Abstracts

Datu Hadi Len Talif Salleh
General Manager Sarawak Timber Industry Development

CoC SarawakSummary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Name in home language
Name in English :COC SARAWAK
Region /Country : Sarawak/Malaysia
Party responsible for issuing verification
Name :STIDC
Location: Sarawak
Communication
Outline of issuing process
Application—--Verification by STIDC---Issuance of export permit by STIDC---Custom
clearance---Port clearance by port authority/Sarawak River Board
The system shall verify legality only
Definition of legality
Timber exported in accordance to ordinances, orders, regulations, legislations enacted bystate government of Sarawak
Relevant laws
Forest ordinances, 1954
Sarawak timber industry development corporation ordinance, 1973 (amendment 2006)
The timber grading regulations, 1975 (amendment 1983)
The Sarawak timber industry(registration)regulations, 1983(amendment 1999)
Sarawak forestry corporation ordinance, 1995
Details of presumed illegal activities
Activities which contravene laws, regulations, restrictions, terms and conditions, legislations
passed by authorities from time to time.
Procedures for retaining and verifying the evidence
Physical and ground inspections by relevant government agencies
Scheme implemented by the third party and so on to ensure reliability
ISO 9001:2000 STISC, registration of company
ISO 9001/UKAS SFC Provision Of Security, asset protection, compliance & sustainable
forest management
ISO 14001/UKAS SFC Verification Land Ownership Status & Use Right, forest planning &operations
ISO 9001:2000 Harwood Timber Log Endorsement, shipping administration & inspection ofexport logs
Definition of sustainability
As stipulated in forest ordinance and forest management plan; based on ITTO guidelines
Procedures for retaining and verifying the evidence
Scheme implemented by the third party and so on to ensure reliability
ISO certified processes
Real picture of the dealings, from logging to export
As per flowchart in chart 1,attached
Procedure for ensuring separative custody management
Procedures in forest management plan as incorporated in licencing
Scheme implemented by the third party and so on to ensure reliability
Procedures that are being implemented by SFC, STIDC, HARWOOD and other relevant
agencies in the state of Sarawak
Criticisms against the system and recognition of problems
The need to strengthen enforcement activities and increase physical check on the ground
Remediation procedure
To develop trained and upgrade of skill in human resources in enforcing and conversion inexisting laws, rules and legislations.
To strengthen human resource.
To have a better coordination among the implementing agencies
Future perspectives
Robust and be able to withstand and eliminate any loopholes, bottleneck, red tapes and be
more effective in enforcing laws and regulations.
Web site: www.pusaka.gov.my
URL
Contact: Datu Haji Len Talif Salleh
Name Title Organization General Manager, STIDC
Email address:lents@pusaka.gov.my

CHAIN OF CUSTODY FOR SARAWAK - TIMBER TRACKING PROCEDURES
Datu Haji Len Talif Salleh1
1

Sarawak Timber Industry Development Corporation, Malaysia

There has been a growing demand lately for genuinely need of proof that timber traded in the global market place is supplied
from legal sources. In testimony, major consumer countries of tropical timber products such as Japan and Europe had drawn
in the pipeline public procurement policies for the trade of legal timber products. Both the industry and the state governmentof Sarawak viewed this development positively. Such a move is in consonance with the continuous effort done by Sarawak
authority to garner customer confidence that industry has always been managed in a manner adhering to the rules and lawsof the country.
INTRODUCTIONLEGAL FRAMEWORKSarawak is the one of the major suppliers of tropicaltimber in the global market. Latest foreign exchangeearning from the export of timber products for Sarawak
improved about 15% from US$2 billion in 2005 to
US$2.31 billion in 2006. This industry generates
investment opportunities, provides employment of multi
disciplines, catalyze transfer of technology and spur
regional development for Sarawak. In all fairness, it is ofutmost importance to ensure that the industry continue tosustain its contribution to the socio-economic
development of the general population at large.
The development of the timber industry that
contributes to the economic well-being of Sarawak was
attributed to internationally commendable sound andtransparent forest management practices implemented
over the years. It was supported by effective legal
framework, efficient regulatory system and continuously
improved administrative mechanism from the forest down
to the export exit point of the country. The system
implemented had not only catalyzed economic benefits
but also successful in curbing illegal practices to a
manageable minimum level.
Illegal timber in the context of Sarawak is timber
which is harvested, transported, bought or sold in
violation of national laws. Such practices include
harvesting without proper approved concession permit,
harvesting in violation of permit conditions, failing to pay
royalty and non-compliance to trading rules. The overallmanagement of the forest resource and industry
particularly in curbing illegal activities for Sarawak has
been adequately defined in the state constitution.
The objective of this paper, therefore, is to highlightthe primary regulatory framework used to manage overall
forest and timber downstream industry in Sarawak. This isnecessary to inform consumers that timber procured from
Sarawak with legitimate documentation is assured
sourced and traded legally. Such understanding isimminent to ensure continuous acceptance of the timbertracking system used in Sarawak.

The existing acts, ordinances, regulations and rules
which are relevant to regulate and manage the forest andforest industry sector in Malaysia in general and Sarawak
in particular are listed in Appendix I.
Forest Concession
The management of land and forests in Sarawak isunder the administrative purview of the state government.
The gazetted primary laws applied to management offorest resources are the Forest Ordinances, 1954,
Sarawak Wildlife Protection Ordinances, Forest Plantation
Ordinance, Natural Resources and Environment
Ordinances and Sarawak Forestry Corporation Ordinance1995.
The right to extract timber from forests in Sarawak is
only granted to companies holding concession license
issued by the Ministry of Planning and Resource
Management and managed by the Forest Department ofSarawak. Each concession, before the start of harvesting
activities, must have an approved plan pertaining totimber inventory, harvesting blocks and coupes, annual
volume of timber harvest, forest engineering plan andenvironmental impacts assessment.
Timber Processing
Any establishment for all types of manufacturing
including the processing of timber is required to obtain
manufacturing licence from the Ministry of International
Trade and Industry (MITI) under the provision of
Malaysian Industrial Co-ordination Act 1975 (ICA) after
obtaining support from the Sarawak Industrial Coordination
Committee(ICC).
Afterobtaining
manufacturing licence approval from MITI, themanufacturing company is required to obtain mill licencefrom Forest Department under Section 66 of the Forest
stOrdinance (Sarawak Cap. 126). With effect from 1 June
2007, STIDC will be authority to issue registration of millfor manufacturing involving in all kinds of timber
processing activities except sawmilling.

The Sarawak Timber Industry (Registration)
Regulations, vested powers to Sarawak Timber Industry
Development Corporation (STIDC) to register any
persons engage in or association with the manufacture,sale, distribute, storing and marketing of timber inSarawak. The penalty for any person who contravenes
this regulation was reviewed to RM300,000 (USD83,000)
in 2006.
Export Permit
All sawn timber exported from Sarawak must be
graded in compliance with the Malaysian Timber Grading
Rules, 1984. Under the Timber Grading Regulations,
1983, STIDC is vested the power as Grading Authority tocheck grade at least 10% of the exported volume.
Under the Malaysian Custom Act 1967, STIDC isgiven the power to issued export and import permit oftimber products by the Malaysian Royal Custom
Department. An electronic permit issuance permit system
known as Sistem Maklumat Kastam (e-permit system)
had been developed and used since 2006. All exporters
must register to obtain their e-permit number as user ofthe e-permit system.
Regulating Agencies
There is not less than 8 agencies involved directly
issuing and cross checking documents for planning,
extraction, processing and trade of timber in Sarawak.
These departments are:a. Ministry of Planning and Resource Managementb. Forest Department
c. Natural Resources and Environmental Board
d. Sarawak Forest Corporatione. Sarawak Timber Industry Development Corporation
f. Harwood Timber Sdn Bhd
g. Royal Custom Department
h. Port Authorities
These organizations have their own procedures whichhave formed a very effective approach of implementing
and auditing the timber tracking system implement at
each point.

harvesting plan. The felling permit or commonly known asa Permit to Enter Coupe issued is to be endorsed by SFC
before the logging crew can implement the timber
harvesting in the approved block.
The felled trees are de-crowned, bucked and skidded
to the log landing at the roadside. These logs are thendebarked and trimmed in accordance with the Licensee’s
requirement. Thereafter, tractor numbers are painted onto
the logs as a means of verifying that the logs are
extracted by a particular crew in the approved block.
Some licensees may affix their own tags (optional) onto
the logs.
Then the logs are affixed with white plastic tags toshow the coupe/block number and species. Blue plastic
tags are used for logs harvested using helicopter. These
plastic tags remain intact as verification features during
movement throughout the supply chain. The logs are thenloaded into the truck accompanied by Log Trucking List to
be transported to transit camps.
At the transit camps, the logs are unloaded andarranged properly to be trimmed, measured and graded.
All logs will be hammered marked at each end and at the
middle with the registered mark of the licence holder
under which the logs were harvested. Every licenceholder is assigned an approved and registered property
mark by the Director of Forests. At this point, logs aremarked with different tags to classify its respective
intended utilization (sawmill, plywood and export). After
grading and documentation is completed, the logs canthen be delivered to log ponds. Each truck must be
accompanied with the log trucking list to detail the logs
ferried.
At the log pond, the logs are further graded andsorted according to quality and end use (export or local
processing). Each log will be assigned with a uniqueserial number on plastic tags. Different alphabets areused as log serial numbers on plastic tags with different
colours to differentiate distinctly its intended used. The
tag colours and alphabets used are as follows:(a)Tractor and Kuda-kuda Logging Systems
Logs for export
White tag
A–L
Logs for sawmills
Yellow tag M – S
Logs for veneer/plywood mill Orange tag T – Z
Poles ( 30 - < 40 cm diam.) Purple tag
Poles ( 20 - < 30 cm diam.) Pink tag

Timber Harvesting(b)
Heli-Harvesting System
Logs for export
Blue tag
Logs for sawmillsBlue tag
Logs for veneer/plywood Blue tag

Only company issued concessions by Forest
Department is allowed to extract timber from the forest.
Before extraction can commence, the concession owneris to prepare and submit for approval their detailThe
concession
licenseewillcomplete and submit Log Specification Forms to SFC for
log inspection. Log inspection is only carried out after
SFC had verified that the Licensee is clear of any

TIMBER TRACKING

HA – HL
HM – HRHT – HZ

offences, unpaid outstanding royalty and other related
irregularity. SFC will carry out log inspection by checking
log measurement, species, property marks, plastic tags
and number of log pieces. After satisfactory verification
exercise, royalty marking and removal pass will be carriedout to enable the logs to be transported to its finaldestination. Similar verification process is conducted forthe issuance of transit removal pass.
This exercise is in accordance with the rules whichstates no forest produce shall be removed to any placefrom any Forest Checking Station unless the person
actually removing it is in possession of a removal passrelating to such produce, issued under the hand of aforest officer and, if it is timber, unless it bears theprescribed Government hammer-mark denoting that it has
been assessed for royalty.
Logs arriving at the export point and mill gates, will
be rechecked in term of measurement, species, property
marks, plastic tags and number of log pieces by SFC.
Harwood Timber will inspect the logs to ensure that it has
been shipped in accordance with its intended utilisation ofeither for export or reserved for domestic processing. An
Export Clearance Certificate (ExCC) is issued for export
logs which fully adhere to the specified requirements.
After verifying compliance through physical inspection
based on ExCC, SFC will issue the final Transit Removal
Pass. The Transit Removal Pass will be submitted as theverifying documents used to process application forexport permit. A similar physical inspection procedure isadhered at the mill gates for logs allocated to sawmill,veneer and plywood mills.
Timber Processing
All logs arriving at the mill will be physically inspectedby SFC and Harwood Timber at the mill log ponds. The
logs detail is verify against the information contained in
the accompanying Transit Removal Pass andEndorsement Clearance Certificate documents. The millcan only processed the log after it was physically verify
tally with the information in the accompanying documents.
All mills are required to submit their monthly production
return to STIDC which will be use to verify production
input and output of the mill.
As a prerequisite regulatory requirement, all mills
must have a valid mill license issued by Forest
Department and registration as manufacturer from STIDC.
Beginning June 2007, the registration of mills for all typesof timber processing activities except sawmill will be
issued by STIDC. The mill licences and registration
issued shall be valid for only one year and subject toannual renewal.

STIDC had been authorised by Royal Customs
Department Malaysia to issue export permits for timber
products exported from Sarawak. To facilitate a more
efficient delivery system, an electronic system wasdeveloped and now been used to process application andapprove export permit electronically. This system enables
accurate and real-time information management. The epermit system had been implemented state wide since
2006.
Exporters are registered and assigned unique
identification in order to do electronic permit applicationtransaction. It is a form of in-built verifying and monitoringmechanisms to curb illegal transaction.
The export permit processes starts when the exporter
submits the Custom Declaration Form (CDF 2) on line
using the e-permit system. The application detail includes
consigner, consignee, shipping agent, description of
goods, destinations, timber volume, timber values andtimber quantity. Supporting documents submitted byexporter for the export of logs are transit removal pass,
shipping order, invoices, log specifications, summary oflogs, trade license, STIDC Registration Certificate andletter of log quota compliance. In the case of permit for
timber products, the exporter is to submit invoice, packing
list, shipping order, supplier list and grading certificates(for sawn timber). Export of Ramin must be accompaniedwith additional documents like grading exemption
certificate and CITES certificate issued by Forest
Department. Special export permit from Forest
Department is required for export of timber species like
Gaharu, Belian, Bakau, Sepetir and Bintangor.
Export of sawn timber is to be accompanied bygrading certificate. Timber Grading Regulations, 1983
requires all sawn timber to be exported are to be gradedin accordance with the Malaysian Grading Rules for Sawn
Hardwood Timber. STIDC will conduct a 10% check
grading of the consignment as detail in the schedule ofTimber Shipped to ensure grading compliance.
STIDC verifies e-permit application by checking theaccuracy of the supporting document received.
Applications with incomplete or inaccurate information are
rejected. Approval of permit application is transacted
electronically. STIDC will conduct physical inspection
before approval is granted. The Sistem Maklumat Kastam(e-permit system) will register, acknowledge and assign
permit number to each application approved. The Royal
Custom Department will issue acknowledgment of permit
approval. Exporters applying the permit will print theCustom acknowledgement on the CDF 2 form and submit
it to STIDC for endorsement of approved export permit.
The export permit is valid for not more than 3 days. New
application is required to replace permit exceeding the
expiry limit.

Export Permit Issuance
The exporter will submit the integrated shipping
documents and outward manifest to the Customs for entry

into the e-declare database system. Custom will give
feedback to STIDC via on-line on the clearance status of
the goods at the port. A copy of the approved e-permit
and e-declare documents will travels with theconsignment. These documents can be used as proof
that the timber in the consignment is legal in accordancewith the law of the country and tracking can be done by
way of assessing the information detailed in those
documents.
TIMBER IMPORT
Beginning 3 July 2000, STIDC is empowered by thestate government to manage and control the import oftimber including sawn timber from Indonesia. Sarawak
share long land and sea border with its neighbouring
Kalimantan, one of the Indonesian provinces in Borneo
Island. For decades, there has always been in-flow ofgoods including timber passing through the borders fromIndonesia to Sarawak.
In effort to control illegal entry of timber, Sarawak has
designated 5 entry points for timber from Indonesia. The
five entry points are Sematan, Biawak, Tebedu, Batu
Lintang and Lubok Antu. These entry stations areoperated under the ambit of STIDC and being assisted by
Harwood Timber. The purpose is to control and monitor
the import of timber from Indonesia to ensure that only
timber from legal sources is allowed.
All importers must register with STIDC. Importer ofsawn timber from Indonesia will submit application for
Custom clearance using Borang Kastam 1 and to besupported with the Pemberitahuan Eksport Barang (PEB)and Surat Keterangan Sahnya Hasil Hutan (SKSHH) fromIndonesian authorities. STIDC will inspect and ensure thattimber of Ramin species is to be supported with CITES
certificate issued by the Indonesian authority. An
inspection note will be issued by STIDC. Timber can only
be allowed entry after it has been verified having
adequate supporting documents.
The timber will be transported to and unloaded at
Harwood Timber deport. Here the timber is physicallytallied by Harwood Timber to ascertain the quantity andspecies. After which the receipt note is issued and thetimber will be neatly stacked and bundle. The importer willsubmit application supported by relevant documents forhammer marking using Form A.
STIDC will validate the document received andconduct hammer marking and tagging on timber. Finally,a removal pass is issued to enable the timber to be
removed to its destination using Malaysian registeredvehicles. The timber will be assigned a unique serial
number used as reference on the tag and the removal
pass.

PREVENTIVE MEASURES
Despite stringent laws enforced, it cannot be denied
that there may be some element of illegal activities. Such
activities, however, are within the manageable limit. In
addition, preventive measures are being in placed tocreate awareness and prevent illegal practices cropping.
Every regulating agencies involved has form its own
preventive and enforcement units to tackle illegal
activities. Inter-agencies joint patrols are being conductedfrom time to time. In some instances, the assistance ofmilitary and police personnel are sought.
The multi-agencies involvement in tracking timbersource before issuing an export permit serve as internal
audit to the system implemented. Each agency has the
responsibility to verify information and documents used
are accurate and authentic. In addition, the relevant work
procedures of these departments are certified under the
ISO 9001:2000. Third party audit is the major requirement
to maintain certification under ISO 9001:2000 quality
management system. The system also emphasize on
continuous improvement on the overall work procedures
implemented.
Obviously, the management of the overall forest andtimber industry is being governed by the existing laws,
regulations and rules. As it is so, efforts are being done toimprove the existing regulatory procedures implemented
to strengthen its effectiveness.
Efforts are continuously being made to ensure thesystem used is transparent. Sarawak government has
engaged URS Australia Pty Ltd to looked at theeffectiveness and identify gap for improvement the forest
chain-of-custody systems used in Sarawak. Initial findingof this study revealed that there is a chain of custodyestablished in Sarawak for log production through to local
processors and log export points. The state government
is looking into the recommendations proposed by URS tostrengthen the acceptance of the system in place.
CONCLUSION
The present legal framework and regulatory systemused in Sarawak to manage the forest and timber industry
has been successful in sustaining the development of theindustry for the last 3 decades. It is the duties of all
stakeholders concern particularly the government and theinvestors alike to play equally important role in upholding
the good management practices to ensure thesustainability of the industry for the future generation.
Glitches in the system will be rectified. Gaps highlighted
will be narrowed at least but neutralise ultimately.

References[1] URS Pty Ltd, “Review of Chain of Custody Systems
Operating in Sarawak, Malaysia”, 12 January 2007
[2] Seneca Creek Associates, LLC and Wood Resources
International, LLC, “ ‘Illegal Logging’ and Global Wood
Markets: The Competitive Impacts on the US Wood
Products Industry”, November 2004
[3] Sarawak Timber Industry Development Corporation
Ordinance, 1999, Sarawak

Appendix I
LIST OF RELEVANT REGULATING LAWS
1.
2.
3.
4.
5.
6.
7.

[4] Forests Ordinance, Chapter 126, 1995
[ 5]
The Sarawak Timber Industry (Registration0
Regulations, 2006

8.
9.
10.
11.
12.
13.

14.
15.

Forest Ordinance, 1954
Wildlife Protection Ordinance 1998
Natural Resources and Environment (Amendment)
Ordinances1997
Forests (Planted Forests) Rules 1997
Sarawak Land Code
Sarawak
TimberIndustry
Development
Corporation Ordinance, 1999
The Timber Industry (Registration) Regulations,
2006
The Timber Grading Regulations, 1983
The Malaysian Grading Rules for Sawn Hardwood
Timber, 1984
The Industrial Co-ordination Act 1975
Malaysian Custom Act, 1967
Occupational, Safety and Health Act 1994
Occupational Safety and Health (Control ofIndustrial Major Accident Hazards) Regulations
1996
Environment Quality Act 1974
Environment Quality (Clean Air) Regulations, 1978

Hadi Daryanto
The Secretary, Directorate General ofForest Production Management, the Ministry of Forestry

BRIK

Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Pengesahan Ekspor Oleh Badan Revitalisasi Industri Kehutanan(BRIK's Endorsement)Indonesia
Party responsible for issuing verification
Badan Revitalisasi Industri Kehutanan
Manggala Wanabakti Bldg, Block IV, 8 floor
Jl. Gatot Subroto, Senayan Jakarta 10270
Tel: 021-57902959, Facsimile: 021-57902962 Email: brik@iwwn.com
Outline of issuing process•
ETPIK submits timber mutation report (LMK), for example December 2006, to be
used as beginning stock. The LMK must be legalized by or registered by the local
forestry office;•ETPIK submits the legality document for the transportation of forest products:
Validity Certificate for Logs (SKSKB), Logs Transportation Invoice (FA-KB),
Processed Timber Transportation Invoice (FA-KO), Tender Transportation
Certificate (SAL), Certificate of Origins (SKAU);•
Copied SKSKB and SAL are legalized by the competent forestry officer; Copied
FA-KB, FA-KO, and SKAU are legalized by the agency/officer issuing those
documents;•
If necessary, BRIK will crosscheck the local forestry office or the institution(s)issuing those legality documents for transportation of forest products;•
ETPIK submits export plan (request for endorsement);•
Endorsement is processed by computer. All the verified data is input to thecomputer: serial number of documents, the officer and registration number,supplier, location, volume and description of goods. The system will automaticallyrefuse if it finds used documents.
•
The recovery factors are based on regulation of Director General of Forest
Production Development, Ministry of Forestry;•
If the documents comply with Indonesian law and regulations, the computer will
issue Endorsement (Surat Pengesahan), which will be transmitted to ETPIK by
facsimile;•
Export of certain wood products is also verified (before stuffing) by independent
surveyor based on the Director General of Foreign Trade decree No. 02/2006.
•
Export realization report in the forms of copied commodity export declaration(PEB), invoice, packing lists and bill of lading must be submitted to BRIK at thelatest 14 days after the realization of shipment. If within 14 days the export
realization report not submitted, the relevant exporter will not be endorsed for the
next export plan.
The system shall verify legality
Definition of legality
The timber to procured should be harvested in legal manner consistent with procedures in
the forest laws of Indonesia.
Relevant laws•
Law Number 41/1999 regarding Forestry;•
Government Regulation No. 34/2002 replaced by Government Regulation No.
6/2007;•The Minister of Forestry regulation No. 126/Kpts-II/2003 replaced by P.55/MenhutII/2006 in conjunction with Number P.63/Menhut-II/2006.
•
The Minister of Forestry regulation No. P.51/Menhut-II/2006 in conjunction with
Number P.62/Menhut-II/2006;•
The Minister of Forestry regulation No. 6/Menhut-II/2007 regarding Long-Term
Forest Management Plan and Annual Work Plan;•
The Minister of Industry and Trade decree No. 32/MPP/Kep/1/2003 regarding
Requirements for Forestry Industrial Products Export, replaced by decree No.
647/MPP/Kep/10/2003, replaced by the Minister of Trade regulation No. 02/MDag/Per/2/2006;•
The Director General of Foreign Trade regulation No. 01/Daglu/Per/3/2006
regarding the Procedures for the Endorsement from the Forestry Industry
Revitalization Body (BRIK);•
Letter No. 452/VI-Edar/2003, No. 948/VI-BPPHH/2004, and No. S.675/VIBPPHH/2006 from the Director General of Forest Production Development
concerning Recovery Factors of Wood Products.
Details of presumed illegal activities

•
Submission fake documents for endorsement;•
Submission used documents;•
On authority instruction to freeze the endorsement.
Procedures for retaining and verifying the evidence
Field verification is conducted by inter-departments (Forestry, Industry, and Trade),including BRIK.
Scheme implemented by the third party and so on to ensure reliability

Scheme to check forsustainability

The field verification can also be made by surveyor independent assigned by thegovernment.
Definition of sustainability
SFM: management of forests to achieve ecological sustainability, social equity andeconomic viability.
Procedures for retaining and verifying the evidence
Government requires all forest management units to attain the above mentioned SFM.
Furthermore, Voluntary SFM Certification is managed by the Indonesian Ecolabeling
Institute (LEI).
Scheme implemented by the third party and so on to ensure reliability

Scheme of separative
custody management

Through engagement of various stakeholders, and independent certification bodies.
Real picture of the dealings, from logging to export
Enclosed
Procedure for ensuring separative custody management
Scheme implemented by the third party and so on to ensure reliability

Future Task andPerspectives

Reference Author-LEI CoC Certification-FSC Controlled Wood Certification
Criticisms against the system and recognition of problems
A number of previous systems was too bureaucratic and abuse prone
Remediation procedure
Revision of regulations such as Minister of Forestry Regulation P.55/2006 (on Forest
Product Administration), P.6/2007 (Forest Management Unit Plan. For a certified
management unit, annual plan will be self-approved).
Future perspectives-Reduced cost
-Increase competitivenessWeb site www.dephut.go.id
URL www.dephut.go.id
Contact : Dr.Hadi Daryanto
Name Title Organization Secretary of DG of Forest Production Management
Email address sekditjenBPK@dephut.go.id ; hdaryanto@yahoo.com

FOREST PRODUCT INDUSTRIES IN INDONESIA:SECURING TIMBER FROM LEGAL SOURCES
1

Hadi Daryanto1 and Jimmy Purwonegoro2
Secretary of Director General of Forest Production Management, Ministry of Forestry of the Republic of Indonesia.
2
Vice Chair of BRIK (Forest Industry Revitalization Body)

GOI recently reforms some regulations linked to promoting legal timber as part of combating illegal logging, enhancing
Sustainable Forest Management, and increasing competitiveness of wood products.

Indonesia's Forests
Indonesia's forests are among the most extensive,
diverse and valuable in the world. These forests do not
only provide habitats for a wide range of flora, but also
play a pivotal role in supporting economic development,
the livelihoods of the rural people and the provision ofenvironmental services. Indonesia's forests cover 120.35
million ha. or approximately 70% of Indonesia's total land
areas, and are divided into three categories: production
forests, conservation forests, and protection forests.
Production forests are designated for commercial purpose,
while conservation forests are assigned for conservation
forest biodiversity and protection forest for hydrologicalservices
Indonesia's forests have long been managed insustainable based forest management system. For
example, forests in Java, managed by state-owned
enterprise (Perum Perhutani), are predominantly teakplantation have been managed in a sustainable way
according to forest planning system. While in the outerisland of Java due to different types of forests and thevariety of species composition and richness, the forests
have been managed based on the cutting block systemwith cutting cycle of 35 years. The forests are also
managed in a certain cutting quota with limit diametercutting is the same or above 50 cm dbh, named as
Indonesian Selective Cutting and Replanting System.
This system has mandated not only selective cutting to be
implemented but also required to replant forest area assoon the harvesting completed. Ideally with all thesesystems the forests could be managed in a sustainableway.
Illegal Logging and Its Associated Trade
Illegal logging and its associated trade (mainly logs
smuggling) have threatened Indonesia's forests because
they undermine good forest governance and the rule oflaw; and result in deforestation, forest degradation, lost
government revenues and conflicts. The government ofIndonesia has shown seriousness in combating illegal
logging and its associated trade by issuing a Presidential
Instruction No. 4 in March 2005 to speed up efforts tocurb illegal logging.
Other efforts related to combating illegal logging and
its associated trade are bilateral agreements between
Indonesia and other countries such as United Kingdom,
Norway, China, Japan, South Korea, Philippines andUSA. In addition the GOI established BRIK (Forest
Industry Revitalization Body) on 13 December 2002 tomonitor and control the legality of wood products export
through endorsement system, MOU between Ministry ofForestry and PPATK (The Center for Analysis andReporting Financial Transaction), and posting special
forest police (SPORC) in 10 provinces. In general theactivities combating illegal logging consist of pre-emptive(eg. PR and capacity building to local people), preventive(forest control and surveillance), and repressive (field
operation conducted by national police) measures.
Recent Development
On January 8th, 2007 in Brussels the Government ofIndonesia (Minister of Forestry) and EU (Commissioner
for Development and Commissioner for Environment)
took a step further by releasing a joint statement to curb
illegal logging and its associated trade through a FLEGT
partnership. They agreed to initiate formal negotiations
towards conclusion of a voluntary partnership agreement(VPA) on Forest Law Enforcement, Governance andTrade (FLEGT), which will provide assurance thatIndonesian forest products imported to EU are verified tobe legal. The agreement will also provide for cooperation,
including capacity building, market and technical studies
and knowledge-sharing.
On April 4th, 2006 the Ministry of Forestry stipulated
decree No. 70/Menhut-II/2006 to set up national steeringcommittee and multi-stakeholder working groups decree
No. 63/Kum-II/2006 concerning Wood Legality Standard
Harmonization. Development and harmonization oflegality standard have been facilitated by Indonesian
Ecolabelling Institute (LEI) through extensive multistakeholder consultations (the Ministry of Forestry,Business Association, Academicians, Certification Body,
and NGOs). LEI finalized the harmonization process andformally submitted the draft of harmonized standard to the
Ministry of Forestry in mid January 2007.
The draft derived from the result of MoU IndonesiaUK and TFF's draft on legality standard, which was a
result of comparative study from:••

Keurhout Protocol for the Validation of Claims ofLegal Timber in Particular with a View On Legal
Origin (TFF);
The Requirements for “Verified Legal” in WWF's
Nusa Hijau Conditions of Participation (NTTA);•The “OLB (Origine et Legalite des Bois)
Certification and Control System: Origin and
Legality of Timber” (Eurocertifor).
The Latest Regulation in Forestry Sector

In January 2007 and the second semester 2006 theGovernment of Indonesia issued the following regulation:•••

Government Regulation No. 6/2007 regarding
Forest Management and Preparation of Forest
Management Plan and Forest Utilization
replaced Government Regulation No. 34/2002.
These regulation has been mandated by Law No.
41/1999 regarding Forestry;
Minister of Forestry decree No. P.51/MenhutII/2006 regarding the Use of the Certificate ofOrigins (SKAU) for Transporting Timber Forestry
Products from Community Forests in conjunction
No.
P.62/Menhut-II/2006
regardingtheAmendment to the Decree of the Minister ofForestry No. P.51/Menhut-II/2006;
Minister of Forestry decree No. P.55/MenhutII/2006 regarding the Administration of theForestry Products from the State Forests inconjunction with No. P.63/Menhut-II/2006
regarding the Amendment to the Decree of the
Minister of Forestry No. P.55/Menhut-II/2006.
The decrees replaced the Minister of Forestry
decree No. 126/Menhut-II/2003.

The above regulation guarantee the legality of logs
harvested and also play as a technical guideline of chainof custody, since they include the document as follows:••skshh (forest products legality letter is used as a
general term) which will be discussed by BRIK;LHC (cruising report); RKT (annual workingplan); LHP (Cutting Report); SKSKB (round log
legality letter); FA (transportation invoice);
Chain of custody is mandatory.
BRIK in Brief

BRIK was established based on a joint decree of the
Minister of Industry and Trade and the Minister ofForestry No. 803/MPP/Kep/12/2002; 10267/Kpts-II/2002
inconjunctionNo.
495.1/MPP/Kep/9/2004;
SK355.1/Menhut-I/2004. As stated in the decrees, theestablishment of BRIK is a mutual understanding and joint
actions between private forestry industry and the related
government institutions in order to implement sustainable
forest, sustainable raw material supply, creating job aswell as business opportunities.
On January 16th, 2003 the Minister of Forestry andthe Minister of Industry and Trade approved BRIK Action
Program and Establishment Deed. The Action Program
includes among other things:•••

Ensuring timber supply from legal sources;
Development of timber industrial data base;
Providing inputs to the government in preparing

regulations;
Implementation of ETPIK (registered forestry
industrial product exporter) to all forestry
industries;
1) Establishment of serving mechanism, monitoring,and evaluation of ETPIK;
2) Others: efficiency and product diversification,
evaluationofregulations
thatburdencompetitiveness.

•

Export Procedures
To be acknowledged as exporter of wood products,
forest industry must have legal permits based onIndonesian law and regulation. After completing
requirements stipulated in the Minister of Trade decree
No. 02/M-Dag/Per/2/2006, the industry will then be
eligible to have an ETPIK license issued by the Director
General of Foreign Trade, the Ministry of Trade. The
decree also mentioned that export of forest industry
products within HS. 4407, 4408, 4409, 4410, 4411, 4412,
4413, 4415, 4418, 4421.90.50.00, and 9406.00.92.00
must be endorsed by BRIK. The endorsement document
is attached to commodity export declaration (PEB).
Export of certain products under Ex. HS. 4407 (S4S,
end jointed), HS. 4409, Ex..HS. 4415 (pallet), Ex.HS.
4418 (door and window frame), and HS. 9406 are verified
by independent surveyor assigned by the Minister ofTrade with the objective to ensure wood product export
fulfills all the government regulations and provides morevalue-added.
Of the total existing ETPIK 4,500, BRIK has been
given authority by the government to endorse two groups
of products: Wood Panel and Woodworking. Other
products such as pulp and paper, furniture, and handicraft
can still export without BRIK endorsement. The twoendorsed products represented less than 40% of total
forestry industrial export.
Indonesian Law and Regulation Related to
Verification and Endorsement
BRIK verification and endorsement, based upon
those government mandatory process, is attached to thispaper. The following law and regulations are related to
the verification and endorsement:






Law No. 41/1999 regarding Forestry;
Government Regulation No. 34/2002 replaced
by Government Regulation No. 6/2007;
The Minister of Forestry regulation No. 126/KptsII/2003 replaced by P.55/Menhut-II/2006 in
conjunction with No. P.63/Menhut-II/2006.
The Minister of Forestry regulation No.
P.51/Menhut-II/2006 in conjunction with No.
P.62/Menhut-II/2006;
The Minister of Industry and Trade decree No.
32/MPP/Kep/1/2003 regarding Requirements for
Forestry Industrial Products Export, replaced bydecree No. 647/MPP/Kep/10/2003 replaced by
the Minister of Trade regulation No. 02/MDag/Per/2/2006;



The Director General of Foreign Trade regulation
No.
01/Daglu/Per/3/2006
regardingtheProcedures for the Endorsement from theForestry Industry Revitalization Body (BRIK); LetterNo.
452/VI-Edar/2003,
948/VIBPPHH/2004, and S.675/VI-BPPHH/2006 fromthe Director General of Forest Production
Development concerning Recovery Factors ofWood Products.
Endorsement system is electronically processed andfree of charge. Of 2,124 ETPIK (panel and woodworking)endorsed by BRIK around 41% still actively export theirproducts, while the rest have ceased permanently or
temporarily to operate.

As can be in the Verification and Endorsement Chart
attached, there is similarity between BRIK Endorsement
and Green Konyuho. BRIK Endorsement is based onIndonesian forest laws and other regulations in industry
and trade sector. BRIK verifies legalized copied
documents (LMK, SKSKB, FA-KB, FA-KO, SAL, and
SKAU) to make sure that the legality of timber.
Verification steps are mentioned in BRIK Circular Letter
No. 713/BRIK/XII/2006 and summarized in Appendix A(Summary of the verification scheme).
References
All references are from
Ministerial Regulations.

Government

Regulations,

BRIK Endorsement and Green Konyuho= ROUND LOGSLEGALITY LETTERFOREST
CONCESSIONHOLDER
IPK( CONVERTION
FORESTS)LOGS

HTI
INDUSTRIAL
PLANTATIONLOGS(SMALL ROUNDLOGS)(SMALL ROUND
LOGS)
LAND
CLEARING

13= ROUND LOGSINVOICE

WOOD
INDUSTRY

MILL
FACTORY= ROUND LOGSINVOICEORIGINALGROWTHCERTIFICATE= ROUND LOGSINVOICE(SMALL ROUND LOGS)= ROUND LOGSINVOICE( ROUND LOGS)= ROUND LOGSLEGALITY LETTERCOMMUNITY
FORESTS
LOGS

Bruce Telfer
Asia/Pacific Manager, SGS Forest Monitoring Service

Log Export Monitoring System in PNG

Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Name in English: Forest and Log Export Monitoring System in Papua New Guinea
Region /Country: Papua New Guinea
Party responsible for issuing verification
Name: SGS PNG Limited
Location: PNG Forest Authority Headquarters Building, Papua New Guinea
Communication: bruce.telfer@sgs.com (+675) 323 1433
Outline of issuing process
Companies affix official SGS bar-coded tags to all logs at time of harvest (each has aunique number).
SGS notified of impending shipment 2 weeks in advance.
SGS inspectors complete scaling check (10%) and species check (100%) prior to loading.
Ship loading is monitored to produce an independent tally of loaded logs.
SGS Inspection Report is issued at the completion of loading and is used by all Govt.
authorities to clear the shipment for export.
Copies of all shipping and inspection documents are held by SGS.
All information is entered into a central database and monthly reports are provided to awide range of Govt. authorities and other stakeholders.
The system shall verify legality only /or both sustainability
SGS PNG system verifies aspects of the legal origin of logs.
Definition of legality
No formal definition exists but SGS will not perform an inspection unless:
Official log tags have been affixed to he logs. These tags are not issued unless the Forest
Service has confirmed that the company is holding a legitimate operating permit of somekind for the forest area.
Shipment must have an Export Permit issued by the PNG Forest Service and an Export
Licence issued by the Department of Trade and Industry.
Logs are correctly measured and identified.
Both the export volume of a shipment and the prices for the logs have formal approval fromthe PNG Forest Service.
Export taxes are paid in the correct amount.
Relevant laws:
PNG Forest Act and Customs regulations.
Details of presumed illegal activities
Some examples: Species mis-declaration; Under measurement of logs; Shipping
undeclared logs; Shipping with Export Permit and Licence; Not paying export tax
Procedures for retaining and verifying the evidence
Logs are physically inspected at the export port by SGS inspectors who employ bar-code
scanners and portable computers.
Ship loading is not authorized by the PNG Forest Service unless the SGS pre-shipment
inspection gives a satisfactory result.
All inspection, ship loading and commercial documentation are held at the SGS
headquarters. All data is held 9n a central database.
Scheme implemented by the third party and so on to ensure reliability
All verification procedures are managing and executing by SGS, the world’s leading
inspection, verification, testing and certification company under SGS General Conditions ofServices that ensure reliability and international creditability.
Real picture of the dealings, from logging to export
The number on the SGS log tag is also the official log no. for declaration on a monthly basis
to the PNG Forest Service. Each log has a location and landowner registered. .
Procedure for ensuring separative custody management
The log numbers together with details of species and measurement, as declared monthly to
the PNG Forest Service are verified by SGS at time of export.
Scheme implemented by the third party and so on to ensure reliability
All verification procedures are managing and executing by SGS, the world’s leading
inspection, verification, testing and certification company under SGS General Conditions ofServices that ensure reliability and international creditability.
Criticisms against the system and recognition of problems
Some international stakeholders would like to see the independent monitoring extended
back into the forest and to include other legal compliance issues for example, harvesting
practices plus compliance with social and environmental laws of PNG.
Remediation procedure
PNG Forest Service is considering the development of a legal definition for PNG forest
operations to assist companies and the Government to demonstrate legal wood production.
Web site: www.forestry.sgs.com
Author: Bruce Telfer
E-mail: bruce.telfer@sgs.com

FOREST AND LOG EXPORT MONITORING SYSTEM IN PAPUA NEW GUINEA
Bruce Telfer
SGS PNG Limited

Twelve years ago the Government of Papua New Guinea (through its agency the PNG Forest Authority) addressed
the issue of illegal log export practices by appointing the internationally known Swiss inspection company SGS todevelop and implement a monitoring system for all log exports from the Nation. The system (including modern log
tracking technology) introduced by SGS has been very successful in enhancing revenues for the Nation and providing
international credibility for the Government in demonstrating that this controversial sector is under control. The SGS
system ties in closely with the existing PNGFA monitoring system to assure buyers that a reputable independent
inspection company has verified that PNG logs have been exported in the quantity, quality, value (with taxes paid) andfrom the area as approved by Government. This is an important foundation for any future legal verification requirements
which may include social and environmental factors as increasingly demanded by ENGOs. The adoption of such a legal
verification system (on a voluntary basis) is being considered by the PNG Forest Industry Association.

BACKGROUND
The need for independent third-party monitoring
Although the processing industry is growing, forest
product exports from Papua New Guinea are still
dominated by raw logs. PNG exports 2 to 3 million m3 oflogs each year with a total fob value of US$150 to 200
million. A Royal Commission of Inquiry into Papua New
Guinea forest sector in the late 1980's revealed
widespread abuses in the forest industry - transfer pricing
through miss-declaration of log cargoes and artificial
pricing being particularly rampant. These abuses were
costing both Government and landowners millions ofdollars each year. The new Forestry Act of 1991,
designed to address the problems identified by theInquiry, also set up the Papua New Guinea Forest
Authority (PNGFA). The Government recognised that itneeded to act very quickly to halt losses to the Nationfrom export logging and accordingly tendered for a log
export monitoring system to be implemented promptly.
The tender was won by a Swiss-based inspection
company, SGS. By contracting this service out to a large
international verification company such as SGS, theGovernment was allowing the PNGFA to concentrate on
the vital role of monitoring forest operations at the cutting
face. The contract was also to facilitate the introductionof new technology and management systems to PNG
citizens.
Over 12 years of operation the SGS system has
proven to be very cost effective in increasing revenues toboth Government and traditional resource owners. Also
the international credibility of the PNG forest sector has
been considerably enhanced by the engagement of an
independent and reputable company to verify log exports.
This was an extremely controversial area prior to 1995
but since then the Government has gained international
kudos for taking prompt and effective action to get thisarea of the economy under control.

This international credibility has also proven importantfor protecting PNG’s overseas markets for timber
products. Due to ENGO pressure many overseas buyers
and their Governments are moving to restrict or stop
purchases of forest products from countries where
logging is regarded as out of control. Increasingly it is
becoming incumbent on the forest industry to prove thelegal origins of its log sources to maintain offshore
markets. With a system of independent log export
monitoring already well established, PNG can assure
overseas buyers that the logs have not come fromsmuggled sources and the country is well placed to buildon this system in future to give additional proof of legality
according to market requirements.
GENERAL OVERVIEW OF VERIFICATION
Party responsible for issuing verification
Verification of forestry operations in PNG areprimarily the responsibility of the PNG Forest Authority
who have contracted out the monitoring of export log
shipments to SGS.
The PNGFA is responsible for granting permission toharvest logs, monitoring the actual forest operations andgranting permission to export forest products. However, it
is a fundamental point under PNG law that unaliented
land (97% of PNG including all forest areas) are ownedby the people who have traditionally lived on it for
generations and development cannot occur without theirpermission. All logging companies must be registered as
Forest Industry Participants with the PNGFA which firstchecks that they are legally registered with the Registrarof Companies under the Investment Promotion Authority.
Under the Forest Act 1991 (and amendments) the
PNGFA issues a Timber Permit to a company only afteran extensive 34 step process that begins with providing
awareness to traditional landowners whose approval toenter into a Forest Management Agreement (FMA) is
required before any further action. A company is issued
with the Timber permit only after a lengthy consultation

(at landowner, Provincial and National Government level)
and tender process. The Timber Permit stipulates all theoperating conditions such as harvest/export/processing
quotas, benefits to be provided, royalties, levies andother charges to be paid etc.
However, the bulk of PNG’s existing forest
concessions are operating under Permits that precedeand are preserved by the 1991 Forest Act. These are
generally operating through Timber Permits under
Timber Rights Purchase Agreements that have beensigned between the traditional landowners andGovernment or Local Forest Areas where Government
has granted landowners the right to negotiate directlywith logging companies. In most of these cases theTimber Permit or LFA is held directly by a landownercompany who engage a contractor to operate the area
under a Logging and Marketing Agreement. Large-scale
Agriculture and Roadline Projects can also be granted
permission to harvest and export logs under a Timber
Authority (TA) Agreement.
All forest concessions in PNG are subject toplanning monitoring and control regulations establishedby the PNGFA. These ensure that logging proceeds inan orderly fashion in accordance with the Timber Permit,that socially and environmentally sensitive areas are
excluded from logging and that logging takes place inaccordance with sound forest management andenvironmental practices. Monitoring is carried out by the
120 staff of the PNGFA Field Services Division. Most
concessions have a PNGFA Project Officer based on site
and are equipped to undertake monitoring operations.
PNGFA officers from the Marketing Section are also
involved in the export process. They must approve thespecies, volume and prices proposed and issue an
Export Permit (signed by the Minister) which shows all
this information. A copy is also provided to SGS who areresponsible for ensuring that the actual shipment follows
these approved specifications. The Department of Tradeand Industry also issue an Export Licence with the same
information but only if the PNGFA approves. Thisappears to be a duplication but is a requirement of PNG
law.
The PNGFA is also responsible for the licensing oflog scalers. Companies are required to use licensed
scalers who must follow regulations that apply to themeasurement and declaration of logs in PNG. In general
the requirement is that all operators must declare theirmonthly log production in a prescribed format which
includes a summary of volumes extracted for eachlandowner plus the royalties owing to them.
The PNG log export monitoring service wasdeveloped and is run in conjunction with the PNGFA by
Société Générale de Surveillance (SGS) of Geneva,
Switzerland. The SGS group is the world’s largest
verification, testing and certification company. With its
headquarters in Geneva and 48,000 staff world-wide, it
operates a network of 1180 offices and 321 laboratories
in 145 countries. The Forestry Monitoring Programme of
SGS offers services to governments, companies andinternational institutions aimed at revenue protection,
trade facilitation, legal and sustainable use of natural
resources.

SGS PNG Limited was set up late in 1994 todevelop and operate the monitoring system. Currently
SGS PNG operates with a staff of 40 (including 31 field
inspectors) from a headquarters in Port Moresby and 4
field support offices. There are currently 42 active export
sites in PNG and so inspections are conducted on a fly-in
fly-out basis.
Outline of verification process
The PNGFA Field Services Division is responsible forthe field monitoring of all forest operations in PNG. All
operations are required to have 5 year, annual and individual
setup logging plans and actual operations are to be
conducted in accordance with the “Papua New Guinea
Logging Code of Practice” that is approved by both the
PNGFA and Department of Environment/Conservation andendorsed by the Prime Minister. The PNGFA has formal
documented (publicly available) procedures for themonitoring, reporting and approval processes. The PNGFA
has the power to close down operations that are notcompliant with these approved procedures.
Before issuing the Export Permit for each shipment, thePNGFA Marketing Section checks that the company isoperating within its current and approved quota, that royalty
payments to landowners are up to date and that the export
prices for each species are satisfactory.
The SGS involvement in the verification process begins
at the time of initial log measurement (at the forest landing)where all companies are required to affix an official barcoded tag provided by SGS. This log number (which includes
a unique site-code identifier) is used right through theverification process to export. SGS will only issue these tags
when advised in writing by the PNGFA that the company has
authority to harvest the area under one of the permit
arrangements outlined earlier.
Then, at least two weeks prior to the impending log
shipment an exporter must notify SGS so that inspection
arrangements can be put in place. At the export port
exporters must provide the SGS inspector with a log list in
both electronic and hard copy format. The SGS inspector
undertakes a pre-shipment inspection which involves a
scaling check (10%); species check (100%) and verificationthat the volumes and species mix are as per the PNGFA
Export Permit. Exporters are notified of any discrepancies
and only if the results are satisfactory will the PNGFA
officer on site permit ship loading to commence.
The SGS inspector then monitors the actual ship loading by
removing a section of the bar-coded log tag and produces
an independent tally of loaded logs. SGS has provided theinspectors with bar-code readers and portable computers tofacilitate efficient and accurate preparation of all reports
during the inspection process. An SGS Inspection Report isissued at the completion of loading. This Inspection Report
is used by all Government Authorities to check thecommercial and shipping documentation and clear the
shipment for export.
All field inspection documents and reports are sent into
the SGS head office which also receives copies of all
shipping and commercial documents directly from theexporter. All this information is entered into a central

database. A number of checks are made, for example, toconfirm that the export volume and prices for each species
in a shipment are as approved by the PNGFA (through the
Export Permit issued prior to shipment); that a project is
operating within its approved log export quota and that theexport tax paid has been calculated correctly.
Any serious discrepancies are immediately bought tothe attention of the relevant Government Authority – usually
the PNGFA or Customs Office. Monthly reports are also
provided to a wide range of Government Authorities toassist them with their audit and monitoring functions. In
addition to the PNGFA these include the Central Bank
(foreign exchange remittances), Customs (export tax) andthe Tax Office (export earnings declared on company tax
returns).
The central database maintained by SGS has also been
useful to verify if shipments declared as being from PNG
have in fact originated from this country. There have been
examples where logs have been detected in other Asian
countries with documents purporting to show they are of
PNG origin. In some cases a check of the SGS database wasable to confirm that these documents were false and thatthe logs are therefore illegal. In other cases the same checkrevealed that the logs were indeed exported from PNG via
the legitimate process.
SCHEME TO CHECK FOR LEGALITY AT THE TIME
OF LOGGING
Definition of legality
While there is no formal and separate “Definition of
Legality” in the context of the PNG forest industry,
operators must follow the requirements of the Forest Act(1991) and there are a number of checks and balances in the
PNG log export system that confirm many aspects of legality.
Specifically.
Official log tags are not issued to any company unlessthe PNGFA confirms that they are a legitimate operator.
This means that all logs inspected by SGS come from areasthat have officially approved for harvest by the PNGFA
through the Timber Permit or contract processes describedearlier in this paper. All forest operations are required tocomply with PNGFA regulations covering planning,
operations and monitoring. Operations are also required tohave their Environmental Plan approved by the Departmentof Environment and Conservation and follow Department ofLabour regulations governing workers health and safety plus
the employment of foreign workers.
Each export shipment must have a formal price approvaland subsequent issue of an Export Permit by the PNGFA.
As mentioned earlier the PNGFA completes a verification
process prior to issuing this Export Permit which includes
checking the log price and volume plus confirming thatroyalty payments due to traditional landowners are paid up
to date. An Export License is required separately for each
shipment from the Department of Trade and Industry.
SGS will not even commence an inspection unless thereis evidence of all these requirements having been fulfilled.
The SGS inspection confirms directly that the log
measurements and species identification are accurate andthat the volume and invoiced amounts on commercial trade

documents are as legally approved by the PNGFA.
Subsequent checks in the SGS head office confirm that theexport tax legally due has been paid in the correct amountand that logs have been cleared through the export
procedures of all relevant PNG Government Authorities.
In more than 12 years of operations to date, SGS has notdetected any instances of log smuggling. This therefore
means that all of PNG’s log exports for this period (25 mm3) have been independently verified as having met the legal
export requirements outlined above. By providing some
information of shipment details, the extensive databasemaintained by SGS can also be queried for verification by
overseas log buyers to confirm that they are dealing with alegitimate PNG export.
Procedures for retaining and verifying the evidence
The role of the PNGFA Field Services Division staff inmonitoring the day to day operations of the logging
companies has already been outlined. They follow clear
documented procedures for monitoring short and longterm logging plans plus they undertake field checks toverify that the PNG Logging Code of Practice is being
followed.
SGS are provided with copies of official Government
documents: Export Permit and Licence (which detailapproved volumes and prices). Log lists are provided to
SGS inspectors who then verify the data in the export log
yard by check scaling 10% of the logs and confirming thespecies identification of the whole shipment. Any
discrepancies are reported to the exporter and local
PNGFA supervisor in writing. Logs actually loaded onto
a vessel are tallied by SGS who then issue an Inspection
Report. Again copies are provided to the exporter and
PNGFA.
In the SGS head office, the results of the inspection
activities are checked against the commercial
documentation and Government clearance documents(e.g. Export Entry) for any discrepancies. All informationis entered into a central database from which are
generated regular monthly reports plus special purpose
reports on demand for stakeholders (generally
Government agencies). All documents are stored in apermanent archive in case they are needed in future as
evidence by the PNG Authorities.

CHAIN OF CUSTODYPNG requirements
There is no formal chain of custody system
implemented across the PNG forest industry. However,the number on the SGS log tag (used for export
verification) is also the official log number used bycompanies to declare their monthly production records to
the PNGFA. For each number (log tag) this declaration
includes location (concession only), species, diameter,
length, volume and landowner.
So it is possible to trace a log back to a concession
and landowner area. However, the production records
are held in hard copy in Provincial PNGFA offices and sotracking is not easy. Company records can be used but
this presents an obvious problem with lack of
independence. There is potential in future for all the log
production and log export records to be stored in a single
database. This would constitute the beginnings of anational log tracking system and this is underconsideration by the PNGFA.
Chain of custody verification
As there is no formal CoC system there cannot be aformal verification system. However, as alreadyexplained SGS does check the measurement andspecies identification of export logs and as the number
used is the same as that used by the company to declareits production records to the PNGFA. Therefore it ispossible to check if there have been any unauthorizedchanges to individual log records.

landowners who may or may not be justified in theirconcerns. This can almost be described as a problem of
democracy where the majority rules.
Some stakeholders would like to see independent
monitoring extended back into the forest and to include
legal compliance issues such as harvesting practices,
environmental controls, plus the rights of traditionallandowners and workers. The lack of a formal link
between log production and log export records is also a
problem that was described earlier. This prevents easyreconciliation of records.
The SGS monitoring system only covers log exports
and not processed wood products. Although PNG’sforest exports are dominated by logs the processing
sector is gaining in importance at an increasing pace.
Currently there is a lack of accurate statistics to monitor
and support this desirable trend.

FUTURE TASK AND PERSPECTIVES
Criticisms and problems with the system
At the time that SGS was contracted to be theindependent monitor of log exports, the major concern ofmany stakeholders was the perceived revenue losses
that had been occurring through various transfer pricing
mechanisms. The export monitoring system run by SGS
has largely countered this. However, as is occurring inmost countries with tropical rainforest resources, issues
are being raised by international stakeholders(particularly through the efforts of ENGOs) over legalityof wood sources and wood production from a much wider
perspective.
In PNG, recognizing that log exports are largely
under control, this is focusing on social andenvironmental concerns and perceived breaches of PNG
Government laws and regulations covering these issues.
On paper, the regulations and monitoring systems of the
PNGFA are very strong but in practice, as is often thecase in developing countries, resources such as
sufficient staff and logistical backup are lacking due tofunding constraints. Also, Government Departments
other than the PNGFA are responsible for monitoring key
aspects such as social and environmental issues. These
Government Departments also have funding andperformance issues that prevent them from performing all
their mandated tasks. Thus it is very difficult for the PNG
Government to be certain that all its laws and regulations
are being followed.
The key issue of customary landowner permission
has been highlighted earlier. ENGOs argue that for manyor even all forest concessions, the awareness process
and gaining of permission have been inadequate. While
this may be true of some areas, in practice it is very
difficult to have a long lasting consensus that involves
100% of customary landowners in a forest concession.
Groups or factions in an area (who may have been
traditional enemies for generations) can struggle for adominant position in the decision making process andnew generations may disagree with decisions made by
their older relatives. No matter how careful the
consultation process has been it is nearly always
possible for groups like ENGOs to find disgruntled

As with any system involved with legal verification,
there are criticisms that there is no verification ofsustainability – the major objective of most concerned
stakeholders. However, the present PNG log export
monitoring system does provide an important building
block on which to build legal and sustainability
verification systems.
Potential solutions and improvements
PNGFA is considering the development of a legal
definition for PNG forest operations to assist companies
and the Government to demonstrate legal wood
production. The development of such a definition would
need an extensive stakeholder consultation process toensure maximum credibility.
The PNG Forest Industries Association (whose
members are responsible for 80% of PNG’s forestry
production) is also very interested in seeing thedevelopment of a legal forestry standard for PNG which
can be adopted on a voluntary basis by their members.
This would to offer their international buyers assurances
regarding the legal origins of their log sources and legal
compliance of their production processes. SGS is alreadyconsulting with the PNGFIA regarding the process andissues involved. This voluntary verification approach
would be funded by the operating companies and would
thus overcome the funding and co-ordination issues thatmake it difficult for a range of Government Departments
to offer the assurances increasingly required byinternational trade.
To facilitate improved chain of custody verification thatmust go hand in hand with such legality verification, thePNGFA is considering the development of a single
centralised database to hold all log production,
processing and log export records. This could be
implemented as a logical extension of the existing SGS
export database.

Lu Wenming
Professor, Chinese Academy of Forestry

Timber Certificate Scheme and so onSummary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Timber Certificate Scheme.
China.
Party responsible for issuing verification
Forestry departments above county level.
Outline of issuing process
Application – review - certificate issuance.
The system shall verify legality only /or both sustainability
Legality only.
Definition of legality
Meeting relevant laws and regulations, and having forest harvesting certificate.
Relevant laws
Forest Law of the People’s Republic of China, Regulations on Implementation of Forest
Law of the People’s Republic of China, Criminal Law of the People’s Republic of China,
Explanation on Several Issues of Concretely Applying Relevant Laws Concerning Dealing
with Criminal Cases of Damaging Forest Resources by the Supreme People’s Court, Importand Export Commodities Inspection Law of the People’s Republic of China.
Details of presumed illegal activities
Logging exceeding the harvesting quota, logging not in the approved stand, logging without
any forest harvesting certificate, activities damaging forest resources, stolen logging andsevere deforestation.
Procedures for retaining and verifying the evidence
Check whether there is any forest harvesting certificate.
Scheme implemented by the third party and so on to ensure reliability
No such scheme.
Definition of sustainability
Procedures for retaining and verifying the evidence
Scheme implemented by the third party and so on to ensure reliability

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Real picture of the dealings, from logging to export
Checking stamp labeling (seal) from logging (forest harvesting certificate and document),
transportation (timber transportation certificate and document), selling (timber sellingcertificate and document) and processing (timber processing certificate and document) (noany further custody management).
Procedure for ensuring separative custody management
Check whether there is any certificate and document for any of the four stages mentioned
above.
Scheme implemented by the third party and so on to ensure reliability
No third party scheme. All activities are monitored by forestry departments above county
level.
Criticisms against the system and recognition of problems
The system is generally widely accepted. There are two problems: One is that the system is
not complete enough as there is no further custody management so the end-users could
not identify any information of logging and subsequent activities; The other is that there aresome mis-conducts of the implementation of the system. Some places do not implement
the system in a very effective way.
Remediation procedure
Some experts are trying to develop timber tracing system to cover all chains of custody, forthe consideration of the government.
Future perspectives
Quite promising.
Web site: www.forestry.gov.cn
Name: Professor Mr. Lu Wenming
Title: Director of Division of International Cooperation
Organization: China Academy of Forestry
Email: luwenmingcaf@126.com

Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference
AuthorNational Forest Certification Scheme of China (both for forest management and chain ofcustody), which is still under developing.
China.
Party responsible for issuing verification
Independent and third party certification body (bodies) accredited by both Certification andAccreditation Administration (CNCA) and State Forestry Administration (SFA).
Outline of issuing process
Application–preassessment-main assessment-peer review-certificate issuance–
surveillance.
The system shall verify legality only /or both sustainability
Both legality and sustainability.
Definition of legality
Meeting relevant laws and regulations, and having forest harvesting certificate.
Relevant laws
Forest Law of the People’s Republic of China, Regulations on Implementation of Forest
Law of the People’s Republic of China, Criminal Law of the People’s Republic of China,
Explanation on Several Issues of Concretely Applying Relevant Laws Concerning Dealing
with Criminal Cases of Damaging Forest Resources by the Supreme People’s Court,
Import and Export Commodities Inspection Law of the People’s Republic of China.
Details of presumed illegal activities
Logging exceeding the harvesting quota, logging not in the approved stand, logging without
any forest harvesting certificate, activities damaging forest resources, stolen logging andsevere deforestation.
Procedures for retaining and verifying the evidence
Check whether there is any forest harvesting certificate.
Scheme implemented by the third party and so on to ensure reliability
National Forest Certification Scheme of China (both for forest management and chain ofcustody), which is still under developing.
Definition of sustainability
Sustainability is an attempt to provide the best outcomes for the human and naturalenvironments both now and into the indefinite future. It relates to the continuity of
economic, social, institutional and environmental aspects of human society, as well as thenon-human environment. It is intended to be a means of configuring civilization and humanactivity so that society, its members and its economies are able to meet their needs andexpress their greatest potential in the present, while preserving biodiversity and natural
ecosystems, and planning and acting for the ability to maintain these ideals in a very longterm.
Procedures for retaining and verifying the evidence
Conducting environmental, social and economic impact assessment.
Scheme implemented by the third party and so on to ensure reliability
National Forest Certification Scheme of China.
Real picture of the dealings, from logging to export
Checking stamp labeling (seal) from logging (forest harvesting certificate, labeling anddocument), transportation (timber transportation certificate, labeling and document), selling(timber selling certificate, labeling and document), processing (timber processing
certificate, labeling and document), and labeling and document for any further custody
chain (from product packaging, product transportation, product marketing and productexport).
Procedure for ensuring separative custody management
Check whether there is any certificate, labeling and document before timber processing
and whether there is any labeling and document throughout the latter custody chain (fromlogging to end-users).
Scheme implemented by the third party and so on to ensure reliability
National Forest Certification Scheme of China.
Criticisms against the system and recognition of problems
As the scheme is still under developing, it is too early to judge the scheme.
Remediation procedure
Not applicable at the moment.
Future perspectives
Generally good.
Web site: www.forestry.gov.cn
Name: Professor Mr. Lu Wenming
Title: Director of Division of International Cooperation
Organization: China Academy of Forestry
Email: luwenmingcaf@126.com

Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference
AuthorForest Stewardship Council (FSC) Forest Certification Scheme (both for forest
management and chain of custody).
Global (As of December 31, 2006, there are 5 forest management units in China which are
granted as FSC FM certificates, and 221 timber processing companies which are granted
as FSC COC certificates).
Party responsible for issuing verification
Independent and third party certification bodies accredited by FSC International.
Outline of issuing process
Application – pre-assessment - main assessment - peer review - certificate issuance –surveillance.
The system shall verify legality only□/or both sustainability□
Both legality and sustainability.
Definition of legality
See FSC documents.
Relevant laws
See FSC documents.
Details of presumed illegal activities
See FSC documents.
Procedures for retaining and verifying the evidence
See FSC documents.
Scheme implemented by the third party and so on to ensure reliability
See FSC documents.
Definition of sustainability
See FSC documents.
Procedures for retaining and verifying the evidence
See FSC documents.
Scheme implemented by the third party and so on to ensure reliability
FSC Forest Certification Scheme (both for forest management and chain of custody).
Real picture of the dealings, from logging to export
See FSC documents.
Procedure for ensuring separative custody management
See FSC documents.
Scheme implemented by the third party and so on to ensure reliability
FSC Forest Certification Scheme (both for forest management and chain of custody).
Criticisms against the system and recognition of problems
The system is too environmentally oriented, especially with too strict principle of plantation.
As plantation is the principal sources of timber supply in China due to the implementation of
the Natural Forest Protection Program (NFPP) since 1998, it is a big challenge for China towidely apply FSC scheme. Also, the cost of FSC certification is quite high, both for the
direct cost due to the lack of Chinese FSC accredited certification body (which leads to highcost of international travel and non-Chinese auditors) and indirect cost due to the more
improvement to be made so as to meet stricter standard of FSC. Furthermore, the domestic
market for FSC certified forest products is quite limited.
Remediation procedure
See FSC documents.
Future perspectives
Generally good.
Web site: www.fsc.org, www.forestry.gov.cn, www.caf.ac.cn, www.cfcn.cn
Name: Professor Mr. Lu Wenming
Title: Director of Division of International Cooperation
Organization: China Academy of Forestry
Email: luwenmingcaf@126.com

CHINA’S EFFORTS FOR TIMBER VERIFICATIONLu Wenming
Chinese Academy of Forestry, Wan Shou Shan, Beijing 100091, China

The paper outlined the general description of China’s mis-conducts of forest harvesting, illustrated the measures theforestry authority takes to cope with these mis-conducts, acknowledged the current irrelevance to the procurement
policies of Japan, and prospected the future perspectives of tackling them by developing timber tracing system,
establishing company credibility system, implementing government green timber procurement policy, and carrying out
forest certification, so as to promote responsible and sustainable forest management.
Keywords: mis-conduct of forest harvesting, timber certificate scheme, government green timber procurement policy,
timber tracing system, forest certification
In a recent decade, illegal logging and illegal trade
has been rampant in a global context. Due to such illegal
logging, many countries, such as Indonesia andCambodia in Asia, Russia in Europe, Brazil in Latin
America, Papua New Guinea in Oceania and Democratic
Republic of Congo in Africa, are suffering serious
environmental problems of mass destruction of virgin,
natural and secondary forest resources, threatened
habitats of rare and endangered animal and plant
species, and rapid loss of biodiversity, also causing a lotof economic problems such as loss of tax revenue andsocial problems such as local society conflict etc.
Tackling illegal logging is a global challenge.
GENERAL DESCRIPTION
Since 1998 when adopting Nature Forest Protection
Program (NFPP), China’s timber import has increased
significantly with a total of 134 million cubic metres inround wood equivalent (RWE) in 2005, especially from
Russia and Indonesia where illegal logging is still
rampant.
China is now the world’s both leading importer andexporter of timber and timber products. The Governmentof China attaches great importance to the sustainable
forestry development and takes it as the solefundamental forestry development strategy in a long run.
Through various efforts for a long period, theGovernment of China has obtained great achievements
in tackling illegal logging and illegal trade. At present,
there is very very rare case of illegal timber trade due toprevious several years of continued joint efforts by theforestry sector, commerce sector and custom sector etc,
as well as bilateral cooperation with respective trade
countries. Forest harvesting has been also in a right trackin meeting with relevant laws and regulations. However,
due to several reasons, there are still some, althoughquite small, cases of mis-conducts of forest harvesting
which does not fully comply with relevant laws andregulations. We can not regard all these mis-conducts offorest harvesting as illegal logging, but this does havesome negative implication. As such, the forestry authority
has been taking a serious of measures in tackling thesemis-conducts of forest harvesting.
Furthermore, the Government of China, mainly
through the State Forestry Administration (SFA) and theMinistry of Commerce (MOC), is actively tackling thisissue by improving domestic policy and regulation

monitoring system and strengthening international
cooperation. China is now a member of both North East
Asia Forest Law Enforcement and Governance (FLEG)
Process and South East Asia Forest Law Enforcement
and Governance Ministerial Conference Process.
TIMBER CERTIFICATE SCHEME
China has had a very effective forest resources
monitoring system for several decades. This system aims
to protect and utilize forest resources and ecologicalenvironment, to strengthen the monitoring management
for forest conservation, forest harvesting, timber
production, timber marketing and timber consumption etc,
and to actively extend technology for saving the timberand substituting the timber, so as to accelerate thedevelopment of resource saving and environmentallyfriendly society.
The key element of this system is the documentation
management with timber certificate issuance in the stageof forest harvesting and timber transportation andmarketing. This system may be called as “timber
certificate scheme”. Annual allowance cut (AAC) quota,
forest harvesting plan and forest harvest certificate(timber concession), as well as code of forest harvesting
and reasonable timber making are very strictly
implemented. The forest authority checks the AAC quota
and forest harvesting certificate and verification of timber
origin (also through stamp labeling (seal) and forest
harvesting certificate and document), as well as timbertransportation certificate and buying invoice (also throughtimber transportation certificate and document). In someplaces, the forestry authority also checks timber sellingcertificate and document in timber marketing stage andtimber processing certificate and document in timber
processing stage when these regulations are applicable.
The forest authority is granted by the laws andregulations to sternly deal with any cases of logging
without any certificate, stolen logging and severe
deforestation.
Suchstrengthened
monitoring
management system for the timber origin and marketingis proved to be very effective.
However, there is no any further custody
management after the timber is sold out, such as fortimber processing (some places has), product packaging,product loading and unloading, product transportation,
product marketing and product consumption etc. As such,it is eventually impossible to identify the origin of timberjust from the timber products. The monitoring system forsuch chain of custody should be further strengthened.
The government is supposed to strengthen timbermonitoring management system through developing plan,
improve laws and regulations and standards, enhance
policy guidance, increase technical support, strengthen
publicity and education, and enhance institutional
development. The development of timber tracing system
for whole stages of chain-of-custody is also being
suggested[1].
RESPONSE TO
PROCUREMENTPOLICIES OF JAPANIt is quite encouraging that Japan adopted the
procurement policies to tackling illegal logging throughverify the legality and sustainability of timber. This is notjust the procurement policy itself, but is a comprehensive
system which also includes the supporting mechanism ofverification of legality through sectoral and self
verification, as well as sustainability through forest
certification scheme both for forest management andchain of custody[2,3]. It is also quite encouraging that thispolicy has been proved to be effective just for less than
one year, and there are a number of countries such as
Indonesia, Malaysia, Papua New Guinea and Russia
which actively respond the policy.
Very unfortunately, however, China has not had at
the moment a complete timber tracing and monitoring
management system, and its current timber certificate
scheme just cover the custody before the timber isprocessed. So, it is impossible to identify or verify theorigin of timber just from the final timber products. As
such, the procurement policies of Japan are notapplicable to China at the moment.
Nevertheless, as both China and Japan areimportant timber trade partners due to great andcontinuously increased timber products export from
China to Japan (furniture and plywood), it is timely that
China needs to think about the actions in respond to the
procurement policies of Japan, not only for trade market
access but also for the responsible and sustainable
forest management within China which is the primary andfinal objective of forestry development in China.
FUTURE PERSPECTIVE
It is recognized that like many countries in the world,
China faces challenges in timber monitoring systemalong with all chain of custody due to technical, financial
and other constraints. However, a lot of efforts are being
initiated by the government, the academia, and theindustry to improve such system.
Efforts by the government
The government has made a lot of efforts to improveforest laws and regulations, enhance its forest law
enforcement, and strengthen the capacity of forest law
enforcement expertise. Strengthened forest law
enforcement was listed by the State Forestry
Administration as one of the major two tasks of theforestry sector across the country in 2004.
The government also encourages forest certification
as the market based instrument to promote sustainable
forest management. The State Council (SC), China’s top
governing body, stipulated in its Resolution to Accelerate
Forestry Development “to actively carry out forest
certification work and try to be in line with international
practices as soon as possible”. The State Forestry
Administration is now initiating the National Forest
Certification Scheme of China. The Chinese Academy ofForestry (CAF) had already developed the National
Standard for Forest Certification in China (for forest
management) and has nearly finished the developmentof the National Standard for Chain-of-Custody
Certification in China (for COC), both of which arecommissioned by the State Forestry Administration.
Besides, the Chinese Academy of Forestry is also in theprocess of establishing, under the support of theInternational Centre for Bamboo and Rattan (ICBR)(which is also affiliated under the State Forestry
Administration) and Zhejiang Provincial Forestry
Department (ZPFD), an independent and third party
forest certification body to be accredited by both
Certification and Accreditation Administration (CNCA)
and State Forestry Administration. It is expected that thisNational Forest Certification Scheme of China will beformally launched within this year of 2007[4].
As the National Forest Certification Scheme of China
is currently aimed at domestic objectives to promotesustainable forest management, it is quite enough formeeting the requirement of procurement policies ofJapan in terms of legality of timber origin, regardlesswhether China’s scheme could be or not be recognizedby Japan. It is known to all that currently there are dozen
different forest certification schemes in the world,international such as FSC and PEFC, regional or national.
The standards among different schemes are different, so
the sustainability to be verified according to different
standards may not be mutually recognized, but thelegality of different schemes should not be doubt to beclear.
In terms of forest certification practices, as ofDecember 31, 2006, there have been 5 forest
management units certified by FSC scheme for forest
management with a total forest area of 442,500 ha andcovering both natural forests and plantation, and 221
timber processing companies certified by FSC scheme
for chain-of-custody, including those in Hong Kong,
Macau and Taiwan.
Efforts by the academia
The academia, mainly the Chinese Academy ofForestry (CAF) which is the national research institution
on forestry sector in China, is currently initiating
government green timber procurement policy and timbertracing system to the government for consideration asvery effective measures to tackle mis-conducts of forest
harvesting in China and to promote responsible andsustainable forest management. This initiative is also
submitted to the British Government for possible funding
and it is likely that the initiative is to be funded for further

research[5].
According to the proposed government green timber
procurement policy, all the government organizations andgovernment-funded institutions across the country will
only buy the timber products listed in the government
endorsed timber products and timber producing
companies, which could either verify the legality of timber
origin or verify that the timber products is made fromtimber coming from sustainably managed forests certified
by either National Forest Certification Scheme of China
or any internationally recognized forest certification
scheme such as FSC or PEFC.
At present, there are two kinds of government
procurement policies, both of which prove to be quite
effective. One is for general commodity items, mainly for
key government infrastructural projects and for major
government consumption of vehicles and electronics aswell as some special services such as printing andconference services etc. The other one is very much
related to forestry sector, and of course could be
extended to the tracing of timber origin.
Just on October 24, 2006, the Ministry of Finance(MOF) and the State Environmental Protection
Administration (SEPA) jointly issued the government
green product procurement policy. It has been effectivefrom January 1, 2007 for all government organizations
and government-funded institutions in central andprovincial levels, and will be effective from January 1,
2008 for all government organizations and governmentfunded institutions across the country. This government
green product procurement policy is focused on the“green products”, which means that the process ofmanufacture is environmentally friendly with minimum
damage both for human health and the environment. The
first list of this policy includes 856 products in 14
categories by 81 companies, which cover 17 products by
9 wood-based panel companies, 24 products by 10
wooden flooring companies and 6 products by 5 furniturecompanies. All these products and companies are
granted with environmental certification/verification labels
by government accredited certification/verification
bodies[6]. Although currently the policy does not mention
any forest certification or even the verification of legalityof timber origin, it is a great signal that eventually theverification of legality of timber origin and forest
certification could be incorporated into the current policy
or as a separate government green timber procurement
policy as suggested by the academia.
With regard to the timber tracing system, it is also
the domestic need of China to improve the present“timber certificate scheme” which just traces timber flowfrom logging to processing but no furthermore. The
proposed timber tracing system will fill such gap so thatthe end users, even the end users from the countries
importing timber products from China, could be able toidentify the legality and/or sustainability of the timber
products they buy. Although actually it is a challenging
task to well develop such timber tracing system due totechnical constrains, it is still encouraging that once thistimber tracing system is developed, it will surely improve
the timber monitoring management system, thus
encouraging the good conduct of forest harvesting andresponsible forest management, and from the other sidetackling any mis-conduct of forest harvesting.
Efforts by the industry
The timber industry itself is also realizing theimportance of responsible timber processing behavior.
China Timber Distribution Association (CTDA, a timbermarketing association), which consists of nearly 600
major timber processing companies across the country
covering manufacturing, marketing (whole sale or retail),international trade and research sub-sectors etc, isinitiating a pilot campaign of “Credibility Assessment
System for Timber Sector in China”. Such system
consists of two aspects, “Qualified Suppliers Assessment
System for Timber Sector in China” and “Company
Credibility Assessment System for Timber Sector in
China”. The key point of such system is to regulate codesof conduct for the timber sector (both for processing andmarketing through government behavior). At present,
China Timber Distribution Association is persuading thegovernment, mainly through the State-owned Assets
Supervision and Administration Commission of the StateCouncil to adopt such system as a government
procurement policy. The system contains a lot of
assessment indexes classify into 4 grades, marked with
A, B, C and D, and value as points with full points of 100.
Such indexes cover mainly 6 fields, such as basic
qualification certification and assessment, basic
management and competition level assessment, basic
management capacity assessment, basic economic debtpaying capacity assessment, marketing credibility record
assessment, and social responsibility assessment[7]. If
the system is adopted by the State-owned Assets
Supervision and Administration Commission of the StateCouncil (it is likely), all the government-owned
companies have to abide by this system as the supplierchain, and all the government-funded institutions shall be
encouraged to buy the products manufactured by thelisted companies (both processing and marketing). The
social responsibility assessment may include the label orrecord showing or verifying that the timber products are
made of timber coming from certified or legally sourced
forest resources, and some others. Currently the social
responsibility assessment does not include timber legality
or sustainability, but it is likely to include as there is aneffort for appealing China Timber Distribution Association
to include the forest certification (especially COC label)
into the assessment system, and try to persuade thisassociation to increase the weight of points if the
products is certified or legally sourced. This will also be
an effective tool for verify the legality or sustainability oftimber origin.
CONCLUSION
It is quite clear that at the moment, the procurement
policy of Japan has little implication in China as it is notapplicable to China. However, as the Chinese
Government and the Chinese people are realizing thatthe responsible forest management is increasingly
important, more and more efforts will be made from all
works of life to promote responsible and sustainable
forest management. Government green timber
procurement policy, timber tracing system, forest
certification schemes (whether national or international)and timber company credibility assessment system, andmaybe some more others, all will surely improve theverification of legality and sustainability of timber origin,and will very easily link to the procurement polices ofJapan, and any other countries around the world.
China attaches great important to the international
cooperation, also in the forestry and timber trade sector.
It will have a brighter future for both China and Japan,
and all other timber trade partners, to work andcooperate together to make full use of all kind of
approaches, schemes, mechanisms etc to promoteresponsible and sustainable forest management andinternational timber trade.
REFERENCES[1] Lu Wenming etc, Effectives Approaches to Promote
FLEGT, 2007 (paper to be published by a journal ofWorld Forestry Research).
[2] Forestry Agency of Japan, Guideline for Verification
on Legality and Sustainability of Wood and Wood
Products, 2006.
[3] Japan Federation on Wood Industry Associations,
relevant documents on Sustainable Green Ecosystem
Council, 2005.
[4] Lu Wenming etc, Forest Certification in China, 2007.
[5] Lu Wenming, “Promote FLEGT Process in China
through Improving National Forest Certification Schemeof China, Developing Government Green Timber
Procurement Policy and Developing Timber Tracing
System for Certified or Legally Logged and Traded
Timber”, Project Proposal to UK FCO, 2006.
[6] Ministry of Finance and State Environmental
Protection Administration, Notes for Implementation ofGovernment Procurement on Environmentally Labeled
Products, 2006.
[7] China Timber Distribution Association, Application
Report for Carrying Out Pilots of Credibility Assessmentin Timber Sector”, 2006.

(Paper presented for the International Seminar inTokyo for Tackling Illegal Logging, 2007 --- Responseof the World to the Procurement Policies of Japan,
held in Tokyo, Japan on February 26-27, 2007)(Contact: Lu Wenming, Professor, Chinese Academyof forestry, luwenmingcaf@126.com)

Kouji Kadoya
Secretary-General, Forest-products Identification Promotion
Conference（FIPC）

Legal wood supplier certification system byForest-products Identification Promotion ConferenceSummary of the verification scheme
Name of system
Related area
Overview ofverification

Scheme to check
legality at the time of
logging

Scheme to check forsustainability

Legality Verification with Wood Product Identification
All over Japan, Worldwide
Party responsible for issuing verification
Name: Forest-product Identification Promotion Conference (FIPC)
Location: Nagatacho Bldg. 2-4-3, Nagata-cho, Chiyoda-ku, Tokyo
Communication: Tel: +81-3-3580-3215
Outline of issuing process
To become a member of this Conference with an aim to voluntarily indicate the place oforigin, tree species, and type of wood processing.
When its capacity sufficient to verify own legality based on the guidelines of the Forestry
Agency is determined, the member can attach the “L” mark to the Conference’s logo.
Timber and timber products with the logo are recognized as being certified in legality.
The system verifies legality only.
Definition of legality
As the precondition, necessary procedures must be completed under the Forest Law.
Relevant laws
Forest Law
Details of presumed illegal activities
Illegal logging, if any.
Documents to verify legality, procedures of their retention/verification
Each business entity retains legality certificates submitted by timber suppliers.
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability
This is a voluntary regulation which is not certified by a third party.
Strictness and penalty system of the quality examination
Definition of sustainability
Documents to verify sustainability, procedures of their retention/verification
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability

Scheme of separative
custody management

Future Task andPerspectives

Real picture of the dealings, from logging to export
Circle of legality certification
Procedure for ensuring separative custody management
Respect of autonomy
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability
None
Criticisms against the system and recognition of problems
Remediation procedure
Future perspectives

Reference Author

Web site
URL www.zenmoku.jp/fipc
Name: Koji Kadoya
Title: Managing Director
Organization: Japan Federation of Wood Industry Association
E-mail: kadoya@zenmoku.jp

Response of Forest-products Identification Promotion Conference to Japan’s Wood
Procurement Policy Measures to Counter Illegal Logging
Kouji Kadoya 1
Secretary-General, Forest-products Identification Promotion Conference
c/o Japan Federation of Wood Industry Associations, 6F Nagata-cho Bldg., 2-4-3 Nagata-cho, Chiyoda-ku, Tokyo 1000014
The Forest-products Identification Promotion Conference (FIPC) was founded to promote voluntary identification oftree species, place of origin, processing type, etc. of forest products. In April 2006, the Japanese government started
implementing their policy to give priority to legally harvested wood/wood products in government procurement. In
response to this, the FIPC revised its charter in March 2006, and sought the status of a certification body as specified in
the guideline of the Forestry Agency. Currently, there are more than 100 such certification bodies in Japan. However, theFIPC is unique in that it can operate a certification system that is based on the Forestry Agency’s guideline and goesbeyond the boundaries of industry segments or geographical areas.
Keywords: Place of origin, tree species, processing type, voluntary labeling

Introduction
The Green Purchasing Law was revised and the wood procurement policies of governmental bodies were changed. Now
national and local governments give priority to procuring wood that is legally verified. Thus, certification activities of legal
wood suppliers by industry organizations commenced, based on the Forestry Agency's Guideline for Verification on
Legality and Sustainability of Wood and Wood Products." Currently, there are over 100 bodies that certify legal wood
suppliers in the nation, such as Prefectural Federation of Wood Industry Associations, and the Prefectural Federation ofForest Industry Associations, and the FIPC is one of them.
The primary aim of the FIPC is to establish a uniform set of rules to voluntarily identify the tree species, place of origin,processing type, etc., in the labels of wood/wood products, and to promote fair and just implementation of such rules.
In response to the government’s decision to give priority to legal wood/wood products in their procurement exercise
after the enforcement of the Green Purchasing Law in April 2006, the FIPC revised its charter in March 2006, anddecided to seek the status of a certification body as specified in the said guideline.
This paper will explain the background of the establishment of the FIPC, and the current status of legal wood suppliercertification.
Japan’s Forest Management and Green Procurement of Wood and Wood Products
Legislation Concerning Forest Management
Japan has two principal pieces of legislation concerning forest management: The Basic Law on Forest and Forestry, andthe Forest Law.
The former is a product of a revision of the Basic Law on Forestry and was enacted in 2002. It is the highest-level
legislation concerning forests, and it specifies “the basic philosophy for forest and forestry and the basic mattersconcerning its implementation.” The law advocates as its principal philosophy, 1) fulfillment of multi-faceted functions offorests and 2) sustainable and healthy development of forestry industry. The law further specifies 1) promotion of forest
enhancement and 2) assured conservation of forests as the policy measures to practice the said philosophy. It also
provides that the Basic Plan for Forest and Forestry should be developed to comprehensively and systematically
implement forest and forestry policy measures.
The Forest Law aims to “specify the basic matters concerning forest plans, protection of forests, and other forests; planfor forest maintenance and growth and forest productivity increase; and thereby contribute to conservation of the national
land and development of the national economy.” This is to realize one of the philosophy statements in the Basic Law,“the fulfillment of the multi-faceted functions of forests.”
The forest planning system and the protection forest system specified by the Forest Law are the components mostclosely related to “the legality at the time of logging” as described in the said guideline.
The Forest Planning System and its Operational Status

The Forest Law specifies two-phase planning by the national forest plan and the regional forest plan, and theiroperational-level planning in the municipal forest enhancement plan and the forest operation plan.
The national forest plan is developed by the Ministry of Agriculture, Forestry and Fisheries every 5 years for a term of
15 years, and its scope encompasses all the forests of the nation. The plan is developed in accordance with the abovesaid Basic Plan, and considers the status of enhancement of conservation facilities, etc. The regional forest plan isdeveloped by the prefectural governors every 5 years for a term of 10 years in accordance with the national forest plan.
The scope of the regional forest plan encompasses the privately owned forests in the 158 forest planning areas of thenation. These plans determine the basic matters regarding forest enhancement and conservation, such as the locations
and areas of the forests by each function of forests, and their enhancement and conservation objectives.
The municipal forest enhancement plan is developed by the municipality every 5 years for a term of 10 years, inaccordance with the above-said regional forest plan. Its scope encompasses the privately owned forests within themunicipal area.
Forest owners/operators prepare a forest operation plan for a term of 5 years, singularly or jointly with others, if a joint
enhancement is appropriate for the forest in question. They submit the plan to their city/town/village mayor, and seek theapproval that the forest operation plan in question is appropriate. This is the tool to link the individual forest operators to
the three forest plans: The national forest plan, the regional forest plan, and the municipal forest plan. Approximately one
half of the nation’s privately owned forests are thought to be under a forest operation plan.
If a forest owner/operator chooses not to prepare the above-described forest operation plan, and if he/she wishes to
cut down trees standing in a privately owned forest in the scope of a regional forest plan, the owner/operator must submit
a logging plan to the municipal mayor. The logging plan must explain the location of the forest, the area to be logged, thelogging method, the ages of the trees to be logged, the forest regeneration method after logging, the logging period andtree species, and other relevant information.
Forty-five percent of the nation’s forests are designated “protection forests” and any logging in these forests requires apermit from the prefectural governor of the jurisdiction.
The biggest issues of forest management in Japan are effective use of forests planted after the war, and their care andmanagement, such as thinning. Inappropriate logging practices are rather unlikely to be seen in this country.
Our nation does not have any domestic legislation to regulate processing, transport, import, and use of wood andwood products. The nation, however, is required to fulfill the obligations of a signatory to international treaties, such as
the CITES (Convention on International Trade in Endangered Species.)
The Movement of Green Procurement of Wood, and Response to the Movement
From April 2006, the Japanese government implemented its policy measure to give priority to wood and wood products,of which the legality is verified, in their procurement exercise in accordance with the Green Purchasing Law. In responseto this development, efforts were made to rapidly establish a system to supply legal wood and wood products. The
establishment phase of such a system is near completion.
The change in the government’s wood procurement policy significantly influenced wood procurement policies of private
enterprises: Furniture manufacturer associations and other groups published their codes of conduct to counter illegal
logging, and residential home manufacturers are in discussion to clearly define their legal wood procurement policies.
Establishment of the FIPC and its Activities
Labeling of Tree Species, Place of Origin, and Processing TypeThe FIPC aims to fulfill its accountability as a group of wood suppliers and contribute to diffusion of legal wood use, bydisclosing information to wood users and consumers through voluntary labeling of forest products indicating the tree
species, places of origin, and processing type.
Consumers are increasingly sensitive with the quality, standards, and place of origin information about agricultural andfishery products, foods, and other sundry commodities used in their daily life. In order to respond to the needs ofconsumers, wood suppliers need to disclose such information about wood supplies, and send the message that wood isa material consumers can use safely, without harm to their health, and with peace of mind.
Therefore, the FIPC concluded that wood labeling indicating its place of origin, tree species, and processing type
would be the way to fulfill the wood industry’s accountability and social responsibility to consumers, builders, andcarpenters. The FIPC was established as the mother organization to promote and encourage the establishment of alabeling system for information disclosure and its stringent and responsible practice. The FIPC concluded that disclosing
the place of origin, etc. would serve as a tool to exclude illegally harvested wood from the market.
The Activities of the FIPC
The FIPC is an independent organization of businesses that wish to actively disclose wood identification information.
The members of the FIPC label their products in an accurate manner and according to the rules specified by the FIPC,
so that the place of origin, tree species, and processing type may be clearly identified. The FIPC also implements
activities to communicate the aim and necessity of such labeling, and to ensure the credibility of the labels.
A business must pass a qualification audit to become a FIPC member. Once qualified as a member, the businessundergoes a qualification renewal audit every three years. To ensure the impartiality, fairness, and transparency of theseaudits, the audit committee members come from research organizations, non-government organizations (NGOs) andconsumer groups. All members are from non-wood and wood product industry.
The label must indicate the place of origin, tree species, and processing type, as well as the name of the FIPC.
The place of origin is normally the name of a nation, but the business may opt to indicate the name of an area inbrackets next to it. The reason is as follows: In Japan, it is a traditional and commonplace practice for a wood supplier toindicate the area of origin of the wood, and such indication serves as the brand of wood they sell. The FIPC assumed
that allowing the indication of the area of origin would make it easier for the Japanese wood distribution industry to widely
accept the FIPC labeling system.
The FIPC decided to take the common name approach to the tree species indication. Some tree species are called bynames uniquely known within the wood supply industry, and many discussions were necessary to determine the names
to be used in the tree species labels. However, the FIPC felt that it was a mandate of its labeling system to let theconsumers know the accurate names of trees, which they tend to use without recognizing them.
The processing type indication was introduced to distinguish mainly between natural wood and laminated timber.
However, more recently, it has proved useful for distinction between plywood, LVL (Laminated Veneer Lumber), MDF(Medium Density Fiber Board), and OSB (Oriented Strand Board).
The above-discussed information items are written on a label or sticker together with the logo shown below, andattached to the wood/wood products for shipment.

ムク材
樹種：スギ（人工林）
原産地：日本（埼玉西川）

木材表示推進協議会

No.000001

http://www.zenmoku.jp/fipc

If a complaint is received regarding the labeling and its contents, the audit committee investigates the matter byhearing, site inspection and other means, and takes appropriate measures. These include requesting improvement, acorrective action order, or disqualification and a public announcement thereof, depending on the findings of theinvestigation.
Legal Wood Supplier Certification
In accordance with the clear government procurement policy as specified in the Green Purchasing Law in force from
April 2006, the Forestry Agency proposed a set of guideline on methods to prove the legality of wood. The guideline
states that an industry organization may conduct a qualification audit of its member, and certify it as a legal wood
supplier.
The FIPC is an organization that fulfills the requirements to conduct the legal wood supplier certification in light of theForestry Agency’s guideline, and there was no doubt that such certification should become one of the FIPC’s businesses.
Therefore, it revised its charter in March 2006 and enacted the “voluntary code of conduct concerning illegal logging
countermeasures” and started its legal wood supplier certification as an industry organization.

Certification Method and Logo
As explained before, the FIPC was originally established to ensure the identification of place of origin, tree species,
and processing type of wood, and its members have passed a rigorous qualification audit. The FIPC therefore concluded
that the members needed only to answer a few additional questions and receive a few more audits to meet therequirements specified in the said guideline for legal wood supplier certification.
The FIPC member qualification audit is performed on the assumption that separation by tree species and place oforigin, appointment of a responsible person, and control of the documented body of evidence are the most importantcomponents of its member qualification audit. These requirements are the same as those for proof of legality, whereseparation of verified and un-verified wood supplies is required. Therefore, the FIPC concluded that a member could becertified as a legal wood supplier if it rigorously controls the separation of verified and un-verified wood supplies.
A certified business is permitted to put the FIPC logo including the capital letter “L,” on their product label indicating thetree species, place of origin and processing type. The “L” mark as shown below may not be used alone. It must
accompany a label of the place of origin and other required information.

ムク材

樹種：スギ（人工林）
原産地：日本（埼玉西川）
木材表示推進協議会

No.000001

http://www.zenmoku.jp/fipc

Current Status of Legal Wood Suppliers
After the commencement of legal wood supplier certification in June 2006, we have certified 45 businesses.
Scheme to Prove Legality
The FIPC proves the legality of wood in accordance with the Forestry Agency’s guideline, and the legality is defined asfollows: “The procedure of logging the trees was appropriate in light of the legislation concerning forests in the state orarea where the trees originally grew.”
In the case of domestically produced wood and wood products, those of which the legality is proven by the indicationof a legal wood supplier certification number, or those harvested from forests certified by Sustainable Green Ecosystem
Council (SGEC), Forest Stewardship Council (FSC), and other forest certification bodies, are recognized as legal
wood/wood products.
In case of imported wood/wood products, the FIPC verifies their legality in accordance with the said guideline asfollows: The FIPC checks the distribution route from the production of the wood in question to the factory, etc. of theapplicant business, requests the submission of proof of legality in light of the legislation of the exporting country fromwhich the wood is harvested and exported, conducts an audit at the FIPC audit committee meeting, and certifies thelegality of the wood in question, if its legality is considered rationally proven. Once a supply is certified, the FIPC only
considers the subsequent supplies of wood legal if the identical importing route is used.
Scheme of Separative Management
The normal distribution of domestic wood is as follows: The forest owner sells standing trees to log producers, andthey cut the trees and ship the logs to the log markets. The logs are sold to lumber manufacturers by auction or bidding.
The lumber is shipped to lumber markets nationwide and sold to timber manufacturers, again by auction or bidding.
As wood and timber products go through many stages in their distribution route as described above, strict separative
management each of these stages must be ensured.
Future Tasks and Perspectives

Current Problems and Required Improvements
Japan has Japan Agricultural Standards (JAS) and Approved Quality (AQ) for quality standard labeling systems for woodand wood products. There are also chain of custody (CoC) forest certification systems such as FSC and SGEC toguarantee the sustainability of the forests from which the wood and wood products come. The FIPC’s labeling system isan indication of information such as place of origin and tree species, which are not included in these other labelingsystems.
On the other hand, the consumer’s interest in the place of origin and tree species is weaker that their desire to know
more about food products and sundry items that are more directly connected to the state of their health. Wood is used forbuilding residential homes but consumers do not buy them directly, and therefore, their desire to know its place of origin
is not very strong.
As a consequence, the wood industry’s interest in this issue is not very high, and the number of participating wood
supply businesses is still low. However, the FIPC believes that the demand for legal wood/wood products will growstronger in the future, and the FIPC intends to operate its labelling system as a means of wood information disclosure
together with legality verification.
Needless to say, the accuracy, fairness, and transparency of the labeling system must be strictly maintained.
Expectation for and Requirements of Green Procurement
The Green Purchasing Law is the government’s first step in tackling the most serious environmental issues for us all.
Our future challenge is to spread this practice to not only governmental bodies, but also local municipalities, private
enterprises, and generic consumers.
If specific demand from the consumer side is not present, the supplier side normally does not embark on the costly
information disclosure. The public administration needs to advocate more about the importance of legality labeling.
The FIPC recognizes the importance of the information disclosure about wood supplies, and will reinforce its
educational and PR activities for consumers.
Reference Materials[1] Voluntary Code of Conduct to Counter Illegal Logging, Japan Office Institutional Furniture Association, June 2006
[2] Forest-products Identification Promotion Conference Rule Book, May 2006

Alexander N. Sidorenko
Chairman of Association Dalexportles

Industry certification system by Association Dalexportles

Summary of the verification scheme
Name of the system

Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Name in home language: Система управления легальностью
заготовок и поставок лесоматериалов на экспорт,внедряемая ассоциацией «Дальэкспортлес»Name in English: Legality Management System of Timber Logging and Timber Products
Supply for Export Implemented by Dalexportles Association
Region /Country Far East , Russia
Party responsible for issuing verification
Name: Dalexportles Association, Non-Profit Organization
Location: 19, Gaidar St., Suite9, Khabarovsk, Russia, 680000
Communication: dalexportles@list.ru
Outline of issuing process
Verification on availability of relative legal and regulatory documents for the right of timber
harvesting, commissioning and exporting.
The system shall verify both legality and sustainability
DEL Independent Expert Assessment shall verify the logging operations by the producers
for legality and sustainability and /or the legal basis for logging by the sellers.
Definition of legality
Definition of legality is formed by the availability of raw forest materials and timber harvest
volumes
Relevant laws
Code of Conduct of Dalexportles Association Members.
Details of presumed illegal activities
Double invoices, money transfer to the accounts not specified in the contract before thedeal is over
Procedures for retaining and verifying the evidence
Verification of contracts and timber and timber products supply for export by DEL
Association members
Scheme implemented by the third party and so on to ensure reliability
Interaction with SGS VLTP
Definition of sustainability
Verification of real volumes for export supply with allowable cutting
Procedures for retaining and verifying the evidence
Scheme implemented by the third party and so on to ensure reliability
Interaction with SGS VLTP
Real picture of the dealings, from logging to export
Continuous, systematic inventory of the timber harvest volumes and its quality in the chain
from logging sites to the shipment area in the ports and/or railway cars at the customs
terminal (Grodekovo).
Procedure for ensuring separative custody management
Monitoring of timber products separative custody and shipment is not observed by DEL
Expert Assessment
Scheme implemented by the third party and so on to ensure reliability
DEL controls the legislation observance during the operations
Criticisms against the system and recognition of problems
Some stakeholders are concerned about the fact that DEL Expert Assessment does notconsider the environmental issues and that in a while they would require verification of an
independent international organization.
Remediation procedure
Future perspectives
Web siteContact Alexander N. Sidorenko, Dalexportles Association Chairman
Name/ Title Organization: Dalexportles Association, Non-Profit Organization
Location: 19, Gaidar St., Suite9, Khabarovsk, Russia, 680000
Email address: dalexportles@list.ru

LEGALITY MANAGEMENT SYSTEMS OF TIMBER LOGGING AND TIMBERPRODUCTS SUPPLY FOR EXPORT VALID IN THE RUSSIAN FAR EAST.
Alexander N. Sidorenko
Dalexportles Association of Timber Exporters, Far East, Russia

GENERAL OVERVIEW
Dear ladies and gentlemen! Dear participants of theseminar!
I am thankful to the organizers for a kind invitation andopportunity to introduce a management system forlegality of raw materials origin in the Russian Far East.
Several monitoring systems for legality of timber
harvesting and timber products supply for export exist on
the territory of the RFE:•

The state system is based on more than 30
legislative acts, and over 15 forestry ministries,
agencies and departments are involved in thisprocess.

Since the above laws are our internal laws, it is obvious,that there are very few people from other countries who
are familiar with the real situation in the Russian Timber
Industry Sector, and with the Russian system of forest
use and management in particular.
••

Dalexportles Association(DEL) Verification
System and
SGS VLTP System.
I’ll briefly describe each of them.

THE STATE SYSTEM FOR LEGALITY CONTROLThe state system covers all stages of the forest
business. In the thirties of the last century the research of
the forest stock of Russia was started. The strict
centralized regime, the state ownership on everything
without exception and a planned economy required
regular inventory of the whole property of the Soviet
Union of that period. A unique system of total inventory
and control has been established in each area and foreach branch in the Soviet Union, including forestry. All
forests have been divided into districts and allocated tothe state timber industry incorporations.
The forest inventory enterprisers organized for that
purpose have thoroughly studied and described thespecies of the forest stock, its density and age on every
allotment. The forest stock study and inventory is carriedout regularly to present day. They have also preserved
the system of distributed and allocated plots of forest
stock to timber industry enterprises.
The state grants plots of the forest fund to the forest
users for a long-term lease up to 49 years. At the sametime they estimate the legal status of a company- lessor,
its business solvency and social responsibility.

The forest plots are granted in compliance with thelong-term state policy in sustainable forest management.
There is a considerable number of territories, where
forest use is either restricted or completely prohibited.
Such restrictions are mainly related to environment
protection issues, water protected area areas, etc. At thisstage the federal laws, the Forest Code and Tax Coderegulate the company’s activities.
The enterprise develops a cutting plan and otheractivities for harvesting in accordance with the state
regulations. The annual volume for harvesting is limitedby allowable (prescribed) cutting, providing a sustainable
forest management in the allotment of the leased forest
fund. The observance control for cutting volumes andtechnology, ecological issues compliance is provided by
the state inspections: Rosleskhoz, Rosprirodnadzor,
Rosselkhoznadzor, Ministry of Natural Resources,
Ministry of Forestry Industry, environmental departments
at the Government of each territory, the subject of theRussian Federation.
Responsibility for violation of legislative acts andregulations under the above mentioned state
departments is various and depends on the degree of theviolation. Punishment varies from a financial fine to theenterprise’s right deprivation on lease of a forest plot;
whereas a criminal liability can be applied to the head of
the company. The infringer practically risks losing his
business and freedom.

Under the results of the logging operations, theforestry industry enterprise submits a declarationthat informs the state of the work performed:
harvest volumes, place of logging, etc.
After submission of the declaration on logging
executed, verification procedure of the data officiallyannounced and the actual data starts.
Both land survey and aerial photography fromplanes and satellites are used to perform
verification.

Drawing 1.shows the processed aerial photography
images.
Using the analysis of the aerial photography results,
one could see the violations, including the compact
undercut and harvesting outside of legal boundaries.
Moreover, the aerial photography allows disclosing thesigns of large environmental disruptions.
The violations detected from aerial photography are
double-checked and verified by land survey. The land
survey is also used to identify smaller ecologicaldisruptions. 1580 people, the forest unit workers, carryout the land inspection in the Khabarovsk Territory. The
results of all kinds of control are compared, analyzed andissued for further decision- making.
The further control over the legality of wood productsupply for export under the state system is assigned to
Rosselkhoznadzor and the companies-carriers.
At dispatch station, while being transported in the otherregion, Rosselkhoznadzor checks timber at the storage
place and prepared for shipment for legality. The
quarantine certificate, which indicates the volume andstructural parameters of the timber products for shipping,is issued.
Weighing of loaded cars at large transit terminals
also allows disclosing violations, related to illegal
overweight of cars, when the real volume of the timber
products exceeds the volume declared in a waybill.
The most frequent violations are the ones executed bydoubtful companies, when they deliver timber to People's
Republic of China via Grodekovo Terminal. If
infringement occurs, the fine is five times the amount of
the transportation fee.
Upon the freights’ delivery in ports, the goods are put
into customs control zones. Rosselkhoznadzor watchescarefully that all cars, arriving to a port and loaded withtimber products, have quarantine certificates.
Rosselkhoznadzor inspectors together with the VNIIKR
specialists (All-Russia Scientific Research Institute for
Plants Quarantine) inspect timber again, calculatequarantine certificates issued at the place of shipment,
verify with the actual number of certificates at the storage
area and issue a unified phyto- quarantine certificate forall ship consignment.
The customs inspection precedes timber products’
loading on board a ship. In this case the procedures are
regulated by the Customs Code. The Customs bodies
build their work upon the conclusions made by
Rosselkhoznadzor, Chamber of Commerce and Industry
expertise and other independent expert reports,
concerning the quantity and quality of the goods to be
shipped for export. The Customs also performs its own
inspection of the goods ready for shipment for export.
After completing loading the Customs issues a Cargo
Customs Declaration, which confirms the legality oftimber products shipped for export.
It’s obvious that a Cargo Customs Declaration
cannot provide a hundred percent guarantee for the
product legality. We acknowledge that we have such

violations but the state is fighting against those and theviolation’s number is getting reduced.
The violations are divided into two major categories:

1.
2.

Illegality of harvesting, causing damage to theenvironment;
Illegality related to economic violations inforestry business.

Illegal harvesting in Russia is rather limited due tothe existing system of overlapping satellite and airplane
control. The above violations and the persons at fault
could be easily identified and punished. In this connection,
the number of violations in the harvesting process isgradually dropping.
It’s more complicated to control the economic
violations in the forestry business, where the major
violation is deviation from taxes payment. Unfortunately,
the similar violations are typical for all other branches ofindustry and not only in this country.
One of most significant issues is the price making
procedure for the timber products to be sold is a rather
serious process. The price is defined and establishedbetween a seller and buyer individually, upon theirdiscretion and depends on many factors.
On a monthly basis, the State Customs Committee sets
up the prices minimum level, recommended for usage by
the customs throughout the territory of Russia, when
determining the customs value of the goods for export,
including the timber products.
In case the exporter declares the price lower than thefair value, the customs shall correct the export duty, using
the legislative act- Adjustment of the Customs
Value.However, because of the unfair actions during
price making (double invoices), a gross violation of theRussian Currency and Tax legislation occurs. It happens
when a seller asks a buyer to transfer only a part of thesum to an account in Russia, whereas the rest would betransferred to various bank accounts.
In this case the customs duties do not suffer, but the statebudget receives less of the tax revenues, and an unfair
exporter receives an additional illegal profit, saving on
taxes.
It’s a serious infringement of the Federal Law
No.173-Φ3 of December 10, 2003 “On Currency
regulation and currency control”, Chapter 3, Article 19
and is penalized by fine from three fourth up to one sizeof the sum of money resources, which have not been
paid onto the accounts in authorized banks ”. Point 4,
Article15.25. of “ the Code on Administrative violations ”
of December 30, 2001. No.195-Φ3.
The Currency Control Bodies of the Central bank of
Russia observe this kind of infringement through theagent banks, realizing settlement operations under
foreign trade contracts. Under such infringement theunderestimated base for the taxation is formed. Only after
receiving all amount of money for the sold goods on his

account, the seller has the right to transfer money to any
account of any country if necessary.

to accept the guarantee from Dalexportles Association as
the provisional measure for the above period.

This significant infringement is very difficult formonitoring from Russia. The Customs follows the unified(indicative) prices. If the prices of the sale are lower than
the indicative prices, the Customs have no right to either
forbid export of the goods or make any obstacles, but will
only increase the duties up to the level of therecommended (indicative) prices. The attempts of the
Customs to stop export of forest products under theillegal prices have been challenged in courts by thesellers. The function of the customs is to collect duties forthe goods crossing the border, and the customs is not acommercial organization to define what price is fair andwhat price is not fair.

The collective verification system on legality fortimber harvesting and timber products supply for export,
being implemented by Dalexportles Association, is asfollows:

However, the Japanese companies –buyers canrender a great help to the Russian party in stopping theabove violation, which we call “ the illegal price”, andconsequently in stopping the illegal timber products
supply. From now on the Japanese buyers know that all
money should be transferred to an account of the seller,
specified in the contract and if a Russian seller asks totransfer money to several accounts, using double
invoices, it means an illegal activity.
The purpose of any illegal activity, in most cases, isto receive additional revenue, which is impossible when
you observe the legislation.
The illegal activity is accompanied by reduced costs at
timber harvesting, when every sort and kind of
regulations and legislative acts are violated, theenvironmental sustainability is infringed.
The State Control System struggles against the above
mentioned violations.

1)
2)

The items under verification are subject to the policyof the Association, developed for the purpose of theverification on legality for timber harvesting and timber
products supply for export.
The appointed commission of experts receives from theenterprise - applicant answers to the questionnaire,
totaling 78 points.
The questions are categorized under the following
headings:
1.

2.
Illegal activity is also accompanied by a productvalue hidden from taxation- it’s the trade using double
invoices under “illegal price. At this stage we are applying
our Japanese colleagues for support and interaction andnot to purchase forest products from Russia for which it isnecessary to transfer money onto accounts not specified
in the contract. It is an illegal purchase.
VERIFICATION SYSTEM FOR LEGALITY BEING
IMPLEMENTED BY TIMBER EXPORTERS OFDALEXPORTLES ASSOCIATION
Besides the State System of Control, there exists theverification system on legality for timber harvesting andtimber supply for export, being implemented by
Dalexportles Association.
This work started after the moment the Memorandum
between Dalexportles, the Far Eastern Timber Exporters
Association and Japan Lumber Importers Association
was signed in Khabarovsk, Russia in April 2006.
In accordance with the Memorandum the Russian
exporters have to confirm the origin of raw timber for
legality using one of the existing systems, that is byreceiving the certificates of sustainable forest
management.
Taking into consideration that receiving of the certificate
under “FCS" system takes long time, it has been agreed

Above all, a company should be the member of
DEL;
The Association appoints a commission ofexperts, consisting of the representatives of theauditing company, Far East Forestry ResearchInstitute and representatives of the Executive
Board of Directors of DEL Association.

3.

4.
5.

6.

The legal status of a company
Law observance/compliance of a companyapplicant is verified at the stage when thecompany issues shares and undergoes theprocedure of registration as the business
representative.
Access to land and forest fund
Under this item the legality for harvesting
operations right acquisition is verified;contracts, providing the foundation for the
allotments of forest fund granted to a company–applicant, are examined, fulfillment of
obligations by the company-applicant under
the signed contracts is assessed.
Timber products manufacture technology
The expert team studies the harvesting
technology and its compliance with the law andregulations
Quality management system
Regulations observance of storing, measuring,
grading and inventorying of timber products
Sustainable forest management
It includes observance of legislation
requirements in terms of environment
protection, reforestation, forest fire protection,utilization of all timber products assortment, etc.
Enterprise management systems

Completeness and correctness of tax and otherobligatory payments is examined. The established levelof salaries and obligatory payments to budget and nonbudget funds is studied.
I would like to point to the fact that the companies,
optimizing the above item, that is applying illegal
schemes for reducing tax fees, do violate the Law.

Besides, they have an opportunity for receiving excess
profits, and consequently expanding their illegal activity.
It should be noted that the examination for completenessand correctness of the tax computation is a distinctive
feature of the verification system being implemented by
Dalexportles Association, compared to other acting
systems.
7.

Timber products traffic monitoring
Warehousing methods, inventory of timber
product traffic in the warehouse andobservance of the Customs Code is attested at
this stage. The attention is focused on thevalue of the product to be sold at this stage.

The Association informs the company-applicant of theexpert commission assessment results and its decision,
which either confirms the legality of harvesting and wood
products supply for export, or rejects it.
3)

In case the company-applicant is not theDalexportles Association member, the former
can apply for a membership.

The observance of laws, reputation –are the values,
highly respected by the Dalexportles Association
members. We are happy to state that more and morecompanies share our views and approaches are ready to
become DEL Association members and be verified forlegality of harvesting and wood products supply for export.
SGS VLTP VERIFICATION SYSTEM
Besides the above described State Control System
for legality of the raw timber origin and its supply forexport AND the collective verification system being
implemented by Dalexportles Association, the Validationof Legal Timber Programme (VLTP) is being realized on
the territory of the Russian Far East. The Programme isrepresented in a separate block and I shall only briefly
report on it.
Validation of Legal Timber Programme (VLTP) is thepart of a global Forestry Monitoring Programme, which
operates in 145 countries. The objective of theProgramme is to contribute to international, national andregional initiatives aimed at struggling the illegal timber
harvesting and trade of illegally produced timber products.
The concept of the Program meets the requirements ofinternational initiatives for fighting the illegal forest
management.
In the Russian Far East SGS VLT Programme isbeing implemented under the Territorial Governments
within the state- private partnership framework on a
voluntary basis. “Legality verification” under SGS VLTP
is considered as an alternative, but additional and usefulstage in the sustainable forest management verification
process.
Program management is realized by SGS in
partnership with the local organization, the Center ofForest Certification, through the VLTP Agency, set up in
Khabarovsk, Far East of Russia.

Verification methods for legality include: datacollection and cross analysis of the information received
from the companies and competent state bodies,
undeclared inspections of production areas, continuous
monitoring of industrial operations, data analysis of thetimber products manufacture in dynamics and data
analysis of the remote monitoring.

CONCLUSION
It’s quite obvious that of the above-introduced
systems for verification on legality for timber harvesting
and timber products supply for export, the State Control
System is the most powerful and effective one. It consistsof a great number of overlapping verification sub-systems,
which double-check each other in some cases. The State
Control System is responsible for reliability of theinformation provided or for hiding of information. At thesame time the companies under inspection bear
responsibility for violating the Law. The system of
ecological safety has always been an old tradition in
Russia.
I can gladly note that we at present we observe theinteraction of the representatives of different controlling
institutions and determination of the timber industry
companies to conduct a responsible and legal businessand it’s the most important tendency. We all realize thatlegal, transparent and sustainable business is theguarantee for our future

Carl-Éric Guertin
Communications and Responsible Trade Manager ofQuebec Wood Export Bureau/Canada Wood

Q-Web auditing and traceability system

Summary of the verification scheme
Name of the system
Related Area
Overview ofverification

Scheme to check forlegality at the time of
logging

Quebec Wood Export Bureau (Q-WEB) auditing and traceability system
Region /Country : Province of Quebec / Canada
Party overseeing verification
Name : Quebec Wood Export Bureau (Q-WEB)
Location : Quebec City, Province of Quebec, Canada
Communication :Outline of verification process
On an annual basis, Q-WEB will audit members through a third party (auditor) to make surethat all members’ suppliers have signed the Policy on Wood Origin and Legality (Appendix
B) of the Q-WEB Code of Conduct. A certificate will then be issued to members certifyingthat it complies with the Q-WEB’s Auditing and Traceability System.
The system shall verify legality only/or both sustainability
At this time, the system solely monitors legality.
Definition of legality
In Canada illegal logging can be defined as :• Theft of timber or logs;• Deliberate harvesting without express or implied authority to do so, or in unauthorizedareas or where authority has been revoked for deficient harvesting practices, or after
government approvals are obtained by corrupt practices;• Where there is a deliberate failure to pay stumpage and/or royalties to forest owners.
Relevant laws
• Many laws related to logging and harvesting exist at the municipal, regional, provincial
and national level.
• On a provincial level for public lands (Crown Lands) : Quebec’s Forest Act andBest
Management Practices on Crown Lands .
Details regarding presumed illegal activities• In Canada and in all its provinces, governance, or the lack of ability to enforce laws, is
not an issue. No presumed illegal activities.
Procedures for retaining and verifying the evidence
Scheme implemented by the third party and so on to ensure reliability

Scheme to check forsustainability

Definition of sustainability
Procedures for retaining and verifying the evidence
Scheme implemented by the third party and so on to ensure reliability

Scheme of separative
custody management

Real picture of the dealings, from logging to export
Procedure for ensuring separative custody management
Scheme implemented by the third party and so on to ensure reliability

Future Task andPerspectives

Reference Author

Criticisms against the system and recognition of problems
At this moment, members are only requested to have their immediate suppliers provide theevidence of legality. For North American wood species, suppliers are requested to submit
all documents described in the Q-WEB Policy on Wood Origin and Legality (Appendix B of
Code of Conduct) only if the Q-WEB members request them.
Remediation procedure
Members could eventually ask their suppliers to submit all documents described in the QWEB Policy on Wood Origin and Legality (Appendix B of Code of Conduct).
Future perspectives
By introducing its auditing and traceability system, Q-WEB has taken a major step todemonstrate its commitment to counter illegal logging and illegal trade. Based on market
demands (customers and public administrations) members could eventually decided to
trace their wood all the way back to the forest of origin.
Web sitewww.quebecwoodexport.com
Contact
Carl-Éric Guertin, Responsible Trade Manager, Quebec Wood Export Bureau (Q-WEB)
ceguertin@quebecwoodexport.com

QUEBEC WOOD EXPORT BUREAU (Q-WEB)
AUDITING AND TRACEABILITY SYSTEMINTERNATIONAL SEMINAR IN TOKYO FOR TACKLING ILLEGAL LOGGING, 2007
Response of the world to the Procurement Policies of Japan
Carl-Éric Guertin
Quebec Wood Export Bureau (Q-WEB), Québec City, Province of Quebec, Canada

The Quebec Wood Export Bureau (Q-WEB) is committed to representing more than 200 wood productmanufacturers and producers that conduct their business with integrity and in a manner consistent with relevant
professional standards. Consequently, Q-WEB has established a Code of Conduct which includes a Policy on Wood
Origin and Legality. As a prerequisite for membership, members will be requested to have all their suppliers sign the
Policy to demonstrate the legality of their wood supply. Q-WEB will audit its members to make sure their suppliers havesigned the Policy.
Keywords: code of conduct, illegal logging, wood products, audit, traceability

INTRODUCTION

The Quebec Wood Export Bureau (Q-WEB)
The Quebec Wood Export Bureau (Q-WEB) is a nonprofit organization established to promote the export ofwood products from the province of Quebec (Canada). QWEB represents more than 200 member companies that
manufacture wood products in one or more of thefollowing sectors: Construction Grade Softwood Lumber,Appearance Grade Softwood Lumber, Hardwood Lumber
and Components, Hardwood Flooring, Engineered Woodand Products and Prefabricated Wood Frame Housing.
Q-WEB member companies vary in size ranging
from small family owned companies to multinational
corporations. Multinational corporations only operate insoftwood sectors. In the softwood and hardwood lumber
sectors, members can source their timber from crownlands (public lands) under a CAAF 1 obtained from theQuebec government and/or from small woodlot owners(also called non-industrial private forests) and in a few
cases, from their own private lands. Supplies can alsocome from other Canadian provinces as well as theUnites States. For the other sectors, members buy theirsawn wood and other wood products on the open market
be it local, regional, provincial or national, as well as fromthe United States.
Q-WEB Code of Conduct
Q-WEB is committed to representing wood productmanufacturers and producers that conduct their business
1

CAAF : Timber Supply and Forest Management Agreementwith integrity and in a manner consistent with relevant
professional standards. Consequently, Q-WEB adopted a
Code of Conduct (1) during the fall of 2006. For Q-WEB
members, adhering to a Code of Conduct means striving
to do what is right, being a good corporate citizen in thecommunity, and integrating social and environmental
priorities into business practices and relationships with
suppliers and business partners. Adherence to the Codeof Conduct is now a prerequisite for Q-WEB membership.
In the Code of Conduct, members recognize that
forests are a renewable resource that can provide acontinuous flow of goods and services for current andfuture generations when managed responsibly. Therefore,
Q-WEB members are committed to sourcing their wood
products from companies that can provide evidence that
their supply sources are known and legal, and that forests
are managed according to the legislation in effect.
Q-WEB Policy on Wood Origin and Legality
In Canada, governance, or the lack of ability to
enforce laws is not an issue because of its strict laws andregulations in the forestry sector. What’s more is theefficient compliance monitoring systems that are
implemented and the fines being charged to companies
that do not comply. There are also a number of wellstructured planning processes and policies in place. It is
for these reasons that there is no suspicious log supply in
Canada as shown in the figure 1.

Q-WEB AUDITING AND TRACEABILITY SYSTEM(2)

Figure 1 : Corruption and Illegal Forest Activity

In order to meet market demands, i.e. private
and public procurement policies, and more
specifically the Japan Forest Agency “Guidelines for
Verification on Legality and Sustainability of Woodand Wood Products”, Q-WEB developed an
auditing and traceability system. This system could
fall under Reference II – Certification by companies
Approved by industry. The system is solely
intended to verify legality.
Working with suppliers
Since the issue of demonstrating legality is a fairly
new concept in North America, Q-WEB members areencouraged to have a standardized and coherent
approach towards their suppliers whether they are from
Canada, the United-States or overseas. A four-step
approach is proposed and members need to document
every step for auditing purposes:
1.

2.
Still Q-WEB adopted a Policy on Wood Origin and
Legality to respond to market demands (private andpublic procurement policies). The Policy was instigatedto foster awareness on forestry and timber trade and todemonstrate best practices for the benefit of the forest
sector, our communities and the environment. Suppliers
are requested to sign the Policy which lists responsible
wood supply practices described here after:

1. Wood that is sourced from areas where logging
is authorized by legislation.
2. Wood that is procured or purchased in a legalway.
3. Wood where harvesting operations are legal.
4. Wood whose origin can be verified throughproper documentation.
5. All relevant documents, if required, todemonstrate that stumpage fees, taxes or any otherfees related to the harvested timber have been paidor shall be paid according to legal requirements.
6. The location of the forest and legislation in effect,
if required, for the areas where the wood has been
harvested, and also the management plans or any
other documents proving the wood’s origin andlegality.

3.

4.

Each member will inform its suppliers of the current
approach and make known that they will have to sign
the Policy on Wood Origin and Legality. A deadline isset to have all the policies signed. Members may
also ask if their suppliers have certified forests undera specific sustainable forest management standard
or if they have a certified chain of custody (CanadianStandards Association (CSA), Forest StewardshipCouncil (FSC) or Sustainable Forestry Initiative(SFI)).
Follow-ups will be undertaken with every supplier tomake sure they received the Policy, discuss any
matter related to the policy and remind them of the
Policy signing deadline.
If, following the first two steps, a supplier has not
signed the Policy, a registered letter will be sent
whereby the previous measures that were taken will
be highlighted. Again, the deadline will be mentioned
as a last reminder.
If, following these 3 steps, a supplier still does not
sign the Policy, he will be removed from thepreferred suppliers’ list or tagged as a high risk
supplier.

Demonstrating the origin and legality of wood

Q-WEB members are requested to have all
their suppliers sign the Policy on Wood Origin and
Legality. For North American suppliers, who supply
North American wood species, it is not mandatory
to provide all the documents described in points 5
and 6 of the Policy. However, if in a given situationa member is not confident about one of his North
American suppliers, this member should request
the appropriate documentation listed in points 5
and 6 as proof of origin and legality.
In rare cases, where members import exotic
species, all documents listed in points 5 and 6 will
be requested. For some specific countries,
members are encouraged to ask for the
documentation identified by the World Wildlife Fundin their publication Keep it Legal (Appendix 7 –Country Legal Documentation Lists).

Auditing

the wood fibre they are using comes from legal
sources 2(4).

Once a year, a third party hired by Q-WEB willaudit member companies to make sure that all their
suppliers have signed the Policy on Wood Origin
and Legality. In cases where suppliers have notsigned the policy, members will have todemonstrate, through proper documentation, thatthey followed the four-step approach describedabove in the “Working with suppliers” section.
Upon receiving audit results, Q-WEB will issue
a certificate to members that have met therequirements of the auditing and traceability system.
AN OTHER EXAMPLE OF CANADIANCOMMITMENT

It is worth mentionning that in Canada there isan other example of a trade association committed
to sustainability and traceability. In 2002, FPAC
committed its membership to achieve SFM
certification (CSA, FSC, SFI) on all lands under
their management by the end of 2006(3). FPAC is
the only trade association in the world with this typeof a commitment regarding third party SFM
certification as a condition of membership. As ofJune 2006, FPAC members have achieved
approximately 95% of their commitment to have alllands under their management certified by the endof 2006. By the end of 2006, an area equivalent toSweden, Finland and Norway combined will becertified, accounting for some 3/4 of Canada’s
working forest. As June 2006, almost 120 million
hectares were certified in Canada as show in figure
2.
Figure 2

FPAC will track its member progress against its
commitment on an annual basis. Each FPAC
member will ensure appropriate mechanisms are inplace to deliver on this commitment, such as, but
not limited to:• supplier evidence of legal right to harvest throughtenure or ownership; or• a chain-of-custody certificate; or• an auditable supply chain management system; or• relevant audit results from suppliers or customers;or• supplier SFM certification
CONCLUSION

The traceability of wood products throughout
the supply chain is very complex for small andmedium sized companies. This is especially true
when there are numerous suppliers from bothpublic and private lands as well as from different
provinces and countries. Traceability also gets
noticeably harder as we move along the supply
chain and wood products have undergone manytransformations. By introducing its auditing andtraceability system, Q-WEB and its member
companies have taken a major step to demonstrate
their commitment to counter illegal logging andillegal trade. As private and public market
expectations evolve, so will the Q-WEB’s auditing
and traceability system. In the future, the next step
will be to identify, for various provinces andcountries, all the documentation suggested inpoints 5 and 6 of the Policy on Wood Origin and
Legality. Members could also decide to eventually
trace their wood all the way back to the forest oforigin.
Some member companies already have SFM
certifications and/or chains of custody under CSA,
FSC or SFI. As more and more certified woodenters the market, more members will implement
chains of custody. The lack of certified wood on themarket is a limiting factor at the moment formember companies.
Finally, Q-WEB and its member companies areready to collaborate with suppliers, customers andany organisation who wish to improve this new
auditing and traceability system.

2

In addition, FPAC members are committed totracing their fibre supplies back to the forest area oforigin by the end of 2008 to assure customers that

Given tenure arrangements in Canada, it is often the fibre
suppliers that hold the legal right to harvest whether throughtenure or ownership. Therefore, in the Canadian context,
knowing the fibre supplier is often the equivalent of knowing theforest area of origin. The source is considered legal if it iscertified, recycled, or originates from a forest where the supplieris the owner and/or has evidence of the legal right to harvest.

References(1) Q-WEB, 2006, Code of Conduct, 16 p.
www.quebecwoodexport.com/codeofconduct/index.htm(2) Illegal Logging and Global Wood Markets: The
Competitive Impacts on the U.S. Wood Products
Industry. Prepared for the American Forest &Paper Association by Seneca Creek Associates,
LLC and Wood Resources International, LLC.
October, 2004.
(3) FPAC, 2006, Market Acceptance Customer
Briefing Note – Forest Certification, 1p.
(4) FPAC 2006, Traceability Commitment. 1p.,

Michael Virga
Acting Executive Director,
American Forest &Paper Association

Sustainable forest verification system (SFI)Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

SFI, Inc.
United States & Canada
Party responsible for issuing verification
SFI, Inc.
1600 Wilson Blvd.
Arlington, VA 22209
Outline of issuing process
SFI Audit Procedures and Qualifications (SFI APQ). SFI Standard.
The system shall verify legality only /or both sustainability
The SFI verifies legality and sustainability
Definition of legality
Assurance that theft of timber or logs and cutting in parks, reserves, or other similar areas
where otherwise precluded by law did not occur.
Relevant laws
Endangered Species Act (ESA), Clean Water Act (CWA) and Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA), Occupational Health and Safety Act, National
Labor Relations Act, and Internal Revenue Code.
Details of presumed illegal activities
Procedures for retaining and verifying the evidence
SFI Audit Procedures and Qualifications (SFI APQ).
Scheme implemented by the third party and so on to ensure reliability
SFI Audit Procedures and Qualifications (SFI APQ)
Definition of sustainability
Sustainable Forestry: To meet the needs of the present without compromising the ability of
future generations to meet their own needs by practicing a land stewardship ethic that
integrates reforestation and the managing, growing, nurturing, and harvesting of trees for
useful products with the conservation of soil, air and water quality, biological diversity,
wildlife and aquatic habitat, recreation and aesthetics.
Procedures for retaining and verifying the evidence
SFI Audit Procedures and Qualifications (SFI APQ)
Scheme implemented by the third party and so on to ensure reliability
SFI Audit Procedures and Qualifications (SFI APQ)
Real picture of the dealings, from logging to export
SFI Requirements for Fiber Sourcing, Chain of Custody, and Product Labels
Procedure for ensuring separative custody management
SFI Requirements for Fiber Sourcing, Chain of Custody, and Product Labels
Scheme implemented by the third party and so on to ensure reliability
SFI Requirements for Fiber Sourcing, Chain of Custody, and Product Labels
Criticisms against the system and recognition of problems
All systems, including the SFI, will continue to be criticized by detractors who only
recognize one system and want a monopoly in the marketplace.
Remediation procedure
The SFI is based on continuous improvement and all SFI standards will be undergoing their
5 year review in 2008. All stakeholders are encouraged to comment on the standards.
Future perspectives
SFI program will continue to gain market share and increase chain-of-custody certifications
and expand label use in response to the demands of government procurement policies.
Web site
URL www.sfiprogram.org
Contact
SFI, Inc.
contact@sfiprogram.org

Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

American Tree Farm System
United States
Party responsible for issuing verification
American Tree Farm System
1111 Nineteenth Street, NW, Suite 780
Washington, DC 20036
Outline of issuing process
Certification process currently under review to meet PEFC requirements.
The system shall verify legality only /or both sustainability
The ATFS verifies legality and sustainability
Definition of legality
Relevant laws
Forest management complies with all relevant federal, state and local regulations andordinances. Landowners must adhere to all national, state, and local laws and regulations
applicable to forest management when conducting forest operations.
Details of presumed illegal activities
Procedures for retaining and verifying the evidence
See attached 004 Form and auditor verification form.
Scheme implemented by the third party and so on to ensure reliability
ATFS currently in process of achieving third-party certification.
Definition of sustainability
sustainability The capacity of forests, ranging from stands to ecoregions, to maintain theirhealth, productivity, diversity, and overall integrity, in the long run, in the context of humanactivity
Procedures for retaining and verifying the evidence
See attached 004 Form and auditor verification form.
Scheme implemented by the third party and so on to ensure reliability
In progress
Real picture of the dealings, from logging to export
Not applicable. Certifying forest management of family forest owners.
Procedure for ensuring separative custody management
Chain of Custody option available (PEFC Annex 4).
Scheme implemented by the third party and so on to ensure reliability
Certification body accreditation in process.
Criticisms against the system and recognition of problems
To some degree the American Tree Farm System will be criticized by detractors who only
recognize one system and want a monopoly in the marketplace.
Remediation procedure
The American Tree Farm System is seeking third-party certification system-wide. ATFS willcontinue with the rigorous internal monitoring system. The Standard will go under review in2008. All stakeholders are encouraged to comment on the standards.
Future perspectives
ATFS will continue to grow in acres and number of Tree Farms as we intend to expand ourreach to family forest owners in the U.S.
Web site
URL www.treefarmsystem.org
Contact
American Tree Farm System
info@treefarmsystem.org

US EXPORTS, LEGALITY AND FOREIGN PROCUREMENT POLICIESMichael Virga1
1

American Forest & Paper Association, Washington, D.C. USA

Government procurement policies in Japan and Europe are attempting to ensure that imported wood
products are derived from legal and sustainable sourcing of timber. The United States is a “low-risk” supplier tointernational markets in terms of illegal logging and a high performance producer in terms of sustainability.
Tenure of forest land is well-established and enforced. An array of legal, voluntary and cultural institutions
ensures long-term forest sustainability. The rule of law is deeply-rooted in the American culture and enforcementof laws and regulations is very effective. Forest resources are vast -- they cover one-third of the country – andforest resources are well-monitored. The area of forest land has remained stable and has, in fact, increasedslightly over the past two decades. Timber inventory has consistently increased over the past fifty years despite
rising demand and production. Net growth exceeds harvesting for both softwoods and hardwoods. The use ofcertification systems is also increasing.
Keywords: legality of forest resources, wood products, certification

INTRODUCTION
Timber production in the United States is highly
regulated by federal, state and local governments
although the United States does not have a single or sole
national forestry law. Instead, an array of legal, voluntaryand cultural institutions ensures long-term forest
sustainability. Tenure of forest land is well-establishedand enforced. Over 70% of the forest resource isprivately owned. The vast majority of private forest landis owned by over 10 million family forest landowners thatown small forest tracts, typically less than 25 hectares.
Data on US forest resources consistently show stable
forest area, and growth in excess of harvests, but U.S.
producers are increasingly becoming certified to meet therequirements of international procurement policies.
Forest Conditions
The area of forest in the US has remained stable
over the past fifty years and has even increased slightly
over the past two decades. About one-third of the country
is forested. Net growth exceeds removals by a
substantial margin for both softwoods and hardwoods
and, thus, U.S. timber inventory continues to expand
despite increasing timber production.
Populations of many species of wildlife haveincreased even as some species are at risk. Populationsof deer, wild turkey, elk and the American Bald Eagle arejust a few examples of wildlife that have regained theirprominence after a period of decline. Protection for
endangered species is codified in the Endangered
Species Act supplemented by additional laws at the statelevel. Species and their habitats that are identified as
threatened or endangered are legally protected andusually the subject of concerted recovery efforts.

The management of US forest resources is
supported by a sophisticated forest inventory andanalysis system administered by the US Forest Service.
For the past five decades, every forested state has
undergone periodic forest inventories to measure andmonitor forest conditions. More recently, the periodic
system is being transformed into an annual inventory thatwill enable early warnings and faster responses tochanges in forest conditions.
US LEGAL & REGULATORY ENVIRONMENT
National Laws
Six major federal laws regulate human activities onforest land: Endangered Species Act (ESA); Clean Water
Act (CWA), Clean Air Act (CAA) and Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA); National
Environmental Policy Act (NEPA); Occupational Safety &Health Act (OSHA). As noted earlier, none of these laws
is specific only to forestry, but all provide strict legal
oversight of various aspects of forest practices. For
example, the ESA reaches deeply into US forests.
Forest landowners and managers cannot cause injury or
death to a species listed under the ESA by direct harm or
through habitat modification. The ESA has effectively
removed large swaths of public lands from commercial
exploitation and has additionally restricted forest
management activity over millions of hectares of private
land. Species such as the northern spotted owl, redcockaded wood pecker, Kirtland's Warbler and gopher
tortoise are just a few of the forest-dependent species
protected under the ESA. Penalties for violations of the
ESA are severe.
Under the federal Clean Water Act, states must haveprograms to control non-point source pollution, usuallyaccomplished through Best Management Practices

(BMPs), and federal regulations control activities inforested wetlands. Every forested state has a program ofeither mandatory or voluntary BMPs for forest lands.
Similarly, under the Clean Air Act, states must haveprograms to protect air quality and visibility. These
typically include controls on prescribed burning and theuse of ozone-depleting chemicals.
Chemical use in forest stands, whether for insect
control or for vegetation management, is regulated under
FIFRA. All forest-use chemicals must be registered andforest land operators must follow application guidelines.
NEPA mandates that federal agencies assess andminimize the environmental impacts of their activities on
government-owned forest land. NEPA has resulted indetailed assessments of impacts from federal activities
on forests and associated wildlife, and has frequently
necessitated changes in management or has resulted ineliminating activities altogether.
Finally, in terms of the major federal laws that affectforestry, the Occupational Safety and Health Act (OSHA)
prescribes that very specific safety measures be taken
and safety equipment used while engaged in commercial
activity in forest areas. Detailed records of accidents,
injuries, and corrective measures must be maintained.
Penalties for violations are severe.
State & Local Laws
Each of the fifty US states has various laws that
affect forests. In total, over 1,000 full time employeeswith a payroll of over $57 million are engaged in statelevel regulatory activities. Some 276 different stateagencies have some kind of regulatory authority overforest practices. A recent study characterized over half ofthese as extensively or moderately engaged in forest
practice regulatory activity [1]. At least 15 states haveextensive regulatory programs specific to forestry. Most
require some form of harvesting plan, notification or
permit and most require a reforestation plan. Of the
fifteen states with extensive forestry regulation, thosewith the most rigorous forest practice laws tend to belocated in the western region – in states such as
California, Oregon and Washington – where, as apractical matter, most of the exports to Japan originate.
Enhancement of water quality is the primaryobjective in regulating forest practices in most states. In
37 states, regulatory agencies provide oversight of nonpoint forest sources of water pollutants.
Timber Theft & Logging
Timber theft occurs in the United States. However,while there are no data on the extent of the problem, it is
not believed to be of major significance in terms of total
production, neither nationally, nor locally.
Virtually every jurisdiction in America has strict laws
against trespass and theft. Any theft of timber or logs, orthe cutting of timber in parks, reserves, or other similarareas where it is precluded by law, is vigorously

prosecuted. Law enforcement is stringent and provides
an effective deterrent against timber theft. Landowners
are protective of their private property and local law
enforcement responds to complaints. Consequently,
illegal harvesting is not a significant national problem in
the U.S.
Moreover, most transactions are subject to the
Uniform Commercial Code which governs the sale ofgoods, their transportation and delivery, financing,storage, payments, and various other aspects ofcommercial transactions. All commercial transactions,
including timber sales, carry with them an explicit or
implied warranty of title. Any breach of this warranty
incurs serious civil or criminal penalties.
Landowners are always advised to clearly markboundaries, obtain bids for timber sales, always havewritten contracts and have a professional forester
oversee harvesting. Written contracts are always
enforceable in courts of law.
VOLUNTARY STEWARDSHIP &SUSTAINABILITY PROGRAMS
Sustainability Defined
The definition of sustainable forestry as used byforest industry is an adaptation of the more generalapproach to sustainability adopted in 1987 by the World
Commission on Sustainable Development. That is: “tomeet the needs of the present without compromising theability of future generations to meet their own needs bypracticing a land stewardship ethic that integrates
reforestation and the managing, growing, nurturing, andharvesting of trees for useful products with theconservation of soil, air and water quality, biologicaldiversity, wildlife and aquatic habitat, recreation andaesthetics.”[2]Sustainability Programs & Certification
To foster forest sustainability, voluntary forest
certification programs have increased dramatically overthe past decade in the United States. More than 35
million hectares have been voluntarily certified to leading
sustainable forest management certification systems.
These include the Sustainable Forestry Initiative (SFI),
Forest Stewardship Council (FSC) and the American
Tree Farm System (ATFS). SFI has over 22 million
certified hectares; FSC has over 9 million certified
hectares; Tree Farm has over 8 million certified hectares.
Tree Farm and SFI are members of the Programme
for the Endorsement of Forest Certification (PEFC). SFI
is an endorsed PEFC scheme while the PEFC Tree Farm
endorsement is pending. The American Tree Farm
System was formed in 1941 primarily for small forest
growers in the U.S. FSC was formed in 1993 primarily by
WWF and other environmental organizations to curtail
tropical deforestation in the developing countries. The
SFI was originally formed by the American Forest &Paper Association (AF&PA) as a code of conduct for theindustry. It has since evolved into a completely
independent system and as of January 1, 2007 has
severed all organizational links with AF&PA.

Rule of Law - 2005
(Chosen comparator also shown for selected countries)

Forest Certification & Legality
All certification systems in the U.S. have recognized
standards for sustainable forestry management andchain-of-custody. In addition, all certification systems in
use in the U.S. require compliance with U.S. law as acondition of certification and the certification bodies haveprocedures in place which determine compliance with thestandards. Beyond legal compliance, each of the threesystems used in the U.S. have extensive performancemeasures and indicators on sustainability that also must
be met. Thus, certified U.S. producers meet allinternational procurement requirements for legality andsustainability.
Third-party auditing provides credible assurance thatsustainability indicators are being addressed. In all cases,
the accreditation and certification bodies have detailed
remediation procedures to correct non-conformances or
identify opportunities for improvements. All systems arecontinuously scrutinized, reviewed and criticized by
ENGO’s, governments, customers and otherstakeholders. This, along with competition among thesystems, drives the continuous improvement process forall systems.
Chain of Custody
SFI and FSC have provisions for Chain of Custody(CoC) tracking and certification. Given the complex
supply situation in the US involving millions oflandowners, CoC is a more challenging task than it might
be in other countries. Nevertheless, 42 mills/facilities areusing SFI CoC certification and FSC lists 622 CoC
certificates issued in the United States
MEASURES OF GOVERNANCE
The World Bank has compiled a series of indicatorsthat are a useful tool to assess the effectiveness ofgovernance in over 200 countries. The World BankWorldwide Governance Indicators measure six
components of good governance: (1) voice andaccountability; (2) political stability and absence ofviolence; (3) government effectiveness; (4) regulatory
quality; (5) the rule of law; and (6) control of corruption.
In terms of Rule of Law, the most relevant of theWorld Bank indicators with respect to the risk of illegal
timber production, the US ranks in the 92nd percentile
amongst 208 countries, indicating a very high confidence
in enforcement of laws and regulations. This compares
favorably against Japan in the 89th percentile, Malaysia
in the 66th percentile, Brazil in the 43rd percentile, China
in the 41st percentile, Russia in the 22nd percentile, andIndonesia in the 20th percentile.
MARKET CONSIDERATIONSGreen Purchasing

Normalized Rule of Law Index

2

HIGH

UNITED STATES

3

1

0

-1

-2

-3

LOW

208 Countries

Fig. 1. World Bank Rule of Law Indicator, 2005 [3]U.S. producers are increasingly becoming certified
to meet the requirements of international procurement
policies or those of major domestic customers. Major
retailers have instituted policies giving preferences tocertified material and/or not trading in timber products
from “endangered forests.”
U.S. consumers who are aware of these issues
encourage all producers and markets to procure only
legally harvested timber. This is a general trend in North
America and Europe but awareness will vary. While
increasing, there is currently little domestic demandpressure directly from consumers for assurances about
legality and sustainability. Generally, the US market does
not demonstrate a premium being paid for certified forest
products although some producers are beginning to seesome market differentiation.
Government Procurement Policies in the US
Federal, state and local governments in the US havevarious procurement policies related to environmentally
preferable products. The most common have to do withrecycled content in paper. The federal government andother government jurisdictions have guidelines thatencourage the purchase of paper with various acceptable
thresholds of recovered paper content depending on thepaper grade.
To date, US government procurement policies are
not dictating that wood products be purchased fromverifiably legal and sustainable sources. In general, theU.S. government is “certification neutral,” leaving
decisions about certification systems to the marketplace.
Instead, government procurement is moving towards
recognizing “green building” standards that typically
include preferences for certified wood products. Not all of
the available and referenced green building standards
provide equal treatment of the three certification
schemes. The most prevalent of the green building
systems – Leadership in Energy and Environmental
Design (LEED®) – discriminates against wood products
by providing more favorable treatment to other building
materials. It also recognizes only FSC certification forwood products. In contrast, the Green GlobesTM Systemand the NAHB’s Residential Green Homebuilding
Guidelines recognize all three certification schemes.
The U.S. government also has laws that prohibit
government procurement of stolen property. National
Stolen Property Act (NSPA) makes it a federal crime totransport stolen goods across state lines or in interstate
commerce.

its 5 year review in 2008. The American Tree Farm iscurrently seeking to be endorsed by the PEFC.

In a few localities, local governments have imposed
restrictions or outright bans on the use of certain timber
products (particularly, tropical timber products) in public
procurement, but they are few in number and highly
controversial.

Certification is a useful tool but will not in and of itself
be the cure for illegal logging or the deeper, underlying
causes of illegal logging (corruption, absence of rule oflaw and good governance, lack of effective enforcement,poverty, etc). We need to be shifting resources towards
the underlying core causes of illegal logging.

EFFORTS TO COMBAT ILLEGAL LOGGINGIn 2003, the U.S. Administration launched thePresident’s Initiative Against Illegal Logging (PIAIL)
whose goal is to assist developing countries to combat
illegal logging, the sale, (including for export) of illegally
harvested timber products, and fight corruption in theforest sector. More recently, in November 2006, the U.S.
signed a Memorandum of Understanding with Indonesia,
a legally binding document that commits the twocountries to work together to address the problem.
In 2004, AF&PA sponsored what is widely
considered to be the one of the most credible andinformative reports on illegal logging. The study
measured the economic impact on timber production andtrade that results from illegally harvested wood products.
The report concluded that many of the estimates on theextent of illegal logging are likely exaggerated, but the
problem is nevertheless significant and depresses world
prices by between 7 and 16%. [4]AF&PA is also in partnership with Conservation
International in the Alliance to Combat Illegal Logging.
The Alliance is working with local law enforcement inselected countries in using remote sensing technologies
to identify illegal logging in protected areas. The
American Hardwood Export Council (AHEC) will soon becommissioning a study to assess the risk of illegal woodentering the supply chain for American hardwood
products. The study will be independently peer reviewed
and any significant issues with illegal wood supply will be
addressed
FINAL NOTES
Future Steps
While US forest resources are sustainably managed,
there remain many challenges. One of the goals should
be to expand the area under forest certification which
now represents just 17% of US timberland. Another goal
should be to increase the number of chain-of-custodycertificates in the U.S. while accommodating our own
unique tenure system whereby the majority of timber is
supplied by 10 million +/- small private family forest
owners.
Having an assortment of competing systems – SFI,
FSC, PEFC, ATFS -- tailored to specific situations should
be encouraged because the competition will by itself
foster improvements in the certification schemes. Healthy
competition among forest certification systems helps
ensure market-responsive changes and adaptation todifferent wood supply situations. All systems also need
to be continuously improved. The SFI will be undergoing

Potential Policy Pitfalls
Policy-makers should be aware that policies that
affect the trade and use of wood products can have
inadvertent and sometimes counter-productive
consequences. One the major concerns is that demandside measures can increase costs for legitimate, legal
producers while not increasing the risks associated withillegal production. Thus, the gap between illegitimate
and legitimate production costs widens. That, in turn,provides an even greater incentive to illegal operators.
Second, in the US, Chain of Custody tracking andcontrol is much more challenging because of the large
number of landowners and complex supply situation.
That the US has a very high rule of law quotient, strict
environmental laws and demonstrably effective law
enforcement should be sufficient to establish all US wood
products as low risk for illegal sourcing. Indeed, theproblem of illegal logging is not known or alleged to benationally significant in the US.
Third, even from countries where the risk of illegal
activity is high, markets and shipments are easily
fungible. Thus, verified legal product may be shipped tomarkets with procurement restrictions while all otherproduct is shifted elsewhere.
Finally, demand side measures if mandatory or
discriminatory may violate WTO rules. While
governments are making efforts to institute policies they
believe are in conformance with WTO rules, measuresthat result in trade distortions may well be challenged byan affected country.
References[1] P. Ellefson et al, “State Government Regulation ofForestry Practices Applied to Nonfederal Forests: Extent
and Intensity of Agency Involvement”, Journal of Forestry.
Vol. 104, Number 8, 2006, pp.401-406.
[2] Sustainable Forestry Board, “Sustainable Forestry
Initiative® Standard, 2005-2009 Standard”, 2005, pp. 3.
[3] Daniel Kaufmann et al, “Governance Matters V:
Governance Indicators for 1996-2005 " World Bank,
September, 2006.
[4] Seneca Creek Associates, LLC and Wood
Resources International, LLC, “’Illegal Logging’ andGlobal Wood Markets: The Competitive Impacts on the
US Wood Products Industry:, November, 2004.

Poster Session

Bruce Telfer
Asia/Pacific Manager, SGS Forest Monitoring Service

SGS Timber Legality and Traceability Verification

Summary of the verification scheme
Name of the system
Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Name in English: SGS Timber Legality and Traceability Verification (SGS TLTV)
Region /Country: World wide.
Party responsible for issuing verification
Name: SGS Société Générale de Surveillance
Location: 1, place des Alpes, CH-1211 Geneva Switzerland
Communication: antoine.delarochefordiere@sgs.com
Outline of issuing process
Timber Legality & Traceability Verification (TLTV) is an extension of SGS’s concept ofverification of compliance with agreed requirements in the forest and timber products
industry and trade sector. In comparison with Mandatory and Voluntary Legal Timber
Validation , TLTV provides the “voluntary, company level” approach, which incorporates
regular auditing, or continuous monitoring and verification of a company’s wood production
and tracking information, outside any national scheme.
TLTV potentially involves a combination of the following activities:
1. verification of log/timber production and tracking data - involving review of timbertracking systems, from port back to stump in legitimate forest concession
2. auditing of company data and specific legality investigations and checks
data monitoring and processing, information analysis and reporting.
The system shall verify legality only /or both sustainability
SGS TLTV verifies legality only. This is a first step towards sustainability certification.
Definition of legality
Definition of legality is based on the laws of the country in which the company is operating
but must cover the basic legal principles of: Legal right of the company to conductbusiness; Rights of workers and local communities; Approval for forestry activities;
Payment of all forest related charges and taxes; Forest Harvesting Regulations; Marketing
and Timber processing Regulations; Registrations maintained by the company.
Relevant laws
− Flexible according to requirements but must cover all legal principles as described.
Details of presumed illegal activities− Some examples: Harvesting without a permit, outside of an approved plan, banned
species, exceeding quotas, Non-payment of forest taxes, violation of basic labour laws,
violation of environmental laws
Procedures for retaining and verifying the evidence
SGS conducts field audits against the agreed legal criteria including document checks.
The audit team verifies compliance against the defined criteria after which a verification
report is compiled.
− A “TLTV Legal Production” Statement is issued by SGS. The company can provide
copies of the Statement to stakeholders as evidence of the legal compliance of theirforest operations. The company’s wood tracking system is also audited to ensure
traceability from port back to stump in legitimate forest concessions.
Scheme implemented by the third party and so on to ensure reliability
All verification procedures are managing and executing by SGS, the world’s leading
inspection, verification, testing and certification company under SGS General Conditions ofServices that ensure reliability and international creditability.
Real picture of the dealings, from logging to export
Each company is responsible for implementing a CoC system for its circumstances.
Procedure for ensuring separative custody management
TLTV requires a chain of custody monitoring system that is audited by SGS to test
traceability from the export port back to stump in legitimate forest concessions.
Scheme implemented by the third party and so on to ensure reliability
All verification procedures are managing and executing by SGS, the world’s leading
inspection, verification, testing and certification company under SGS General Conditions ofServices that ensure reliability and international creditability.
Criticisms against the system and recognition of problems
Agreeing on the details of a legal definition for forest operations can be a difficult andcontroversial process. Some stakeholders are not happy with legal verification systems andprefer the much higher standard of sustainable certification instead.
Remediation procedure
Extensive stakeholder consultation can ease such criticisms.
Web site: www.forestry.sgs.com
Contact: Bruce Telfer, Asia/Pacific Manager, SGS Forest Monitoring Services
Email address Bruce.Telfer@sgs.com

Andrey Zakharenkov
SGS Forest Monitoring Services, Russia

SGS Verification of Legal Timber Programin the Far East, Khabarovsk Region

Summary of the verification scheme
Name of the system

Name in home language: Независимое Подтверждение Легальности
Лесопродукции

Related Area
General overview ofverification

Scheme to check forlegality at the time of
logging

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Name in English: Validation of Legal Timber Programme (SGS VLTP)
Region /Country: Far East / Russia
Party responsible for issuing verification
Name: SGS Société Générale de Surveillance
Location: 1, place des Alpes, CH-1211 Geneva Switzerland
Communication: antoine.delarochefordiere@sgs.com
Outline of issuing process
The verification process combines regular audits of a company’s timber production andtraceability system, continuous data monitoring, and unannounced inspections at
production sites.
The system shall verify legality only /or both sustainability
SGS VLTP shall verify legality and some aspects of sustainability that related withsustainable usage of forest resources (trees), protected areas, impacts of logging activity toenvironment etc.
Definition of legality
Definition of legality formed by regional Standard for the Verification of Legality in theforest sector under the SGS VLTP. This standard consist 9 principles, 26 criteria and 68
indicators.
Relevant laws
Federal and regional Forestry and Environment legislative acts consist of more than 30
documents.
Details of presumed illegal activities
Cuttings without permits; logged in excess of allowed amounts; logged beyond allotment
borders; wood of a species forbidden from cutting or not permitted to be cut on a site; wood
logged with a violation of cutting technology; Industrial wood logged over the fixed quota inthe conduct of intermediate cuttings; evasion of royalties, taxes and other forest charges
Procedures for retaining and verifying the evidence
Verification/ auditing incl. documentary checks, field inspections; coordination withauthorities for data collection and field verifications; continuous and systematic data
management; computerised log/ timber tracking (optional); remote sensing (satellite
imagery, aerial photography) in coordination with authorities
Scheme implemented by the third party and so on to ensure reliability
All verification procedures are managing and executing by the third party (SGS VLTP
Agency) under SGS General Conditions of Services that ensure reliability and international
creditability
Real picture of the dealings, from logging to export
The schemes of separative custody management in Khabarovsk region includes directexport shipment from producers (logging, logging&processing, processing) companies andimporters and export through special timber trade companies. Each company is
responsible for implementing a CoC system for its unique circumstances
Procedure for ensuring separative custody management
SGS VLTP Standard consist chain of custody (CoC) requirements (Principle 7) that areauditing during verification process by third party with issuing SGS VLTP/CoC Statements
Scheme implemented by the third party and so on to ensure reliability
All verification procedures are managing and executing by the third party (SGS VLTP
Agency) under SGS General Conditions of Services that ensure reliability and international
creditability
Criticisms against the system and recognition of problems
Some stakeholders are not happy with legal verification systems and prefer the muchhigher standard of sustainable certification instead.
Remediation procedure
Extensive stakeholder consultation and participation during verification process as observer
can ease such criticisms
Future perspectives
Implementing in the other regions of Russian Federation
Web site
URL www.forestry.sgs.com
Contact: Zakharenkov Andrey, Project manager of Forest monitoring programme in
Russia, SGS Vostok Limited
Email address Andrey.Zakharenkov@sgs.com

SGS VALIDATION OF LEGAL TIMBER PROGRAMME IN THE RUSSIAN FAR EAST,KHABAROVSK REGION
Andrey Zakharenkov
SGS Forest Monitoring Services, Russia

Validation of Legal Timber Programme (VLTP) has been designed for the Government of the Russian Far-East
Khabarovsk Region which has in its search for ways to improve the control of its vital forest sector, expressed interest in
adopting ‘legal timber verification’ approaches developed by SGS. VLTP is an instrument of ‘good governance’supporting forest law enforcement. Verification systems employ efficient monitoring of production and trade activities andmeaningful verification of compliance with agreed ‘legality’ principles, throughout the supply chain. These ‘legality’principles and verification scheme are endorsed by the regional Government and implemented under their Government
mandate.

BACKGROUND
Related area and illegal logging problemsrd
The Khabarovsk region is the 3 largest timber
producing region in Russia and a major producing andexporting area in the international timber trade. It boasts
over 73 million hectares of forests. The softwood
resource (mainly larch and fir) comprises 85% of theregion’s production, and temperate hardwood theremainder (15%). Over 200 logging and timber
processing companies (including some international)
have concessions (leased forest resources). Accordingly,
improved control of forest sector activities has been
identified as a priority by the regional Government andby the forest and timber industry of the Khabarovsk
region.

While the basis for such assessment could often bechallenged, recent reports from environmental NGOs
have claimed that the level of illegal logging currently
taking place in the region varies from significant to veryhigh. Both the Government and the industry are looking
to improve and demonstrate legal compliance, build abetter image and facilitate the trade with high-value
export markets, via the verification of ‘legal timber’. Thisis seen as a reliable and internationally credible
instrument that could be used to monitor and verify thattimber has been harvested, produced, and sold legally.
GENERAL OVERVIEW OF VERIFICATION
Party responsible for issuing verification
The ‘Validation of Legal Timber Programme (VLTP)
was developed and adopted by Société Générale deSurveillance (SGS) of Geneva, Switzerland. SGS is theworld’s largest verification, testing and certificationcompany. With its headquarters in Geneva and 48,000
staff world-wide, it operates a network of 1,180 offices
and 321 laboratories in 145 countries. In Russia, SGS
employs 1,700 people (staff and regular contractors) in acentral office in Moscow, 5 regional branches and 42
offices. The Trade Assurance Services Division of SGS
brings together the services to governments andinternational institutions aimed at revenue protection,
trade facilitation, aid monitoring and sustainable use ofnatural resources. The latter is currently represented bya Forestry Monitoring Programme. VLTP in the Russian
Far East is the part of SGS global Forestry Monitoring
Programme.
Outline of issuing process
SGS VLTP verifies legality and some aspects ofsustainability related to usage of forest resources(authorized volumes and quotas), protected areas(observance of protected regime), impacts of logging
activity to environment etc.
Verification of legality in the framework of VLTP isconducted on a step-wise approach. In the first stage
Legal Origin is verified. This includes checks of the,legitimacy of the forest source and legal ownership offorest products throughout the whole production andsupply chain. At the second stage Legal Compliance isverified. This means that the producer or owner of forest
products complies with federal and regional laws andregulations as specified by this VLTP Standard, has asystem of registration and control over the transport offorest products in place, and follows other necessary
management procedures. Products that are successfully
checked for legal origin and legal compliance areconsidered as fully verified legal forest products.
SCHEME TO CHECK FOR LEGALITY AT THE TIME
OF LOGGING
Definition of legality
No worldwide standard and mechanism exist as yet
to prescribe what ‘legal timber’ is and how it should beverified. The question of whether or not timber has beenlegally harvested and sourced touches on somepotentially complex issues. The concept of legality is notuniversal (what is legal in one country may be illegal inanother), and laws and regulations are sometimes weak,complex and even inconsistent or contradictory between
the different levels. Indeed the scope of all relevant laws
and regulations is far too wide for these to be equally
covered by the VLTP.
The generic principles of ‘Timber Legality”
developed by SGS were adapted by regional experts
and are represented in this VLTP Standard. They consistof minimum requirements which:− contain auditable “legality” criteria;− focus on essential (priority) criteria;− are acceptable to a vast majority of Russian andinternational stakeholders;− are based on or supported by relevant federal andregional laws and regulations; and− reflect international agreements ratified by the
Russian Federation.
The VLTP Standard used by SGS for the
Khabarovsk Region specifies requirements for the legal
origin of forest products and legality of production,transport, processing and distribution activities. It also
includes requirements related to traceability and chain ofcustody assurance systems. The Standard contains 9
principles (shown below), 26 criteria and 68 indicators oftimber legality:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Authorization of the company to exercise an
economic activity
Access to land and forest resources, anddocumentation of rights for use
Classification of forest fund and terms oftenancy
Systems of company's management andmonitoring of forest products transportation(quality system)
Legitimacy of forest management andharvesting plans, projects and technicaldocumentation
Legitimacy of production activity in forest fund
Chain of custody (CoC)
Authorized volumes and quotas
Payments and social liabilities

The first 4 principles relate to the legal origin of theforest products. The next 5 relate to legal compliance by
the producing company.
The definition of legality that these principles form
can be modified over time, its scope can be broadenedor it can, for example, incorporate further social andenvironmental requirements as agreed by stakeholders.
Relevant laws
Federal and regional Forestry and Environment
legislative acts that relates to the VLTP Standard consistof more than 30 documents. A sample is listed bellow.
Forest code of Russian Federation; Federal law“Environmental protection”; Water code of RussianFederation; Federal law “Animal world”; Land code of
Russian Federation; Federal law “Environmental
expertise”; Federal law “Territories of traditional natureuse of indigenous people”; President’s decree of RF“Highly protected nature territories of RF”; Directions onallotment and inventory of cutting areas in the forests of
RF; Procedure of forest division on tax categories;
Minimum tariff of fares for standing timber; Ratification ofprinciples of leasing forest locations in RF; Procedure ofleasing forest areas; The rules for timber harvest in Far
Eastern forests; Practical manual of organization andcarrying out timber harvesting in the coniferous andbroadleaf deciduous Far Eastern forests; Regulations oforganization and carrying out timber harvesting on thesteep slopes of the Sikhote-Alin forests; Ratification ofprinciples for water protected zones river sites and theirshoreline shelterbelts.
As a result of key changes in Forestry legislation
since 1 January, 2007 after the introduction of a newForest Code will require significant changes in the
consummation most of legislative acts. VLTP Standard
will be modified to accommodate these changes throughconsultation with technical experts and other key
stakeholders.
Details of presumed illegal activities
Perceived illegal activities taking place in the
Russian Far East usually include:: logging without permits;
harvesting in excess of legal quotas and/or outside of legal
boundaries; cutting of protected species; wood logged within violation of approved cutting technology; industrial wood
logged over the fixed quota for thinnings; evasion ofroyalties, taxes and other forest charges.
Procedures for retaining and verifying the evidence
At the operational level, verification of timber legality
is achieved through:− verification/ auditing including documentary checks andfield inspections;− coordination with authorities for data collection and field
verifications;− continuous and systematic data management;− computerised log/ timber tracking (optional);− remote sensing (satellite imagery, aerial photography) in
coordination with authorities.
All verification procedures are managed andexecuted by a third party auditor (SGS VLTP Agency)
under SGS General Conditions of Services that ensure
reliability and international creditability.
FUTURE TASK AND PERSPECTIVES
Future perspectives
Under the new decree issued by Russian Federal
Government at the end of December 2005 and the newForest Code introduced on 1 of January 2007, Regional
Governments are responsible for all forest management

functions. This increases the potential for verification oflegality to be implemented in other regions as a
replication of the VLTP model under similar regional
schemes or, to expand under the SGS ‘Timber Legality
and Traceability Verification’ (TLTV) service to individualcompanies.

Kiyoo Nakagawa
Secretary-General Sustainable Green Ecosystem Council

Certification System of
Sustainable
Green Ecosystem Council
Summary of theverification scheme
Name of the system
Related area
Overview ofverification

Scheme to check
legality at the time of
logging

Independent efforts by paper companies
All over Japan, Worldwide, Specific region
Party responsible for issuing verification
Name: Member companies of the Japan Paper Association
Location: See the web site of the Japan Paper Association or of the “Goho(=Legal)-Wood
Navigation Page.”
Communication:
Outline of issuing process
To manufacture and ship only paper products whose legality has been verified. To issue
certificates.
The system shall verify legality only/or both legality and sustainability
Definition of legality
At the time of logging, procedures are appropriately completed with regard to the forest
related laws of the country or the region where the raw wood is produced.
Relevant laws
Forest laws, laws/regulations concerning conservation of water sources, soil, etc. of thecountry or the region concerned
Details of presumed illegal activities
Document to verify legality, procedures of their retention/verification

Scheme to check forsustainability* To have suppliers pledge not to trade illegally logged timber by means of a memorandum,etc.
* To have suppliers submit the traceability report on confirmed legality of timber material by
tracing back to the logging stage.
* In addition to suppliers’ audit of logging sites to confirm no illegal logging, paper
companies (sometimes entrusted to exporters) examine the logging sites to confirm that noillegal logging is performed.
* In the case of the forest certified material, to use the FM certification and CoC
certification.
* In the case of a certified wood chip manufacturer of the industry organization, to use thecertificate for legal timber, etc.
* To retain the relevant documents for five years.
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability
Each company has annual auditing by a third party concerning the efforts against illegal
logging and the summary is disclosed on the web site, in the environmental report, etc.
Definition of sustainability
Documents to verify sustainability, procedure of their retention/verification
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability

Scheme of separative
custody management

Real picture of the dealings, from logging to export
Procedure for ensuring separative custody management
Scheme implemented by the third party, administrative authoridy, etc. to ensure
reliability

Future Task andPerspectives

Criticisms against the system and recognition of problems
Remediation procedure
Future perspectives

Reference Author

Web site
URL: http://www.jpa.gr.jp
Contact: Kiyoshi Kamikawa
Name, title, division: Managing Director, Japan Paper Association
E-mail:Illegal Logging Countermeasures by the Japan Paper Association
Kiyoshi Kamikawa
Managing Director, Japan Paper Association
The paper manufacturing industry is regulated by the “individual company’s voluntary effort” as stated in the guidelinesof the Forestry Agency, and individual companies may vary from one another in their approach to illegal logging
countermeasures. However, the common trend is to develop a raw material procurement policy and establish a legality
verification system. The Japan Paper Association (JPA) discussed and adopted the JPA’s Action Policy forCountermeasures against Illegal Logging, at the board of directors meeting on March 20, 2006 and subsequently
published it. The Action Policy was developed based on the understanding that it was very important to have a common
philosophy throughout the industry to help each individual company develop its own material procurement policy andlegality verification system, as our industry is regulated by “individual company’s voluntary effort.” Our member
companies publish their undertakings on their websites, etc., and details of member companies that have developed andpublished their material procurement policies and legality verification systems can be viewed by visiting the Go-ho(Legal) Wood NAVI website operated by the Council for Tracking Illegal Logging Issue: http://www.gohowood.jp/kigyou/jirei1-3.html

Measures by Private Companies
5)
As the paper manufacturing industry is regulated by
the “individual company’s voluntary effort,” individualcompanies may vary from one another in their approach
to illegal logging countermeasures. However, thefollowing actions are generally taken:

B. Domestic Wood1)

1. Development of a Material Procurement Policy
Companies develop their material procurement
policies ensuring that they will not deal in illegally
harvested wood, and publish the policies on theirwebsites, environmental reports, and other publications.
In many cases, the policy includes diffusion of woodfrom certified forests, diffusion of timber from planted
forests, utilization of previously unused wood and otherclauses according to each company’s material
procurement situation.
2. Development of a Legality Verification Systemdelegated to an import company.
An FM certificate and CoC certificate are
acceptable for wood from previously certified
forests.

2)

If a wood chip supplier is certified by theindustry organization, a certificate of thelegality of the wood is acceptable.
If a wood chip supplier is not certified by theindustry organization, its supplies of wood will
be handled in the same manner as importedwood.

3. Separate Management
The paper manufacturer must use wood that is legallycertified. Therefore, there should not be need forseparating certified wood from un-certified wood.
4. Safe-keeping of Related Documentation

Companies develop their legality verification systems
ensuring that they do not deal in illegally harvested
wood, and they publish the contents of such systems on
their websites and environmental reports, etc. The
following is an overview of a verification system.
A. Imported Wood
1)

2)

3)
4)

The company asks each of its suppliers to
submit a memorandum of understanding
stating that it does not deal in illegally
harvested wood.
The company asks each of its suppliers to
submit a traceability report indicating the siteof logging, tree species, and forest
management methods, etc.
Suppliers monitor their logging sites roundthe-clock and ensure that there is no illegal
logging activity.
The paper manufacturer regularly inspects thelogging sites and ensures that there is no
illegal logging activity. The inspection may be

Companies keep related documentation safe for five
years at the minimum and present them, as necessary,
for audits, etc.
5. AuditCompanies annually receive third-party audits tocheck their undertakings against illegal logging, andpublish such activities and results on their websites,
environmental reports, etc.
Each of these companies has its own voluntary efforts
and therefore, its measures may not be uniform
throughout the industry. Please refer to their websites forfurther details.

Figure 1. Paper Industry’s Illegal Logging
Countermeasures
JPA’s Action Policy for Countermeasures against
Illegal Logging
Forests fulfill an important role to supply wood,
maintain ecosystems, and mitigate global warming. JPA
recognizes that illegal logging hinders sustainablefulfillment of these functions of forests, and is deeply
concerned that illegal logging lowers the image andcompetitive strength of the paper manufacturing industry.
Therefore, JPA has stated nationally and internationallythat it would, in cooperation with international forestry
and paper manufacturing industry groups, promote
countermeasures against harvesting and trading illegallylogged wood.
In addition, the government has decided to introduce
policy measures to strictly limit government procurement
to wood and wood products that are legally verified. This
policy is based on the principle of not using illegallylogged wood, and is in accordance with the agreement
reached at the G8 Summit meeting.
On this backdrop, JPA has decided to clearly express
anew its philosophy and countermeasures against illegal
logging as follows:

1. JPA and its members strongly object to all illegal
activities that obstruct sustainable forest
management or potentially hinder the
maintenance of the forests’ ecosystems orotherwise damage the health of forests.
2. The JPA members ensure that their logging
activities comply with the logging legislations of
the country in question.
3. The JPA members do not deal in illegally
harvested or imported wood or wood products,
and thus ensure the exclusion of illegally
harvested wood or wood products from themarket.
4. The JPA members develop their own
procurement policies for wood materials (suchas pulp and wood chips), and establish
systems to verify the legality of the raw
materials and end products.
5. JPA and its members will cooperate with thenational
government’s
countermeasuresagainst illegal logging, and hope that illegal
logging countermeasures will be promoted in
all wood producing and consuming nations of
the world.
6. JPA will cooperate with domestic andinternational forest-related groups in promoting
countermeasures against illegal logging.

Kiyoshi Kamikawa
Executive Director. Japan Paper Association

Verification methodby original measure of Paper Companies of Japan

Summary of the verification
Name of the system

SGEC(Sustainable Green Ecosystem Council)

Related Area
Overview ofverification

All over Japan
Party responsible for issuing verification
Name: SGEC
Location: National Land Afforestation Promotion Organization, 2F, 2-7-5 Hirakawacho,
Chiyodaku, Tokyo 102-0093, Japan
Communication: e-mail: info@sgec-eco.org
TEL: 03-5276-3311 FAX: 03-5276-3312
Outline of issuing process
Application for verification submitted to the certification body (At moment, there are threecertification bodies) – Inspection by the certification body (document/on-site) – Inspection
Committee within the certification body – Inspection report submitted – SGEC Auditing
Committee – Issuance of Certificate
The system shall verify legality and sustainability.
Definition of legality
To be logged legally in accordance with the forest-related laws.
Relevant laws
(Example) Relevant to the Forest Law – Municipal Forest Plans System and AdvanceNotification System on Intended Logging, Change Order System on Logging Plan/Operation
Advisory System, Adjacent Land Development Permit System, Protection Forest System,
Protective Facility District System
Details of presumed illegal activities
Violation of the above relevant laws
Documents to verify legality, procedure of their retention/verification
Documents; Forest certification inspection report, Forest certificate, Certified forest products
handling certificate
Retention/verification; Retained by the SGEC Secretariat.
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability
Details of the examination are disclosed to the public.
Certification bodies carry out management/certification once a year.
Definition of sustainability
To be produced from a forest under sustainable forest management.
Documents to verify sustainability, procedure of their retention/verification
Documents; Forest certification inspection report, Forest certificate, Certified forest products
handling certificate
Retention/verification; Retained by the SGEC Secretariat.
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability
Details of the examination are disclosed to the public.
Certification bodies carry out management/certification once a year.
Real picture of the dealings, from logging to export
Timber logged from forests with the SGEC certification are separated and labeled for trading
during all the manufacturing processes.
Procedure for ensuring separative custody management
Conforming to the SGEC certified forest products distribution system. Under this systemforest products from SGEC certified forests are separated and labeled for management
during the manufacturing and distribution processes,.
Scheme implemented by the third party, administrative authority, etc. to ensure
reliability.
Details of the examination are disclosed to the public.
Certification bodies carry out management/certification once a year.
Criticisms against the system and recognition of problems
Criticized as lacking international recognition due to the short time after establishment.

Scheme to check
legality at the time of
logging

Scheme to check forsustainability

Scheme of separative
custody management

Future Task andPerspectives

Reference Author

Remediation procecure
To endeavor to promote information exchange with international certification systems.
To participate in preparation of international and objective evaluation standards.
To proactively ask for evaluation based on the international evaluation standards forcertification.
Future perspectives
In three years since establishment in June 2003, the area certified under SGEC hasreached330 thousand hectares. This indicates an interest in using domestic timber and, also, antrust in legal timber. We will make efforts to contribute to world-wide promotion of use oflegal timber.
Web site
URL:http://www.sgec-eco.org/

Contact: Kiyoo Nakagawa
Name, title, division: Secretariat, SGEC (Sustainable Green Ecosystem Council)
E-mail: info@sgec-eco.org

SGEC’s Effort for Japan’s Wood
Procurement Policies to Promote
Countermeasures against Illegal
Logging

The government’s guidelines for proving the legality
explain the method for forest operator to prove it
independently, and the method to prove it through aforest certification mark. SGEC(Sustainable Green
Ecosystem Council) is listed as one of the certification
bodies.

Kiyoo Nakagawa １
Sustainable Green Ecosystem Council, 2F Sabo
Kaikan, 2-7-5 Hirakawa-cho, Chiyoda-ku, Tokyo 1020093

Japan’s effort for forest certification was trailing behindthat of other nations, but the entry of Forest StewardshipCouncil (FSC) into Japan triggered the movement within
the forestry and related industries to establish acertification system suitable for Japan. Various NGOs
and citizens’ groups joined forces, and after many
discussions, SGEC was founded on June 3, 2003. Its
activities started immediately. SGEC believes that forests
must be positioned as a crucial element of a future
recycling-based society. To that effect, SGEC aims toraise the level of the nation’s forestry management andestablish a system where the whole society recognizes
and uses wood and wood products that are certified tohave come from forests managed and operated in asustainable manner.

１

Abstract
The Sustainable Green Ecosystem Council (SGEC)
was established in 2003 with the participation of Japan’s
forestry and related industries, environmental nongovernmental organizations (NGOs), citizen’s groups, etc.
The SGEC’s certification system is unique to Japan inthat it integrates a forestry certification and a chain ofcustody, or CoC, (separation and labelling) certification.
Over 330,000 hectares of forest have been thus certified,
and the system has received widespread support.
SGEC-certified wood has a certification of legality andsustainability, and meets the criteria of green
procurement. SGEC is thought to contribute to Japan’s
wood procurement policies to reinforce its
countermeasures against illegal logging.
Keywords: SGEC, Sustainable Green Ecosystem
Certification, forest certification/separation and labellingcertification, green procurement
Japan’s Forestry Management and Green
Procurement of Wood
The objectives of Japan’s forest management are
fulfilment of multi-faceted functions of forests as stated in
the Basic Law for Forest and Forestry, and sustainable
and healthy development of the forestry industry. Its
forest management implementation is based on theforest operation planning system as specified in theForest Law.
The national government develops its basic plan forforest and forestry, and based on it, local governments
develop their forest plans and forest enhancement plans.
A forest owner/operator, singularly or jointly with others,
voluntarily develops a five-year forest operation plan andsubmits it to their city/town/village mayor for approval.
The nation’s forest operation planning system isimplemented in the hopes that forest operation is rationaland systematic based on the plan.
By introducing the Green Purchasing Law, theJapanese government implemented its measures to givewood and wood products, of which the legality andsustainability are verified, priority when the government
procures materials. The said law also specifies thedetails of verification, including the definition of legality
and sustainability and products/materials in scope. The
government also has developed guidelines of proving thelegality of wood and wood products in scope ofgovernment procurement. These guidelines, based on
the Green Purchasing Law, encourage extensive efforts
by the industries and private companies in this regard.
1.

The Relationship between Japan’s Guidelines
and the SGEC Certificate

SGEC’s judgment criteria of sustainable forest
management uses the above-mentioned Japan’s forest
operation planning system and incorporates Montreal
Process, other standards/indicators, ISO, and otherenvironmental management systems. These are applied,
where appropriate, to the actual state of forest
management in Japan, so that the certification system
will withstand international scrutiny. The criteria specify
the following seven standards and 36 indicators, andprovide guidelines to serve as the basis of a certification
checklist.
1)
2)
3)
4)
5)
6)
7)

Standard 1
Identification of forests inscope of certification and establishment of their
management policies
Standard 2
Conservation of biodiversity
Standard 3
Conservation andmaintenance of soil and water resourcesStandard 4
Maintenance of productivity
and health of forest ecosystems
Standard 5
Legal and institutionalframework for sustainable forest management
Standard 6
Maintenance and promotionof societal and economic benefits
Standard 7
Monitoring and disclosure of
information

The SGEC certification includes in its scope not only aforest certification but also a chain of custody (CoC)
certification of the separation and labelling of products
harvested from certified forests. More specifically, logs
from certified forests are separated from non-certified
logs and wood, and after trading of the logs/wood, only
those businesses from supplier side (manufacturers oftimbers, laminated lumber, pulp and paper) to user side(builders, residential home manufacturers, etc.) that are
certified for its separation and labelling practices may
handle the logs/wood. The integration of a forest
certification system and a forestry product certification
system is the unique attribute of the SGEC system.
Based on the above-mentioned standards/indicatorsand guidelines, each certification body creates its own
guidelines and checklist to perform their certification
audits. The final audit is performed by the SGEC Auditing
Committee to ensure the uniformity and reliability
between and of various certification bodies.

After an audit and judgment by the certification bodyand a further audit by the SGEC Auditing Committee, theSGEC Head Office issues the certificate. The certificationbody has the obligation to conduct annual surveillance
audit after the issuance of the certificate.
SGEC believes that the certificate, issued after a thirdparty audit based on the forest operation planningsystem of the Japanese government and internationallyrecognized sustainable forest management methods,
attests to the legality and sustainability of the forest
managed/operated by the certified party.
Legality means that the wood/log was harvested
legally in light of the forest-related legislations of thenation in question, and in the case of Japan, such
legislations include its Forest Law and many otherrelated laws and regulations. SGEC forest certification
enables verification of legality through a forest
certification audit report, documentation that is kept safe
at the SGEC Secretariat. Sustainability means that thewood/log was harvested from a forest that is managed
and operated in a sustainable manner, and thecertification enables verification of sustainability througha forest certification audit report, documentation that is
kept safe at the SGEC Secretariat. The legality andsustainability are ensured through publication of thecontents of audits and the annual surveillance audits.
Wood/logs harvested from SGEC-certified forests are
separated and labelled throughout their processing andtrading. Reliability is ensured through publication of thecontents of audits and the annual surveillance audits.
2.

Future Tasks and Perspectives

The SGEC certification system was established only
recently, and its lack of international recognition has
been criticized. We recognize that it is an issue toovercome. To that end, we will increase our efforts in
exchanging information with the bodies of otherinternationally-recognized certification systems, andactively seek recognition from bodies operatinginternational certification standards.
Since the establishment of SGEC in June 2003, theSGEC-certified forest area has expanded to 330,000
hectares. This attests to the interest in the use ofdomestically produced wood in this country and the trustthat is given to the legality and sustainability of SGECcertified wood/logs.
We expect that the movement of green wood/log
procurement will further pick up its momentum in Japan,
and hope to contribute to it actively.