EN Official Journal of the European Union C 318/88

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council laying down the obligations of operators who place timber and timber products on the market’

COM(2008) 644 final — 2008/0198 (COD)

2009/C 318/17

Rapporteur: Mr SALVATORE

Co-rapporteur: Mr BURNS

On 14 November 2008 the Council decided to consult the European Economic and Social Committee, under Article 175(1) of the Treaty establishing the European Community, on the

‘Proposal for a Regulation of the European Parliament and of the Council laying down the obligations of operators who place timber and timber products on the market’

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 September 2009. The rapporteur was Mr SALVATORE and the co-rapporteur was Mr BURNS.

At its 456th plenary session, held on 30 September and 1 October 2009 (meeting of 1 October), the European Economic and Social Committee adopted the following opinion by 87 votes to seven with eight abstentions.

1. Conclusions and recommendations

1.1 The European Economic and Social Committee whole-heartedly backs the goal of the Regulation proposed by the Commission, to minimise the risk of illegal timber and its by-products entering the European market. In addition to being responsible for 20 % of global emissions of greenhouse gases and for loss of biodiversity, deforestation causes major economic and, in particular, social problems. In order to achieve the objective set, greater boldness and more determined action are needed, making use of legally binding measures and short deadlines for implementation.

1.2 The Proposal for a Regulation represents an essential component, together with FLEGT (1) Voluntary Partnership Agreements, the development of cooperation programmes in connection with the certification and sustainable use of forestry resources, and agreements with the major timber importers, for combating not only illegal logging but also illegal placing on the market of timber.

1.3 The concept of sustainability does not focus solely on the capacity to produce timber, but also on social criteria (acceptable working conditions, compliance with workers’ rights) based on ILO (2) definitions, economic criteria (preventing market distortions through unfair competition) and environmental criteria (impact of illegal deforestation on the environment and in terms of reducing biodiversity).

1.4 In the Regulation under consideration, the Commission has designated the due diligence system as the means of minimising the risk of illegal timber and its by-products entering the European market. As set out, this option requires some readjustment.

1.5 Firstly, it only considers primary traders in timber and timber products. The Committee believes that the system should be extended, with differing procedures and rules, to all timber industry operators. Tracking should apply to all operators, who must be informed on the origin and characteristics of the product: country, forest, species, age, and supplier. Small and medium-sized enterprises, together with small-scale producers, should be allowed flexibility and a graded approach in adapting to the new system, without having to bear an excessive burden.

1.6 In any case, any duplication with existing ‘tracking’ systems must be avoided, by recognising national legislation and control mechanisms, forest certification systems and organisation models when they are in tune with sustainable forest management. It is pointless imposing additional red tape, particularly in cases where the principles of due diligence already apply. The EU must set standards for rules and common approaches for risk management procedures, with greater strictness in areas with a high risk of illegal timber management (3), where appropriate making use of outside, independent certification bodies of proven experience.

1.7 Agreements with third countries should provide for organisational/managerial cooperation and social incentive systems, given the inverse correlation observed between the level of illegal logging and the per capita income in a given country.

1.8 Extending due diligence to all operators would help ensure that only legal timber enters the market; this timber meets with greater approval not so much for the economic effects strictly speaking as for their major social impact. The fact is that forward-looking forestry management and the use of legal products offer an opportunity for ‘sustainable’ development to local populations who work in the timber sector, and a guarantee for the future of the European timber industry.

1.9 The Regulation should also be extended to timber and timber products used for producing energy from renewable sources.

1.10 Penalties for those breaching their obligations regarding the trade in timber and timber products must be uniform in all countries, and should be proportionate to the degree of liability, even including, for grave offences, the suspension of commercial activities.

1.11 In order to ensure that the system works properly, the Committee strongly supports the idea of setting up an advisory group on the timber trade, involving the various interested parties, to assist the Commission.

1.12 Two years after the Regulation enters into force, the Commission should carry out an assessment of its impact on the functioning of the internal market for timber products. In the event of negative consequences, provision should be made for revising any weak points.

2. Introduction

2.1 This Proposal for a Regulation aims to combat illegal logging by promoting sourcing from countries with legal forest management practices. It is one of the EU's responses to illegal logging, which is one cause of deforestation. Deforestation is responsible for approximately 20 % of global emissions of greenhouse gases and is a major cause for global losses of biodiversity. In addition, illegal logging leads to economic, social and environmental dumping, thereby undercutting the competitiveness of companies engaged in legitimate forest industry operations.

2.2 Regarding social dumping, since 1996 the EU has made several attempts to insert provisions to protect fundamental labour rights into WTO (World Trade Organisation) agreements. These proposals have run up against strong resistance from the developing nations, who accuse the industrialised countries of using the proposals to create new forms of protectionism targeting their exports. This is also a live issue at present within the EU itself.

2.3 The Commission has consequently drawn up a set of options for ensuring that only legally harvested timber and timber products are placed on the EU market. These options were subject to an impact assessment and culminated in the ‘due diligence’ system. Tighter border controls would undoubtedly be desirable and highly effective but would unfortunately breach free trade rules, and are therefore impracticable.

2.4 The legality of the source is defined on the basis of the legislation of the country where the timber is grown. Legality can be verified in FLEGT partner countries on the basis of EU FLEGT licences which are established by bilateral Voluntary Partnership Agreements (VPAs) between the European Commission and individual exporting countries, or on the basis of CITES (4) permits. Other countries can verify legality by other means. Operators can verify legality via systems that fully meet the due diligence system's criteria.

2.5 The due diligence system is based on the operators’ responsibility to minimise the risk of placing illegal timber on the Community market by using a tracking system based on accessible information on the provenance and characteristics of timber, in line with the legal requirements established by national legislation. The system also seeks to provide consumers with the information they need to ensure that their purchases do not contribute to illegal logging.

2.6 In order to facilitate the implementation of the Regulation, operators can avail themselves of systems developed by control bodies when and where they exist. At all events, competent authorities designated by the Member States are responsible for accrediting the monitoring organisations, while retaining the right to carry out checks at regular intervals to ascertain that they comply with the specified requirements.

2.7 Monitoring organisations, having previously established rules for implementing due diligence, authorise operators via appropriate systems. The competent authorities carry out the required checks, and take appropriate disciplinary measures against any certified operator who fails to comply with the due diligence system.

2.8 The Member States are to lay down the rules on penalties applicable to infringements of this Regulation and take all measures necessary to ensure that it is implemented. The rules it sets out, on the basis of WTO agreements, will be applied uniformly to imported products as well as EU products.

3. General comments

3.1 The goal of ensuring that timber on the EU market comes from legally and sustainably managed forests is whole-heartedly endorsed. The Committee hopes that the Regulation will be adopted without delay and that it will give a strong indication of the EU's commitment to fighting illegal logging.

3.2 Expanded coverage of the bilateral approach through FLEGT Voluntary Partnership Agreements is undoubtedly to be welcomed, as are agreements with the major timber importers (the USA, Russia, China, Japan) to establish international rules to combat the illegal harvesting of, as well as trading in, timber. Cooperation programmes should be developed with producer countries, aimed at the sustainable use of forestry resources, compliance with the legislation of producer countries and the extension of certification systems. More generally, projects promoting the application locally of the principles of good governance through the development of appropriate monitoring systems would be welcome.

3.3 The due diligence system nevertheless has a number of weaknesses. Firstly, it only considers primary traders in timber and timber products: forest owners, those entitled to carry out logging and timber importers. As a result, the expected impact of controlling the risk of placing illegal products on the market is progressively reduced as operators in the supply chain get nearer to the final consumer. The Committee believes that the system should be extended, with differing procedures and rules, to all timber industry operators in the EU.

3.3.1 All timber sector operators must make sure the timber they possess is legal, and have essential information on the origin of the product: country, forest, supplier, species, age and volume. This could be achieved by adopting a tracking system that sets out various levels of responsibility. Small forest owners operating in national markets that already have effective legislation and controls in line with the due diligence system should not have further unnecessary red tape imposed on them. On the other hand, large-scale operators purchasing and marketing timber in the EU or importing it from third countries are obliged to apply the system set out in the Regulation.

3.4 The due diligence system, even with the proposed changes, does not appear capable of delivering the set objectives in the short-term, also in the light of the gravity and complexity of the issues involved in illegal logging. More specifically, we need to focus measures and controls on timber provenance and stages in the supply chain at high risk of illegality, which are the real source of the problem. In these cases, forest management would also have to be monitored by independent certifying bodies of proven experience.

3.5 A common EU-level framework should be established to set the standards to be complied with in the risk management procedure. This should make the best possible use of existing enforcement and tracking systems in the EU, avoiding unnecessary duplication, particularly when that would burden small and medium-sized forestry businesses. The aim should be to harmonise the new system with the most effective ones already adopted in the various Member States. The application of systems that already meet due diligence requirements is therefore to be encouraged, on the basis of national legislation and appropriate monitoring systems, such as forest certification.

3.6 The Regulation should also be extended to timber and timber products used for producing energy from renewable sources. All timber products and by-products, including those that might present sustainable characteristics, such as biomass for energy production, must be of legal provenance. Legality should indeed be an absolute prerequisite for the sustainability of any action.

3.7 Finally, the system of penalties to be adopted for those who breach the obligation to trade in legally acquired timber and timber products must be clearly and uniformly defined in all the Member States. To this end, penalties must be effective, proportionate and dissuasive and, for grave offences, should even include the suspension of commercial activities.

4. Specific comments

4.1 In order to fulfil the specified objectives it is imperative to define appropriate instruments capable of verifying the legality of timber and timber products placed on the EU market. In addition to national legislation and the instruments foreseen in the Proposal for a Regulation, other systems that already satisfy due diligence criteria, including forestry certification systems, should also be taken into account. Furthermore, we need to define appropriate mechanisms to recognise those who operate correctly and to penalise those who breach the established rules when placing timber or timber products on the market. Those rules that cannot be set at European level must be established by the Member States according to uniform criteria.

4.2 Illegal logging poses a threat to any sustainable forest management project. Agreements with third countries should therefore provide for organisational/managerial cooperation and social incentive systems, in light of the inverse correlation observed between the rate of illegal logging and the per capita income in a given country. Densely populated tropical countries with the most widespread poverty tend to be the front line for deforestation (5). Similarly, the African timber-exporting countries are among the 50 poorest countries in the world, those with the lowest levels of human development and with the most meagre per capita income levels (6).

4.3 Extending the due diligence system to all operators as opposed to just primary traders in timber and timber products, entails additional administrative burdens. However, the expected benefits will be reflected in the fact that only legally harvested timber that has been tracked throughout the supply chain will be placed on the EU market. There will be any number of benefits, not only economic (7) but above all social. In this context, the environment dovetails with economic and social considerations, so that stakeholders are motivated by environmental, social and cultural interests as well as economic ones.

4.4 The products obtained in this manner will not only be better suited to the requirements of a market that is increasingly mindful of environmental protection issues but will also be enhanced. This could also lead to the not inconsiderable benefit that other countries might follow suit. Forward-looking forestry management and the use of legally harvested products therefore offer an opportunity for development to local workers and a guarantee for the future of the European timber industry.

4.5 Obligations should, however, be commensurate with the size of companies, thereby allowing small and medium-sized enterprises and small producers more flexibility to adapt gradually to the due diligence system. In particular, primary purchasers of timber should minimise the risk of marketing illegal products through documentary tracking, stating the product's provenance and characteristics (country, forest, supplier, species, age and volume). Subsequent downstream operators in the sector would have to document from whom the timber was purchased.

4.6 In framing the Regulation, it would seem appropriate to fully recognise those national rules and organisational models that are most in tune with sustainable forest management criteria, rather than imposing novelties for their own sake. In this regard, the concept of sustainability should be broadened, so as not to focus solely on the capacity to produce timber, but also on social criteria (conditions that comply with human and workers’ rights), economic criteria (preventing distortions of competition through unfair competition) and environmental criteria (impact of operations on the environment and local biodiversity).

4.7 We need to develop a positive environment for compliant operators who inform buyers of the legality of timber and its by-products. Finally, it would also be appropriate to carry out a consumer awareness campaign on the importance of ascertaining, via tracking, the legal harvesting of timber and its by-products at the time of purchase.

4.8 The use of legally harvested timber in the construction sector, furniture-making and other manufactured articles can be promoted by joint initiatives and by circulating publicity and information material. The aim would be to promote timber from sustainably managed forests as the only sustainable raw material that can reproduce itself naturally and store carbon dioxide throughout its entire lifecycle, a feature which sets it apart from any other material.

4.9 The Committee strongly supports the idea of setting up an advisory group on the timber trade, involving all stakeholders, to assist the Commission in ensuring the proper functioning of the system.

Brussels, 1 October 2009. The President of the European Economic and Social Committee Mario SEPI

(1) Action Plan for Forest Law Enforcement Governance and Trade.

(2) International Labour Organisation.

(3) Ruhong Li, J. Buongiorno, J.A. Turner, S. Zhu, J. Prestemon. Long-term effects of eliminating illegal logging on the world forest industries, trade and inventory. Forest policy and economics. 10 (2008) pp. 480-490.

(4) The Convention on International Trade in Endangered Species.

(5) Causes of forest encroachment: An analysis of Bangladesh, Iftekhar M.S., Hoque A.F.K. Geo Journal 62 (2005) pp. 95-106.

(6) Greenpeace. L'industria del legno in Africa. Impatti ambientali, sociali e economici (2001).

(7) Economics of sustainable forest management. Editorial. Shashi S. Kant. Forest Policy and Economics. 6 (2004) pp. 197-203.