Summary
¦ The EU’s Illegal Timber Regulation takes effect on March 3, 2013.
¦ The US’s Lacey Act was amended to include wood products in 2008.
¦ Under the EU ITR, only FLEGT and CITES licensed timber is given an automatic passport.
¦ The TTF classifies certification as good evidence of legality and sustainability.
TTJ: What is the EU Illegal Timber Regulation (ITR) and what are the timber industry’s obligations?
Rachel Butler: The EU ITR will take effect on March 3, 2013 – not far away in trading terms. From this date it will be an offence to place illegal timber onto the EU market. The critical business issue is whether your organisation is regarded as an “operator” or “trader” under the regulation. Operators are considered the first placers of timber and timber products onto the EU market and are therefore required to undertake due diligence. Other timber traders in the supply chain are required to know from whom they bought and to whom they sold the timber products.
At present there is some grey area as to who is defined as the first placer. The regulation, in most cases, intended to define the first placer as the domestic producer or first European importer of wood products into the EU from outside Europe. Operators can undertake either to set up their own due diligence systems, or make use of one provided by a monitoring organisation.
The Commission is currently drafting and consulting on further guidance on defining first placers, as well as developing criteria for due diligence systems and monitoring organisations.
TTJ: What is the US Lacey Act and what are the timber industry’s obligations?
Adam Grant: In 2008 the US amended the Lacey Act to prohibit commerce in illegally-sourced plants, including wood products. The new law requires that everyone along the supply chain needs to know from where they are buying their forest products.
The Lacey Act now does three main things:
? prohibits all trade into or within the US in plant and plant products (eg furniture, paper, or lumber) that are illegally sourced from any US state or any foreign country;
? requires importers to declare the country of origin of harvest and species name of all plants contained in their products;
?establishes penalties for violation of the Act, including forfeiture of goods and vessels, fines and jail sentence.
The Lacey Act is a fact-based, rather than a document-based statute. Documents are part of demonstrating due care and assessing legality, but they are not proof of legality. It is important for buyers to not take documents at face value, to look behind the documents and, if needed, ask further questions.
TTJ: What is the difference between the two?
AG: The EU ITR is a process with an underlying prohibition and the Lacey Act is a prohibition that requires a declaration but, in reality, for US and EU buyers there is very little difference between the two in terms of actions that are needed.
The main difference between the EU ITR and the Lacey Act is the process the trader is asked to follow. Under Lacey, individual companies are left to their own devices. There are not any clear guidelines or processes, and so it is up to the individual to find the methods that work best for the particular business. The EU ITR has a prescriptive approach with a developing process that needs to be met by the individual in order to meet the requirements of the legislation.
TTJ: How is EU ITR/Lacey Act compliance achieved?
RB: Under the EU ITR only FLEGT and CITES licensed timber is given an automatic passport, nothing else. In the case of Lacey, no evidence is automatically accepted.
However, for Lacey, the level of due care a buyer carries out is important if the buyer is found to have been trading in illegally-sourced products. There is similar wording in the EU regulation with references to proportionate risk.
In general for both EU TR and Lacey, there is no such thing as compliance (FLEGT/CITES licences for the EU the only exceptions). And any organisation that offers you “compliance” should be treated with suspicion.
TTJ: Is certification no longer necessary?
RB: For the Lacey Act, third-party sustainable forestry certification or legality verification schemes can be good ways to demonstrate due care. However, certification and verification are not required by the Lacey Act, and the associated documents are not considered proof of legality. So they are not a guarantee to avoid prosecution if illegal timber is found in your supply, and they don’t relieve importers of the requirement to submit appropriate import declaration information.
It is hoped that the EU will provide further guidance on this issue for the ITR. Certification, in most cases, is good evidence that the timber is legally felled and sourced from well-managed forests and will help demonstrate to both the government and your customers that you have taken some of the steps necessary to eliminate illegal wood from your supply chain.
The TTF, as part of its guidance under RPP, classifies certification as good evidence of legality and sustainability as defined by the UK government and therefore an operator is mitigating risk and implementing due diligence. Therefore no further due diligence is required over and above normal chain of custody checks. A caveat is where there is intelligence or a risk that the certification claim is fraudulent. In this case, further investigation and due diligence are advised.
TTJ: What should timber traders do now?
AG: For now, based on the current EU ITR interpretation, determine whether you think you are the operator or trader. If in doubt at this stage, assume you are the operator and consider implementing a due diligence system. For Lacey, it is important to remember that it is a fact based law and so checking out and trusting your suppliers and the wood they are providing is as important, if not more important, than proper paperwork.
TTJ: Where can you get advice?
RB: The TTF is working closely with the UK government and will provide consultation and information events over the coming months, so visit www.ttf.co.uk.
For Lacey, visit the Forest Legality Alliance’s website www.forestlegality.org for information and links to relevant bodies.
TTJ: Any final words of advice for traders?
AG: Don’t despair. As far as the EU ITR is concerned we still have some way to go in knowing the detail. For the present time we stick with what we know was the intention. Certification and verification are good tools and could provide evidence that your organisation is undertaking due care or due diligence, and on that basis the trade should continue to support them. For Lacey, it is important to start to work with your suppliers closely. Build a rapport and develop trust in them and the forest products they provide.
