Just how the EU Timber Regulation (EUTR) will impact on trading will not really be known until the new law comes into force next March but it is generally accepted that European hardwoods from EU countries shouldn’t pose any difficulties for UK traders.

The new legislation will make it an offence to "first place" illegal timber on the EU market and put an obligation on "first placers" to undertake due diligence risk assessment of their sources to avoid it getting into their supply chain.

Many European sources are PEFC or FSC certified and, while environmental certification will not be accepted as automatic proof of legality, it is a potential tool in assessing risks of illegality.

In the majority of cases, the first placer of European hardwoods will be the forest owner, however, the Timber Trade Federation’s sustainability manager, Anand Punja, believes that in some instances UK traders may want to carry out a "lighter touch" due diligence to reassure their customers.

"Commercially, importers may still want to conduct due diligence if importing from European countries which will be perceived as having lighter or non-existent enforcement regimes, especially if downstream customers are asking for greater reassurance – which seems to be the message, from the retail sector at least," he said.

This may involve checking whether the products have gone through the necessary due diligence.

"This may mean that EU hardwood importers may need to know the legal framework around forestry and the timber trade in those European countries they’re buying from," said Mr Punja.

Traders contacted by TTJ agreed that the new law was unlikely to create any stumblingblocks for European hardwoods.

"Most timbers are certified or come from sustainable woodlands with strict government regulations," said Andy Lodowski, managing director of Associated Timber Services.

"The regulations within the European forestry and timber trade are, and always have been, strictly adhered to."

Likewise, International Timber doesn’t foresee any problems as it imports only certified European hardwoods.

"To ensure compliance with the EUTR we will carry out supplier assessments, although with certified supply I would expect low risk on these products," said procurement director Malcolm Ellis.

Morgan Timber’s main European species is oak from France, Croatia, Hungary and Poland.

"It is nearly all FSC or PEFC certified and we believe that our existing chain of custody systems, together with our TTF Responsible Purchasing Policy procedures, should enable us to comply with the EUTR without any major problems," said joint managing director Robert Morgan.

Although Croatia was currently not an EU member, its accession was planned for July 2013, he said.

Non-EU sources
However, Rupert Oliver of Forest Industries Intelligence Ltd believes the EUTR could add to the existing problems of sourcing hardwoods from some eastern European countries that are outside the EU.

"Suppliers in these countries are likely to face tougher requirements for third-party legality verification or certification. In practice, this might be relatively easy for wood from state-owned forests, which are centrally planned and managed and benefit from economies of scale in legality verification, but more difficult for wood derived from smaller forest owners," he said.

Peter Latham, chairman of James Latham plc, believes that the EUTR could also be more of a burden for smaller producers.

"The EUTR makes it easier to deal with big suppliers – they have the infrastructure to trace their logs and very often they have big forest areas under their control and they don’t have to buy logs from a whole lot of small producers," he said.

Mr Oliver agrees that securing the necessary assurances of legality from smaller wood producers and trading companies will be a "major challenge". "Many remain ignorant of the legislation and are likely to face larger unit costs of implementation," he said, adding that larger, state enterprises and companies would benefit at the expense of smaller operators.

Where UK traders will need to be wary is if they are buying European hardwood products direct from manufacturers outside the EU, such as in China.

"Buyers of such products will need to conduct full due diligence and therefore may need evidence from suppliers that the European hardwood used is from legal sources and comes through a well-controlled supply chain," said Mr Punja.

Mr Oliver agrees that the EUTR could be challenging for manufacturers outside the EU engaged in long and complex supply chains that might be sourcing and combining wood from several countries.

"This is true, for example, of Chinese flooring, plywood and furniture manufacturers that, at least until the onset of recession in 2008, were taking a larger share of the European market," he said.

Temperate hardwoods have a head start over most tropical species but whether demand for them will increase at the expense of the latter remains to be seen.

"Temperate hardwoods are going to be at an advantage," said Mr Latham, "but part of that preference goes back 20 years when environmentalists were telling architects that they should ban the use of tropical hardwoods. Any prejudices against tropical hardwoods are already established in the market prior to the EUTR."

But, he added, specifiers’ choice of timber was driven not only by environmental factors, but also by aesthetics and performance.

Mr Morgan agrees that European hardwoods could gain market share at the expense of tropical species and Mr Ellis said some shift was "conceivable" although many key tropical species would comply with the EUTR.

However, Mr Lodowski believes that tropical countries will put more effort into certification and will increase volumes in the short term as the price of European timbers would not allow mass production.

Mr Oliver said the outcome hinged on the ability of the EU’s FLEGT VPA process to deliver effective legality systems in tropical producing countries.

"I suspect the process will be slow and that trade in tropical hardwoods wll be increasingly concentrated in the hands of a few larger producing enterprises and EU importing companies," he said.

Competitive edge
What does concern him is that the extra bureaucracy imposed by the EUTR could erode timber’s overall share of the furniture, joinery and finishing sectors. However, the EUTR could also give timber the edge on competing products.

"There’s also an opportunity, with effective communication, to turn the EUTR to wood’s advantage. We’ll be the only material supply sector that can claim all product is risk-assessed as legally sourced. It would be very hard for other material sectors to make an equivalent claim – just think of the recent media reports of widespread metals theft in the UK and levels of corruption typical in many oil-exporting regions."