Summary
¦ The legality verification dialogue in Kuala Lumpur attracted 180 delegates.
¦ EU and US legislation aim to drive illegal timber of their markets.
¦ If suppliers don’t make proof of timber legality simple, buyers may boycott them.
¦ Timber approved under EU Voluntary Partnership Agreements (VPAs) will have a “green lane” into Europe.
The “Dialogue on the Requirement for Timber Legality Verification in the Global Market” might have been a mouthful of a title for an industry conference. But, according to the opening address from EU ambassador to Malaysia Vincent Piket, the message of the event was simple: if timber is not legally sourced and backed by unimpeachable evidence to that effect, it will increasingly be marginalised and ultimately squeezed off a growing number of markets worldwide.
The conference was organised by the Malaysian Timber Council (MTC) and took place in Kuala Lumpur on October 18, the day before the inaugural Global WoodMart exhibition launched in the city. It attracted about 180 delegates from around the world, including the international timber trade press.
Underlining the international reach of the event, it was also backed by the UKAid agency, UK Timber Trade Federation (TTF), German sustainable development agency GTZ, the Netherlands timber trade association VVNH and the European Forest Institute (EFI).
Mr Piket acknowledged the complexities of international legal timber verification which is why initiatives like the conference were so key. “Dialogue on this issue between producers and consumers is what is needed if timber is going to exploit its business opportunities,” he said.
The illegal timber trade was still a major problem, he said, with an estimated 20% of EU imports still from illicit sources. This was “just not acceptable” and the EU was taking action.
“Consumers increasingly want proof they’re not buying illegal timber and we’ve passed legislation to ensure the EU won’t be a market for it,” he said. “Our new [due diligence] regulation will come into force in 2013 prohibiting [first placing of] illegal wood on the EU market. It will root out this pernicious problem and traders who get an unfair market advantage by selling the material. Those caught red-handed will be strongly penalised.”
Malaysian suppliers, he added, are well placed to comply with the new European rules, with the Malaysian Timber Certification Scheme (MTCS) already accepted as proof of sustainability and legality by several EU governments and the country negotiating a Voluntary Partnership Agreement (VPA) under the EU Forestry Law Enforcement Governance and Trade initiative (FLEGT). Timber backed by a VPA would be accepted under the new EU rules without importers undertaking additional legality checks or risk assessment. It effectively amounted to a “green lane” into Europe.
Mr Piket maintained that Malaysia’s VPA negotiations were now at “the last stage” and that the agreement should be finalised by the time the EU regulation came into force.
Vincent van den Berk, programme co-ordinator for the EFI’s €6m programme to drive the adoption of FLEGT VPA’s in Asia, said the latter and the EU due diligence legislation should not just be seen as a means to close the EU market to illegal wood but, more positively, to stimulate “supply of sustainable timber”.
He was confident the first VPA-licensed timber – from West Africa – would arrive in the EU in the near future. “We’re also positive about progress on VPAs in Asia. We’re starting talks with Vietnam, Thailand, Laos and Cambodia have expressed interest, and we’re discussing [legality verification] joint activities with China.”
UK strategies drive demand
In the UK, strategies to achieve a low carbon economy and green building industry are driving demand for legal and sustainable timber, said TTF head of sustainability Rachel Butler.
“So, in a way, you could say climate change is good for timber,” she told the conference.
And, she added, environmentally-certified timber was also a business opportunity for the industry, securing a premium in the UK of 2-7%.
The EU and US may have adopted different regulatory tools for stopping illegal timber imports; the former’s based on due diligence risk assessment by first-placing importers, the latter’s Lacey Act on traders showing ‘due care’ they weren’t handling illegal material. But Ms Butler said, in terms of proof of legality, the two approaches put similar demands on suppliers.
“The key message to suppliers is don’t make it complicated,” she said. “Buyers need you to keep it simple. If it’s not, there’s a risk they will just boycott your timber.”
Caitlin Clarke of the Washington-based World Forest Institute said that the repercussions for breaching the Lacey Act were becoming increasingly clear for the US timber sector, with Gibson Guitars the first company charged under the regulation (for buying illegal Malagasy rosewood).
“Lacey is reshaping the US wood products industry,” she said. “You can’t ignore it.”
The obstacles remaining to putting timber legality systems in place were highlighted by forthright input from the conference floor from Dr Lulie Melling, of the Tropical Peat Research Laboratory Unit in Sarawak. She said temperate forest products countries, like Russia, were not under the same pressure as tropical producers and described the VPA system as a “carrot with a poisoned heart”; on the surface promising suppliers easy access to the EU as an incentive to implement proof of legality strategies, but involving hidden costs.
“I don’t see the VPA as ‘voluntary’; it’s a form of blackmail,” she said. “Layer by layer, more will be asked of us and who’s going to pay?”
But in a robust response, the EFI’s Aimi Lee Abdullah said that, to maintain access to the growing number of environmentally-sensitive markets, like the EU and US, companies had to comply with legality regulations and back initiatives like the VPAs.
“This train is leaving the station,” she said. “If you want to continue supplying these markets, you have to be on it.”
