It might have sounded like ‘no more Mr Nice Guy’. But the National Measurement and Regulation Office (NMRO) insists its message on future enforcement of the EU Timber Regulation (EUTR) a year after it came into force was more nuanced than that.

The NMRO, the UK’s Competent Authority EUTR enforcement agency (CA), spent the first 12 months after the Regulations’ 2013 introduction on communication and bridge-building. It was important all round.

The industry needed to understand how the NMRO worked and improve its knowledge of the EUTR, especially the due diligence illegality risk assessment it demanded of companies which first place timber on the EU market, or ‘operators’. The NMRO meanwhile had to get to grips with the complexities of the timber sector and its supply chains.

But then it declared it was moving to the next phase. It would beef up monitoring and investigative resources, increase timber company checks, focus on high illegality risk market sectors and flag up non-compliance. Remedial action notices would suffice for most EUTR breaches, but it would take serious offenders to court, whether for due diligence violations or handling illegal timber.

CRACKDOWN AND COLLABORATION

Now two and a half years into the Regulation’s life, EUTR Project Officer Michael Worrell said the NMRO has fulfilled its pledge on policing. Consequently some of its actions have made waves. But while its aim is ever more effective EUTR enforcement, it’s also to maintain its collaborative approach. Mr Worrell sees no discrepancy here.

"The NMRO mission statement is ‘Simplifying technical regulation for the benefit of British business’. We’re not here to curb trade, but make the EUTR work with the industry," he said. "An effectively enforced Regulation is generally considered good for the future of this trade, which we’re now effectively part of. We know it has limited shelf life if it doesn’t act legally and use timber conscientiously."

Cooperation between EUTR enforcer and industry is expressed in ongoing close working relations with the Timber Trade Federation (TTF). The NMRO also talks at trade events and to the media.

"And it’s reciprocated," said Mr Worrell. "Businesses invite us in. They open their books, explain their due diligence strategies and offer us information and advice."

In terms of boosting resources to fulfil its various roles, including industry liaison, the NMRO has increased its forest products team from two to five. Covering such a diverse sector with such a small team is challenging. But it says deepening industry knowledge and risk analysis enable it to target resources.

The EU’s 28 national CAs are also reinforcing their enforcement capabilities by collaborating. Meetings between them have been coordinated by the EU, and informally driven forward by states themselves.

Non-pro_ t organisation Forest Trends has also brought enforcement of_ cials together in the Timber Regulation Enforcement Exchange (TREE) for intelligence and best practice sharing. Its meetings have been attended not only by CAs, but also US Lacey Act officials and bodies behind Australia’s Illegal Logging Prohibition Regulation.

"We also collaborate individually, with the UK and Netherlands, for instance, in unilateral initiatives," said Mr Worrell.

GOLD PLATING REFUTED

Despite this, some traders still worry that weak EUTR implementation in certain states could undermine its effectiveness overall. There are also concerns UK ‘gold-plates’ the Regulation relative to other countries. Mr Worrell contests both views.

"There’s no sign of EU imports diverting through countries with allegedly weaker enforcement – and we are seeing implementation strengthening overall at an accelerating rate," he said. "We don’t gold-plate either. We take a strictly legalistic approach. In fact, that frustrates some, as they want to be told precisely what to do.

But the EUTR is not a proscriptive tickbox Regulation. Companies must make judgements, apply due diligence according to circumstances."

Species testing is another growing part of NMRO EUTR armoury, with emphasis again on supporting compliance as well as enforcement.

"We use mainly anatomical, but see DNA testing increasing as species references develop, so we’re building knowledge of testing lab capabilities across Europe," said Mr Worrell. "But we encourage businesses to test too. It’s valuable in due diligence for validating paperwork and, relative to the cost of timber, it’s inexpensive."

NGOs and Trade share Goals

The NMRO has also cultivated contacts at environmental NGOs. That’s another concern for some traders, wary that harder line greens are focused on bringing EUTR breaches to book. But Mr Worrell dispels this too.

"Our experience is that NGOs want to make the EUTR work, so we have the same goals," he said. "In fact, it would make sense for everyone to work closer together and there’s scope for greater outreach from the trade and NGOs to learn from each other."

Arguably the biggest impact of the NMRO’s EUTR activities to date was made by its investigations into compliance of Chinese plywood imports. The subsequent report evaluated performance of 16 ‘operators’ in due diligence and timber species verification. Only one made the grade on both counts.

No-one faulted the report itself, but concerns were raised over the fact that the trade did not get a pre-publication heads-up and that the 16 companies accounted for just 10% of UK plywood imports.

Mr Worrell said putting reports straight into the public domain is NMRO policy and gives added assurance of impartiality. Companies accounting for a larger share of plywood imports had also already been checked individually in other investigations and projects for different products.

And while the report was meant to send a message, it was again also about boosting compliance rather than stark enforcement. "It raised awareness; highlighting to the trade that composite products from half way round the world, with complex chain of custody and containing tropical timber represent a high EUTR compliance risk which demands added scrutiny and mitigation," he said. "Encouragingly, companies involved also showed real eagerness to improve EUTR performance; seeking third-party support, strengthening risk mitigation through switching to certified products, for example, or even switching suppliers."

Another positive was that the report gained "widespread currency" across the UK and beyond.

"Other CAs asked about our approach and compliance issues with Chinese plywood," said Mr Worrell. "I was also invited for discussions in China, where it reinforced the need to take the EUTR seriously."

While he wouldn’t comment on speculation that the next report may be on West African hardwood, he confirmed that ‘reports to promote outcomes’ are part of the NMRO approach and it is hoped more will follow.

No hesitation on prosecution

What we have not seen so far is EUTR prosecutions, but Mr Worrell stresses, this is not evidence of the NMRO leaning too far toward aiding compliance at the expense of tackling offenders.

"The NMRO enforces regulations in numerous sectors and has extensive experience of building cases, so we won’t hesitate to prosecute when the occasion arises," he said.

Clearly he couldn’t speculate on when that might be. But in line with a growing consensus among CAs and other agencies across Europe, he expects initial court cases to be over due diligence breaches rather than illegal timber trading.

"Of course, if presented with strong evidence of illegality, we’d fully investigate and seek proportionate penalties," he said. "But investigating such cases is complex and time-consuming, possibly involving inquiries in the country of origin, and as a government body, we must justify everything we do against public interest criteria. The 2013 case of the German CA investigating wenge from the Democratic Republic of Congo (DRC) highlighted the difficulties. Extensive investigations indicated an EUTR breach, but then DRC authorities validated the documents. Achieving definitive outcomes in such cases is a challenge."

Tackling due diligence breaches

Cracking down on due diligence breaches, however, is slightly more straightforward. And by ensuring effective due diligence industry-wide, said Mr Worrell, should have the same impact as prosecuting illegal traders – blocking them from the market.

"We’ve issued a lot of warning letters and around 20 remedial action notices and failure to act on these is an offence," he said. The area where timber businesses continue to fall short most frequently, he added, is risk assessment and subsequent mitigation; where they’ve identified a risk and must then take further steps to reduce it.

"Risk assessment is a process in itself, with definitive findings of negligible or nonnegligible needing to be identified, and we still find firms failing to take adequate or any mitigation steps," said Mr Worrell. "But if a risk anything above negligible is identified, whether to do with country of origin, supplier or species, you must look into it thoroughly and take adequate mitigation measures." Generally though Mr Worrell does see the EUTR being ever more effectively and rigorously enforced.

"The trade increasingly sees the EUTR as being in its long-term interest," he said. "As a result we’ll see enforcement increasingly backed by business peer pressure to comply." At the same time, NMRO will continue to develop its role assisting compliance.

"We want to hear from anyone with questions or problems and we’re also producing a new EUTR guide," said Mr Worrell. "We’re here to help."