85
Antwerp, Belgium, and attended by around 50 tradeand government representatives from Belgium and theNetherlands. When asked whether trade representatives
had offered FLEGT-licensed timber in bids for government
contracts, hardly anyone confirmed that they had andthose that did failed to win the contract. Participantsalso flagged up a perceived lack of awareness of the wider
benefits of FLEGT VPAs among decision makers shaping
public procurement policies and specifying timber for
public projects, especially at local level, where the bulk ofpurchasing takes place.

83 he UK government’s commitment in 2009 was to consider FLEGT-licensed products as meeting the criteria for ‘legal and sustainable’ until April
T
2015. In July 2014 the deadline was extended indefinitely. It is understood that a review is planned to be undertaken in mid-2019 onwards.
84
ProForest (2012). Support for the Development of Luxembourg’s Public Procurement Policy for Timber, pp. 22–23.
85
IMM_2019 Personal communication - Federal Institute for Sustainable Development. Reference made to a study by FISD-Radboud University
Nijmegen on sustainable procurement policy in Belgium covering 2011 to 2017.
86http://www.flegtimm.eu/index.php/20-news/project-news/145-imm-trade-consultation-workshop-3-flegt-and-sustainability86		Main Report – November 2019

Links between FLEGT and voluntary
third-party certification
11.1 Overview
The question of where FLEGT stands in relation tovoluntary third-party certification is frequently raisedin discussions during IMM Trade Consultations and ininterviews conducted as a part of IMM surveys. Is the
FLEGT VPA process “a step backwards” because it focuses
on demonstrating compliance to national forest laws rather
than to international “sustainable forestry” principles thatare the basis for forest certification systems? Or is the FLEGT
process “better” than voluntary certification, because it
is mandatory, better placed to achieve a broad national
stakeholder consensus on forest management standards
integrated with national regulatory and fiscal frameworks,
and helps to ensure equitable access for all forest operators?
It is not IMM’s role to answer questions on the relative
contribution of different mechanisms to achievementof specific forest policy goals in VPA partner countries,
only to inform on the evolving market position of FLEGT
licensing in relation to forest certification, and from
this, to advise on strategy to improve market access for
FLEGT-licensed timber in the EU. However, it is becoming
clear, from the feedback received from IMM surveys andconsultations, that a key part of this strategy must be toclarify the different but complementary roles of FLEGTVPAs and voluntary certification to promote sustainable
forest management. Furthermore, market opportunities for
FLEGT-licensed timber may be enhanced, both by reducing
the costs of verification and increasing market recognition,by building on synergies between FLEGT licensing andvoluntary forest certification. In line with the IMM
87
indicators, this chapter reports on:• the level of acceptance of FLEGT-licensed timber as

evidence of low-risk with respect to FSC Controlled Woodcriteria and the PEFC Due Diligence standard.

• the proportion of forest covered by FSC and PEFC

certification framework in each VPA Partner country in2018 to determine the extent to which these voluntary
systems may or may not already be assisting exporters
to maintain market access in the EU. This also provides
insights into the extent to which licensing might provide
preconditions for independent certification, and thereby
encourage greater uptake or, alternatively, discourage
further investment in forest certification by providing aneffective alternative assurance mechanism.

• the level of access to FLEGT-licensed timber and FSC

third party certified timber in the EU market in 2018,
commenting on implications for the future developmentof demand for timber from VPA partner countries.

• EU trade perceptions of the relationship between FLEGT

Licences and third party certification, derived from IMM
surveys and consultations in 2018.

• some recent policy discussions attended by IMM where

the links between FLEGT licensing and forest certification
were considered.

87

1111.2 FSC assessment of FLEGT underControlled Wood criteria
The FSC Controlled Wood System was first introduced in
2004 alongside introduction of the FSC Mix label whichallows, under controlled conditions, the mixing of FSC
certified material with uncertified material in FSC labelled
products. The non-certified portion must comply with the
FSC Controlled Wood standards which enable manufacturers
and traders to avoid timber and timber products fromunacceptable sources. The Controlled Wood requirements are
an integral part of FSC chain of custody (CoC) certification
which, at the end of 2018, applied to 40,000 operators
worldwide, including nearly 20,000 in the EU.
Only materials from acceptable sources can be used ascontrolled. There are 5 categories of unacceptable material
that cannot be mixed with FSC certified materials:• illegally harvested wood
• wood harvested in violation of traditional and civil rights• wood harvested in forests in which High Conservation
Values are threatened by management activities (HCVs
are areas particularly worth of protection)• wood harvested in forests being converted to plantations
or non-forest use• wood from forests in which genetically modified trees
are planted.

The FSC standard “Requirements for sourcing FSC
Controlled Wood (FSC-STD-40-005 V3-1 EN)” sets out a due
diligence system to be implemented by chain of custody(CoC) certified organisations to ensure they avoid material
from ‘unacceptable’ sources in the production of FSC Mix
products. Initially the FSC Controlled Wood system relied
on risk assessments undertaken internally by CoC certified
organisations. However, in a process starting in June 2011
and due for completion by October 2019, FSC progressively
phased-out company-developed risk assessments to be
replaced by FSC-approved National Risk Assessments(NRAs) for making risk designations.
The CoC standard explicitly requires the use of NRAs toevaluate the risk for each of the FSC Controlled Wood
categories and indicators for a defined geographic area.
NRAs should result in either ‘low risk’ or ‘specified
risk’ designations. When ‘specified risk’ is determined,organisations are required to implement “Control
Measures” to mitigate the risk. “Mandatory Control
Measures” may be specified in the NRA. If the NRA specifies
no mandatory measures, then the certified company isobliged to develop their own measures using procedures set
out in the Controlled Wood standard.
According to FSC, the requirements for demonstrating
negligible risk of illegal harvest have been drafted to alignwith the legality requirements of the EUTR. For FSC Mix
products, certified companies must demonstrate a “low

IMM Global Indicators IV

Main Report – November 2019

87

risk” of any “illegally harvested wood” content. “Illegally
harvested wood” is defined as that which has been
“harvested in violation of any laws applicable to harvestingin that location or jurisdiction including the acquisitionof the harvesting rights from the rightful owner; theharvesting methods used and the payment of all relevant
fees and royalties”.
FSC state in the standard that “Low risk” as determinedby FSC is synonymous with “negligible risk” as defined by
the EUTR. The standard also proscribes that a “Low riskarea” must be identified “through the risk assessment
process described in FSC-PRO-60-002a FSC National
Risk Assessment Framework or in approved National Risk
Assessments”.
As the FSC assessments are nationally determined, and as
the only country to have issued FLEGT Licences, Indonesia
is the only country for which FSC has pronounced on theControlled Wood status of FLEGT-licensed timber. In 2018
the FSC updated its “Centralized National Risk Assessment”(CNRA) of the Indonesian Timber Legality System andpublished both the full result and an explanation of its
findings in February 2019.88
The CNRA concludes that Indonesia “cannot be regarded
as low risk for many controlled wood requirements,
including legality”. As a result, companies seeking tosource controlled wood from Indonesia have to apply risk
mitigation measures, even though the EU recognises
Indonesia’s FLEGT-licensed timber as legal. The FSC
explicitly mentions that its own conclusions are “at odds
with the issuing of EU’s FLEGT Licences for timber andtimber product exports”. FSC quoted the following reasonsfor this decision:• “ FSC Controlled Wood indicators go beyond legality of
harvesting and include four other categories.

• F LEGT legality requirements are less comprehensive thanthe CNRA legality requirements.

• T he precautionary approach to FSC risk assessments

requires confidence that the risk of wrong-doing is low,even if there is not always direct evidence of such a risk”.

FSC also state that there would be “insufficient stakeholder
trust in the effectiveness of an enforced legality scheme,with respect to upholding community and indigenous
peoples’ rights and in successfully combatting corruption”.
Another point of criticism is the level of evaluation of the
FLEGT VPA, with the Periodic Evaluation89 found by FSC tonot systematically report against specific indicators.

11.3 FLEGT as evidence of “negligible risk”
with respect to PEFC Due Diligence
The PEFC International Standard for Chain of Custody ofForest Based Products, which has been mandatory for all
PEFC CoC certified organisations since 2014, aims to ensurecompatibility with the due diligence system requirementsof EUTR and to apply the same systematic approach toensure negligible risk of any wood from the full range of“controversial sources” identified in the standard entering
supply chains of PEFC-labelled products. By the end of 2018,nearly 11,500 PEFC chain of custody certificates had been
issued worldwide, including over 9,000 in the EU. Under
88
89

article 3.9 of the PEFC standard, controversial sources aredefined as “forest activities which are:
 ot complying with local, national or international
a. nlegislation, applying to forest related activities (...)
b. n
 ot complying with legislation of the country of harvest
relating to trade and customs, in so far as the forest
sector is concerned,
 tilising genetically modified forest-based organisms,
c. u
d. converting forest to other vegetation type, including
conversion of primary forests to forest plantations”.
The CoC standard requires that certified organisation’s risk
assessment shall result in the classification of all supplies
into the “negligible” or “significant” risk category and thatthe organisation’s risk assessment be carried out based onan evaluation of:(a) t he likelihood that activities defined under the term
controversial sources occur in the country / region of the
supply or for the tree species of the supply (which PEFC
refer to as the likelihood at the origin level) and;(b) t he likelihood that the supply chain has not been able
to identify a potential controversial source of supply(which PEFC refer to as the likelihood at the supply
chain level).
PEFC publishes no formal guidance on the specific status of
FLEGT-licensed timber in the PEFC due diligence system.
On enquiry by IMM, PEFC stated: “PEFC requires each andevery company to undertake its own assessment, based on
its company-specific supply chain. While supplies verified
by licensing mechanisms such as FLEGT may provide
valuable information concerning the legality of timber, thedecision as to whether this is sufficient to be considered
as low risk must be taken by the company itself and thatdecision justified to, and verified by, the certification bodyfor the purpose of PEFC Chain of Custody certification”.

11.4. VPA partner countries in global
forest certification
Overall progress of third-party certification under the FSC
and PEFC frameworks in VPA partner countries was slow
before efforts to develop FLEGT licensing systems began
and, in most countries, progress has remained slow during
the period of TLAS implementation.
Total FSC and PEFC certified area in all VPA Partnercountries was 17.5 million hectares in 2018, up from 11.62
million hectares in 2012 and less than 3 million hectares in2007. While the rate of increase is impressive, in 2018 lessthan 4% of total forest area in VPA partner countries wascertified and around 80% of the certified area was in justtwo of the 15 countries, Indonesia (38%) and Malaysia (42%).
Indonesia is the only VPA Partner country where significant
progress was made to expand the area of third party
certified forest in the 6 year period between 2012 and 2018
(Figure 11.4.1).
Considering only FSC and PEFC certification, certified area
in Indonesia increased from 1.68 million hectares in 2012 to
6.7 million hectares in 2018. Despite the progress, FSC andPEFC-certified forest area represented only 7.4% of total

https://ic.fsc.org/en/news-updates/national-news/id/2260
 ttp://www.euflegt.efi.int/documents/10180/438736/Periodic+evaluation+Indonesia_final.pdf/ce95b6ef-aeae-2ec8-b600-cba756018780
h

88		

Main Report – November 2019

Dual

PEFC

2007

2018

7
FSC

6

million hectares

5
4
3
2

Licensing Implementing Implementing Implementing Negotiating(Indonesia)
(Af)
(Am)
(As)
(Af)

2018

2012

2007

2012

2018

2012

2007

2018

2012

2007

2018

2012

2007

2018

2012

0

2007

1

Negotiating(As)

Figure 11.4.1: FSC and PEFC certified forest area in VPA Partner countries,
by certification system and FLEGT VPA status, 2007, 2012, 2018.

Source: IMM analysis of FSC & PEFC data. (As=Asian partners, Af=African partners, Am=Latin
American partners ‘Dual’ is area certified by both systems)

500

PEFC

450

FSC

Dual*

400
million hectares

350
300
250
200
150
100

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0

2000

50

Figure 11.4.2: FSC and PEFC global certified forest area, by certification
system, 2000 to 2018. Source: IMM analysis of FSC, PEFC & UNECE data. As=Asian partners,
Af=African partners, Am=Latin American partners. *FSC and PEFC started to provide accurate
joint estimates of dual certified areas from 2016. Data prior to 2016 is a rough estimate by IMM
based on earlier analysis by PEFC in 2012 and by UNECE.

Indonesian forest area and was dwarfed by the 23 million
hectares certified to PHPL, Indonesia’s national sustainable
forest management standard (see 5.3.4).
Total certified area in the five African VPA implementing
countries, all under the FSC system, more than doubled to
2.6 million hectares between 2007 and 2012 but added only
another 200,000 hectares by the end of 2018. Between 2012
and 2018, an increase of 800,000 hectares in FSC-certified
forest area in RoC, to 2.4 million hectares, was offset by a
600,000 hectare decline in Cameroon, to 400,000 hectares.
There is negligible certified forest area in all other VPAimplementing countries, both in Africa and other regions.
Main Report – November 2019

Total PEFC and FSC-certified forest
area in Malaysia, nearly all under
the PEFC-endorsed MTCS systemand concentrated in Peninsular
Malaysia, increased 4% to 5.2
million hectares between 2012
and 2018. Only a tiny fraction offorest in Thailand and Lao PDR was
certified in 2018. Of the three VPAnegotiating countries in Africa,
only Gabon had any certified forest
in 2018. After rising from zero to
1.9 million hectares between 2007
and 2012, the area of FSC-certified
forest in Gabon increased by only
180,000 hectares between 2012 and2018. In 2017, a 600,000 hectare
concession in Gabon, already FSCcertified, became the first area tobe certified by the PEFC-endorsed
Pan African Forest Certification(PAFC) system. In 2018, President
Ali Bongo announced that all forest
concessions in Gabon would haveto implement FSC certification by2022; this plan was later revised
and now recognises other formsof certification.
The slow pace of uptake of FSC andPEFC certification in most VPA
partner countries between 2012
and 2018 is part of a wider global
slowdown. Worldwide, the total
certified area of forest reported in
December 2018 was 200 million
hectares by FSC and 310 million
hectares by PEFC. Data issued jointly
by FSC and PEFC in January 2019shows a high degree of overlap, 87
million hectares of forest worldwide
being certified by both frameworks(Figure 11.4.2).
In the decade between 2004 and2013, the total global area of forest
certified by either FSC or PEFC
quadrupled from 100 million
hectares to nearly 400 million
hectares, rising by 30 million
hectares per year on average.
However, in the next four years,
certified forest area increased at
an average rate of only 12 million
hectares per year, to a peak of 442
million hectares in 2017.

In 2018, the global area of certified forest recorded thefirst ever annual decline. Although FSC reported static
certified forest area and PEFC only a 1% decline, when asignificant rise in dual certification to both FSC and PEFC
during the year is taken into account, the total area isestimated to have declined 4% to 423 million hectares in2018. Although certified forest area continued to rise in
Russia and Belarus, this was offset by a larger decline incertified area, with a particularly large fall in Australia
during 2018. At the end of 2018, global certified forest
accounted for 11% of global forest area, only a marginalincrease from around 10% in 2012.
89

1000

Dual

PEFC

FSC

Uncertified

900

million hectares

800
700
600
500
400
300
200
100
0

2007 2012 2018 2007 2012 2018 2007 2012 2018 2007 2012 2018 2007 2012 2018 2007 2012 2018 2007 2012 2018
America

EuropeCIS
Temperate

Other temperate

America

AfricaAsia & Oceania

TropicalFigure 11.4.3: Total forest and FSC and PEFC-certified forest area, by certification system and global region,
2007, 2012, 2018. Source: IMM analysis of FAO Forest resource Assessment and FSC and PEFC
Of total global FSC and PEFC-certified
forest area in 2018, only around 25
million hectares (6%) was in tropicalregions compared to over 400 million
hectares (94%) in non-tropical regions(Figure 11.4.3).

2.2
2.0
1.8
1.6

2007
2012
2018
2007
2012
2018
2007
2012
2018
2007
2012
2018
2007
2012
2018
2007
2012
2018
2007
2012
2018
2007
2012
2018

million hectares

The slow progress of certification
1.4
in most VPA partner countries is
1.2
mirrored in other tropical timber
1.0
supplying countries not engaged inthe VPA process. Brazil is the only
0.8
non-VPA country with a large tropical
0.6
forest area where there is also a
0.4
significant area of certified forest. In
2018 there was 7.93 million hectares
0.2
of certified forest in Brazil including
0.0
3.57 million hectares certified by both
FSC and PEFC, 3.04 million hectares
Bolivia
Peru
India Ecuador Mozamb. Surinam Solomon Papua
certified just by FSC, and 240,000
Is.
N.G.
hectares certified just by PEFC. While
the area dual certified in Brazil tripled
between 2012 and 2018, the total area
Figure 11.4.4: Certified forest area (all FSC) in leading non-VPA tropicalof certified forest increased by only
timber supplying countries, 2007, 2012,2018.
300,000 hectares. Only around 1.5
Source: IMM analysis of FSC and PEFC data
million hectares of certified forest in
Brazil is natural tropical forest, theremainder comprising plantations
increased by 100,000 hectares in the previous five years
with a large proportion outside the tropical zone.
and accounting for less than 1% of total forest area.
There is no PEFC certification and only a small area of
There are indications that certified area globally is
FSC-certified forest in all other non-VPA countries inbecoming more concentrated in larger state and industry
the tropics that are significant timber suppliers (Figure
forest enterprises at the expense of smaller community
11.4.4). Bolivia had 2 million hectares of FSC certified
and other non-industrial operators. At least half of allforest in 2007, but this has had fallen by 50% to under 1
newly certified FSC and PEFC forest in the 2012 to 2018
million hectares in 2018. FSC-certified forest area in Peru
period was in Russia and likely to comprise large stateincreased 30% to 920,000 hectares between 2007 andowned and operated management units. Much of the rest2012 but had fallen to 810,000 hectares in 2018. India is
was in Belarus, Ukraine, Sweden, Canada, and Norway
the only other non-VPA tropical country with anything
where most forest production is concentrated in larger
other than negligible certified forest area, although instate and corporate management units.
2018 this extended to just over 500,000 hectares, having
90		

Main Report – November 2019

11.5 Share of FLEGT-licensed
and other verified timber
products in EU trade flows

120

billion (constant 2018)

100
80

Dual

PEFC

FSC

FLEGT licenced

FSC Controlled

Not exposed

60
40
20
0

2007

2012

2018

Intra-EU trade

2007

2012

2018

EU tropical imports

2007

2012

2018

Other EU imports

Figure 11.5.1: Exposure to verification in EU trade of EUTR-regulated products,
by verification system and main source region, 2007, 2012, 2018. Source: IMM
analysis of Eurostat Comext, FAO Forest Resource Assessment, FSC and PEFC data

7

billion (constant 2018)

6
5

Dual

PEFC

FSC

FLEGT licenced

FSC Controlled

Not exposed

4
3
2
1
0

2007

2012

2018

Figure 11.5.2: Exposure to verification in EUTR-regulated tropical timber
imports, by verification system, 2007, 2012, 2018. Source: IMM analysis ofEurostat Comext, FAO Forest Resource Assessment, FSC and PEFC data

Assessing the current availability ofthird party verified products in the EU
market is challenging since no systemwide data is regularly or systematicallycollected on the actual volume or valueof trade in these products. The FSC andPEFC certification frameworks thatmight be expected to provide such data
only publish information on the areaof certified forest and the numbers of
chain of custody certificates issued.
To partially overcome this obstacle,building on earlier market assessment
work by other agencies starting in
2007, IMM regularly assesses the “levelof exposure to third party verified/90
certified wood”. This is a roughmeasure to identify gaps in forest
coverage of third party certification andother legality verification procedures.
It is based on the percentage area ofcertified or legally verified commercial
forest area in each individual suppliercountry. For example, if 40% of acountry’s forest area is known to be
independently certified or legally
verified, the level of exposure of wood
production and exports in that country
is assumed to be 40%. The certified/verified forest areas are calculated
by comparing data from the various
certification and verification systems
with UN FAO figures for areas ofproductive forest land.
‘Level of exposure’ data can be broken
down by verification system, including
FSC, PEFC and FLEGT licensing. For the
IMM assessment, wood from countries
covered by FSC-endorsed Controlled
Wood National Risk Assessment(CWNRA) is also considered ‘third party
91
verified’. To avoid double counting,areas dual certified to FSC and PEFC are
accounted separately.

90

 n elaboration of the exposure measure, developed in consultation with IMM, was used by IDH, the Dutch sustainable trade initiative, asAthe basis for their 28% estimate of EU tropical timber imports in 2018 being “certified sustainable” (according to their definition recognising
only FSC and PEFC certification). The IDH assessment is further broken down by EU country to indicate that share of “certified sustainable”
in imported tropical timber was 10% to 15% in France, 5% to 10% in Italy, 2.5% to 7.7% in Spain, 25% to 30% in Belgium, 30% to 35% in
Germany, 40% to 45% in the UK, and 65% to 70% in the Netherlands. The IDH assessment differs from the IMM assessment in that IDH
excludes FLEGT-licensed timber and limits the assessment to logs, sawn wood, veneer and plywood (IMM includes all EUTR-regulated
products). The results are also not directly comparable due to differing assumptions (for example the IDH assessment assumes 50% to 80%
of all certified wood produced in the tropics is exported to the EU whereas IMM makes no assumptions about the share of certified wood inexports to different regions).
91
A n aim of the IMM assessment is to include forms of verification likely to be used for risk assessment and mitigation by operators to comply
with EUTR. FSC CWNRAs indicating a “Low Risk“ of illegal harvest are effectively recognised as an appropriate tool in support of EUTR
compliance in the EC EUTR Guidance Document (Commission Notice of 12.2.2016). In the Annex to the EC guidance, providing “Examplesof Information on Composite Products“, acceptable evidence to demonstrate the legality of products placed on the EU market includes“Classified Non-Controversial under certification guidelines“, conditional on the operator having, and being able to demonstrate “wellfounded confidence“ in this evidence. IMM interprets this to include risk assessments developed in accordance with a standard publishedby (again using EUTR terminology) a “certification or other third-party-verified scheme which cover compliance with applicable legislation“.
In the absence of more specific EUTR guidance on these certification systems, at this stage IMM only monitors exposure to FSC and PEFC
certification, alongside FLEGT licensing. Although there are other third party verification systems, reliable monitoring of exposure to thesesystems is not possible due to lack of consistent published data on the forest areas covered and on the scope and content of the legality
standards used.
Main Report – November 2019

91

Overall the results suggest that thedrive to promote responsible timber
procurement practices in EU tradeis having an effect, both to increase
the area of forest verified as low riskof illegal harvest in major supply
countries, and to encourage an overall
shift in trade towards countries withgreater access to verified products.
In 2018, 81% of internal EU tradein all EUTR-regulated timber andtimber products was “exposed” tosome recognised form of third party
verification. This compares to 69%
in 2012 and 50% in 2007. This reflects
the very large and growing proportionof forest area in the EU that is either
certified or assessed to be low riskof illegal harvest by an FSC CWNRA(Figure 11.5.1).

Dual
FSC
FSC CW
Not exposed

Other
AfricaMiddle East/India

PEFC
FLEGT licensed
VPA partners

EU imports in billion

SE Asia
Non-EU Europe
North America
CIS
Latin America
China
0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Figure 11.5.3: Exposure to verification in EUTR-regulated timber imports,
by region of supply and verification system, 2018. Source: IMM analysis of

Exposure to third-party verification ofEurostat Comext, FAO Forest Resource Assessment, FSC and PEFC data
all EU timber products imports from
non-tropical regions outside the EU
was 42% in 2018, compared to 23%
Latin America is assessed to have relatively low level ofin 2012 and only 18% in 2007. This ispartly due to a rise in both the proportion of forest verified
exposure to certification and verification. However, thisand the share of EU imports from countries in Eastern
figure is severely distorted by reliance on forest area toEurope, notably Russia, Belarus, Ukraine, Serbia, Bosnia,
calculate the index. The Amazonian rain forest is, of course,
and Turkey. There has also been a slight increase in certified
huge and only a tiny proportion is certified. But this area
forest area in China, the largest external timber supplier
only contributes a relatively small volume of timber toto the EU, over this period. However, a more significant
international trade. Most of the wood product imported into
factor driving the rise in exposure is the publication of FSC
the EU from Brazil now constitutes softwood or eucalyptus
CWNRAs indicating low risk of illegal harvest in Canada,from plantations outside the tropical zone (including large
USA, Norway, and Switzerland, all of which are large
quantitities of chemical pulp), much of which is certified.
suppliers of timber products to the EU.
Therefore, the index underestimates the real level of
exposure of Latin American wood products in EU trade.
Exposure to third-party verification of all tropical timber
imports was 25.8% in 2018, up from 5% in 2012 and lessthan 1% in 2007 (Figure 11.5.2). All the gain between 2012
and 2018 was due to FLEGT licensing of Indonesian productwhich accounted for 20.5% of all EU imports of tropicaltimber. Exposure to FSC and PEFC certification in total
EU imports of tropical timber and timber products was
5.3% in 2018, a slight increase from 5.2% in 2012. The
lack of increase is indicative of the slow pace of uptake ofcertification in tropical countries.
The assessment indicates that if all timber from the
9 countries that in 2018 were either licensing, or were
implementing or had initialled a VPA, the level of exposure
to verified product in EU tropical trade would have been
49.4%. If all 15 VPA partner countries were included, thelevel of exposure would have been 67.7%.
While the level of exposure has increased, in 2018 a large
proportion of EU imports were still not exposed to verified
sources or engaged in the VPA process. Figure 11.5.3 showsthat China dominates amongst EU-supplying countries
with low exposure to verified timber. China’s level of
exposure to certification is expected to increase in the
future, but the rate of change is uncertain. The China Forest
Certification System (CFCS), endorsed by PEFC in February
2014, had certified only 6.6 million hectares of China’s
over 200 million hectares of forest by the end of 2018. An
additional 1 million hectares in China were certified by FSC.
Much of the certified forest area is natural protection forest
and China’s large area of production plantation forest is stilllargely uncertified.
92		

A similar situation prevails in Russia where the certifiedarea, at over 50 million hectares in 2018, is enormous but
still represents only 6% of Russia’s total forest area (ofover 800 million hectares). The certified area in Russia isconcentrated mainly in the western part of the country
where trade is oriented more towards the EU.
The Middle East (mainly Turkey) and India, where there is
only very limited exposure to verification, have emerged as
more important suppliers of timber products to the EU inrecent years.
While the VPA process captures only a relatively small
proportion of total EU imports of timber and timber
products, it is very significant amongst tropical supplying
countries in South East Asia and Africa. If all timber
products imported by the EU from VPA countries were
FLEGT-licensed, the level of exposure to verified timberfrom South East Asia would rise from 46% to 95% and fromAfrica from 22% to 80%.

11.6 EU trade perception of links between
FLEGT and certification
The IMM 2018 trade survey analysed whether there were any
perceived direct impacts from the introduction of FLEGTlicensing and the EUTR on imports of timber certified byprivate certification and legality verification schemes.
Figure 11.6.1 shows that, according to respondents, private
schemes, especially FSC, have profited to some degree from
Main Report – November 2019

80%
Other

70%

PEFC

FSC

60%
50%
40%
30%
20%
10%
0%

Big increase

Small increase

No change

Small decrease Big decrease

Figure 11.6.1: EUTR impact on certification and legality verification schemes.
Source: IMM 2018 EU trade survey

100%
Other

90%

PEFC

FSC

80%
70%

When trying to source additional
certified timber, respondents to the
IMM 2018 trade survey said theyfrequently face supply restrictions,especially for African timber products.
The decision of several European
companies to offload some of their
African operations, including forest
concessions, during 2017 and 2018,
implied to some respondents that the“old model” of European companies
supplying certified hardwood toenvironmentally sensitive European
markets may be breaking down in
the face of failure to secure pricepremiums and intense competition
for timber from markets operating tolimited environmental constraints,
notably China.

11.7 Synergies between
FLEGT licensing andforest certification

60%
50%
40%

The respective roles of FLEGT licensing
and forest certification and links
between the two mechanisms werediscussed at various policy meetings
attended by IMM in 2018 and the firsthalf of 2019.

30%
20%
10%
0%

their purchases of certified timber,an overwhelming majority of
respondents said there had been “nochange”. Only a small proportion of
respondents noticed small (5%, FSC)
or large (4% FSC, 5% PEFC, 3% other)decreases (Figure 11.6.2).

Big increase

Small increase

No change

Small decrease Big decrease

The “development of synergies
between PEFC and other initiatives
Figure 11.6.2: FLEGT-licensing impact on certification and legality
such as FLEGT” was the theme of an
verification schemes. Source: IMM 2018 EU trade survey
event organised by PEFC as a part of
the Asia-Pacific Forestry Week (APFW)in Incheon, South Korea, in June 2019.
the introduction of EUTR. Several respondents remarked
A presentation by EFI articulated thethat, since EUTR was introduced, they have tended to prefercomplementary role of FLEGT VPAs and certification:
certified timber from countries where the risk of illegal“both promote legal compliance and sustainable forest
harvest is considered non-negligible and certification is
management [but] operate at different levels, VPAs at
used as the principle mechanism to mitigate this risk. Thisnational level, certification at company level”.
effect was particularly pronounced in markets where (FSC)
According to the PEFC press release issued after thecertification of tropical timber products had a relatively
event, “speakers emphasized that FLEGT VPA andlow level of market penetration before the EUTR entered
PEFC certification (…) share many commonalities andinto force: several traders in Germany, France and Italy,
strongly urged for prompt and greater synergies between
for example, reported “big increases” in FSC certified
the two. (…) Synergies are believed to yield substantial
timber due to the introduction of EUTR, but none in thebenefits in facilitating trade among regions and nations,
Netherlands or the UK. Small increases were noted in all
and improving cost-effectiveness, market access andcountries. The lowest overall level of growth was reported
competitiveness for timber-based business operators as
by the Netherlands, where only two respondents reported
having both certified and legal timber claims.” The PEFC,“small increases” due to EUTR.
on their website, recognises that “PEFC certification
In addition to FSC and, where available PEFC, respondents
can inform or contribute to the development andsaid they had been increasingly looking to other private
implementation of VPAs and vice versa”.
legality verification schemes managed for example by
In Ghana, PEFC has explored these synergies in a study
Rain Forest Alliance, Nepcon or Bureau Veritas, to ensurecomparing Ghana’s FLEGT VPA requirements with Ghana’s
EUTR compliance.
National Forest Certification System, which is currently
When asked whether the market introduction of FLEGTseeking PEFC endorsement. The study concludes thatlicensed timber from Indonesia had had any impact on
VPA requirements cover “a wide range of environmental,
Main Report – November 201993

social and economic requirements outlined in the national
standards for sustainable forest management and chainof-custody certification”. The report finds that “timbercompanies are already in various stages of adopting
systems in response to the VPA requirements and thisforms a very great synergy point for integrating PEFC
requirements.”92
Also at APFW, FSC held a dialogue on “FSC’s impacts
in Asia Pacific on the forestry and value chains –perspectives from the private sectors and partners”
which considered the relationship between FSC and FLEGT
licensing. Here a variety of opinions were expressed on
the scope for closer linkage between FSC certification
and FLEGT. Some participants believed that FSC should
focus on its “uniqueness” and build on its strong presencein the market, notably the commitments of large andhigh-profile retailers, to drive improvements in forestry
performance. FSC should aim to be “untouchable in themarket”, it was suggested, implying only limited scope for
co-operation with other policy initiatives that might beseen to weaken the brand.
However, other commentators at the FSC event questioned
the “framing of FSC only as a market-based tool” andcriticised the creation of an “artificial dichotomy”
separating voluntary market-based certificationfrom the regulatory framework. It was suggested thismay result in “fragmentation of responsible forest
management interventions”, potentially reducing thevalue of certification to producers as a tool to meet theirown objectives and that “FLEGT was not leveraging theexperience from certification”. These commentators
suggested that promoting complementarity (between
FLEGT and certification) offered “a pathway to increased
success” and that “researchers needed to look at thepractical steps to overcome these dichotomies”.
In the EU, a “dialogue on the differences and synergies
of FLEGT and certification” was on the agenda of a
Sustainable Tropical Timber Event organised by IDH, theDutch sustainable trade initiative, in June 2019. The main
conclusion of the panel discussion between representativesof FSC, PEFC and the UK Timber Trade Federation was thatthe two are complementary and each have a specific roleto play. FLEGT’s focus on governance and the developmentof licensing systems with full engagement at national
level in the producer country, which “brings scale into
the assurance” was highlighted. An FSC representative
observed that “FSC and FLEGT are important and cansupport each other, legality for us is the number one
priority, where there is law enforcement, certification
93
becomes a lot easier”.

11.8 Comment on market implications
The view sometimes expressed that the movement todevelop TLAS in VPA partner countries is undermining
efforts to progress towards third-party certification inthese countries is not supported by the available data,
which indicates that: progress towards certification inmost cases was very slow before VPA implementation
began; by far the most rapid recent progress to achieve

third-party certification in the tropics has been madein Indonesia, the one country that was also the first toachieve FLEGT licensing; and there has been no uptick inthird-party certification in non-VPA tropical countries,
even where their exports to the EU have been rising inrecent years (as is the case, for example, for furniturefrom India, charcoal from Nigeria, and decking from
Peru and Bolivia).
While there has been a shift towards supply regionswith higher “exposure to verification” in the EU, there
are continuing high levels of EU import from countries
and regions with low exposure, notably China and India,
raising questions relating to the forms and credibilityof legality assurances being offered by suppliers inthese regions. IMM survey data suggests that much ofthis may be covered by third party legality verification
systems operated by individual certification companies
and agencies, but there is no centralised and consistent
data published on these systems, relating either to thestandards used, the scope of operators covered or thecosts involved. If these systems are being offered, andaccepted, as appropriate evidence of EUTR compliance,
effectively as alternatives to FLEGT Licences, then there
needs to be much greater scrutiny of the comparability of
their standards, and more information made available on
their coverage.
Although analysis elsewhere in this reports shows there
are other contributory factors (such as logistics and a
growing focus on just-in-time ordering favoring local
suppliers), the “exposure to verification“ measure doessuggest that EUTR and procurement policies are having
an effect, both to increase the area of forest verified as
low risk of illegal harvest in major supply countries, andto encourage an overall shift in trade towards countries
with greater access to verified products.
This in turn reinforces the view that, first, the slow paceof third-party certification in VPA partner countries, andthe challenges of obtaining reliable legality assurances byother means, has been a contributory factor behind theirdecline in share in these markets. Another implication isthat FLEGT licensing has a critical role to play in helping
to reverse this trend, particularly for suppliers in Africa
and South East Asia. Furthermore, the FLEGT licensing
process may be particularly beneficial for smaller
operators that, from analysis of certification uptake,it is clear have struggled to engage in private sector
certification systems, both in the tropics and in nontropical regions outside Europe.
The signs are that, having certified the “low hanging
fruit” of generally larger state and industrial forest
operations, and better organised associations ofsmall operators, in countries with good governance,
the forest certification movement has been unable toexpand in more challenging regions where there is aneed for governance reform and/or which lack strongorganisations on which to build group certification.
In those supply regions where there is clear evidence ofgood governance, such as the EU and North America, theevidence suggests that, in the absence of certification,92

 synopsis of the study is available at https://storage.googleapis.com/pefc-platform/pefc.org/media/2019-04/9d6f6031-35d5-4466-9bdcA
1468bde7c7cf/7844002c-52cd-559a-afc0-5cd4291856aa.pdf. A narrative report is at https://storage.googleapis.com/pefc-platform/pefc.org/
media/2019-04/9d6f6031-35d5-4466-9bdc-1468bde7c7cf/7844002c-52cd-559a-afc0-5cd4291856aa.pdf
93ITTO Tropical Timber Market Report. Volume 23 No 11; 1-15 June 2019.
94		Main Report – November 2019

smaller operators (at little marginal cost to themselves)
have been able to maintain access to the EU market
through the use of regional risk based approaches,notably the FSC CWNRA framework. This, so far, has notprovided a channel for small operators in VPA partnercountries, none of which are recognised in any CWNRA as
being low risk of illegal harvest.
The relative slow pace of implementation of FLEGT
licensing and of uptake of third-party certification in
all tropical countries clearly creates challenges for allagencies seeking to influence forestry practice throughthe medium of regulatory measures like EUTR andresponsible procurement policies. The architects ofthese policies have a responsibility to ensure equitable
access for operators, both large and small, in all supply
countries, not only in the narrow legal sense (forexample, for public authorities to ensure compliance with
WTO non-discrimination principles), but also to maintainmarket leverage and influence in those areas where illegal
logging and associated problems, such as deforestation,
are a genuine threat. The FLEGT VPA process is the key
mechanism by which this can be achieved in the EU, a fact
recognised in EUTR, but which needs to be more clearly
articulated to other actors in both the public and private
sector in the EU.
There may also be strong opportunities created by
the FLEGT and forest certification initiatives working
more closely together, a fact increasingly recognised bystakeholders involved in both initiatives. While there isinternal debate within FSC, with some interests seeking tomaintain the purity of FSC values and an exclusive focus
on certification as a voluntary market-based instrument,
others seem interested in working more closely withgovernment agencies and to engage in the FLEGT TLAS
dialogue, particularly as a way to increase FSC access forsmall holders and communities in tropical countries.
This difference of opinion within FSC creates animmediate issue for FLEGT-licensed products in the
EU market. The fact that FSC does not acknowledge
Indonesian FLEGT Licences as demonstrating complianceeven with the legality criteria for Controlled Wood,despite FSC stating their criteria are fully compatible
with EUTR criteria, has potential to cause confusion andundermine wider market recognition of FLEGT Licencesin the EU. Efforts need to be made to work with FSC to
resolve this, or at least clearly articulate the reasons forthe difference of interpretation.
Attitudes appear more straight-forward within PEFC
where there seems to be a widespread desire for close
dialogue with agencies developing FLEGT TLAS to help
simplify verification, reduce the bureaucratic burden,
limit duplication, improve cost effectiveness, improve
market access, and prevent unnecessary competition
between systems.

Main Report – November 2019

The potential market benefits of exploiting this synergy
between FLEGT licensing and third-party certification
are perhaps best illustrated in relation to Indonesia.
A key rationale for the development of the SVLKPHPL system, the basis for FLEGT licensing, is that by
imposing a national system, the costs of verification areshared widely by all operators in the sector, there is also
a rational framework for cost sharing with the public
sector, for a dialogue with all stakeholders to ensurealignment of legislation with certification standards,
and to ensure equitable access of all forest operators in
the country.
The success of this strategy in the market place
is ultimately dependent on ensuring that there is
widespread customer (and investor) recognition for
the national system that results. This is where theexperience of private sector certification systems isparticularly valuable. This shows that, in practice, it
is extremely difficult to promote individual national
certification systems in global markets. To date, it has
always been necessary to seek some form of international
endorsement. It is this need which has led so manystate forest operations to seek FSC or PEFC certification
around the world. This need was the driving force for theformation of the PEFC in the first place, initially to allow
European operators to promote their conformance tonational regulatory frameworks aligned to sustainable
forestry as defined in the European Ministerial Forestry
Principles. Since then, even large national certification
systems with deep domestic markets and supported bymultinational corporations (like the Sustainable Forestry
Initiative in the US) have seen a need to affiliate to the
PEFC framework to achieve international recognition.
It is an open question as to whether linkage of the SVLKPHPL framework in Indonesia to the FLEGT process canprovide this kind of international recognition. Comparedto voluntary systems like FSC and PEFC, FLEGT licenses
benefit from specific regulatory recognition in the EUTR
in an important export market. However, while some
non-EU countries are now giving similar recognition in
their own import legislation (see Chapter 13), the appealof the FLEGT VPA process is strongly associated with the
EU market. Ultimately, if the aspiration of Indonesia,
and other VPA partner countries, is to achieve market
recognition for TLAS timber products beyond regulatorycompliance to EUTR, then the most efficient way toachieve this may be to find an accommodation with
PEFC or FSC. The TLAS would benefit from international
market recognition and the marketing initiatives of theinternational program.
The certification system would benefit from closer
regulatory alignment, both in producer and consumer
countries, and from greatly expanding the reach andrelevance of certification in the tropics.

95

12

FLEGT impact on forest
sector investment
12.1 Overview
In 2018, IMM commissioned a scoping study on forest
sector investment in VPA implementing (including
Viet Nam and Honduras) and FLEGT-licensing VPA
partner countries. The study is intended to provide abaseline for monitoring potential impacts of FLEGT VPA
implementation and FLEGT licensing on investment
decisions in the forest and timber sector.94 To include
results of this study in the most timely way possible,
its results are being reported in the 2018 IMM Annual
Report, which is being prepared following conclusion of
the investment study.
Forest sector investments are realized by a diverse setof investors. They all have the common aim to generate
returns from economic activities related to forest
management and wood processing. The underlying
assumption of the study is that implementation of
FLEGT VPAs attracts legal and sustainable forest sector
investments, while reducing informal and illegal
economic activities in the sector. The study will be
published in the second half of 2019 and aims to:• assess the quality, accessibility and regularityof existing data on the value of domestic andinternational forest sector investment flows, and thesuitability of this data for long-term monitoring of the
impact of FLEGT licensing;• provide a baseline assessment of the views of key

international investors and the content of financial sector
guidelines on the role of FLEGT Licences as a current or
potential mechanism to mitigate investment risk;•

draw on the previous two aspects, to makerecommendations for refinements to the IMM
indicators and long-term strategy for monitoring offorest sector investment flows.

12.2 Methodology
The scoping study is based on combination of analysis ofquantitative data on forest sector investment flows in theselected countries and an interview-based survey among
investors in the forest sector.
The consultant approached all types and sizes forest
sector investors for the survey, in order to obtain acomprehensive set of opinions and experiences, including:• Domestic forest sector associations (representing
micro enterprises, SMEs and large enterprises)• International forest industries (frequently referred
to as strategic industry investors)• Financial investors (including TIMOs, institutional
95

96

investors,

banks, family office).

N (interviews or
written statements)

Investor type
Domestic SMEs/associations

5

International industry investors

5

TIMOs/institutional investors invested inforest assets in emerging markets

7

TIMOs/institutional investors without
significant investments in emerging markets

3

Civil society actors

3

Table 12.2.1: Investors providing inputs to the IMM
Forest Sector Investment study

To establish the baseline dataset of forest sector
investments in VPA countries, the following data sourceswere reviewed and analysed:• Meta-studies and publications on forest investments;• Strategies and publications of international investors(i.e. TIMOS and specialized forest funds);• National statistics on FDI flows and capital stockincrease in economic sectors.

A first summary of insights and recommendations
provided to IMM by mid-year 2019 allows for some
initial conclusions.

12.3 Monitoring forest sector investment
Data availability is a major constraint when assessing
investment volumes for FLEGT VPA countries. Amongthe countries reviewed by the IMM study, Viet Nam,

94

IMM Global Indicators IX http://www.flegtimm.eu/images/imm_indicators/IMM_Meth_Annex1_Indicators_global.pdf
 Timber Investment Management Organization (TIMO) is a management group that aids institutional investors in managing their timberlandA
investment portfolios. A TIMO acts as a broker for institutional clients. The primary responsibilities of TIMOs are to find, analyse and acquire
investment properties that would best suit their clients. Once an investment property is chosen, the TIMO is given the responsibility of actively
managing the timberland to achieve adequate returns for the investors.
96Institutional investors have several options for timberland investment types and structures. These options include subscribing to commingled
funds, pursuing direct investments (in forest enterprises) or separate accounts, and investing in timber REITs. Some of the largest institutional
investors pursue direct investments, including co-investments alongside their fund investments, which aligns with a trend among the larger
investors toward internal management of assets and efforts to reduce fees. On the other hand, most institutional investors are constrained bylimited in-house timberland investment expertise and a lack of scale to undertake direct investments. Therefore, the majority of investors opt forexternal managers, such as TIMOs, while some asset managers may include forestry investments as part of broader real assets or combined forestry
and agriculture mandates (New Forests, 2017b).
95

96		

Main Report – November 2019

Country

Direct indicators

Qualification of direct indicators

Indonesia

Investment data available for 20112017 for medium and large scale
enterprises

Only medium and large
enterprises – data for small andmicro enterprises is value-added.

Suitability forinvestment monitoring
Suitable data publicly available

For forestry and logging, data is
direct investments, but no capital
net increase.
Ghana

National Statistical Yearbook to 2015 no detail beyond "Manufacturing"Ghana Statistical yearbook – only
has data for 2013 (previous census
year 2003)

Data from the integrated businessestablishment survey only has
one data point – 2013 (reportpublished in 2018). Other sources
do not provide detailed enoughinvestment information.

Unsuitable, since notregularly updated

Viet Nam

Investment data available fromstatistical yearbooks until 2017

Value of fixed-asset and long-term
investment of enterprises available
for the period in question.

Suitable data publicly available

Cameroon

Investment data available (in French)from statistical yearbook to 2015 foryears 2014 and 2015

Regularity of updates is difficult –latest available data is 2015.

Data updates are too slow forreliable practical monitoring

Congo

No data

No data

Further investigation required

Central African Republic

No data

No data

Further investigation required

Liberia

No data

No data

Further investigation required

Honduras

No data

No data

Further investigation required

Table 12.3.1: Forest investment data availability by country

Source: (BPS, 2018), (GSS, 2018), (Statistics Office of Vietnam, 2017), (National institute of Statistics Cameroon, December 2018)
Indonesia, Ghana and Cameroon provide historical data on
investment flows and only data for Viet Nam, Indonesia,
and possibly Cameroon is of adequate quality andregularity to allow for monitoring of investment flows.
Table 12.3.1 shows the availability and suitability of data
identified to date. For the other countries, the consultant
was unable to identify sources of reliable data on
investment flows in the forest sector. Publicly available
data does not provide the detail or regularity required.
Trends in forest sector investment in Indonesia and Viet
Nam and, as far as possible in Cameroon and Ghana, as wellas country fact sheets for all considered countries will be
published as a part of the full baseline study later in 2019.

12.4 FLEGT in the light of investment strategies
Emerging economies, including VPA countries, arebecoming of more interest to international investors.
The focus of this interest is Asia and Latin America,
while Africa is still maturing. Investments by TIMOs/
institutional investors in VPA countries mainly target
plantations and related industries. Natural tropicalforests are mainly targeted by domestic and international
industry investors.
Investment in forestry depends on a set of factors. Each ofthese factors is tested by investors for opportunities andrelated risks before taking an investment decision. If therisks outweigh opportunities, an investment will not berealized. From the perspective of an investor in the forest
97
sector, risks are typically grouped into three categories:97• Project risk: These are risks directly related totechnically operate an asset in the forest sector
and generate the expected returns. These includesite conditions and productivity, production costs,
financing requirements (volume, tenor, CAPEX or
working capital type investment), cash flow profile,
overall complexity, presence of off-takers, productprices, natural hazards, etc.

• Forest sector risk: sector specific policies, taxes andincentives, competition, level of differentiation, levelof formalization and legality, access to land/forests andtenure security, environmental and social safeguards
and requirements, etc.

• Country risk: all other factors “surrounding” projectand sector risk, i.e. maturity of the market, economic
stability and growth, terms of trade, incentives forinvestment, taxes, ease of doing business, regulatory
frameworks, national security, etc.

In theory, FLEGT hosts an array of activities and toolsthat enhance forest sector attractiveness for investmentsby reducing typical risks. All investors interviewed forthis study recognised this risk mitigating potential of
FLEGT. However, according to the study, most of theserisk-mitigating characteristics only materialise when a
VPA becomes fully operational and the majority of market
participants in a partner country comply with the TLAS
requirements. Moreover, the importance of risks associatedwith weak law enforcement and governance structure is
rated lower by investors than more specific technical andeconomic project risks.

 here are various approaches to structure forest investment risks in literature (see PROFOR 2014 for a comprehensive review of forest investment
Trisk). However, they all comprise of the same risk elements, though grouping them under different headings. For the purpose of this study, theconsultant applied a modified risk categorization to better match the key questions on the causal nexus of VPA and investment risks.

Main Report – November 2019

97

The study concludes that, to date, a FLEGT VPA is notconsidered a criterion for any investor type to rate
partner countries as preferential investment locations forthe following reasons:• Long duration of the VPA implementation processes
and lack of trust that processes will be completed.

• Relevance: Indonesia is the only country with anoperational timber legality assurance and FLEGTlicensing system. In all other countries, the scopeof reforms implemented and the number of actors
complying with reforms is still perceived to be toolow. Investment decisions are based on the status of
the investment enabling environment at the time thedecision is under consideration.

•13

Lack of information: some respondents assume that,for example, timber legality assurance systems will
only apply to exports to the EU and are therefore of
relatively limited importance to the wider industry. As aconsequence, the scope of reforms of law and governancestructures undertaken as a part of VPA implementation
were underestimated and respondents saw no risk
mitigation potential of FLEGT at country level.

The report makes several recommendations, including:• Targeted awareness-raising in the financial sector. Materials

informing about the scope of VPAs and their risk-mitigating
potential with reference to specific investment risks would
be of particular interest. Industry investors in natural forestbased value chains rated VPAs risk-mitigating potential more
important than financial investors.

• Assess how the FLEGT VPA process can better embrace
the risk perceptions of institutional investors and
TIMOs and prioritise investment-related reforms.

• Further monitoring of correlations between the FLEGT VPA
process and forest sector investment should be limited tocountries with an operational licensing system.

• Due to limitations in data availability a panel survey toassess the attractiveness of VPA countries for investors– with a specific view of VPA implementation activities –should be established.

• Results of such a panel survey could be used toestablish an investment attractiveness index of VPA
countries, ideally disaggregated by investor types(domestic SMEs, international forest industries, TIMOs
and institutional investors).

Policy initiatives in non-EU tropicaltimber consuming countries
13.1 Overview
In addition to assessing the EU market for FLEGT-licensed
timber, IMM monitors the market impact of policy
measures and regulations with potential to generatedemand for timber from FLEGT-licensing VPA partnercountries98 in non-EU countries.99
The acceptance of FLEGT Licences (or equivalent documents
issued by FLEGT-licensing VPA partner countries forexports to non-EU countries) as evidence of legality in
non-EU countries has become increasingly relevant as anincentive for countries to implement a FLEGT VPA in the last
decade. This is due to Europe’s decline in importance as aplayer in the global tropical timber trade and the emergenceof other dominant consumer markets and processing hubs,
notably China and Viet Nam. Unlike the EU, Japan and the US
have also regained strength as global consumers of tropicaltimber since the financial crisis.
While IMM lacks capacity for detailed surveys of market
impacts of policy measures in consuming countries outside
the EU, it aims to provide insights into the broad scopeand relevance of these measures for FLEGT VPA countries.
This is achieved through analysis of global trade flow data
and literature review, where possible supplemented bya limited number of inquiries for comment from market
experts and government representatives in those non-EU
countries implementing timber import regulations.

The EUTR was not the first policy initiative designed toregulate trade in illegally harvested timber, nor was it
the most recent (Figure 13.1.1). In 2008, the US Lacey Act
was amended to include timber and timber products
and in 2012, one year before the EUTR, the Australian
Illegal Logging Prohibition Act entered into force. Morerecently, Japan and South Korea - in addition to VPA
partner countries - Viet Nam, Malaysia, Indonesia – havetaken steps to develop and implement import regulations
designed to ban illegal timber from their markets.
The Indonesian import regulation entered into force
in 2016, as part of the implementation of the country’s
FLEGT VPA. Malaysia and Japan followed in 2017 andSouth Korea in 2018. Development of the import control
system in Viet Nam is also linked to the country’s VPA and
expected to come into force in the early 2020s.
All these regulations are designed to encourage or legallyoblige importers to put in place systems that reduce therisk of illegally harvested timber entering the supply
chain (Figure 13.1.2). However, the regulations vary widelyin terms of the obligations placed on importers, scope of
application, binding or non-binding character as well as
checks, and enforcement. As a result, their potential toinfluence demand for timber and timber products from
FLEGT-licensing VPA partner countries in the respective
markets also varies.

98This chapter refers to “timber from FLEGT-licensing VPA partner countries” rather than “FLEGT-licensed timber” as the FLEGT Licence is only
issued for exports to the EU and other documents (V-Legal in Indonesia) are for exports to other countries.
99
IMM Global Indicators VI: Non-EU countries have policies and/or regulations that generate demand for FLEGT-licensed timber
98		

Main Report – November 2019

Malaysia Import
Regulation
under TLAS
EU Timber
Regulation

2008

2009

2010

2011

2012

2013

Japan
Clean Wood Act

2014

Australia
Illegal Logging
Prohibition Act

US
Lacey Act

2015

2016

Indonesia
ImportControl

2017

2018

Korea Acton Sustainable
Use of Wood
ImportProvisions

Figure 13.1.1: Timeline of Timber Import Regulations entering into force. Source: IMM based on information from Forest Trends

Mandatory

Voluntary

Scope of regulated actors

Requirements on actors

ChecksAustraliaxFirst placers

Due Diligence

Post-import based on risk

Indonesiax

All companies

Due Diligence

Pre-import and linked tocustoms clearance

Whole supply chain

Due Diligence

Pre-import. Not linked tocustoms clearance

Japan

x

MalaysiaxFirst placer + exports to EU

Document Legality

Pre-import and linked tocustoms clearance

Norway, Iceland,
LichtensteinxFirst placers

Due Diligence

Post-import. All three
countries adopted the EUTR.

Republic of Korea

x

Whole supply chain(unconfirmed)

Document Legality

Pre-import and linked tocustoms clearanceUSAx

Whole supply chain

Prohibition – Due Care

Post-import based on
suspicion and evidence ofillegality

Viet Namx

All companies(organisations + households)

Due Diligence

Pre-import and linked tocustoms clearance

Figure 13.1.2: Comparison of Efforts to Regulate Trade in Illegal Timber in Non-EU Countries
Source: IMM based on information from Forest Trends100

Any trade-related impact can be expected to strongly
depend on consistency of enforcement and on whether
penalties for breaches of regulations have a deterrent
effect. It will, of course, also depend on whether the
regulations grant special status to timber from FLEGTlicensing VPA partner countries.
In addition to the direct impact on market demand fortimber from FLEGT-licensing VPA partner countries,
illegal logging import regulations in non-EU countries are
expected to have a significant impact on investment flows.
The forest sector investment study commissioned by IMM
100

in 2018 (see section 12) found that the FLEGT VPA process“facilitates sector reforms and sets market incentives thatcreate a favourable environment for investments in bothplantations and natural forests”. It concludes that fully
implemented VPAs could have substantial positive impact
on attracting forest sector investment in VPA partnercountries. However, the report qualifies that the influenceon global investment flows is likely to remain “marginal”
for as long as explicit demand for legal timber products
and import regulations banning illegal timber remain
limited to markets in the EU, the USA and Australia.

 egulating the Trade in Illegal Timber. Asian Approaches Compared. June 2017. Marigold Norman/Jade Saunders (FT 2017).
R
https://www.forest-trends.org/wp-content/uploads/2017/08/doc_5634.pdf

Main Report – November 2019

99

The Lacey Act is a fact-based statutewith strict liability, which means that100		

US$ billion

Japan Clean
Wood Act

6

US Lacey Act
AmendmentIndonesia SVLK
import conditions

4

Malaysia TLAS
Import Regulation
2

No VPA

Negotiating (As)Negotiating (Af)

Implementing (As)Implementing (Am)

Implementing (Af)0Viet Nam TLAS
Import Control*
Swiss Env. Act
Amendment*
EUTR (EEA)
EUTR

Figure 13.1.3: Value of global trade in tropical wood products in 2018,by FLEGT VPA status and consumer country regulatory status.
Source: IMM analysis of STIX trade data and national legislation(*legislation still in draft at end of 2018)100%

Not regulated

90%

Australia Illegal
Logging Proh. Act

80%

Rep. of Korea
Sustainable Use Act

70%
60%

Japan Clean
Wood Act

50%

US Lacey Act
Amendment

40%

Indonesia SVLK
import conditions

30%

Viet Nam TLAS
Import Control*0%

Swiss Env. Act
Amendment*

No VPA

10%
Negotiating (As)Malaysia TLAS
Import Regulation

Negotiating (Af)20%

Implementing (As)The Lacey Act is a 1900 United States lawthat bans trafficking in illegal wildlife.
In 2008, the Act was amended to include
plants and plant products such as
timber and paper. There are two major
components to the plant amendments: aban on trading plants or plant products
harvested in violation of the law; anda requirement to declare the scientificname, value, quantity, and country of
harvest origin for some products.

8

Implementing (Am)13.2 The US Lacey Act

Rep. of Korea
Sustainable Use Act

Implementing (Af)

Around US$15.6 billion of tropicalwood exports in 2018, 38% of recorded
tropical wood trade, was destined forcountries without import regulationsin 2018. Two thirds of this trade went
to China and India (Figure 13.1.5).

Australia Illegal
Logging Proh. Act

10

Licensing (Indonesia)

In 2018, the share of exports toregulated countries was particularlyhigh in Indonesia (70%) and Viet
Nam (83%). The share of exports toregulated countries was lower for
VPA-implementing countries in Africa(49%) and Latin America (39%), andfor negotiating countries in Africa(43%) and Asia (50%).

Not regulated

Licensing(Indonesia)

Analysis of trade data shows thatthe goal of closing world markets
to illegal wood products is alreadywell advanced, although there are
significant gaps in China and India.
In 2018, 62% (US$25.6 billion) of thetotal value (US$41.2 billion) of recorded
tropical wood exports worldwide weredestined for countries with regulatory
measures to eliminate illegal trade(Figures 13.1.3 and 3.1.4). At 66%, theproportion was even higher for exports
from VPA partner countries. In addition
to EUTR, which accounted for 11% of
total exports by VPA partner countries
in 2018, a large share of exports went
to destinations regulated under the US
Lacey Act (28%), Japan Clean Wood Act(13%), Republic of Korea Sustainable
Use Act (7%) and Australian Illegal
Logging Prohibition Act (3%).

12

US$ billion

To achieve “substantial leverage”, thereport argues, Asian markets need to
be integrated into the process, andeffectively closed to illegal timber
products, to create a level playing
field for legal products. Both financial
investors and timber producers
interviewed for the study recogniseda high project-related risk mitigation
potential of FLEGT VPAs, dependent
on the products being exported toregulated markets with mandatory
legality due diligence requirements.

EUTR (EEA)
EUTR

Figure 13.1.4: Share of global trade value in tropical wood products in
2018, by FLEGT VPA status and consumer country regulatory status.

Source: IMM analysis of STIX trade data and national legislation (*legislation still in draftat end of 2018) As=Asian partners, Af=African partners, Am=Latin American partners
As=Asian partners, Af=African partners, Am=Latin American partners

Main Report – November 2019

Total unregulated imports: US$15.6 billion

China

3.7, 24%India

8.6, 55%

0.4, 3%
0.6, 3%
0.6, 4%

TaiwanCanadaSingapore

1.7, 11%

Other

Figure 13.1.5: Tropical wood product imports into unregulated markets, bymain importers, 2018. Source: IMM analysis of STIX trade data and national legislation

10

No VPA

9

Negotiating(As)

Value (US$ billion)8
7

Negotiating(Af)

6

Implementing
(As)

5
4

Implementing(Am)

3

Implementing(Af)

2

Licensing(Indonesia)

1
0

2015

2016

2017

2018

Figure 13.2: United States tropical wood product imports,
by FLEGT VPA status, 2015 to 2018. Source: IMM-STIX

As=Asian partners, Af=African partners, Am=Latin American partners

only actual legality counts (no third-party certification orverification schemes can be used to “prove” legality underthe Act) and that violators of the law can face criminal andcivil sanctions even if they did not know that they were
dealing with an illegally harvested product.
Penalties for violating the Lacey Act vary in severity basedon the violator’s level of knowledge about the product:penalties are higher for those who knew they were tradingin illegally harvested materials. For those who did notknow, penalties vary based on whether the individual orcompany in question did everything possible to determinethat the product was legal. In the U.S. system, this is called“due care,” and is a legal concept designed to encourage101
flexibility in the marketplace.
There is no mechanism by which the US Lacey Act can provide
formal recognition for timber from FLEGT-licensing VPA
partner countries, or indeed any specific verification system.

101

However, on inquiry by IMM, the US
Department of Agriculture’s Forest
Services stated that this lack of formal
recognition does not mean that “FLEGT
Licences do not go a long way in provingthat Due Care is being practiced”.
The US International Wood Products
Association (IWPA) advises attendeesof its Wood Trade Compliance Training
Programme that “there is a benefit tosourcing FLEGT-licensed product”.
However, awareness of the FLEGT VPA
programme and FLEGT Licences (orequivalent documents issued by FLEGTlicensing VPA partner countries forexports to the US) is currently low. The
IWPA expects that FLEGT will become
more relevant and widely known once it
is no longer limited to Indonesian timber
and timber products. IWPA cautioned,
however, that the dominant source of
information on the FLEGT VPA process
is – often negative – informationand publicity from NGOs rather thaninformation showing reform of theforestry sector in partner countries.
Trade data highlights the potential roleof the FLEGT VPA process to assist US
importers compliance to the US Lacey
Act (even if they are not yet widely
aware of FLEGT). US imports from VPA
Partner countries were US$8.62 billion
in 2018, having increased rapidly in2017 and 2018 by close to US$1 billion
per year, mainly driven by risingfurniture and plywood imports from
Viet Nam and Indonesia. In 2018, 87%of all tropical wood imports in the
US were sourced from VPA partnercountries (Figure 13.2).

The prospects for continued trade
growth in the US for VPA partnercountries are good, particularly against
the background of the on-going US/
China trade war which is encouraging
importers to look for supplies from other Asian countries.
According to IWPA, Indonesian plywood products are
particularly favoured in the US because of their quality
and producers’ ability to comply with the Toxic SubstanceControl Act (TSCA). According to IWPA, the main concern
from the US side is that Indonesian supply may be limited in
the future by lack of capacity and access to fibre.

13.3 Japan: Clean Wood Act
In the Japanese Clean Wood Act, operators voluntarily register
as a way of being recognised by the Government of Japan for
their responsible behaviour. Registered operators are officiallyrecognised as businesses that take measures to verify thelegality of their wood and wood products. The Government ofJapan plays an important role in promoting the registration ofoperators and disclosing good practice by registered operators.
Further, the Government engages in educational andSummary of Lacey Act Amendment derived from Forest Legality Initiative - https://forestlegality.org/policy/us-lacey-act

Main Report – November 2019

101

The product scope is broad, the basic
policy stating that legality measuresapply to ‘wood and the like’, whichrefers to timber and items obtained byprocessing wood, or furniture, paperand other items manufactured usingwood as the primary raw material.

5.5

No VPA

5.0
4.5
Value (US$ billion)

public-awareness activities to promotetimber legality. Under the Act, the main
penalty is the revocation of registration.
Registration can be refused or revoked
if the operator cannot prove that it takes
measures to handle only legal timber
and timber products. Fines are also
contemplated, but they relate to falsely
claiming registration and not to the tradein illegal timber or timber products.

Negotiating
(As)

4.0

Negotiating
(Af)

3.5
3.0

Implementing
(As)

2.5

Implementing
(Am)

2.0
1.5

Implementing
(Af)

1.0
0.5
0.0

Licensing(Indonesia)
2015

2016

2017

2018

The Clean Wood Act applies to two
Figure 13.3: Japan tropical wood product imports, by FLEGT VPA status,
types of operator. Type 1 are entities
2015 to 2018. Source: IMM-STIX
As=Asian partners, Af=African partners, Am=Latin American partners
in the supply chain that first placetimber on the Japanese market. Type
2 are entities that handle timber
and timber products that have beenobtained from other timber-related entities in Japan.
not underestimate the reputational benefits that theExercising due diligence and maintaining a robust due
formal recognition of responsible behaviour brings
diligence system are fundamental obligations under theto Japanese businesses. Large-scale operators in theAct. The enforcement ordinance sets out requirements on
Japanese timber sector are likely to pursue such a highcollecting information for Type 1 operators to ensure theylevel form of recognition from the authorities and thistake measures to verify that the timber was harvested inmight cause smaller players to follow suit. One should
compliance with the laws and regulations of the country of
not underestimate the reputational damage of losing theharvest. When transferring timber, Type 1 operators mustregistration due to irresponsible behaviour either. Once
give the recipient a record demonstrating that the relevant
deregistered, businesses risk losing their good name andinformation was collected and a statement on the legality
standing in society”.102of the timber. Type 2 operators must confirm the content
After a dip in 2017, Japan’s imports of tropical woodof the documents provided by the operator that transfers
products rebounded 11% to US$5.3 billion in 2018. VPA
the timber to them.
Partner countries accounted for 77% of total imports in
The ministerial ordinances do not provide details on
2018, 22% coming from Indonesia, 27% from Viet Nam,risk assessment and risk mitigation. However, theyand 28% from other VPA negotiating countries in Asia.
stipulate that, if no documentation is available, theJapan’s imports of biomass and chips, wood furniture andoperator shall gather additional information confirming
plywood from Viet Nam, and plywood from Malaysia allthat the timber was legally harvested. The ordinanceincreased sharply in 2018.
states that the operator shall not handle timber if itcannot confirm its legality. The Japanese government
13.4 Republic of Korea
also supports implementation of the Act by establishinga database including extensive information on supply
The Republic of Korea’s compulsory legislation — thecountry legislation/regulations for timber production
Act on the Sustainable Use of Timbers — entered intoand exports. ITTO assisted the Japan Forestry Agency inforce on 1 October 2018, initially covering sawn wood,
populating this database for some tropical countries.
plywood, pallets and anti-decay, fire retardant orlaminated wood. Together, these products account for
Although there is no formal recognition for timber froma large portion of South Korea’s imports of timber and
FLEGT-licensing VPA partner countries under the terms
timber products. The Korea Forest Service may extend
of Clean Wood Act, the law should motivate registered
the product scope in the future.
companies to prefer VPA partner timber, for which
comprehensive documentation on legality is available,
The law requires importers to submit documents,
compared to products from countries with less readily
for example harvesting permits, to Korean Customs
accessible or credible evidence.
authorities to show that their timber and timber
products are legal. After the Korea Forest Service has
To some extent, the relevance of the Japanese Clean
confirmed that the products are legal, Korea Customs
Wood Act is limited by its voluntary character.
However, as the EU FLEGT Facility notes “one should
will clear the imports for entry into the country.

102
103

 ttp://www.euflegt.efi.int/publications/a-comparison-of-the-japanese-clean-wood-act-and-the-eu-timber-regulationhKorea Forest Service, 2018, Country Specific Guideline for Indonesia, retrieved from http://www.forest.go.kr/images/data/down/%EC%9D%B8%EB%8F%84%EB%84%A4%EC%8B%9C%EC%95%84%EA%B0%80%EC%9D%B4%EB%93%9C%EB%9D%BC%EC%9D%B88%EC%9B%9428.pdf

102		

Main Report – November 2019

2.5

No VPA
Negotiating(As)

Value (US$ billion)

2.0

Negotiating
(Af)

1.5

Implementing
(As)

1.0

Implementing(Am)
Implementing
(Af)

0.5

0.0

Licensing(Indonesia)
2015

2016

2017

also significant growth in Korea’s
imports of biomass and plywood
from Viet Nam and plywood fromIndonesia in 2018.
The Republic of Korea’s importregulation is currently less relevantfor African VPA partner countries.
However, Ghana is one of Africa’s
most important timber sources for
Korea. If effectively implemented
and enforced, the Korean regulation
has potential to make sourcing from
Ghana more attractive, seeing as
Ghana is now firmly expected to start
FLEGT-licensing in 2020 at the latest.

2018

Figure 13.4: Republic of Korea tropical wood product imports,
by FLEGT VPA status, 2015 to 2018. Source: IMM-STIX

As=Asian partners, Af=African partners, Am=Latin American partners

Unverified timber cannot be sold and must be returned
or destroyed. Non-compliance with the legislation will
trigger fines and, in severe cases, imprisonment.
FLEGT Licences are accepted as evidence of legality
under the terms of the legislation. The country-specificguideline for Indonesia issued by the Korea Forest Service
states that SVLK and V-Legal documents should be
accepted as evidence of legal compliance for products
103
from Indonesia.
The role of the FLEGT VPA process to provide
assurances of legality in Korea is made more importantby the very high proportion of tropical wood imports
from VPA partner countries (The role of the FLEGTVPA process to provide assurances of legality in Korea
is made more important by the very high proportionof tropical wood imports from VPA partner countries(Figure 13.4). Over 95% of the Republic of Korea’s
imports of tropical wood products in 2018 were fromthese countries, including 22% from Indonesia,
47% from Viet Nam, and 27% from VPA negotiating
countries in Asia. There was also significant growth inKorea’s imports of biomass and plywood from Viet Nam
and plywood from Indonesia in 2018.
The Republic of Korea’s import regulation is currently
less relevant for African VPA partner countries. However,
Ghana is one of Africa’s most important timber sources
for Korea. If effectively implemented and enforced, theKorean regulation has potential to make sourcing from
Ghana more attractive, seeing as Ghana is now firmly
expected to start FLEGT licensing in 2020 at the latest.
Over 95% of the Republic of Korea’s imports of tropicalwood products in 2018 were from these countries,
including 22% from Indonesia, 47% from Viet Nam, and
27% from VPA negotiating countries in Asia. There was

13.5 The Australian Illegal
Logging Prohibition
Act (ILPA)
The Australian Illegal Logging
Prohibition Act is similar in design
to the EUTR. It has a broad scope,targets first placers, and importers are
obliged to develop a due diligence system to prove theirtimber imports are from legal sources.
The Australian regulation does not establish any formal
status for FLEGT-licensed timber. In fact, Australia
removed FLEGT Licences from the regulation’s scopeas part of reforms in October 2017, due to the fact that
“FLEGT Licences are only issued for products exported
directly from certain countries to the European Union andare unlikely to be seen within the Australian market”.104
In practice, however, the Australian Government gives
preferential treatment to timber and timber products
from Indonesia, still the only FLEGT-licensing VPA
partner country during 2018. The Country Specific
Guidelines for Indonesia,105 which are to assist businesses
in importing timber products under the ILPA, specify
that, when importing from Indonesia, importers merely
have to check whether their supplier holds a SVLK Timber
Legality Certificate and that they are provided with a
V-Legal Document106 for every shipment. This makes
importing wood products from Indonesia very simple inpractice and puts it on equal footing with FSC and PEFC
certified timber, both of which are “deemed to comply”
under the Australian law.
As in other non-EU consuming countries, the VPA
process has considerable potential to facilitate Australianmarket access for VPA partner exporters and to assist
legal conformance by Australian importers. Each year,
Australia imports over US$900 million of tropical wood
products, over 90% of which derive from VPA partnercountries (Figure 13.5). Imports from Indonesia, which
increased 6% to US$305 million in 2018, account for athird of all Australia’s tropical wood product imports.
One quarter of imports, US$227 million in 2018, are104http://www.agriculture.gov.au/import/industry-advice/2017/95-2017
 ountry Specific Guidelines for Indonesia. Australian Government/Government of Indonesia. Revision 1.1. October 2018 (CSG IND 2018). http://C
www.agriculture.gov.au/SiteCollectionDocuments/forestry/australias-forest-policies/illegal-logging/indonesia-country-specific-guideline.pdf
106V-Legal Documents are Indonesian export licenses attesting legality. For exports to the EU, they were replaced with FLEGT Licences in 2016. Clientsin all other countries continue to receive V-Legal Documents for products covered by the Indonesian VPA.
105

Main Report – November 2019

103

As the only country yet to issue FLEGT
Licences, Indonesia was the only country
to benefit directly from this recognitionin 2018. However, the longer term
“network effects” of mutual recognitionof legality licenses by VPA partnercountries may be considerable, helping toreinforce legal compliance and facilitate
the free flow of trade between countries
which are now themselves emerging
as major consumer markets for wood
products. There will also be significant
market pull effects for other tropicalcountries not engaged in the VPA process.
Collectively, Viet Nam, Indonesia andMalaysia, the three Asian countries thathave introduced import controls as partof national TLAS development (or aredrafting these controls in the case of VietNam), imported tropical wood productswith total value of US$1.53 billion in 2018
(Figure 13.6). Around a third (US$590
million in 2018) comprised bilateral trade
between the three countries, the largest
flows in value terms being from Indonesia
and Viet Nam to Malaysia. The largest
single tropical wood import flow by any of
the three countries, of US$261 million in
2018, was into Viet Nam from Cameroon,another VPA partner country. The largest
single import from a non-VPA country,of US$92 million in 2018, was from
Cambodia into Viet Nam.

13.7 Import regulations in nonEU European countries
Iceland, Norway and Liechtenstein haveadopted the EUTR, as part of the European
Economic Area (EEA) agreement toimplement all relevant EU legislation in
the field of the Single Market.
Switzerland has been working on
legislation similar to EUTR for several
years. In 2019, the Swiss Environment,
104		

Value (US$ million)

Timber import regulations developedin tropical timber consuming VPA
partner countries are closely linked tothe implementation of FLEGT VPAs andtherefore typically recognise timberfrom other FLEGT-licensing partnercountries as compliant. The Indonesianas well as the Malaysian and Vietnamese
import regulations all accept FLEGT
Licences from other VPA partnercountries.

900

No VPA

800

Negotiating
(As)

700

Negotiating
(Af)

600
500

Implementing
(As)

400

Implementing
(Am)

300

Implementing
(Af)

200
100
0

2015

2016

2017

Licensing(Indonesia)

2018

Figure 13.5: Australia tropical wood product imports,
by FLEGT VPA status, 2015 to 2018.

Source: IMM-STIX As=Asian partners, Af=African partners, Am=Latin American partners

1.6
No VPA

1.4

Value (US$ billion)

13.6 Timber import regulations
in VPA partner countries

1000

1.2

Negotiating
(As)

1.0

Negotiating
(Af)

0.8

Implementing
(As)

0.6

Implementing
(Am)

0.4

Implementing
(Af)

0.2

Licensing(Indonesia)

0.0

2015

2016

2017

2018

Figure 13.6: Total tropical wood product imports by Indonesia,
Malaysia and Viet Nam, by FLEGT VPA status, 2015 to 2018.

Source: IMM-STIX As=Asian partners, Af=African partners, Am=Latin American partners

180

No VPA

160

Value (US$ million)

sourced from Viet Nam. Nearly twothirds of Australia’s imports of tropicalwood products comprise value-added
products such as furniture and joinery.
Most of the remainder comprises
plywood, decking and sawn wood.

140

Negotiating
(As)

120

Negotiating
(Af)

100

Implementing
(As)

80
60

Implementing
(Am)

40

Implementing
(Af)

20

Licensing(Indonesia)

0

2015

2016

2017

2018

Figure 13.7: Total tropical wood product imports by EEA countries
and Switzerland, by FLEGT VPA status, 2015 to 2018. Source: IMM-STIX
As=Asian partners, Af=African partners, Am=Latin American partners

Main Report – November 2019

Spatial Planning and Energy Commission (UREK)
approved a draft regulation from the National Council
as an amendment to the country’s Environmental Act.
The Commission also voted in favour of new rules toblock imports of other raw materials if their cultivation,mining or manufacture adversely impacted theenvironment or “significantly endangered sustainable
use of natural resources”. The Swiss National Council andthe Council of States both still had to decide about thedraft at the time of writing of his report. The bill will only
pass if both Councils agree, something not expected tohappen before the end of 2019, at the earliest.
Imports of tropical wood products by EEA countries andSwitzerland totalled US$162 million in 2018 (Figure 13.7),
around two thirds destined for Switzerland and one third
for Norway (Iceland and Liechtenstein are negligible
importers of tropical wood products). Viet Nam was
the largest tropical supplier to these countries in 2018,delivering products with a total value of US$48 million,
up from US$39 million in 2016. Indonesia is the second
largest supplier, delivering US$26 million in 2018, downfrom US$31 million in 2016. Around one third ($52 million
in 2018) of tropical wood imports into these countries isfrom non-VPA countries, although this includes indirect
imports from neighbouring EU countries (US$16 million
in 2018). India was by far the largest non-VPA tropicalsupplier to these countries in 2018 (US$21 million).
At the time of writing of this report the EU still had 28
Member States and the future of the UK as a part of theUnion remained open. However, the UK plays a prominentrole among the EU’s major tropical timber consuming
markets and an EU without the UK would be a smaller
importer of VPA partner timber products.
In preparation of a possible Brexit, the UK and Indonesia
have already signed an agreement committing theformer to continued recognition of FLEGT Licences
107
after Brexit. The UK government also committed toincorporating both the FLEGT and EU Timber Regulationsin UK law after Brexit. Therefore, the green lane
advantage enjoyed by FLEGT-licensed timber in the EU is
expected to continue in the UK if it leaves the EU.

14

Recommendations
14.1 Recommendations for FLEGT Licencemarket development
Drawing on contacts and interviews with a wide
range of interests in government, industry and civilsociety during IMM activities in 2018, the following
observations are made with respect to future strategies
for market development of FLEGT-licensed timber. These
recommendations are directed to the EC and EU member
states, VPA partner country governments, the private
sector, as well (and as relevant) to partners like ITTO, FAO
and others.

• S upport the efforts of the private sector within FLEGT

counties, especially those with operational TLAS
systems, to promote the benefits and positive impactsof these systems. FLEGT licensing and the supporting
TLAS systems are regulatory tools and systems
which presently are not widely understood and whose
benefits are either not known or poorly communicated.
European buyers need to be able to see and believe thevalue of processes, but they need to hear this message
from their peers within the countries with active TLAS
systems. Authentic communications originating within
the VPA countries designed for a business audience arevital to building trust in the system.

• C ommunicate results of independent reviews of theperformance of the systems underlying FLEGT Licences
in a non-technical way. Use reports of VPA monitoringand evaluation initiatives to identify the performanceand value of FLEGT licensing and address the concernsof users and stakeholders with respect to its real value
and impact in-country.

107• The private sector both in VPA Partner countries andin the EU needs to be actively engaged in the positivemarket development of FLEGT-licensed timber. Timbertrade federations, for example, could play a leading roleand have already started doing so in some countries.
ENGOs that are open to supporting the FLEGT/VPA
process and commercial use of tropical timber should
also be more actively engaged.

• Actively engage those civil society organisations andprivate sector organisations that seek to influence
private sector procurement policies. Whilst many
influential organisations already support FLEGT
licensing many others can be potentially influenced
to be more supportive in their advocacy. Continued
dialogue and trust building based on communicationof the evidence-based benefits and realistic limits tothe value of the VPA process and FLEGT licensing inparticular is essential.

• Encourage EU MS to regularly review their policies for

public procurement of timber and timber products inthe light of developments in the FLEGT process. Market
development for licensed timber would benefit from
more widespread acceptance of FLEGT-licensed timberas evidence of both “legality” and “sustainability” in EU
member state public procurement policies, recognising
the wider governance reforms required for licensing.
Public sector policies are important not only for theirdirect influence over government procurement but also
for the signal they send out to the wider market.

• High political priority (backed by public money) should
continue to be attached to promoting development ofhttp://www.flegtimm.eu/index.php/newsletter/flegt-policy-news/38-eutr-and-eu-flegt-stay-in-uk-law-post-brexit

Main Report – November 2019

105

credible TLAS systems in VPA partner countries. Thereis an underlying frustration within the private sector
that FLEGT-licensed timber from a single country
is insufficient for market needs and insufficient toconvince industry that VPA are successful and that
FLEGT-licensed timber is a serious contender in themarketplace. The wider availability of FLEGT-licensed
timber would build the commercial proposition andoffer choice in the marketplace.

• Concerted efforts should be made to build on thepotential synergies between the development of TLAS
in VPA partner countries and international third
party forest certification systems to help simplify
verification, reduce the bureaucratic burden, limit
duplication, improve cost effectiveness, improve
market access, and prevent unnecessary competition.

• There is a specific need for engagement with FSC toaddress the current lack of recognition of FLEGTlicensed timber in the FSC Controlled Wood National
Risk Assessment for Indonesia.

• Some EU MS are imposing fees for processing FLEGT

Licences. While not currently considered a significant
market barrier, they were felt to send a negative
message to the market. Abandoning such fees would
help maximise the benefit of FLEGT licensing.

• Efforts to ensure consistent and effective enforcementof EUTR provide the most immediate, and likely mosteffective, market advantage for FLEGT-licensed timber andshould continue to be prioritised. In a number of countries,
the private sector would still benefit from improved
guidance for complying with EUTR due diligence.

14.2 IMM future monitoring
In 2018, IMM widened the scope of its survey work andits information base, through the introduction of special
studies and Trade Consultations. The project also draws
on experience of five years of trade statistics analysis.
IMM monitoring going forward:

stakeholders for consumption of VPA Partner timber inEurope has provided interesting insights in 2018 and 2019
and will be continued and possibly expanded in 2020.

• There are still significant gaps in existing data

limiting the ability of IMM to reliably assess the tradeand competitiveness impact of FLEGT licensing and
IMM will continue to liaise, and where possible andappropriate, co-operate with other agencies to help fillthese gaps which include:• Lack of data on the actual value or volume of tradein timber which is independently certified or legally
verified through non-VPA mechanisms;• Lack of systematic, consistent and comprehensive
assessments of forest governance risk in non-VPA
supplying countries;• Lack of centralised and consistent data on the levelof EU market acceptance, the standards used, theoperators covered, and the costs involved in third
party legality verification systems operated byindividual certification companies;• Lack of data on investment flows into the forestry

and forest products sectors in VPA partner countries.

• In the absence of trade data from third party

certification and legality verification schemes, IMM’s“exposure to certification/verification” measure willcontinue to be used to help assess the market positionof FLEGT licensed timber relative to alternative
assurance mechanisms.

• I MM will continue its efforts to improve the quality,

consistency, scope and regularity of access to reliabletimber trade flow statistics for the purposes of FLEGT
market monitoring through the Sustainable Timber
Information Exchange (STIX) and the development of
dashboards and other tools on the IMM website. As apriority, work to extend data validation routines and toprovide standardised estimates of timber trade quantity,
alongside value, in Eurostat COMEXT data will be
extended to VPA partner trade flows with other regions.

• IMM will continue to work with a network of• There is ongoing need for IMM to maintain strong links• The 2018 studies confirmed the impression from• The first full cycle of IMM Trade Consultations (one inindependent country correspondents; the network will
be further expanded as more VPA partner countries
approach the licensing stage. Viet Nam and Congo
were identified as priority countries for 2020 and therespective consultancy contracts advertised in July 2019.

previous years that information on market conditions
and on corporate and other organisation attitudes to
FLEGT licensing is best acquired using semi-structured
interviews undertaken by national correspondents
using a standard, but flexible template, prepared
centrally by IMM. This approach will be continued.

• IMM country correspondents in the EU will make acontinuous effort to capture all types of operators –large and small – while at the same time coveringa significant proportion of their countries’ trade intimber and timber products with VPA partner countries.

•

The concept of special studies for monitoring specific
IMM indicators and gaining access to some key sectors/

106		

with other agencies engaged in FLEGT work – mostnotably EFI, FAO and UNEP/WCMC – as well as agencies
doing related work – such as Chatham House or STTC –to avoid duplication and improve the flow of information.
each key country with the exception of the Netherlands,
which “shared” a consultation with Belgium) will becompleted in the first quarter of 2020. The Consultations
provided extremely valuable insights into trade practices
and priorities and a forum for direct exchange of
information and opinions among key stakeholders. IMM
will continue the Trade Consultations after completion of
the first cycle, in a modified format to reflect experience
gained in the first cycle and the evolving market for
FLEGT licensed timber.

• IMM will continue monitoring market developments

and market uptake of FLEGT Licences in the UK postBrexit. It will also monitor potential impacts of Brexit
on VPA partner countries.

Main Report – November 2019

Annex 1: 2018 EU Trade Survey
Methodology and sample

A1

The sample of 96 companies interviewed as a part of the
IMM 2018 trade survey was slightly smaller than in 2017(126 companies). The smaller sample size was primarily
due to the fact that a number of companies involved infurniture trade and manufacture (53) were interviewed as108
a part of a separate EU furniture sector scoping study.
With 149 companies interviewed, the combined sampleof the two 2018 surveys is larger than in 2017. It included
importers of sawn timber, decking, plywood, mouldings
logs, veneers, doors, window frames, as well as furnitureand furniture components and other products from VPA
partner countries.

In 2018, the European IMM team undertook follow-up
research in the seven key countries accounting for morethan 90% of EU tropical timber and timber productimports from VPA partner countries (Figure A.1). The 2018studies produced in Belgium, France, Germany, Italy,
Netherlands, Spain and the United Kingdom build on
scoping studies prepared in 2017.
The follow-up studies covered a broad spectrum ofprivate sector players, including importers and agents
as well as manufacturers and retailers. Results werecollected in an online survey tool. As in 2017, companies
did not fill in the survey alone but were guided throughthe tool by the respective IMM country correspondents.
This process allowed for discussion of responses andcomments provided by respondents and gave IMM
correspondents much more detailed insights into
respondents’ opinions and ideas.

Correspondents in several countries did note, however,that it was more difficult in 2018 to engage the private
sector in dialogue about FLEGT than it had been in 2017.
Reasons given for this reluctance included:• Continuing decline in tropical timber trade in a numberof EU countries and lower priority given to tropicaltimber in companies’ product mix.

• Reluctance to “put views on
23

20%

2018
19

15%

17

17

14

15

17

17

16

14

10%
9

• Recurrence of “fatigue” in talking

about FLEGT-licensed timber
while it remains only a theoreticalpossibility for most tropical timber
products and supply countries.

10

9

5%

UK

Spain

Netherlands

Italy

Germany

France6
Belgium

0%

regulation and issues of legality on
record” for fear of being “identified
and put on the list for inspection”
by EU Timber Regulation (EUTR)
Competent Authorities.

2017

25%

• Rising numbers of requests

from media and analysts forparticipation in surveys, which
has led to companies declining tocontribute to surveys.

• Economic recovery kept companies

Figure A1.1: EU trade survey participation by country.

busy and they felt less inclined tospend time on surveys.

2018

11%

2017

11%

0%

89%
10%

20%

30%

40%

50%

60%

70%

80%

108

90%

Figure A1.2: EU trade survey participation by Operators and Traders.
Source: IMM 2018/2017 EU trade surveys

Main Report – November 2019

The proportion of EU survey
respondents who acted as Operators
94% (2017: 89%) under the EUTR was
slightly higher than in 2017. 6% ofrespondents were purely traders, withseveral of the Operator respondents
also running their own trade orwholesale businesses (Figure A1.2).
The size and relevance of IMM trade
survey samples in relation to theoverall number of Operators identified
in the key EU Member States by EUTR

89%

Operator

Trader

Source: IMM 2018/2017 EU trade surveys

100%

A tabling of views: Scoping study forassessing the impacts of timber legality
on the European Union’s furniture sector
and the associated tropical timbertrade”. Author: George White. (ITTO/
IMM 2018). https://www.itto.int/direct/
topics/topics_pdf_download/topics_
id=5782&no=1&disp=inline
107Competent Authorities was analysed in109
the 2017 IMM Annual Report. Whilerelatively small in absolute respondent
numbers, the IMM survey team again
approached a large number of key
operators in 2018 and thus covered asignificant proportion of EU trade incore timber products imported from
VPA partner countries, including
tropical sawn timber/mouldings,
110joinery, plywood and decking.
As a result, the survey can beconsidered reasonably representativein relation to tropical wood products(HS 44). On the other hand, market
coverage was lower when it comes tofurniture and furniture components– even lower than the year before
as a large part of furniture sector
responses went into the separate
furniture sector study – and pulp andpaper products.

Importer
Agent
Manufacturer
Retailer
Wholesaler
Building contractor
2018

Other
0%

10%

20%

30%

40%

50%

60%

70%

2017

80%

90%

Figure A1.3: EU trade survey participation by business type.

Source: IMM 2018/2017 EU trade surveys

Drivers of the EU tropical timber market

As a part of its 2018 research, IMM has been trying to
identify the major drivers of this development. The 2018
trade survey contained a table of nine potential factors
identified by IMM, which respondents were asked to sortaccording to relevance. These factors, plus two additional
factors identified during IMM 2018 Trade Consultations
are summarised in Figure A1.4.

Tropical timber imports to the EU have declined for overa decade now. The loss of market share was particularly
pronounced in the period 2008-2012. Sales then stabilised
up to 2016, before dipping again slightly.

2018 survey respondents identified “substitution by othermaterials” as the main factor responsible for decline in
EU tropical timber imports, followed by the “economic
downturn 2008-2013” and “diversion of supply to otherIn addition to the survey of timber trade and industry
companies, IMM correspondents also interviewed 10 timbersector associations and EUTR Monitoring Organisations,111
representing a total of more than 2700 members.

Economic downturn2008 to 2013

Diversion of supply
to other markets

Erosion of
infrastructure for
EU supply

Importers & bankers
increased aversion tocommercial risk

Just-in-time favours
more regular lessvolatile supply

Substitution bytemperate wood& composites+

EU Timber Regulation

Prefabrication: Switchfrom adaptable utility
woods to tightly
specificied materials

Competition from
China for material
access and in markets
for finished goods

Environmental
prejudices &uncoodinatedmarketing+

Declining qualityof tropical timber
supplies

Figure A1.4: Drivers of EU tropical timber market decline. Source: IMM 2017 analysis

109

“FLEGT VPA Partners in EU Timber Trade 2017”. Authors Sarah Storck/Rupert Oliver. (IMM 2018). http://www.flegtimm.eu/images/annual_reports/
VPA_Partners_in_EU_Timber_Trade_2017_Final_201118.pdf
110Respondents accounted for between 15% and 65% of the key countries’ total imports of tropical sawn timber/mouldings, joinery, plywood anddecking, depending on the country, with high coverage (>50%) achieved in Germany, UK, Netherlands, and France and lower coverage 15-40% in
Spain, Italy and Belgium.
111
Data on membership derived from the European Timber Trade Federation’s website and associations own websites.
108		

Main Report – November 2019

Consumption of tropical timber in Europe has declined sharply since 2007. In your opinion, what are the main reasons(please arrange the suggestions below from most relevant (1) to least relevant (10).
Drivers

Weighted Score

Relative Weighted
Score

Overall Rank

Substitution by temperate, chemically and thermallymodified wood, composites and non-wood materials

634

100

1

Economic downturn 2008 to 2013

583

92

2

Diversion of supply to other markets

553

87

3

Environmental prejudices and uncoordinated marketing

545

86

4

Competition from China for material access and in
markets for finished goods

485

76

5

Import and financial sectors aversion to commercial risk

420

66

6

Just-in-time favouring more regular less volatile supply

398

63

7

Prefabrication and the switch from adaptable utility
woods to tightly specified materials

394

62

8

Erosion of infrastructure for EU supply

366

58

9

Other

187

29

10

Total Responses

83

Table A1.5: Ranking of drivers of decline. Source: IMM 2018 Trade Survey
markets” (Figure A1.5). This latter point is closely linked to
the fifth most important factor, according to the rating,which is “competition from China for material access and in
markets for finished goods”.

10%
41%

Fully aware
Partially aware
Totally unaware

49%

10%
41%

Fully aware
Partially aware
Totally unaware

49%

Figure A1.6a: Awareness of the FLEGT process in 2018.

Source: IMM 2017/2018 EU trade survey

112

Environmental prejudice and uncoordinated marketing(rank 4) was identified as another important driver.
In terms of marketing, respondents highlighted thatsuccessful marketing campaigns promoting local European
timber had led to a loss of market share for tropical timber.
At the same time, NGO campaigns and the tropical timber
sector’s lack of access to end consumers would undermine
efforts to promote the use of tropical timber.
The majority of both survey respondents and participants at
IMM Trade Consultations assumed that the EU market fortropical timber will stagnate at the lower level it has reached
for the foreseeable future. However, some opportunities
for supporting recovery were seen in improved promotionof environmental credentials of tropical timber and“consistent and effective EUTR enforcement”.

Awareness of the FLEGT VPA process
Overall, the European IMM correspondents found that, after
a short period of enthusiasm following the start of FLEGT
licensing in Indonesia, EU trade sentiment towards FLEGTVPAs has cooled again somewhat in 2018. While the majority
continues to recognise that FLEGT-licensing is a significant
benefit with regards to EUTR compliance, replacing theneed for additional risk assessment and risk mitigation
to fulfil the latter’s due diligence obligations, a number of
respondents remarked that its value remained limited as rade Consultations are a series of meetings organized by the IMM programme in the EU key tropical timber consuming countries. The
T
Consultations aim to gauge the trade’s views and discuss opinions of relevant FLEGT-related topics identified as a part of IMM surveys. IMM also
shares latest survey and study results with trade representatives during the Consultations. Consultations were held in London (March), Nantes(May) and Berlin (November) during 2018.

Main Report – November 2019109

long as Indonesia is the only country supplying FLEGTlicensed wood products.
This element of “fatigue” in talking about FLEGT licensing,while licensed timber remains unavailable from mostpartner countries, was also suspected by correspondents
to have had an impact on respondents’ rating of their levelof awareness of the VPA process. As shown in Figure A1.6,
the overall level of awareness has deteriorated from 2017 to2018, with a higher number of respondents claiming to be“totally unaware” and fewer companies saying that theyfelt “fully aware”.
While some of the additional “totally unaware” ratings
were believed by correspondents to be more expressionsof disinterest or even frustration, the decline in numbersof companies feeling “fully aware” was partly attributed
to the fact that respondents had only appreciated thatthey were not “fully aware” after receiving additional
information on VPAs and FLEGT licensing through 2017 and2018. This was also reflected in discussions during IMM
112
Trade Consultations organised in 2018.
Differences in the 2017 and 2018 survey samples – both interms of companies interviewed and new contact persons
within the same companies – have likely also had an impact
on awareness.

Detailed country-specific and thematic results
Detailed analysis of specific EU trade survey results can befound in the following dedicated chapters of this report:

A2• Chapter 4; VPA Partner Competitiveness: EU trade

perceptions of relevance of VPA partner countries as
tropical timber suppliers.

• Chapter 5; Indonesia, Market position and prospects: EU
trade perceptions of Indonesian FLEGT Licences.

• Chapter 7; Implementation of EUTR: EU trade perceptionsof EUTR impact on tropical timber trade.

• Chapter 11; FLEGT and voluntary third-party

certification: EU trade perceptions of FLEGT licensing and
EUTR impact on voluntary certification.

Insights from interviews with 10 timber-sector associations
and EUTR Monitoring Organisations can be found in thefollowing chapters of this report• Chapter 5; Indonesia, Market position and prospects:

Associations’ perceptions of their members’ acceptanceand experience with FLEGT-licensed timber fromIndonesia.

• Chapter 7; Implementation of EUTR: Associations’perception of EUTR implementation and enforcement.

Background information on general and timber sectorspecific economic trends in the seven key EU countries
monitored by IMM as well as trends in trade between
individual VPA partner countries and these EU countries
is no longer added to the EU Annex of this report but canbe found on the “Key EU Country” section113 of the IMM
website and the IMM Data Dashboard.114

Annex 2: Summary of Ghana 2018 Report
Overview
The IMM Correspondent for Ghana undertook a follow-up
study to assess the market situation for Ghanaian timber
products and progress as well as stakeholder attitudes
towards the VPA implementation process in 2018. The
study built on similar work undertaken in 2017 and 2015. It
included analysis of timber trade data alongside a survey of
Ghanaian government agencies, civil society organisations
and timber industry representatives.
Twenty private companies, three government agencies
and one Civil Society Organisation contributed to thereport. The sample of private companies included bothseven larger exporting companies and a number ofsmaller companies that supply primarily or exclusively
the domestic market in Ghana.

VPA progress
The 2018 Ghana report shows continuing progress in VPA
implementation since 2017. Most importantly, Ghana
and the EU selected auditors and prepared for the Final
Joint Assessment of the system. The Assessment was

subsequently launched in early 2019, with expectations of it
being completed by the end of the year.
Ghana had cleared a major hurdle in completion of VPA
implementation when passing new legislation on Timber
Resource Management and Legality Licensing115 (LI 2254)
in November 2017. The law regulates the identification ofland and conditions for the grant of timber rights as wellas providing for a legality licensing scheme. According to
the IMM 2018 Ghana report, related conversion of existing
forest concessions to Timber Utilisation Contracts (TUC)
was brought underway in 2018, with companies being
prompted to convert their concessions and timber rights
fees being negotiated through stakeholder dialogue.
The Forestry Commission of Ghana also developed andimplemented an action plan to address shortcomings
identified as a part of 2017 trial shipments of FLEGT-licensed
timber from Ghana to Europe. The Action Plan is to ensurethat shipments will work smoothly from the beginning.
Ghana has been further testing FLEGT licensing andshipment procedures by issuing “dummy FLEGT Licences”

113http://www.flegtimm.eu/index.php/key-eu-countries
 ttp://www.stats.flegtimm.euh115
http://www.flegtimm.eu/index.php/64-resources/newsletters/no-1-winter-2017-18/17-vpa-implementation-in-ghana-on-the-home-stretch
114

110		

Main Report – November 2019

Carving

4

Veneer

Moldings

6

Plywood

8

Domestic Trade10

data and information of the cargo havebeen verified in the WTS and physicalinspection of the containers to beexported carried out. In Indonesia,
the Licence is applied for and issued inadvance and remotely.

Products Transport

Log Transport

Lumber12

Logging14

20Figure A2.1: IMM 2018 Ghana Survey Respondents by Product Type.
Source: IMM 2018 Ghana Survey

2%
4%

10%

12%
EuropeAsia
America
Middle East
Africa72%

Figure A2.2: Share of Ghana’s timber exports, by region. Source: TIDD

since September 2018. According to IMM’s industry survey
in Ghana, an area of concern flagged up during this test
process has been a time lag in maintenance of the online
WTS in some forest districts. Delays in uploading data on
felling operations and log conveyance (LMCC) onto thecomputerised Wood Tracking System (WTS) have led todelays in issuance of dummy FLEGT Licences in someinstances. However, improvements were made in theprocess and overall it has been reported to be working well,according to survey participants.
FLEGT Licence mismatches related to HS Codes or volume/
weight of cargo, as they occurred when Indonesia firststarted FLEGT licensing, are not expected to become amajor issue in Ghana, due to the much narrower productrange exported to Europe – mainly sawn timber, veneer,and some joinery products – and the different process in
issuing FLEGT Licences. In Ghana, the license is issued onsite by a Forestry Commission official, after all legality

116

In 2018, the Forestry Commission (FC)of Ghana in cooperation with civilsociety organisation Civic Response
also launched an online platform, theGhana Timber Transparency Portal,116
for ensuring greater transparency of
the Ghana Timber Legality Assurance
System (GhLAS) and to provide public
information on its reliability. The
website provides real-time accessto information on logging permits,
exporting companies, timber sourcing
areas, and exports to different
markets. It can help companies
perform due diligence on Ghanaian
timber – for as long as this is stillnecessary – and give independent
monitors in Ghana information theyneed to scrutinise the sector.
Generally speaking, the IMM Ghana
report found that most respondents
from all stakeholder groups remain
supportive in principle of the VPA
process. The majority of interviewees
believed that VPA implementation has
a positive impact on forest governanceand management, controlling illegal
logging, forest revenue mobilisation, as
well as transparency and accountability.
When it comes to private sector
engagement in the VPA process,contrasting attitudes and levels of
information of the FLEGT VPA process
among larger companies (exporters)
and smaller enterprises, which the IMM
correspondent had identified in 2015
and 2017, persisted in 2018.

Of the twenty companies interviewed by IMM, seven
were medium-sized or large, export-oriented companies
with own sawmilling operations and they all said they
were ready for FLEGT licensing. Of the seven, three said
they had been FSC chain-of-custody certified prior to theintroduction of the WTS and didn’t have any difficulties toadapt to FLEGT licensing procedures. The other companies
said they were receiving training.
Companies interviewed by IMM continued to call forfurther training and capacity building, to ensure legality– in particular of domestic sales – and to improve otherstandards, including health and safety, along the entire
supply chain. For the larger, exporting companies,
training in using and direct access to the WTS databases
to enable them to enter data into the system themselvesrather than requiring FC staff to operate the system forthem was mentioned as a next important step. A phased
inclusion of timber industry operator staff into thesehttps://www.ghanatimbertransparency.info/#!/home

Main Report – November 2019

111

processes was also considered a possibility to help resolve
delays in data capture that were mentioned by a numberof interviewees.
Smaller players (non-exporting) interviewed by IMM
said they did not yet understand how the WTS and
GhLAS work. In 2018, a domestic market reform strategy(DOTNETT) was developed and two associations (DOLTA
and DOLMAG) were assigned contracts to raise awarenessamong their members.
Ensuring adequate raw material supply remains achief concern, especially among smaller players. The
FC has made special provisions for small-size TUCs
to be awarded to small enterprises. Small companies
interviewed by IMM emphasised the importance of being
able to pay timber rights fees for such TUCs in Ghanaian
cedi rather than US dollars.

Timber sector and export trends
The Ghanaian forestry and timber sector has been on a
downward spiral for a long period of time and industry
contraction continued in 2018. The Ghana Timber Millers’
Organisation (GTMO), which represents the major
117
processors of wood, reported in April 2018 that 96 timbercompanies had shut down in the past 15 years, thereby
reducing employment in the wood processing sector by
75,000 to around 20,000. The IMM Ghana Report suggests
industry contraction is linked, among other things,
to declining availability of commercially valued woodspecies, which entails further competitive disadvantages
such as underutilisation of plant capacity and increased
costs of sourcing materials over long distances.
In 2018, five large companies dominated the woodprocessing and export business in Ghana. Three of these

117
118

companies are diversified in their product range and haveinvested in new technologies such as lamination, finger
jointing and molding. One of these companies reduced
production and exports considerably in 2018, running
only its plywood operations, due to financial difficulties.
Another company that had operated from two sites moved
machinery to consolidate production on one site closer toits forest resource.
Newly emerging and small to medium-sized companies
were not focused on investment in technology or productinnovation. They rather installed thin-blade mobile
sawmills and are located around forest fringes and inremote communities. There are no reliable data sources on
the number of such companies active in Ghana
Ghana’s timber exports stabilised with an only marginal
overall decline of -2% (in volume) in 2018, after dropping
significantly, by 15%, in 2017. Asia remained the dominant
export market also in 2018, although unlike the othermajor markets it continued to shrink; in 2017, Asia had
accounted for a 76% share in Ghana’s timber exports.
Exports to Europe recovered slightly, after having declined
or stagnated every year since 2011.
According to Eurostat, EU tropical timber imports from
Ghana increased by 6.5% in value and 8.2% in volume in
2018. Germany remained the most important European
market for Ghanaian timber, followed by Italy, Belgium
and the UK. Sawn timber made up more than half of all
shipments to the EU, while a quarter comprised veneer.
Other products imported into the EU from Ghana insignificant quantities were joinery products and mouldings.
More information on Ghana’s timber trade with the EU can118
be found on the IMM Data Dashboard.

 raphic Online, www.graphic.com.gh April 20, 2018G
http://www.stats.flegtimm.eu

112		

Main Report – November 2019

IMM
Independent Market Monitoring of FLEGT-Licensed TimberInternational Tropical Timber Organization (ITTO)
International Organizations Center
5th Floor, Pacifico Yokohama, 1-1-1 Minato-Mirai
Nishi-ku, Yokohama, 220-0012 Japan
FLEGT Independent Market Monitor
IMM Lead Consultant, Sarah Storck, lead@flegtimm.eu