There’s mounting evidence that timber supplier countries signed up to EU Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreements (FLEGT VPA) are seeing real benefits as a result.
FLEGT entails producers establishing watertight timber legality assurance systems (TLAS). It also demands greater transparency throughout forestry and timber sectors, and broad stakeholder engagement.
Comment from tropical producer VPA signatories in previous TTJ articles showed their industries already evolving. New forest management and timber monitoring approaches are being implemented. There’s improved information access and much wider grass roots involvement in decision-making.
However, less clear is FLEGT’s potential to impact producer countries’ fortunes in the timber market. But with the European Commission’s launch of the Independent Market Monitoring project (IMM), this looks set to come more into focus too.
Once the signatories have established their TLAS and fulfilled other FLEGT obligations, their designated agencies will be authorised to issue FLEGT licences for timber exports. These will allow access to the EU without further due diligence risk assessment under the EU Timber Regulation (EUTR) – and, some believe, they may gain acceptance as a contribution to proof of legality in other markets too. This has the potential to make FLEGT-licensed timber a more attractive commercial proposition for EU buyers, and that, in turn, could encourage more suppliers to go for a VPA.
Improved predictions
However, currently such forecasts remain just that as, although Indonesia and Ghana are said to be close, no VPA signatories have yet reached licensing stage (and there are currently six, with nine other countries in the FLEGT process). But, while we may only have predictions until the first licensed material is actually delivered, the IMM will help make them far more precise, and evidence based.
It will undertake market analysis to build a comprehensive picture of current trading environments, market attitudes and issues facing FLEGT signatory suppliers, and from this develop projections on the potential effects of FLEGT licensing. Once the latter begins, the IMM will then monitor licensed product volume and pricing trends. The overall aim is a "better understanding of market incentives for entering a FLEGT VPA".
The IMM is a five-year project hosted by the International Tropical Timber Organisation, with independent timber market analyst Rupert Oliver appointed lead consultant.
"FLEGT licensing will affect operational costs and relative competitiveness," said Mr OIiver. "So commercial issues and trends need to be identified to maximise the marketing benefit and deal with potential market obstacles."
The IMM’s focus will be EU licensed timber demand, but it will review VPA countries’ trade flows worldwide, and has drafted 52 "quantitative assessment indicators" to ensure its analysis is "consistent, objective and transparent".
It will also follow interaction between FLEGT licensing and forest certification and its impact on forest sector investment.
As part of its FLEGT licence context, it will also analyse the effect on trade flows of the EUTR and other market access legality requirements, such as the US Lacey and Australian Illegal Logging Prohibition Acts, plus public and private sector procurement policies.
Given that the period since the introduction of the EUTR has been characterised by continuing weak market conditions across much of the EU, the jury remains out on its effect on tropical timber trade flows. But some early impacts may now be discernible.
"The figures are most remarkable for their relative stability, albeit at a low level," said Mr Oliver. "But this itself may be partly due to the EUTR which, alongside poor economic conditions, has contributed to greater risk aversion and less speculative EU tropical hardwood purchasing."
Longer term, he agreed, the fact that all other timber, bar CITES-certified, must go through EUTR due diligence should boost FLEGT-licensed timber demand, although he cautioned against expectations of an immediate surge once it’s available.
"Tropical wood’s long-term loss of EU market share is only partly due to lack of confidence in legality and sustainability," said Mr Oliver. "Other factors related to shifting global trade and relative competitiveness need to be considered."
Wider benefits
At the same time, he added, FLEGT licensing could help set the scene for other efforts to recover this lost ground.
"Pro active marketing of the positive benefits of tropical timber can only take place once there’s confidence it’s from a legitimate source," he said. "It’s also a precondition for sustainable investment, so FLEGT licensing provides a foundation on which to build a modern, innovative, higher value tropical timber industry."
The IMM will also contribute to this process by exchanging data and consulting on market strategy with the joint implementation committees (JICs) overseeing VPA signatories’ legality assurance and monitoring system development.
It will additionally work with other trade bodies, NGOs and certification schemes and create a correspondents’ network in VPA countries to "contribute to long-term development of timber policy and marketing activities". It will develop "communication tools for timber market data distribution" and is also preparing a baseline report on VPA signatories’ timber production and 10-year EU trade flows. This will be followed by annual updates from next year.
