on the position to be taken by the European Union in the International Tropical Timber Council on the extension of the International Tropical Timber Agreement, 2006

EXPLANATORY MEMORANDUM

1.Subject matter of the proposal

This proposal concerns the decision by the Council establishing the position to be taken by the European Union in the International Tropical Timber Council (hereafter ITTC), in connection with the proposed extension of the International Tropical Timber Agreement, 2006 (hereafter ITTA, 2006 or “the Agreement”).

2.Context of the proposal

2.1.The International Tropical Timber Agreement, 2006

The ITTA, 2006 aims to promote the expansion and diversification of international trade in tropical timber from sustainably managed and legally harvested forests and to promote the sustainable management of tropical timber producing forests. The European Union is party to ITTA, 2006.

The ITTA, 2006 superseded the ITTA, 1994, while the first ITTA was adopted in 1983 (ITTA, 1983).

ITTA, 2006 (adopted in 2006) entered into force on 7 December 2011 for a period of ten years. Therefore, it will expire on 6 December 2021 unless the ITTC decides to, by special vote, to extend, renegotiate or terminate it, pursuant to Article 44(1) of the ITTA, 2006. ITTA, 2006 can be extended for an initial period of five years and an additional one of three years, pursuant to Article 44(2).

2.2.The International Tropical Timber Council

As per Article 6(1) of the ITTA, 2006, the ITTC is the highest authority of the International Tropical Timber Organisation (ITTO). The ITTO represents about 80% of the world’s tropical forests and over 90% of trade in timber and timber products. The ITTC consists of all the members of the ITTO. ITTO has two categories of membership: producer and consumer. Pursuant to Article 44(1) the ITTC may decide, by special vote, to extend, renegotiate or terminate the ITTA, 2006, while -pursuant to Article 44(2) - the Agreement can be extended for an initial period of five years and an additional one of three years. Pursuant to Article 12(1), the ITTC shall endeavour to take all decisions and to make all recommendations by consensus. If consensus cannot be reached, then the ITTC shall take a decision on ITTA, 2006 by special vote, pursuant to Article 44(1). Pursuant to Article 2(8), “Special vote” means a vote requiring at least two thirds of the votes cast by producer members present and voting and at least 60 % of the votes cast by consumer members present and voting, counted separately, on condition that these votes are cast by at least half of the producer members present and voting and at least half of the consumer members present and voting. Pursuant to Article 7(a), the ITTC can also take decisions without meeting.

Members to the ITTC hold 2000 votes in total (producers and consumers hold 1000 votes each). Annual contributions and votes are distributed equally between these two caucuses. Within each caucus, the dues and votes of individual members are calculated based on tropical timber trade and, in the case of producers on the extent of tropical forests within the country. The EU pays the biggest assessed share of contributions (paid by the Commission for all MS) to the administrative budget of the ITTO; and has the highest number of votes (and the highest number of consumer members) and could have a blocking minority in the case of special vote.

2.3.The envisaged extension of the ITTA, 2006

The ITTO experienced serious financial problems, linked to bad investments of funds by a former management team of the Secretariat, which resulted in the loss of $ 18 million, during the period 2012-2015.

ITTO is in financial recovery even though still in the early stages, addressing the financial and managerial shortfall of projects and activities and has started a reform of its financial architecture. The pilot phase of the new financial architecture will run until 2022.

Extending the ITTA, 2006 will give the appropriate time to the ITTO and its Members to continue work on reforming the organisation’s financial architecture and for ITTO to fully stabilise financially and to determine whether the ITTA, 2006 would need to undergo a substantial revision in the future.

3.Position to be taken on the union’s behalf

The envisaged act is a Council Decision regarding the position to be taken on the Union’s behalf, based on Article 218(9) of the Treaty on the Functioning of the European Union (TFEU).

The purpose of this proposal is to seek the Council’s authorisation to the Commission to give consent or vote, on behalf of the Union, in favour of the extension of the ITTA, 2006 within the ITTC.

4.Legal basis