EN Official Journal of the European Union L 150/252

VOLUNTARY PARTNERSHIP AGREEMENT

between the European Union and the Republic of Indonesia on forest law enforcement, governance and trade in timber products into the European Union

THE EUROPEAN UNION

hereinafter referred to as "the Union"

and

THE REPUBLIC OF INDONESIA

hereinafter referred to as "Indonesia"

hereinafter referred to together as the "Parties",

RECALLING The Framework Agreement on Comprehensive Partnership and Cooperation between the Republic of Indonesia and the European Community signed on 9 November 2009 in Jakarta;

CONSIDERING the close working relationship between the Union and Indonesia, particularly in the context of the 1980 Cooperation Agreement between the European Economic Community and Indonesia, Malaysia, the Philippines, Singapore and Thailand - member countries of the Association of South-East Asian Nations;

RECALLING the commitment made in the Bali Declaration on Forest Law Enforcement and Governance (FLEG) of 13 September 2001 by countries from the East Asian and other regions to take immediate action to intensify national efforts and to strengthen bilateral, regional and multilateral collaboration to address violations of forest law and forest crime, in particular illegal logging, associated illegal trade and corruption, and their negative effects on the rule of law;

NOTING the Communication from the Commission to the Council and the European Parliament on a European Union Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) as a first step towards tackling the urgent issue of illegal logging and associated trade;

REFERRING to the Joint Statement between the Minister of Forestry of the Republic of Indonesia and the European Commissioners for Development and for Environment signed on 8 January 2007 in Brussels;

HAVING REGARD to the 1992 Non-Legally Binding Authoritative Statement of Principles for a Global Consensus on the management, conservation and sustainable development of all types of forests, and to the adoption by the United Nations General Assembly of the Non Legally Binding Instrument on all types of forest;

AWARE of the importance of principles set out in the 1992 Rio Declaration on Environment and Development in the context of securing sustainable forest management, and in particular of Principle 10 concerning the importance of public awareness and participation in environmental issues and of Principle 22 concerning the vital role of indigenous people and other local communities in environmental management and development;

RECOGNISING efforts by the Government of the Republic of Indonesia to promote good forestry governance, law enforcement and the trade in legal timber, including through the Sistem Verifikasi Legalitas Kayu (SVLK) as the Indonesian Timber Legality Assurance System (TLAS) which is developed through a multi-stakeholder process following the principles of good governance, credibility and representativeness;

RECOGNISING that the Indonesian TLAS is designed to ensure the legal compliance of all timber products;

RECOGNISING that implementation of a FLEGT Voluntary Partnership Agreement will reinforce sustainable forest management and contribute to combating climate change through reduced emissions from deforestation and forest degradation and the role of conservation, sustainable management of forest and enhancement of forest carbon stocks (REDD+);

HAVING REGARD to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and in particular the requirement that export permits issued by parties to CITES for specimens of species listed in Appendices I, II or III be granted only under certain conditions, including that such specimens were not obtained in contravention of the laws of that party for the protection of fauna and flora;

RESOLVED that the Parties shall seek to minimise any adverse impacts on indigenous and local communities and poor people which may arise as a direct consequence of implementing this Agreement;

CONSIDERING the importance attached by the Parties to development objectives agreed at international level and to the Millennium Development Goals of the United Nations;

CONSIDERING the importance attached by the Parties to the principles and rules which govern the multilateral trading systems, in particular the rights and obligations laid down in the General Agreement on Tariffs and Trade (GATT) 1994 and in other multilateral agreements establishing the World Trade Organisation (WTO) and the need to apply them in a transparent and non-discriminatory manner;

HAVING REGARD to Council Regulation (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community and to Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market;

REAFFIRMING the principles of mutual respect, sovereignty, equality and non-discrimination and recognising the benefits to the Parties arising from this Agreement;

PURSUANT to the respective laws and regulations of the Parties;

HEREBY AGREE AS FOLLOWS:

Article 1

Objective

1. The objective of this Agreement, consistent with the Parties' common commitment to the sustainable management of all types of forest, is to provide a legal framework aimed at ensuring that all imports into the Union from Indonesia of timber products covered by this Agreement have been legally produced and in doing so to promote trade in timber products.

2. This Agreement also provides a basis for dialogue and co-operation between the Parties to facilitate and promote the full implementation of this Agreement and enhance forest law enforcement and governance.

Article 2

Definitions

For the purposes of this Agreement, the following definitions shall apply:

(a) "import into the Union" means the release for free circulation of timber products in the Union within the meaning of Article 79 of Regulation (EEC) No 2913/1992 of 12 October 1992 establishing the Union Customs Code which cannot be qualified as "goods of a non-commercial nature" as defined in Article 1(6) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/1992 establishing the Union Customs Code;

(b) "export" means the physical leaving or taking out of timber products from any part of the geographical territory of Indonesia;

(c) "timber products" means the products listed in Annex IA and Annex IB;

(d) "HS Code" means a four- or six-digit commodity code as set out in the Harmonised Commodity Description and Coding System established by the International Convention on the Harmonised Commodity Description and Coding System of the World Customs Organisation;

(e) "FLEGT licence" means an Indonesian Verified Legal (V-Legal) document which confirms that a shipment of timber products intended for export to the Union has been legally produced. A FLEGT licence may be in paper or electronic form;

(f) "licensing authority" means the entities authorised by Indonesia to issue and validate FLEGT licences;

(g) "competent authorities" means the authorities designated by the Member States of the Union to receive, accept and verify FLEGT licences;

(h) "shipment" means a quantity of timber products covered by a FLEGT licence that is sent by a consignor or a shipper from Indonesia and is presented for release for free circulation at a customs office in the Union;

(i) "legally-produced timber" means timber products harvested or imported and produced in accordance with the legislation as set out in Annex II.

Article 3

FLEGT Licensing Scheme

1. A Forest Law Enforcement, Governance and Trade licensing scheme' (hereinafter "FLEGT Licensing Scheme") is hereby established between the Parties to this Agreement. It establishes a set of procedures and requirements aiming at verifying and attesting, by means of FLEGT licences, that timber products shipped to the Union were legally produced. In accordance with Council Regulation 2173/2005 of 20 December 2005, the Union shall only accept such shipments from Indonesia for import into the Union if they are covered by FLEGT licences.

2. The FLEGT Licensing Scheme shall apply to the timber products listed in Annex IA.

3. The timber products listed in Annex IB may not be exported from Indonesia and may not be FLEGT licensed.

4. The Parties agree to take all necessary measures to implement the FLEGT Licensing Scheme in accordance with the provisions of this Agreement.

Article 4

Licensing Authorities

1. The Licensing Authority will verify that timber products have been legally produced in accordance with the legislation identified in Annex II. The Licensing Authority will issue FLEGT licences covering shipments of legally-produced timber products for export to the Union.

2. The Licensing Authority shall not issue FLEGT licences for any timber products that are composed of, or include, timber products imported into Indonesia from a third country in a form in which the laws of that third country forbid export, or for which there is evidence that those timber products were produced in contravention of the laws of the country where the trees were harvested.

3. The Licensing Authority will maintain and make publicly available its procedures for issuing FLEGT licences. The Licensing Authority will also maintain records of all shipments covered by FLEGT licences and consistent with national legislation concerning data protection will make these records available for the purposes of independent monitoring, while respecting the confidentiality of exporters' proprietary information.

4. Indonesia shall establish a Licence Information Unit that will serve as a contact point for communications between the competent authorities and the Licensing Authorities as set out in Annexes III and V.

5. Indonesia shall notify contact details of the Licensing Authority and the Licence Information Unit to the European Commission. The Parties shall make this information available to the public.

Article 5

Competent Authorities

1. The competent authorities shall verify that each shipment is covered by a valid FLEGT licence before releasing that shipment for free circulation in the Union. The release of the shipment may be suspended and the shipment detained if there are doubts regarding the validity of the FLEGT licence.

2. The competent authorities shall maintain and publish annually a record of FLEGT licences received.

3. The competent authorities shall grant persons or bodies designated as independent market monitor access to the relevant documents and data, in accordance with their national legislation on data protection.

4. The competent authorities shall not perform the action described in Article 5(1) in the case of a shipment of timber products derived from species listed under the Appendices of the CITES as these are covered by the provisions for verification set out in the Council Regulation (EC) No 338/97 of 9 December 1996 on the protection of species of wild fauna and flora by regulating trade therein.

5. The European Commission shall notify Indonesia of the contact details of the competent authorities. The Parties shall make this information available to the public.

Article 6

FLEGT Licences

1. FLEGT licences shall be issued by the Licensing Authority as a means of attesting that timber products have been legally produced.

2. The FLEGT licence shall be laid out and completed in English.

3. The Parties may, by agreement, establish electronic systems for issuing, sending and receiving FLEGT licences.

4. The technical specifications of the licence are set out in Annex IV. The procedure for issuing FLEGT licences is set out in Annex V.

Article 7

Verification of Legally-Produced Timber

1. Indonesia shall implement a TLAS to verify that timber products for shipment have been legally produced and to ensure that only shipments verified as such are exported to the Union.

2. The system for verifying that shipments of timber products have been legally produced is set out in Annex V.

Article 8

Release of Shipments covered by a FLEGT Licence

1. The procedures governing release for free circulation in the Union for shipments covered by a FLEGT licence are described in Annex III.

2. Where the competent authorities have reasonable grounds to suspect that a licence is not valid or authentic or does not conform to the shipment it purports to cover, the procedures contained in Annex III may be applied.

3. Where persistent disagreements or difficulties arise in consultations concerning FLEGT licences the matter may be referred to the Joint Implementation Committee.

Article 9

Irregularities

The Parties shall inform each other if they suspect or have found evidence of any circumvention or irregularity in the FLEGT Licensing Scheme, including in relation to the following:

(a) circumvention of trade, including by re-direction of trade from Indonesia to the Union via a third country;

(b) FLEGT licences covering timber products which contain timber from third countries that is suspected of being illegally produced; or

(c) fraud in obtaining or using FLEGT licences.

Article 10

Application of the Indonesian TLAS and Other Measures

1. Using the Indonesian TLAS, Indonesia shall verify the legality of timber exported to non-Union markets and timber sold on domestic markets, and shall endeavour to verify the legality of imported timber products using, where possible, the system developed for implementing this Agreement.

2. In support of such endeavours, the Union shall encourage the use of the abovementioned system with respect to trade in other international markets and with third countries.

3. The Union shall implement measures to prevent the placing on the Union market of illegally-harvested timber and products derived therefrom.

Article 11

Stakeholder Involvement in the Implementation of the Agreement

1. Indonesia will hold regular consultations with stakeholders on the implementation of this Agreement and will in that regard promote appropriate consultation strategies, modalities and programmes.

2. The Union will hold regular consultations with stakeholders on the implementation of this Agreement, taking into account its obligations under the 1998 Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (Aarhus Convention)

Article 12

Social Safeguards

1. In order to minimize possible adverse impacts of this Agreement, the Parties agree to develop a better understanding of the impacts on the timber industry as well as on the livelihoods of potentially affected indigenous and local communities as described in their respective national laws and regulations.

2. The Parties will monitor the impacts of this Agreement on those communities and other actors identified in paragraph 1, while taking reasonable steps to mitigate any adverse impacts. The Parties may agree on additional measures to address adverse impacts.

Article 13

Market Incentives

Taking into account its international obligations, the Union shall promote a favourable position in the Union market for the timber products covered by this Agreement. Such efforts will include in particular measures to support:

(a) public and private procurement policies that recognise a supply of and ensure a market for legally harvested timber products; and

(b) a more favourable perception of FLEGT-licensed products on the Union market.

Article 14

Joint Implementation Committee

1. The Parties shall establish a joint mechanism (hereinafter referred to as the "Joint Implementation Committee" or "JIC"), to consider issues relating to the implementation and review of this Agreement.

2. Each Party shall nominate its representatives on the JIC which shall take its decisions by consensus. The JIC shall be co-chaired by senior officials; one from the Union and the other from Indonesia.

3. The JIC shall establish its rules of procedure.

4. The JIC shall meet at least once a year, on a date and with an agenda which are agreed in advance by the Parties. Additional meetings may be convened at the request of either of the Parties.

5. The JIC shall:

(a) consider and adopt joint measures to implement this Agreement;

(b) review and monitor the overall progress in implementing this Agreement including the functioning of the TLAS and market-related measures, on the basis of the findings and reports of the mechanisms established under Article 15;

(c) assess the benefits and constraints arising from the implementation of this Agreement and decide on remedial measures;

(d) examine reports and complaints about the application of the FLEGT licensing scheme in the territory of either of the Parties;

(e) agree on the date from which the FLEGT licensing scheme will start operating after an evaluation of the functioning of the TLAS on the basis of the criteria set out in Annex VIII;

(f) identify areas of cooperation to support the implementation of this Agreement;

(g) establish subsidiary bodies for work requiring specific expertise, if necessary;

(h) prepare, approve, distribute, and make public annual reports, reports of its meetings and other documents arising out of its work.

(i) perform any other tasks it may agree to carry out.

Article 15

Monitoring and Evaluation

The Parties agree to use the reports and findings of the following two mechanisms to evaluate the implementation and effectiveness of this Agreement.

(a) Indonesia, in consultation with the Union, shall engage the services of a Periodic Evaluator to implement the tasks as set out in Annex VI.

(b) the Union, in consultation with Indonesia, shall engage the services of an Independent Market Monitor to implement the tasks as set out in Annex VII.

Article 16

Supporting Measures

1. The provision of any resources necessary for measures to support the implementation of this Agreement, identified pursuant to Article 14(5) (f) above shall be determined in the context of the programming exercises of the Union and its Member States for cooperation with Indonesia.

2. The Parties shall ensure that activities associated with the implementation of this Agreement are coordinated with existing and future development programmes and initiatives.

Article 17

Reporting and Public Disclosure of Information

1. The Parties shall ensure that the workings of the JIC are as transparent as possible. Reports arising out of its work shall be jointly prepared and made public.

2. The JIC shall make public a yearly report that includes inter alia, details on:

(a) quantities of timber products exported to the Union under the FLEGT licensing scheme, according to the relevant HS Heading;

(b) the number of FLEGT licences issued by Indonesia;

(c) progress in achieving the objectives of this Agreement and matters relating to its implementation;

(d) actions to prevent illegally-produced timber products being exported, imported, and placed or traded on the domestic market;

(e) quantities of timber and timber products imported into Indonesia and actions taken to prevent imports of illegally-produced timber products and maintain the integrity of the FLEGT Licensing Scheme;

(f) cases of non-compliance with the FLEGT Licensing Scheme and the action taken to deal with them;

(g) quantities of timber products imported into the Union under the FLEGT licensing scheme, according to the relevant HS Heading and Union Member State in which importation into the Union took place;

(h) the number of FLEGT licences received by the Union;

(i) the number of cases and quantities of timber products involved where consultations took place under Article 8(2).

3. In order to achieve the objective of improved governance and transparency in the forest sector and to monitor the implementation and impacts of this Agreement in both Indonesia and the Union, the Parties agree that the information as described in Annex IX shall be made publicly available.

4. The Parties agree not to disclose confidential information exchanged under this Agreement, in accordance with their respective legislation. Neither Party shall disclose to the public, nor permit its authorities to disclose, information exchanged under this Agreement concerning trade secrets or confidential commercial information.

Article 18

Communication on Implementation

1. The representatives of the Parties responsible for official communications concerning implementation of this Agreement shall be:

For Indonesia: For the Union: The Director-General of Forest Utilisation, Ministry for Forestry The Head of Delegation of the European Union in Indonesia

2. The Parties shall communicate to each other in a timely manner the information necessary for implementing this Agreement, including changes in paragraph 1

Article 19

Territorial Application

This Agreement shall apply to the territory in which the Treaty on the Functioning of the European Union is applied under the conditions laid down in that Treaty, on the one hand, and to the territory of Indonesia, on the other.

Article 20

Settlement of Disputes

1. The Parties shall seek to resolve any dispute concerning the application or interpretation of this Agreement through prompt consultations.

2. If a dispute has not been settled by means of consultations within two months from the date of the initial request for consultations either Party may refer the dispute to the JIC which shall endeavour to settle it. The JIC shall be provided with all relevant information for an in depth examination of the situation with a view to finding an acceptable solution. To this end, the JIC shall be required to examine all possibilities for maintaining the effective implementation of this Agreement.

3. In the event that the JIC is unable to settle the dispute within two months, the Parties may jointly seek the good offices of, or request mediation by, a third party.

4. If it is not possible to settle the dispute in accordance with paragraph 3, either Party may notify the other of the appointment of an arbitrator; the other Party must then appoint a second arbitrator within thirty calendar days of the appointment of the first arbitrator. The Parties shall jointly appoint a third arbitrator within two months of the appointment of the second arbitrator.

5. The arbitrators decisions shall be taken by majority vote within six months of the third arbitrator being appointed.

6. The award shall be binding on the Parties and it shall be without appeal.

7. The JIC shall establish the working procedures for arbitration.

Article 21

Suspension

1. A Party wishing to suspend this Agreement shall notify the other Party in writing of its intention to do so. The matter shall subsequently be discussed between the Parties.

2. Either Party may suspend the application of this Agreement. The decision on suspension and the reasons for that decision shall be notified to the other Party in writing.

3. The conditions of this Agreement will cease to apply thirty calendar days after such notice is given.

4. Application of this Agreement shall resume thirty calendar days after the Party that has suspended its application informs the other Party that the reasons for the suspension no longer apply.

Article 22

Amendments

1. Either Party wishing to amend this Agreement shall put the proposal forward at least three months before the next meeting of the JIC. The JIC shall discuss the proposal and if consensus is reached, it shall make a recommendation. If the Parties agree with the recommendation, they shall approve it in accordance with their respective internal procedures.

2. Any amendment so approved by the Parties shall enter into force on the first day of the month following the date on which the Parties notify each other of the completion of the procedures necessary for this purpose.

3. The JIC may adopt amendments to the Annexes to this Agreement.

4. Notification of any amendment shall be made to the Secretary-General of the Council of the European Union and to the Minister for Foreign Affairs of the Republic of Indonesia through diplomatic channels.

Article 23

Entry into Force, Duration and Termination

1. This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other in writing of the completion of their respective procedures necessary for this purpose.

2. Notification shall be made to the Secretary-General of the Council of the European Union and to the Minister for Foreign Affairs of the Republic of Indonesia through diplomatic channels

3. This Agreement shall remain in force for a period of five years. It shall be extended for consecutive periods of five years, unless a Party renounces the extension by notifying the other Party in writing at least twelve months before this Agreement expires.

4. Either Party may terminate this Agreement by notifying the other Party in writing. This Agreement shall cease to apply twelve months after the date of such notification.

Article 24

Annexes

The Annexes to this Agreement shall form an integral part thereof.

Article 25

Authentic Texts

This Agreement shall be drawn up in duplicate in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish, Swedish and Indonesian (Bahasa Indonesia) languages, each of these texts being authentic. In case of divergence of interpretation the English text shall prevail.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto, have signed this Agreement. Съставено в Брюксел на тридесети септември две хиляди и тринадесета година. Hecho en Bruselas, el treinta de septiembre de dos mil trece. V Bruselu dne třicátého září dva tisíce třináct. Udfærdiget i Bruxelles den tredivte september to tusind og tretten. Geschehen zu Brüssel am dreißigsten September zweitausenddreizehn. Kahe tuhande kolmeteistkümnenda aasta septembrikuu kolmekümnendal päeval Brüsselis. Έγινε στις Βρυξέλλες, στις τριάντα Σεπτεμβρίου δύο χιλιάδες δεκατρία. Done at Brussels on the thirtieth day of September in the year two thousand and thirteen. Fait à Bruxelles, le trente septembre deux mille treize. Sastavljeno u Bruxellesu tridesetog rujna dvije tisuće trinaeste. Fatto a Bruxelles, addì trenta settembre duemilatredici. Briselē, divi tūkstoši trīspadsmitā gada trīsdesmitajā septembrī. Priimta du tūkstančiai tryliktų metų rugsėjo trisdešimtą dieną Briuselyje. Kelt Brüsszelben, a kétezer-tizenharmadik év szeptember havának harmincadik napján. Magħmul fi Brussell, fit-tletin jum ta’ Settembru tas-sena elfejn u tlettax. Gedaan te Brussel, de dertigste september tweeduizend dertien. Sporządzono w Brukseli dnia trzydziestego września roku dwa tysiące trzynastego. Feito em Bruxelas, em trinta de setembro de dois mil e treze. Întocmit la Bruxelles la treizeci septembrie două mii treisprezece. V Bruseli tridsiateho septembra dvetisíctrinásť. V Bruslju, dne tridesetega septembra leta dva tisoč trinajst. Tehty Brysselissä kolmantenakymmenentenä päivänä syyskuuta vuonna kaksituhattakolmetoista. Som skedde i Bryssel den trettionde september tjugohundratretton. Dibuat di Brussel, pada tanggal tiga puluh bulan September tahun dua ribu tiga belas. За Европейския съюз Por la Unión Europea Za Evropskou unii For Den Europæiske Union Für die Europäische Union Euroopa Liidu nimel Για την Ευρωπαϊκή Ένωση For the European Union Pour l'Union européenne Za Europsku uniju Per l'Unione europea Eiropas Savienības vārdā – Europos Sąjungos vardu Az Európai Unió részéről Għall-Unjoni Ewropea Voor de Europese Unie W imieniu Unii Europejskiej Pela União Europeia Pentru Uniunea Europeană Za Európsku úniu Za Evropsko unijo Euroopan unionin puolesta För Europeiska unionen Untuk Uni Eropa За Република Индонезия Por la República de Indonesia Za Indonéskou republiku For Republikken Indonesien Für die Republik Indonesien Indoneesia Vabariigi nimel Για τη Δημοκρατία της Ινδονησίας For the Republic of Indonesia Pour la République d'Indonésie Za Republiku Indoneziju Per la Repubblica di Indonesia Indonēzijas Republikas vārdā – Indonezijos Respublikos vardu Az Indonéz Köztársaság részéről Għar-Repubblika tal-Indoneżja Voor de Republiek Indonesië W imieniu Republiki Indonezji Pela República da Indonésia Pentru Republica Indonezia Za Indonézsku republiku Za Republiko Indonezijo Indonesian tasavallan puolesta För Republiken Indonesien Untuk Republik Indonesia

ANNEX I PRODUCT COVERAGE The list in this Annex refers to the Harmonised Commodity Description and Coding System established by the International Convention on the Harmonised Commodity Description and Coding System of the World Customs Union. ANNEX IA THE HARMONISED COMMODITY CODES FOR TIMBER AND TIMBER PRODUCTS COVERED UNDER THE FLEGT LICENSING SCHEME Chapter 44: HS Codes Description Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; wood in chips or particles; sawdust and wood waste and scrap, whether or not agglomerated in logs, briquettes, pellets or similar forms. 4401.21 - Wood in chips or particles - coniferous 4401.22 - Wood in chips or particles - non coniferous Ex.4404 - Chipwood and the like Ex.4407 Wood sawn or chipped lengthwise, sliced or peeled, planed, sanded or end-jointed, of a thickness exceeding 6 mm. 4408 Sheets for veneering (including those obtained by slicing laminated wood), for plywood or for similar laminated wood and other wood, sawn lengthwise, sliced or peeled, whether or not planed, sanded, spliced or end-jointed, of a thickness not exceeding 6 mm. Wood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rebated, chamfered, V-jointed, beaded, moulded, rounded or the like) along any of its edges, ends or faces, whether or not planed, sanded or end-jointed. 4409.10 - Coniferous 4409.29 - Non-coniferous – other 4410 Particle board, oriented strand board (OSB) and similar board (for example, waferboard) of wood or other ligneous materials, whether or not agglomerated with resins or other organic binding substances. 4411 Fibreboard of wood or other ligneous materials, whether or not bonded with resins or other organic substances. 4412 Plywood, veneered panels and similar laminated wood 4413 Densified wood, in blocks, plates, strips or profile shapes. 4414 Wooden frames for paintings, photographs, mirrors or similar objects. 4415 Packing cases, boxes, crates, drums and similar packings, of wood; cable-drums of wood; pallets, box pallets and other load boards, of wood; pallet collars of wood. 4416 Casks, barrels, vats, tubs and other coopers' products and parts thereof, of wood, including staves. 4417 Tools, tool bodies, tool handles, broom or brush bodies and handles, of wood; boot or shoe lasts and trees, of wood. 4418 Builders' joinery and carpentry of wood, including cellular wood panels, assembled flooring panels, shingles and shakes. Ex.4421.90 - Wooden paving blocks Chapter 47: HS Codes Description Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard: 4701 - Mechanical wood pulp 4702 - Chemical wood pulp, dissolving grades 4703 - Chemical wood pulp, soda or sulphate, other than dissolving grades. 4704 - Chemical wood pulp, sulphite, other than dissolving grades 4705 - Wood pulp obtained by a combination of mechanical and chemical pulping processes Chapter 48: HS Codes Description 4802 Uncoated paper and paperboard, of a kind used for writing, printing or other graphic purposes, and non-perforated punch-cards and punch tape paper, in rolls or rectangular (including square) sheets, of any size, other than paper of heading 4801 or 4803; hand-made paper and paperboard: 4803 Toilet or facial tissue stock, towel or napkin stock and similar paper of a kind used for household or sanitary purposes, cellulose wadding and webs of cellulose fibres, whether or not creped, crinkled, embossed, perforated, surface -coloured, surface-decorated or printed, in rolls or sheets. 4804 Uncoated kraft paper and paperboard, in rolls or sheets, other than that of heading 4802 or 4803. 4805 Other Uncoated paper and paperboard, in rolls or sheets, not further worked or processed than as specify in Note 3 to this chapter. 4806 Vegetable parchment, greaseproof papers, tracing papers and glassine and other glazed transparent or translucent papers, in rolls or sheets. 4807 Composite paper and paperboard (made by sticking flat layers of paper or paperboard together with an adhesive), not surface-coated or impregnated, whether or not internally reinforced, in rolls or sheets. 4808 Paper and paperboard, corrugated (with or without glued flat surface sheets), creped, crinkled, embossed or perforated, in rolls or sheets, other than paper of the kind described in heading 4803. 4809 Carbon paper, self-copy paper and other copying or transfer papers (including coated or impregnated paper for duplicator stencils or offset plates), whether or not printed, in rolls or sheets. 4810 Paper and paperboard, coated on one or both sides with kaolin (China clay) or other inorganic substances, with or without binder, and with no other coating, whether or not surface-coloured, surface-decorated or printed, in rolls or rectangular (including square) sheets, of any size. 4811 Paper, paperboard, cellulose wadding and webs of cellulose fibres, coated, impregnated, covered, surface-coloured, surface-decorated or printed, in rolls or rectangular (including square) sheets, of any size, other than goods of the kind described in heading 4803, 4809 or 4810. 4812 Filter blocks, slabs and plates, of paper pulp. 4813 Cigarette paper, whether or not cut to size or in the form booklets or tubes. 4814 Wallpaper and similar wall covering; window transparencies of paper. 4816 Carbon paper, self-copy paper and other copying or transfer papers (other than those of heading 4809), duplicator stencils and offset plates, of paper, whether or not put up in boxes. 4817 Envelopes, letter cards, plain postcards and correspondence cards, of paper or paper board; boxes, pouches, wallets and writing compendiums, of paper or paperboard, containing an assortment of paper stationary. 4818 Toilet paper and similar paper, cellulose wadding or webs of cellulose fibres, of a kind used for household or sanitary purposes, in rolls of a width not exceeding 36 cm, or cut to size or shape; handkerchief, cleansing tissues, towels, tablecloths, serviettes, napkins for babies, tampons, bed sheets and similar household, sanitary or hospital articles, articles of apparel and clothing accessories, of paper pulp, paper, cellulose wadding or webs of cellulose fibres. 4821 Paper or paperboard labels of all kinds, whether or not printed. 4822 Bobbins, spools, cops and similar support of paper pulp, paper or paper board whether or not perforated or hardened. 4823 Other paper, paperboard, cellulose wadding and webs cellulose fibres, cut to size or shape; other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibres. Chapter 94: HS Codes Description Other seats, with wooden frames: 9401.61. - Upholstered 9401.69. - Other Other furniture and parts thereof 9403.30 - Wooden furniture of a kind used in offices 9403.40 - Wooden furniture of a kind used in the kitchen 9403.50 - Wooden furniture of a kind used in the bedroom 9403.60 - Other wooden furniture Ex. 9406.00. - Pre-fabricated constructions made of wood ANNEX IB THE HARMONISED COMMODITY CODES FOR TIMBER PROHIBITED FROM EXPORT UNDER INDONESIAN LAW Chapter 44: HS Codes Description 4403 Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared: Ex. 4404 Hoopwood; split poles; piles, pickets and stakes of wood, pointed but not sawn lengthwise; wooden sticks, roughly trimmed, but not turned, bent or otherwise worked, suitable for the manufacture of walking-sticks, umbrellas, tool handles or the like. 4406 Railway or tramway sleepers (cross-ties) of wood. Ex. 4407 Wood sawn or chipped lengthwise, sliced or peeled, not planed, not sanded or not end-jointed, of a thickness exceeding 6 mm.

ANNEX II LEGALITY DEFINITION Introduction Indonesian timber is deemed legal when its origin and production process as well as subsequent processing, transport and trade activities are verified as meeting all applicable Indonesian laws and regulations. Indonesia has five legality standards articulated through a series of principles, criteria, indicators and verifiers, all based on the underlying laws, regulations and procedures. These five standards are: — Legality Standard 1: the standard for concessions within production forest zones on state-owned lands; — Legality Standard 2: the standard for community plantation forests and community forests within production forest zones on state-owned lands; — Legality Standard 3: the standard for privately-owned forests; — Legality Standard 4: the standard for timber utilisation rights within non-forest zones on state-owned lands; — Legality Standard 5: the standard for primary and downstream forest based industries. These five legality standards apply to different types of timber permits as set out in the following table: Permit type Description Land ownership / resource management or utilisation Applicable legality standard IUPHHK-HA/HPH Permit to utilise forest products from natural forests State owned/ company managed 1 IUPHHK-HTI/HPHTI Permit to establish and manage industrial forest plantation State owned/ company managed 1 IUPHHK-RE Permit for forest ecosystem restoration State owned/ company managed 1 IUPHHK- HTR Permit for community forest plantations State owned/ community managed 2 IUPHHK-HKM Permit for community forest management State owned/ community managed 2 Private Land No permit required Privately owned/ privately utilised 3 IPK/ILS Permit to utilise timber from non-forest zones State owned/ privately utilised 4 IUIPHHK Permit for establishing and managing a primary processing company Not applicable 5 IUI Lanjutan or IPKL Permit for establishing and managing a secondary processing company Not applicable 5 These five legality standards and the associated verifiers are outlined below. ANNEX II - LEGALITY STANDARD 1: THE STANDARDS FOR CONCESSIONS WITHIN PRODUCTION FOREST ZONES No Principles Criteria Indicators Verifiers Related Regulations (1) 1. P1. Legal status of area and right to utilise K1.1 Forest management unit (concessionaires) is located within the production forest zone. 1.1.1 Permit holder can demonstrate that the timber utilisation permit (IUPHHK) is valid Forest concession right certificate Government Regulation PP72/2010 Regulation of the Minister for Forestry P50/2010 Regulation of the Minister for Forestry P12/2010 Proof of payment for the timber forest product utilisation permit. 2. P2. Comply with the system and procedures for harvesting. K2.1 Permit holder possesses a harvest plan for the cutting area that has been approved by the competent administrative authorities. 2.1.1 The competent administrative authority has approved the work plan documents: master plan, annual work plan, including their attachments. The approved master plan & attachments, drawn up based on a comprehensive forest inventory conducted by technically competent staff. The approved annual work plan, drawn up based on the master plan Maps, drawn up by technically competent staff, which describe the layout and boundaries of the areas covered by the plan of work Regulation of the Minister for Forestry P62/2008 Regulation of the Minister for Forestry P56/2009 Regulation of the Minister for Forestry P60/2011 Map indicating logging exclusion zones within the Annual Work Plan and evidence of implementation on the ground. Harvesting locations (blocks or compartments) on the map are clearly marked and verified on the ground. K2.2 Work plan is valid 2.2.1 Forest permit holder has a valid work plan in compliance with applicable regulations Timber forest product utilisation master plan document & attachments (ongoing applications are acceptable). Regulation of the Minister for Forestry P62/2008 Regulation of the Minister for Forestry P56/2009 Regulation of the Minister for Forestry P60/2011 The location and extractable volumes of natural forest logs within areas to be harvested correspond with the work plan. 2.2.2 Permits for all harvesting equipment are valid and can be verified in the field. (not applicable to a state forest company) Permit for equipment and equipment transfer Regulation of the Minister for Forestry P53/2009 3. P3. The legality of the transport or the change of ownership of round logs. K3.1 Permit holders ensure that all the logs transported from a log yard in the forest to a primary forest products industry, or registered log trader, including via an intermediate log yard, is physically identified and accompanied by valid documents. 3.1.1 All the large diameter logs harvested or commercially extracted have been reported in a Timber Production Report Approved Timber Production Report documents Regulation of the Minister for Forestry P55/2006 3.1.2 All the timber transported out of the permit areas is accompanied by a valid transport document. Valid transport documents and attachments accompany logs from the log yard to primary forest products industry or registered log trader, including via intermediate log yards Regulation of the Minister for Forestry P55/2006 3.1.3 The round logs have been harvested in the areas set out in the forest utilisation permit Timber administration marks/barcode (PUHH) on logs. Regulation of the Minister for Forestry P55/2006 Payment of the Reforestation Funds and/or Forest Resources Fee is consistent with log production and the applicable tariff. K3.2 Permit holder has settled the payment of applicable fees and levies for the commercial extraction of timber 3.2.1 Permit holder shows proof of payment of Reforestation Fund and/or Forest Resources Fee, which corresponds to the log production and the applicable tariff. Payment Orders for Reforestation Funds and/or Forest Resources Fee. Government Regulation PP22/1997 Government Regulation PP 51/1998 Regulation of the Minister for Forestry P18/2007 Regulation of the Minister for Trade 22/M-DAG/PER/4/2012 Government Regulation PP59/1998 Proof of Deposit made for the Payment of Reforestation Fund and/or Forest Resources Fee and the Payment Slips. Payment of the Reforestation Funds and/or Forest Resources Fee is consistent with log production and the applicable tariff. K3.3 Inter-island transportation and trade 3.3.1 Permit holders who ship logs are Registered Inter- Island Timber Traders (PKAPT). PKAPT documents Regulation of the Minister for Industry and Trade 68/2003 Joint Regulation of the Minister for Forestry, Minister for Transportation, and Minister for Industry and Trade 22/2003 3.3.2 The vessel used to transport round logs is Indonesian flagged and possesses a valid permit to operate. Registration documents which show the identity of the vessel and valid permit. Regulation of the Minister for Industry and Trade 68/2003 Joint Regulation of the Minister for Forestry, Minister for Transportation, and Minister for Industry and Trade 22/2003 4. P4. Compliance with environmental and social aspects related to timber harvesting K4.1 Permit holder has an approved Environmental Impact Assessment (EIA) document and has implemented measures identified in it. 4.1.1 Permit holder has EIA documents approved by the competent authorities which cover the entire work area. EIA documents Government Regulation PP27/1999 Regulation of the Minister for Forestry and Plantation 602/1998 4.1.2 Permit holder has environmental management plan and environmental monitoring plan implementation reports indicating the actions taken to mitigate environmental impacts and provide social benefits. Environmental management plan and environmental monitoring plan documents Government Regulation PP27/1999 Proof of implementation of the environmental management plan and monitoring of significant environmental and social impacts 5. P5. Compliance with labour laws and regulations K.5.1 Fulfilment of occupational safety and health (OSH) requirements 5.1.1 Availability of OSH procedures and their implementation Implementation of OSH procedures Regulation of the Minister for Manpower & Transmigration 01/1978 Regulation of the Minister for Forestry P12/2009 OSH equipment Employment injury records K.5.2 Fulfilment of workers' rights 5.2.1 Freedom of association for workers Workers belong to workers unions or company policies allow workers to establish or get involved in union activities Act 21/2000 Regulation of the Minister for Manpower & Transmigration 16/2001 5.2.2 Existence of collective labour agreements Collective labour agreement documents or company policy documents on labour rights Act 13/2003 Regulation of the Minister for Manpower & Transmigration 16/2011 5.2.3 Company does not employ minors/ underage workers There are no underage workers Act 13/2003 Act 23/2003 Act 20/2009

LEGALITY STANDARD 2: THE STANDARD FOR COMMUNITY PLANTATION FORESTS AND COMMUNITY FORESTS WITHIN PRODUCTION FOREST ZONES No Principles Criteria Indicators Verifiers Related Regulations 1. P1. Legal status of area and right to utilise K1.1 Forest management unit is located within the production forest zone. 1.1.1 Permit holder can demonstrate that the timber utilisation permit (IUPHHK) is valid. Forest concession right certificate Regulation of the Minister for Forestry P55/2011 Regulation of the Minister for Forestry P37/2007 Regulation of the Minister for Forestry P49/2008 Regulation of the Minister for Forestry P12/2010 Proof of payment for the timber forest product utilisation permit. 2. P2. Comply with the system and procedures for harvesting K2.1 Permit holder has a harvesting plan for the cutting area that has been approved by the competent administrative authorities 2.1.1 The competent administrative authority has approved the annual work plan document. Approved annual work plan document. Regulation of the Minister for Forestry P62/2008 Map indicating logging exclusion zones in the annual work plan and evidence of implementation on the ground. Harvesting block location are clearly marked and can be verified on the ground. K2.2 Work plan is valid 2.2.1 Forest permit holder has a valid work plan in compliance with applicable regulations. Timber Forest Product Utilisation Master Plan document and attachments (on-going applications are acceptable) Regulation of the Minister for Forestry P62/2008 The location and extractable volumes of logs within the area to be established to timber estate are to correspond to the work plan. 2.2.2 Permits for all harvesting equipment are valid and can be physically verified in the field. Permits for equipment and equipment transfer. Regulation of the Minister for Forestry P53/2009. K2.3 Permit holders ensure that all the logs transported from a log yard in the forest to a primary forest products industry or registered log trader, including via an intermediate log yard are physically identified and accompanied by valid documents. 2.3.1 All large diameter logs which have been harvested or commercially extracted are reported in the Timber Production Report. Approved Timber Production Report documents Regulation of the Minister for Forestry P55/2006 2.3.2 All the logs transported out of the permit area are accompanied by a legal transport document. Legal transport documents and relevant attachments from the Log Yard to the Intermediate Log Yard and from Intermediate Log Yard to primary industry and/or registered log trader. Regulation of the Minister for Forestry P55/2006 2.3.3 The round logs have been harvested in the areas set out in the forest utilisation permit Timber administration marks/barcode (PUHH) on logs. Regulation of the Minister for Forestry P55/2006 Permit holder applies timber marking consistently. 2.3.4 Permit holder can show the existence of log transport documents accompanying logs transported from log yard. Log Transport Document to which is attached a log list document. Regulation of the Minister for Forestry P55/2006 K2.4 Permit holder has paid applicable fees and levies required for the commercial extraction of timber 2.4.1 Permit holders show proof of payment of Forest Resources Fee which corresponds to the log production and the applicable tariff. Payment Order for Forest Resources Fee Regulation of the Minister for Forestry P18/2007 Regulation of the Minister for Trade 22/M-DAG/PER/4/2012 Proof of Payment of Forest Resources Fee Payment of the Forest Resources Fee is consistent with log production and the applicable tariff. 3. P3. Compliance with environmental and social aspects pertaining to timber harvesting K3.1 Permit holder has an approved Environmental Impact Assessment (EIA) document and has implemented measures identified in it. 3.1.1 Permit holder has environmental impact assessment documents approved by the competent authorities which cover the entire work area. EIA documents Regulation of the Minister for Forestry and Plantation 622/1999 3.1.2 Permit holder has environmental management and monitoring implementation reports taken to mitigate environmental impacts and provide social benefits. Relevant environmental management and monitoring documents Government Regulation PP27/1999 Proof of implementation of environmental management and monitoring of significant environmental and social impacts

LEGALITY STANDARD 3: THE STANDARD FOR PRIVATELY-OWNED FORESTS No Principles Criteria Indicators Verifiers Related Regulations 1. P1. Timber ownership can be verified K1.1 Legality of ownership or land title in relation to the timber harvesting area. 1.1.1 Private land or forest owner can prove ownership or use rights of the land. Valid land ownership or land tenure documents (land title documents recognized by competent authorities) Act 5/1960 Regulation of the Minister for Forestry P33/2010 Government Regulation PP12/1998 Regulation of the Minister for Trade 36/2007 Regulation of the Minister for Trade 37/2007 Act 6/1983 Act 13/2003 Act 23/2003 Act 20/2009 Land Cultivation Right. Deed of Establishment of the Company Business licence for companies engaging in trading business (SIUP) Company registration (TDP) Tax payer registration (NPWP) Map of the area of private forest and boundaries delineated on the ground. 1.1.2 Management units (either owned individually or by a group) demonstrate valid timber transportation documents. Certificate of Timber Origin or Log Transport Document Regulation of the Minister for Forestry P30/2012 Invoice/ sales receipt/ freight clearance. 1.1.3 Management units show proof of payment of applicable charges related to trees present prior to the transfer of rights or tenure of the area. Proof of payment of Reforestation Fund and/or Forest Resources Fee and compensation to the state for the value of stumpage cut. Regulation of the Minister for Forestry P18/2007 2. P2. Compliance with environmental and social aspects related to timber harvesting in the case of areas subject to Land Cultivation Rights K2.1 Permit holder has an approved Environmental Impact Assessment (EIA) document and has implemented measures identified in it. 2.1.1 Permit holder has EIA documents approved by the competent authorities which cover the entire work area. EIA documents Government Regulation PP27/1999 Regulation of the Minister for Forestry and Plantation 602/1998 3. P3. Compliance with labour laws and regulations in the case of areas subject to Land Cultivation Rights K3.1 Fulfilment of occupational safety and health (OSH) requirements 3.1.1 Availability of OSH procedures and their implementation Implementation of OSH procedures Regulation of the Minister for Manpower & Transmigration 01/1978 Regulation of the Minister for Forestry P12/2009 OSH equipment Employment injury records K.3.2 Fulfilment of workers' rights 3.2.1 Freedom of association for workers Workers belong to workers unions or company policies allow workers to establish or get involved in union activities Act 21/2000 Regulation of the Minister for Manpower & Transmigration 16/2001 3.2.2 Existence of collective labour agreements Collective labour agreement documents or company policy documents on labour rights Act 13/2003 Regulation of the Minister for Manpower & Transmigration 16/2011 3.2.3 Company does not employ minors underage workers There are no underage workers Act 13/2003 Act 23/2003 Act 20/2009

LEGALITY STANDARD 4: THE STANDARD FOR TIMBER UTILISATION RIGHTS WITHIN NON-FOREST ZONES No Principles Criteria Indicators Verifiers Related Regulations 1. P1. Legal status of area and right to utilise K.1.1. Timber harvesting permit within non-forest zone without altering the legal status of the forest. 1.1.1 Harvesting operation authorised under Other Legal Permit (ILS) / conversion permits (IPK) in a lease area. ILS/IPK permits for harvesting operations in the lease area Regulation of the Minister for Forestry P18/2011 Maps attached to the ILS/IPK permits of the lease area and evidence of compliance on the ground. K1.2. Timber harvesting permit within non-forest zone which leads to a change in the legal status of the forest 1.2.1 Timber harvesting authorised under a land conversion permit (IPK). Business permit and maps attached to the permit (this requirement applies to both IPK holders and business permit holders) Regulation of the Minister for Forestry P14/2011 Regulation of the Minister for Forestry P33/2010 IPK in conversion areas Maps attached to IPK Documents authorising changes in the legal status of the forest (this requirement applies to both IPK permit holders and business permit holders) K1.3 Permit to extract timber forest products from a state forest area for Reforestation-based Plantation Forest (HTHR) activities 1.3.1. Timber harvesting is authorised under a permit to extract timber forest products from reforestation-based plantation forests in areas designated for reforestation-based plantation forests (HTHR) HTHR permit Regulation of the Minister for Forestry P59/2011 Maps attached to HTHR and evidence of compliance on the ground 2. P2. Compliance with legal systems and procedures for tree harvesting and for the transportation of logs K2.1 IPK/ILS plan and implementation complies with land use planning. 2.1.1 Approved work plan for the areas covered by IPK/ ILS IPK/ILS work plan documents Regulation of the Minister for Forestry P62/2008 Regulation of the Minister for Forestry P53/2009 Valid equipment permit 2.1.2 The permit holder can demonstrate that the transported logs are from areas under valid land conversion permit/ other use permits (IPK/ILS) Forest inventory documents Regulation of the Minister for Forestry P62/2008 Regulation of the Minister for Forestry P55/2006 Timber Production Report documents (LHP) K2.2 Payment of government fees and levies and compliance with timber transportation requirements 2.2.1 Evidence of payment of charges. Proof of payment of Reforestation Funds, Forest Resources Fee and compensation to the state for the value of stumpage cut. Regulation of the Minister for Forestry P18/2007 2.2.2 Permit holder has valid timber transportation documents Logs Transportation Invoice (FAKB) and log list for small diameter logs Regulation of the Minister for Forestry P55/2006 Log Legality Document (SKSKB) and log list for large diameter logs 3. P3. Compliance with labour laws and regulations K.3.1 Fulfilment of occupational safety and health (OSH) requirements 3.1.1 Availability of OSH procedures and their implementation Implementation of OSH procedures Regulation of the Minister for Manpower & Transmigration 01/1978 Regulation of the Minister for Forestry P12/2009 OSH equipment Employment injury records K.3.2 Fulfilment of workers' rights 3.2.1 Freedom of association for workers Workers belong to workers unions or company policies allow workers to establish or get involved in union activities Act 21/2000 Regulation of the Minister for Manpower & Transmigration 16/2001 3.2.2 Existence of collective labour agreements Collective labour agreement documents or company policy documents on labour rights Act 13/2003 Regulation of the Minister for Manpower & Transmigration 16/2011 3.2.3 Company does not employ minors/ underage workers There are no underage workers Act 13/2003 Act 23/2003 Act 20/2009

LEGALITY STANDARD 5: THE STANDARD FOR PRIMARY AND DOWNSTREAM FOREST-BASED INDUSTRY Principles Criteria Indicators Verifiers Related Regulations P1. Timber forest product processing industry supports the realization of legal trade in timber. K1.1. Business units in the form of: (a) Processing industry, and (b) Exporters of processed products are in possession of valid permits 1.1.1 Processing industry units are in possession of valid permits The deed of establishment of the company and latest amendments to the deed (the Company's Establishment Deed) Regulation of the Minister for Law & Human Rights M.01-HT.10/2006 Regulation of the Minister for Trade 36/2007 Regulation of the Minister for Trade 37/2007 Act 6/1983 Government Regulation PP80/2007 Regulation of the Minister for Forestry P35/2008 Regulation of the Minister for Forestry P16/2007 Regulation of the Minister for Trade 39/2011 Regulation of the Minister for Industry 41/2008 Reg. of the Minister for Environment 13/2010 Permit to engage in trading business (Business Licence /SIUP) or trading permit, which may be Industrial Business Permit (IUI) or Permanent Business Permit (IUT) or Industrial Registration Certificate (TDI) Nuisance/ disturbance permit (permit issued to the company for affecting the environment around which it operates its business) Company Registration Certificate (TDP) Tax Payer Identification Number (NPWP) Availability of Environmental Impact Assessment documents Availability of Industrial Business Permit (IUI) or Permanent Business Permit (IUT) or Industrial Registration Certificate (TDI) Availability of Raw Materials Stock Planning (RPBBI) for Forest Products Primary Industry (IPHH). 1.1.2 Exporters of processed timber products have valid permits as both producers and exporters of timber products. The exporters have the status of Registered Exporters of Forestry Industry Products (ETPIK). Regulation of the Minister for Trade P64/2012 K1.2 Business units in the form of groups of artisans / household industries are legally registered 1.2.1 The business groups (cooperatives / limited partnership (CV) / other business groups) are legally established. Deed of establishment Act 6/1983 Tax Payer Registration (NPWP) 1.2.2 Traders of processed timber products have valid registration as exporters and are supplied by small and medium certified processing industry not registered as exporters Registration of the traders as Non-Producer Exporters of Forestry Industry Products (ETPIK Non Produsen). Regulation of the Minister for Trade P64/2012 Agreement or contract of collaboration with a processing industry unit which has timber legality certificate (S-LK) P2. Business units apply timber tracking system which ensures that the origin of the timber can be traced K2.1 Existence and application of a system which traces timber in the forest products 2.1.1 Business units can demonstrate that the timber received comes from legal sources. Sales and purchase documents and or contract of supply of materials and or proof of purchase and equipped with forest products legality documents / letter of attestation of the legality of forest products Regulation of the Minister for Forestry P55/2006 Regulation of the Minister for Forestry P30/2012 Regulation of the Minister for Forestry P62/2008 Regulation of the Minister for Forestry P56/2009 Approved report on the transfer of timber and/or proof of transfer and or official report on the examination of timber; letter of attestation of the legality of forest products Imported timber is accompanied by Import Notification documents and information concerning the origin of the timber as well as documents certifying the legality of the timber and country of harvest Log transport documents Transport documents (SKAU/ Nota) with corresponding official reports from the officer of the local authority with respect to used timber from demolished buildings/ structures, unearthed timber and buried timber. Transport documents in the form of FAKO/ Nota for industrial waste wood Documents/ reports on changes in the stock of round logs (LMKB) /reports on changes in the stock of small-diameter round logs (LMKBK)/reports on changes in the stock of processed timber forest products (LMHHOK) Supporting documents, that is, Raw Materials Stock Planning (RPBBI), letter of decision officially certifying the annual work plan (SK RKT) 2.1.2 Business units apply a timber tracking system and operate within permitted production levels Tally sheets on the use of raw materials and on production outputs. Regulation of the Minister for Forestry P55/2006 Regulation of the Minister for Industry 41/2008 Regulation of the Minister for Forestry P35//2008 Output reports on the production of processed products. The production of the unit does not exceed the permitted production capacity. 2.1.3 Production process in collaboration with another party (another industry or with artisans/ household industries) provides for tracking of timber Contract of collaboration or service contract for product processing with another party Regulation of the Minister for Trade 37/M-DAG/PER/9/2007 Act 6/1983 Regulation of the Minister for Forestry P35/2008 Regulation of the Minister for Forestry P16/2007 Regulation of the Minister for Trade 39/M-DAG/PER/12/2011 Regulation of the Minister for Industry 41/M- IND/PER/6/2008 Regulation of the Minister for Forestry P55/2006 The collaborating party has valid permits as set out under Principle 1 Segregation/ separation of produced products. Documentation of raw materials, processes, production and where applicable of exports if export is conducted through the business unit / another company with which collaboration agreement is entered into. P3. Legality of the trade or the change of ownership of processed timber. K3.1 Inter-island transportation and trade complies with applicable legislation. 3.1.1 The business unit shipping processed timber products inter-island are Registered Interisland Timber Traders (PKAPT). PKAPT documents Regulation of the Minister for Industry and Trade 68/MPP/Kep/2/2003 Joint Regulation of the Minister for Forestry, Minister for Transportation, and Minister for Industry and Trade 22/2003 PKAPT report documents 3.1.2 The vessel used to transport processed timber is Indonesian-flagged and possesses valid permits to operate. Documents showing identity of vessel. Registration documents which show the identity of the vessel and valid permit. Regulation of the Minister for Forestry P55/2006 Regulation of the Minister for Forestry P30/2012 Regulation of the Minister for Transportation KM71/2005 Joint Regulation of the Minister for Forestry, Minister for Transportation, and Minister for Industry and Trade 22/2003 The identity of vessel agrees with that stated in the log or timber transport documents 3.1.3 Registered Inter- island Timber Traders (PKAPT) can demonstrate that the transported timber originates from legitimate sources Log or timber transport documents Regulation of the Minister for Forestry P55/2006 Regulation of the Minister for Forestry P30/2012 Joint Regulation of the Minister for Forestry, Minister for Transportation, and Minister for Industry and Trade 22/2003 Timber administration marks/barcode (PUHH) on logs. K3.2 Shipping of processed timber for export complies with applicable legislation. 3.2.1 Shipping of processed timber for export with Export Notification (PEB) documents PEB Act 17/2006 (Customs) Regulation of the Minister for Finance 223/PMK.011/2008. Regulation of the Directorate General for Customs P-40/BC/2008 Regulation of the Directorate General for Customs P-06/BC/2009 Regulation of the Minister for Trade P64/2012 Presidential Decree 43/1978 Regulation of the Minister for Forestry 447/2003 Packing list Invoice B/L (bill of lading) Export licence documents (V-Legal) Results of technical verification (Surveyor's Report) for products for which technical verification is mandatory Proof of payment of export duty, where applicable. Other relevant documents (including CITES permits) for types of wood whose trade is restricted P4. Fulfilment of labour regulations as far as processing industry is concerned K.4.1 Fulfilment of occupational safety and health (OSH) requirements 4.1.1 Availability of OSH procedures and implementation Implementation of OSH procedures. Regulation of the Minister for Manpower & Transmigration 01/1978 Regulation of the Minister for Forestry P12/2009 OSH equipment such as lightweight fire extinguishers, personal protective equipment and evacuation routes Employment injury records K.4.2 Fulfilment of the rights of workers 4.2.1 Freedom of association for workers Trade union or a company policy that allows employees/ workers to establish a trade union or get involved in trade union activities Regulation of the Minister for Manpower & Transmigration 16/2001 4.2.2 Existence of collective labour agreement or company policy on labour rights Availability of collective labour agreement or company policy documents on labour rights Act 13/2013 Regulation of the Minister for Manpower & Transmigration 16/2011 4.2.3 Company does not employ minor/ underage workers There are no underage workers Act 13/2003 Act 23/2003 Act 20/2009 (1) Indicates main regulations, which also covers subsequent amendments

ANNEX III CONDITIONS FOR THE RELEASE FOR FREE CIRCULATION IN THE UNION OF INDONESIAN FLEGT-LICENSED TIMBER PRODUCTS 1. LODGING OF THE LICENCE 1.1. The licence shall be lodged with the competent authority of the Union Member State in which the shipment covered by that licence is presented for release for free circulation. This can be done electronically or by other expeditious means. 1.2. A licence shall be accepted if it meets all the requirements set out in Annex IV and no further verification in accordance with sections 3, 4 and 5 of this Annex is deemed necessary. 1.3. A licence may be lodged before the arrival of the shipment it covers. 2. ACCEPTANCE OF THE LICENCE 2.1. Any licence which does not meet the requirements and specifications set out in Annex IV is invalid. 2.2. Erasures in or alterations to a licence shall only be accepted if such erasures or alterations have been validated by the Licensing Authority. 2.3. A licence shall be considered as void if it is lodged with the competent authority after the expiry date indicated in the licence. The extension of the validity of a licence shall not be accepted unless that extension has been validated by the Licensing Authority. 2.4. A duplicate or replacement licence shall not be accepted unless it has been issued and validated by the Licensing Authority. 2.5. Where further information is required on the licence or on the shipment, in accordance with this Annex, the licence shall be accepted only after the required information has been received. 2.6. Where the volume or weight of the timber products contained in the shipment presented for release for free circulation does not deviate by more than ten per cent from the volume or weight indicated in the corresponding licence, it shall be considered that the shipment conforms to the information provided in the licence in so far as volume or weight is concerned. 2.7. The competent authority shall, in accordance with the applicable legislation and procedures, inform the customs authorities as soon as a licence has been accepted. 3. VERIFICATION OF THE VALIDITY AND AUTHENTICITY OF THE LICENCE 3.1. In case of doubt concerning the validity or authenticity of a licence, a duplicate or a replacement licence, the competent authority may request additional information from the Licence Information Unit. 3.2. The Licence Information Unit may request the competent authority to send a copy of the licence in question. 3.3. If necessary the Licensing Authority shall withdraw the licence and issue a corrected copy which will be authenticated by the stamped endorsement "Duplicate" and forward it to the competent authority. 3.4. If no answer is received by the competent authority within twenty-one calendar days of the request for additional information from the Licence Information Unit, as specified in section 3.1 of this Annex, the competent authority shall not accept the licence and shall act in accordance with applicable legislation and procedures. 3.5. If the validity of the licence is confirmed, the Licence Information Unit shall inform the competent authority forthwith, preferably by electronic means. The copies returned shall be authenticated by the stamped endorsement "Validated on". 3.6. If following the provision of additional information and further investigation, it is determined that the licence is not valid or authentic the competent authority shall not accept the licence and shall act in accordance with applicable legislation and procedures. 4. VERIFICATION OF THE CONFORMITY OF THE LICENCE WITH THE SHIPMENT 4.1. If further verification of the shipment is considered necessary before the competent authorities can decide whether a licence can be accepted, checks may be carried out to establish whether the shipment in question conforms to the information provided in the licence and/or to the records relating to the relevant licence held by the Licensing Authority. 4.2. In case of doubt as to the conformity of the shipment with the licence the competent authority concerned may seek further clarification from the Licence Information Unit. 4.3. The Licence Information Unit may request the competent authority to send a copy of the licence or the replacement in question. 4.4. If necessary, the Licensing Authority shall withdraw the licence and issue a corrected copy which must be authenticated by the stamped endorsement "Duplicate" and forwarded to the competent authority. 4.5. If no answer is received by the competent authority within twenty one calendar days upon request of the further clarification as specified in section 4.2 above, the competent authority shall not accept the licence and shall act in accordance with applicable legislation and procedures. 4.6. If following the provision of additional information and further investigation, it has been determined that the shipment in question does not conform with the licence and/or to the records relating to the relevant licence held by the Licensing Authority, the competent authority shall not accept the licence and shall act in accordance with applicable legislation and procedures. 5. OTHER MATTERS 5.1. Costs incurred while the verification is being completed shall be at the expense of the importer, except where the applicable legislation and procedures of the Union Member State concerned determine otherwise. 5.2. Where persistent disagreements or difficulties arise from the verification of licences the matter may be referred to the JIC. 6. EU CUSTOMS DECLARATION 6.1. The number of the licence that covers the timber products that are being declared for release for free circulation shall be entered in Box 44 of the Single Administrative Document on which the customs declaration is made. 6.2. Where the customs declaration is made by means of a data-processing technique the reference shall be provided in the appropriate box. 7. RELEASE FOR FREE CIRCULATION 7.1. Shipments of timber products shall be released for free circulation only when the procedure described in section 2.7 above has been duly completed.

ANNEX IV REQUIREMENTS AND TECHNICAL SPECIFICATIONS OF FLEGT LICENCES 1. GENERAL REQUIREMENTS OF FLEGT LICENCES 1.1. A FLEGT licence may be in paper or electronic form. 1.2. Both paper-based and electronic licences shall provide the information specified in Appendix 1, in accordance with the notes for guidance set out in Appendix 2. 1.3. A FLEGT licence shall be numbered in a manner that allows the Parties to distinguish between a FLEGT licence covering shipments destined for Union markets and a V-Legal Document for shipments destined for non-Union markets. 1.4. A FLEGT licence shall be valid from the date on which it is issued. 1.5. The period of validity of a FLEGT licence shall not exceed four months. The date of expiry shall be indicated on the licence. 1.6. A FLEGT licence shall be considered void after it has expired. In the event of force majeure or other valid causes beyond the control of the licensee, the Licensing Authority may extend the period of validity for an additional two months. The Licensing Authority shall insert and validate the new expiry date when granting such an extension. 1.7. A FLEGT licence shall be considered void and returned to the Licensing Authority if the timber products covered by that licence have been lost or destroyed prior to its arrival in the Union. 2. TECHNICAL SPECIFICATIONS WITH REGARD TO PAPER-BASED FLEGT LICENCES 2.1. Paper-based licences shall conform to the format set out in Appendix 1. 2.2. The paper size will be standard A4. The paper will have watermarks showing a logo that will be embossed on the paper in addition to the seal. 2.3. A FLEGT licence shall be completed in typescript or by computerised means. It may be completed in manuscript, if necessary. 2.4. The stamps of the Licensing Authority shall be applied by means of a stamp. However, an embossment or perforation may be substituted for the Licensing Authority stamp. 2.5. The Licensing Authority shall use a tamper-proof method to record the quantity allocated in such a way as to make it impossible to insert figures or references. 2.6. The form shall not contain any erasures or alterations, unless those erasures or alterations have been authenticated by the stamp and signature of the Licensing Authority. 2.7. A FLEGT licence shall be printed and completed in English. 3. COPIES OF FLEGT LICENCES 3.1. A FLEGT licence shall be drawn up in seven copies, as follows: i. an "Original" for the competent authority on white paper; ii. a "Copy for Customs at destination" on yellow paper; iii. a "Copy for the Importer" on white paper; iv. a "Copy for the Licensing Authority" on white paper; v. a "Copy for the Licensee" on white paper; vi. a "Copy for the Licence Information Unit" on white paper; vii. a "Copy for Indonesian Customs" on white paper 3.2. The copies marked "Original", "Copy for Customs at destination" and "Copy for the Importer" shall be given to the licensee, who shall send them to the importer. The importer shall lodge the original with the competent authority and the relevant copy with the customs authority of the Member State of the Union in which the shipment covered by that licence is declared for release for free circulation. The third copy marked "Copy for the Importer" shall be retained by the importer for the importer's records. 3.3. The fourth copy marked "Copy for the Licensing Authority" shall be retained by the Licensing Authority for its records and for possible future verification of licences issued. 3.4. The fifth copy marked "Copy for the Licensee" shall be given to the licensee for the licensee's records. 3.5. The sixth copy marked "Copy for the Licence Information Unit" shall be given to the Licence Information Unit for its records. 3.6. The seventh copy marked "Copy for Indonesian Customs" shall be given to the customs authority of Indonesia for exportation purposes. 4. FLEGT LICENCE LOST, STOLEN OR DESTROYED 4.1. In the event of loss, theft or destruction of the copy marked "Original" or the copy marked "Copy for Customs at destination" or both, the licensee or the licensee's authorised representative may apply to the Licensing Authority for a replacement. Together with the application, the licensee or the licensee's authorised representative shall provide an explanation for the loss of the original and/or the copy. 4.2. If it is satisfied with the explanation, the Licensing Authority shall issue a replacement licence within five working days of receipt of the request from the licensee. 4.3. The replacement shall contain the information and entries that appeared on the licence it replaces, including the licence number, and shall bear the endorsement "Replacement Licence". 4.4. In the event that the lost or stolen licence is retrieved, it shall not be used and must be returned to the Licensing Authority. 5. TECHNICAL SPECIFICATIONS WITH REGARD TO ELECTRONIC FLEGT LICENCES 5.1. The FLEGT licence may be issued and processed using electronic systems. 5.2. In Member States of the Union which are not linked to an electronic system a paper-based licence shall be made available. Appendices 1. Licence Format 2. Notes for Guidance. Appendix 1 LICENCE FORMAT Appendix 2 NOTES FOR GUIDANCE General: — Complete in capitals. — ISO codes, where indicated, refer to the international standard two letter code for any country. — Box 2 is for use by the Indonesian authorities only — Headings A and B for use of FLEGT licensing to the EU only Heading A Destination Insert "European Union" if the licence covers a shipment destined for the European Union. Heading B FLEGT licence Insert "FLEGT" if the licence covers a shipment destined for the European Union.

Box 1 Issuing authority Indicate the name, address, and registration number of the Licensing Authority. Box 2 Information for use by Indonesia Indicate the name and address of the importer, the total value (in USD) of the shipment, as well as the name and the two-letter ISO code of the country of destination and where applicable of the country of transit. Box 3 V-Legal/licence number Indicate the issuing number. Box 4 Date of expiry Period of validity of the licence. Box 5 Country of export This refers to the partner country from where the timber products were exported to the EU. Box 6 ISO code Indicate the two-letter ISO code for the partner country referred to in Box 5. Box 7 Means of transport Indicate the means of transport at the point of export. Box 8 Licensee Indicate the name and address of the exporter, including the registered exporter ETPIK and tax payer numbers. Box 9 Commercial Description Indicate the commercial description of the timber product(s). The description should be sufficiently detailed to allow for classification into the HS. Box 10 HS code For the "Original", "Copy for Customs at Destination" and "Copy for Importer" indicate the four-digit or six-digit commodity code established pursuant to the Harmonised Commodity Description and Coding System. For copies for use within Indonesia (copies (iv) to (vii) as set out in Article 3.1 of Annex IV) indicate the ten-digit commodity code in accordance with the Indonesia Customs Tariff Book. Box 11 Common and scientific names Indicate the common and scientific names of the species of timber used in the product. Where more than one species is included in a composite product, use a separate line. May be omitted for a composite product or component that contains multiple species whose identity has been lost (e.g. particle board). Box 12 Countries of harvest Indicate the countries where the species of timber referred to in Box 10 was harvested. Where a composite product include for all sources of wood used. May be omitted for a composite product or component that contains multiple species whose identity has been lost (e.g. particle board). Box 13 ISO codes Indicate the ISO code of the countries referred to in box 12. May be omitted for a composite product or component that contains multiple species whose identity has been lost (e.g. particle board). Box 14 Volume (m3) Indicate the overall volume in m3. May be omitted unless the information referred to in box 15 has been omitted. Box 15 Net weight (kg) Indicate the overall weight of the shipment at the time of measurement in kg. This is defined as the net mass of the timber products without immediate containers or any packaging, other than bearers, spacers, stickers etc. Box 16 Number of units Indicate the number of units, where a manufactured product is best quantified in this way. May be omitted. Box 17 Distinguishing marks Insert barcode and any distinguishing marks where appropriate e.g. lot number, bill of lading number. May be omitted. Box 18 Signature and stamp of issuing authority The box shall be signed by the authorised official and stamped with the official stamp of the Licensing Authority. The signatories' name, as well as place and date shall also be indicated.

ANNEX V INDONESIAN TIMBER LEGALITY ASSURANCE SYSTEM 1. INTRODUCTION Objective: To provide assurance that harvesting, transportation, processing and selling of round logs and processed timber products comply with all relevant Indonesian laws and regulations. Known for its pioneering role in combating illegal logging and the trade in illegally harvested timber and timber products, Indonesia hosted the East Asia Ministerial Conference on Forest Law Enforcement and Governance (FLEG) in Bali, in September 2001, which resulted in the Declaration on Forest Law Enforcement and Governance' (Bali Declaration). Since then, Indonesia has continued to be at the forefront of international cooperation in combating illegal logging and associated trade. As part of international efforts to address these issues, a growing number of consumer countries have committed themselves to take measures to prevent trade in illegal timber on their markets, whilst producer countries have committed themselves to provide a mechanism assuring the legality of their timber products. It is important to establish a credible system to guarantee the legality of harvesting, transportation, processing and trade of timber processed timber products. The Indonesian Timber Legality Assurance System (TLAS) provides assurance that timber and timber products produced and processed in Indonesia come from legal sources and are in full compliance with relevant Indonesian laws and regulations, as verified by independent auditing and monitored by civil society. 1.1. Indonesian laws and regulations as foundation of the TLAS The Indonesian regulation on the "Standards and Guidelines on the Assessment of Performance of Sustainable Forest Management and the Verification of Timber Legality in the State and Privately-owned Forests" (Forestry Minister's Regulation P.38/Menhut-II/2009) establish the TLAS as well as the sustainability scheme (SFM), to improve forest governance; to suppress illegal logging and the associated timber trade and to ensure the credibility and improve the image of Indonesia's timber products. The TLAS comprises the following elements: 1. Legality Standards, 2. Control of Supply Chain, 3. Verification Procedures, 4. Licensing Scheme, 5. Monitoring. TLAS is the basic system used to assure the legality of timber and timber products produced in Indonesia for export to the Union and to other markets. 1.2. Development of the TLAS: a multi-stakeholder process Since 2003, a wide range of Indonesian forestry stakeholders have been actively engaged in developing, implementing and evaluating the TLAS, thereby providing better oversight, transparency and credibility in the process. In 2009, the multi-stakeholder process resulted in the issuance of Forestry Minister's Regulation P.38/Menhut-II/2009, followed by DG Forest Utilization Technical Guidelines No.6/VI-SET/2009 and No.02/VI-BPPHH/2010. 2. SCOPE OF THE TLAS Indonesian forest resources can broadly be divided into two types of ownership: state forests and privately owned forests/lands. State forests consist of production forests for long-term sustainable timber production under a variety of permit types and forest areas that can be converted for non-forestry purposes such as for settlement or plantations. The application of TLAS on state forests and privately owned forests/lands is set out in Annex II. The TLAS covers timber and timber products from all permit types as well as the operations of all timber traders, downstream processors and exporters. The TLAS requires that imported timber and timber products are cleared at customs and comply with Indonesia's import regulations. Imported timber and timber products must be accompanied by documents providing assurance of the legality of the timber in its country of harvest. Imported timber and timber products will have to enter into a controlled supply chain that complies with the Indonesian rules and regulations. Indonesia will provide guidance on how to implement the above. Certain timber products may contain recycled materials. Indonesia provides guidance on how the use of recycled materials will be dealt with under the TLAS. Impounded timber is not included in the TLAS and therefore cannot be covered by a FLEGT licence. The TLAS covers timber products destined for domestic and international markets. All Indonesian producers, processors, and traders (operators) will be verified for legality, including those supplying the domestic market. 2.1. TLAS legality standards The TLAS has five timber legality standards. These standards and their verification guidelines are set out in Annex II. The TLAS also incorporates the "Standard and Guidelines on Assessment of Performance in Sustainable Forest Management (SFM)". The assessment of sustainable forest management using the SFM standard also verifies that the auditee complies with the relevant legality criteria. SFM-certified organisations operating within production forest zones on state-owned lands (permanent forest domain) adhere to both relevant legality and SFM standards. 3. CONTROL OF THE TIMBER SUPPLY CHAIN The permit holder (in the case of concessions) or landowner (in the case of private land) or company (in the case of traders, processors and exporters) shall demonstrate that every node of their supply chain is controlled and documented as set out in the Minister for Forestry Regulations P.55/Menhut-II/2006 and P.30/Menhut-II/2012 (hereinafter referred to as the Regulations). These Regulations require provincial and district forestry officials to undertake field verification and validate the documents which are submitted by permit holders, landowners, or processors at each node of the supply chain. The operational controls at each point in the supply chain are summarised in Diagram 1; the guidance for imports is being developed. All consignments in the supply chain must be accompanied by relevant transport documents. Companies must apply appropriate systems to segregate between timber and timber products from verified sources with timber and timber products from other sources, and maintain records that distinguish between these two sources. Companies at each point in the supply chain are required to record whether the involved logs, products or timber consignment are TLAS-verified. Operators in the supply chain are required to keep records on received, stored, processed and delivered timber and timber products so as to enable subsequent reconciliation of quantitative data between and within nodes of the supply chain. Such data shall be made available for provincial and district forestry officials to carry out reconciliation tests. Main activities and procedures, including reconciliation, for each stage of the supply chain are further explained in the Appendix of this Annex. Diagram 1: Control of the supply chain which shows the required key documents at each point in the supply chain. 4. INSTITUTIONAL SET-UP FOR LEGALITY VERIFICATION AND EXPORT LICENSING 4.1. Introduction The Indonesian TLAS is based on an approach known as "operator-based licensing" which has much in common with product or forest management certification systems. The Indonesian Ministry of Forestry nominates a number of conformity assessment bodies (LP and LV) which it authorizes to audit the legality of operations of timber producers, traders, processors and exporters ("operators"). The conformity assessment bodies (CAB) are accredited by the Indonesian National Accreditation Body (KAN). CAB are contracted by operators who want their operations to be certified as legal and are required to operate according to relevant ISO guidelines. They report the outcome of the audits to the auditee and to the Ministry of Forestry. The CAB ensure that the auditees operate in compliance with the Indonesian legality definition as contained in Annex II, including controls to prevent material from unknown sources entering their supply chains. When an auditee is found to be compliant, a legality certificate with a validity of 3 (three) years is issued. LVs also act as export licensing authorities and check verified exporters' supply chain control systems. If compliant, they issue export licences in the form of V-Legal Documents. Thus exports without an export permit are prohibited. Indonesia has enacted a regulation which allows civil society groups to raise objections on the legality verification of an operator by CAB or in the event of illegal activities detected during operations. In case of complaints about the operations of a conformity assessment body, civil society groups can file complaints with KAN. The relationship between different entities involved in implementing the TLAS is illustrated in Diagram 2: 4.2. Conformity assessment bodies The conformity assessment bodies play a key role in the Indonesian system. They are contracted to verify the legality of the production, processing and trade activities of individual companies in the supply chain, including the integrity of the supply chain. LV also issue V-Legal Documents for individual shipments of exported timber. There are two types of CAB: (i) assessment bodies (Lembaga Penilai/LP) which audits the performance of Forest Management Units (FMUs) against the sustainability standard; and (ii) verification bodies (Lembaga Verifikasi/LV), which audit FMUs and forest-based industries against the legality standards. In order to ensure those audits that verify the legality standards as set out in Annex II are of the highest quality, the LP and LV are required to develop the necessary management systems addressing competency, consistency, impartiality, transparency, and assessment process requirements as outlined in ISO/IEC 17021 (SFM Standard for LPs) and/or ISO/IEC Guide 65 (Legality Standards for LVs). These requirements are specified in the TLAS Guidelines. LVs can also act as Licensing Authorities. In this case the LVs issue export licences to cover timber products destined to international markets. For non-Union markets, the Licensing Authorities will issue V-Legal Documents, and as for the Union market, FLEGT licenses will be issued in accordance with the requirements as outlined in Annex IV. Indonesia is developing detailed procedures for the V-Legal Document or FLEGT licensing of export consignments. The LVs are contracted by the auditees to carry out legality audits and will issue TLAS legality certificates and V-Legal document or FLEGT licences for exports to international markets. LPs will audit timber producing concessions against the SFM standard. LPs do not issues export licences. 4.3. Accreditation body The Indonesian National Accreditation Body (Komite Akreditasi Nasional - KAN) is responsible for the accreditation of CAB. In case of problem with a LP or LV, complaints can be submitted to the KAN. On 14 July 2009, the KAN signed a Memorandum of Understanding with the Ministry of Forestry to provide accreditation services for the TLAS. KAN is an independent accreditation body established through Government Regulation (Peraturan Pemerintah/PP) 102/2000 concerning National Standardisation and Presidential Decree (Keputusan Presiden/Keppres) 78/2001 regarding the National Accreditation Committee. The KAN operates under the guidance of ISO/IEC 17011 (General Requirements for Accreditation Bodies Accrediting Conformity Assessment Bodies). It has developed internal TLAS-specific supporting documents for the accreditation of LPs (DPLS 13) and LVs (DPLS 14). In addition, the KAN will develop requirements and guidance for the accreditation of LVs for export licensing. KAN is internationally recognised by the Pacific Accreditation Cooperation (PAC) and the International Accreditation Forum (IAF) to accredit certification bodies for Quality Management Systems, Environmental Management Systems and Product Certification. KAN is also recognised by the Asia Pacific Laboratory Accreditation Cooperation (APLAC) and the International Laboratory Accreditation Cooperation (ILAC). 4.4. Auditees Auditees are operators which are subject to legality verification. They include forest management units (concessionaires or timber utilization permit holders, community-based forest permit holders, private forest/land owners) and forestry-based industries. The forest management units and forest-based industries must comply with the applicable TLAS standard. For export purposes, the forest-based industries must comply with export licensing requirements. The system allows auditees to submit appeals to the LP or LV on the conduct of or results of audits. 4.5. Independent monitor Civil society plays a key role in the Independent Monitoring (IM) of the TLAS. Findings from the Independent Monitor can also be used as part of the Periodic Evaluation (PE) which is required under this Agreement. In the event of an assessment-related irregularity, complaints by civil society shall be submitted directly to the concerned LP or LV. If no appropriate response is given to the complaints, civil society entities may file a report to the KAN. For accreditation-related irregularities, complaints shall be submitted directly to the KAN. Whenever civil society entities discover wrongdoings by operators, they can lodge complaints with the relevant LP or LV. 4.6. The Government The Ministry of Forestry regulates the TLAS and authorises the accredited LPs to undertake SFM assessment and LVs to undertake legality verification and to issue V-Legal Documents. Furthermore, the Ministry of Forestry also regulates the Licence Information Unit (LIU) as a unit responsible for information exchange which receives and stores relevant data and information on the issuance of V-Legal Documents and which responds to queries from competent authorities or stakeholders. 5. LEGALITY VERIFICATION 5.1. Introduction Indonesian timber is deemed legal when its origin and production process as well as subsequent processing, transport and trade activities are verified as meeting all applicable Indonesian laws and regulations, as set out in Annex II. LVs carry out conformity assessments to verify compliance. 5.2. Legality verification process In accordance with ISO/IEC Guide 65 and the TLAS Guidelines, the legality verification process consists of the following: Application and contracting: The permit holder submits to the LV an application that defines the scope of verification, permit holder's profile and other necessary information. A contract between the permit holder and the LV, setting out the conditions for verification, is required prior to the commencement of the verification activities. Verification plan: After the signing of the verification contract, the LV prepares a verification plan, which includes nomination of the audit team, verification programme and schedule of activities. The plan is communicated to the auditee and the dates of verification activities agreed upon. This information shall be made available in advance for the independent monitors through the websites of LVs and the Ministry of Forestry or mass media. Verification activities: The verification audit consists of three stages: (i) opening audit meeting, (ii) document verification & field observation and (iii) closing audit meeting. — Opening audit meeting: the audit's objective, scope, schedule and methodology are discussed with the auditee, so as to allow the auditee to raise questions on methods and conduct of verification activities; — Document verification and field observation stage: in order to collect evidence on the auditee's compliance with the Indonesian TLAS requirements, LV checks the auditee's systems and procedures, relevant documents and records. LV carries out field checks to verify compliance, including cross-checking the findings of official inspection reports. LV also checks the auditee's timber traceability system to ensure that, with adequate evidence, all timber meets the legality requirements. — Closing audit meeting: the verification results, in particular any non-compliances that may be detected, are presented to the auditee. The auditee may raise questions on the verification results and provide clarification on the evidence presented by the LV. Reporting and decision making: The audit team draws up a verification report, following a structure provided by the Ministry of Forestry. The report is shared with the auditee within fourteen calendar days after the closing audit meeting. A copy of the report, which includes a description of any findings of non-compliances, is submitted to the Ministry of Forestry. The report is used primarily to decide on the outcome of the verification audit by the LV. The LV takes the decision on whether to issue a legality certificate based on the verification report prepared by the audit team. In cases of non-compliance, the LV will refrain from issuing a legality certificate, which will prevent the timber from entering the supply chain of verified legal timber. Once the non-compliance has been addressed, the operator may resubmit a request for legality verification. Infringements, which are discovered by LV during the verification and reported to the Ministry of Forestry, shall be handled by the responsible authorities in accordance with administrative or judicial procedures. If an operator is suspected of breaching regulations, the national, provincial and district authorities may decide to halt the operator's activities. Issuance of the legality certificate and recertification: the LV will issue a legality certificate if an auditee is found to comply with all the indicators in the legality standard, including the rules on control of the timber supply chain. The LV may report at any time to the Ministry of Forestry on issued, changed, suspended and withdrawn certificates and every three months shall issue a report. The Ministry of Forestry will then publish these reports on its website. A legality certificate is valid for a period of three years, after which the operator is subject to a re-certification audit. The re-certification shall be done prior to the expiry date of the certificate. Surveillance: Operators with a legality certificate are subject to annual surveillance that follow the principles of the verification activities summarised above. The LV may also carry out surveillance earlier than scheduled before the annual audit if the scope of the verification has been extended. The surveillance team draws up a surveillance report. A copy of the report, including a description of any non-compliance found, is submitted to the Ministry of Forestry. Non-compliances detected by the surveillance will result in to suspension or withdrawal of the legality certificate. Infringements discovered by the LV during the surveillance and reported to the Ministry of Forestry shall be handled by the relevant authorities, in accordance with administrative or judicial procedures. Special audits: Operators with a l