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ClientEarth Communications

15th December 2021

EUTR
EUTR Newsletter
Forests
Forests & trade

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EUTR Newsletter September 2021 - November 2021

This issue of the quarterly EUTR News provides an update on the operation of EU law to address illegal logging and the EU Timber Regulation (EUTR) in the period of September 2021 to November 2021. In line with our previous editions, this issue will include:

  1. Recent developments from the European Commission and EU Member States on what they are doing to ensure the proper application of the EUTR and relevant updates on similar international legislation,
  2. Resources and publications concerning the EUTR and other issues related to timber trade, and
  3. A short analysis by ClientEarth on the recent Proposal for the new EU regulation on deforestation-free products (“Deforestation Proposal”), and how the new law would change the timber trade system developed under the EUTR.

If you have any updates to share that we could include in the next newsletter, any queries regarding the EUTR implementation or enforcement that you would like us to address in the next release, or if you would like to receive this newsletter by email, please contact us at:

forests-contact@clientearth.org

1. Recent developments – EU and Member States

The COP26 Summit and Forests

In the week between the 31st of October and the 13th of November, 2021, the 26th Conference of Parties to the United Nations Climate Change Convention (COP) took place. The Summit brought parties together to accelerate action towards climate change, and resulted in, inter alia, a pledge of 100 world leaders to end deforestation by 2030, and a declaration to support the protection and sustainable management of the Congo Basin forests. Both documents have been signed by the European Commission on behalf of the European Union (read the Commission’s press statement under this link, and the speech by the Commission’s President von der Leyen Action on Forests and Land Use under this link).

New agreement on illegal logging and timber trade between the US and Vietnam

On the 1st of October, 2021, the United States and Vietnam signed an agreement on illegal logging and timber trade, which widely builds on the FLEGT Voluntary Partnership Agreement (VPA) between Vietnam and the European Commission. You can read the assessment of the agreement and its consequences in the context of the EU timber trade conducted by Fern under this link.

The Commission’s Briefing Note on the EUTR and on sourcing of deforestation-free commodities

On the 25th of October, 2021, the Commissioned published published the latest Briefing Note on the EUTR and on sourcing of deforestation-free commodities (covering April 2021 to September 2021) produced by UNEP-WCMC. Previous editions can be found under this link.

The Commission’s report on the adoption of its delegated powers

On the 10th of November, 2021, the Commission published a report to the European Parliament and the Council on the exercise of the delegation conferred on the Commission pursuant to the EUTR, which can be reached under this link.

Council adopts conclusions on the new EU forest strategy for 2030

On the 15th of November, 2021, the Council released Conclusions on the new EU Forest Strategy, recognising the need for forests to contribute more to the European Green Deal and global targets (like, for example, the 2030 Agenda). The Council has stressed, inter alia, the importance of EU forests for human and animal health and for the environment, as well as of cooperation and dialogue between Member States, the EU institutions and other stakeholders, including civil society. You can read the Conclusions and the details of the Council findings under this link.

The Commission publishes the results of the Fitness Check of the EUTR and the FLEGT Regulation

On the 17th of November, 2021, the Commission published the long-awaited document with the findings of the Fitness Check of the EUTR and the FLEGT Regulation that had been launched in early 2020. The document acknowledges the relevance of both regulations and stresses the main areas for improvement. It can be found – along with its summary – under this link.

The Commission’s Deforestation Proposal is now out

On the 17th of November, 2021, the Commission published the Deforestation Proposal concerning certain commodities and products associated with deforestation and forest degradation. The Deforestation Proposal, which is widerly described in the analytical section of this newsletter, is intended to replace the EUTR and strengthen the legislative framework against deforestation-risk commodities. The Deforestation Proposal and related documents (including the Impact Assessment) is available under this link.

2. Publications and resources

New EIA report reveals that Italian companies import illegal teak from Myanmar to the EU

On the 2nd of September, the Environmental Investigative Agency (EIA) published the report ‘The Italian Job: How Myanmar timber is trafficked through Italy to the rest of Europe despite EU laws’, revealing the scale of illegal imports of timber from Myanmar to the EU through Italian entry points.

New briefing of ClientEarth and Global Witness on human rights and forest-risk commodities

On the 6th of September, 2021, ClientEarth and Global Witness published a joint briefing that details how the EU should integrate human rights in a product-based due diligence framework for forest and ecosystem-risk commodities. The paper explains why specific human rights requirements should be integrated into the proposed due diligence framework for deforestation-free products.

‘Preferred by Nature’ opens consultations on Timber Legality Risk Assessments and tools

On the 23th of September, 2021, ‘Preferred by Nature’ launched a series of stakeholder consultation on Timber Legality Risk Assessment and the Risk Mitigation Guide covering Cameroon, Vietnam, Ukraine, Russia, Nigeria, Thailand, Republic of Congo, Angola, Gabon, Ghana and Laos. The assessment is being developed within the Sourcing Hub framework, which aims at providing stakeholders with a legislative and risk overview in forest harvesting and processing sectors.

At the same time, Timber Legality Risk Assessment and the Risk Mitigation Guide for Equatorial Guinea has been published and is now available under this link.

Court of Auditors’ report on EU funding for biodiversity and climate change in EU forests

On the 4th of October, 2021, the European Court of Auditors published a ‘Special Report 21/2021: EU funding for biodiversity and climate change in EU forests: positive but limited results’, having reviewed the national procedures for checking domestic logging in Germany, Spain and Poland in order to assess the content and extent of the checks and confirm the importance of the Commission’s role in monitoring [what?]. They found, inter alia, that procedural weaknesses and missing checks reduce the effectiveness of the EUTR.

New ITTO update on tropical timber sector

On the 29th of October, 2021, the International Tropical Timber Organization (ITTO) issued its quaterly newsletter. It discusses a variety of topics looking at ways to increase the income that tropical forests generate, featuring articles on the future of tropical timber sector and incentivising sustainable forest management. The newsletter is available in English, French and Spanish under this link.

The COP26 Summit – further read & references

The COP26 Summit (31October – 12November 2021) was attended by many stakeholders who areactive in the timber sector.

Amongst others, on the 2nd of November, 2021, the Timber Trade Federation (TTF) held a panel ‘Global Forests need Global Governance’ with ministers from the United Kingdom and abroad, which can be listened to under this link, with the acommpanying paper to be reached here.

On the 9th of November, 2021, the German Federal Ministry for Economic Cooperation and Development (BMZ) and DG INTPA of the European Commission, hosted a panel ‘Partnerships to Halt Deforestation – for the Benefit of Climate, Biodiversity, Agriculture and People’ on forest preservation and sustainable commodity production.

In addition, ahead of the COP26 Summit, on the 27th of October, 2021, TFF also released the 'Growing our low-carbon future: time for timber' manifesto about the crucial role of timber in decarbonising the construction sector.

Earthsight’s remarks on the Deforestation Proposal

On the 8th of November, 2021, Earthsight published a commentary explaining why the Deforestation Proposal must avoid relying on flawed certification schemes. This has been followed by an analysis of 9th November 2021, disclosing how suspect timber firms had lobbied for certified wood ‘green lane’ in the Deforestation Proposal.

 

3. ClientEarth’s analysis: How would the Commission’s newly proposed EU law on deforestation-free products change the timber trade in relation to the EUTR?

In this section of our Newsletter, where we provide a fresh ClientEarth analysis of an EUTR implementation issue in each edition, we consider how the Commission’s new Proposal for a Regulation on Deforestation-free Products (“Deforestation Proposal”) compares to the EUTR framework

According to the Commission’s Proposal, the new Regulation will eventually replace and repeal the current EUTR and it builds on the legal and regulatory frameworks evolved thereunder. The upcoming legislative process presents the possibility of addressing the gaps identified under the EUTR, but also creates risks of the standards and progress made under the existing framework being watered down. What is certain, however, is that the new law will shape EU action against deforestation and forest degradation for many years to come – and we should, therefore, understand what it means for timber and illegal logging.

Please note that the content of the following analysis represents the views of ClientEarth only and is its sole responsibility. It does not reflect the views of the European Commission, nor any other official entity or organisation mentioned therein.

The proposed EU law on deforestation-free products- How does it compare to the EUTR?

In early 2020, the European Commission began a Fitness Check of the EU’s laws on illegal logging – the EU Timber Regulation (EUTR) and the Forest Law Enforcement, Governance and Trade (FLEGT) Regulation, followed by a public consultation thereon launched in September 2020[1]. The exercise aimed to assess the functioning and impact of these Regulations, and to help the Commission decide whether they were still fit for purpose. On the 17th of November, 2021, the Commission published the results of the Fitness Check together with the Deforestation Proposal that is intended to eventually replace the current EUTR.

The provisions set out under the Deforestation Proposal may significantly change the legal landscape addressing illegal timber trade: strengthening the obligations of operators and traders, levelling up the powers of competent authorities, and empowering civil society to contribute to law enforcement through substantiated concerns and increased transparency. Each of these aspects contributes to strong grounds for an effective legal tool that builds on the achievements of the EUTR but that also learns lessons and takes into account the challenges of the past eight years of EUTR enforcement.


Strengthened obligations on operators and traders

      • The EUTR applies to timber and timber products placed on the EU market, but not exported therefrom, whereas the Deforestation Proposal also applies to exports. Therefore, the Deforestation Proposal covers products placed on the EU market (whether imported into the EU or produced and consumed in the EU) and produced and exported from the EU (Article 1).

      • The EUTR differentiates between the responsibilities of operators – companies that first place timber on the EU market, and of traders – entities that further distribute timber within the EU market. The Deforestation Proposal expands the scope to provide that large traders (those which are not SMEs) should be subject to the same due diligence requirements as operators (Article 6(5)).

      • The EUTR addresses only logging carried out in breach of the laws of the country of harvest: it does not apply to logging carried out at a destructive scale when this is conducted legally. The Deforestation Proposal introduces a new “deforestation-free” criterion in addition to the existing legal sourcing requirements, against which operators will have to check their products before placing on (or exporting from) the EU market to ensure they are not associated with deforestation or forest degradation (Article 3(a)).

      • The Deforestation Proposal integrates and improves the due diligence framework of the EUTR by establishing, among other things, a definition of “negligible risk” (Article 2(16)), a new set of risk assessment criteria (Article 10(2)) and requirements of a procedure to mitigate the risks of non-compliance (Article 10(6)).

More power for competent authorities

      • The EUTR does not clearly lay out how a compliance check should look like, resulting in low numbers of inspections and subsequent enforcement actions in most of Member States. The Deforestation proposal offers a range of improvements, among which: a minimum level of checks per year (Article 14(9)), criteria to be taken into account when planning checks (Article 14(3)), and – in cases of established non-compliance – an obligation on competent authorities to require a company to take corrective action to bring the non-compliance to an end (Article 22).

      • The EUTR penalty schemes applied by Member States do not represent a sufficient threat to companies to discourage non-compliance in terms of both their severity and likelihood of imposition. The Deforestation proposal provides strengthened requirements for national penalty schemes by establishing a set of objective criteria (e.g. a penalty is proportionate to the environmental damage and the value of the illegal commodities), as well as providing important protective measures that would actually ban illegal commodities from being placed on (or exported from) the EU market and deprive the responsible company of the (future) profits from their non-compliant activities (Article 23).

      • The EUTR refers to other relevant EU policy areas, such as tax and customs law, but provides limited further guidance on cooperation between different enforcing authorities. The Deforestation Proposal, however, establishes a much-needed structural role for customs authorities in regards to commodities entering and leaving the EU, providing grounds for more organisational rules on the cooperation between different enforcing authorities (Articles 24-26).

Improved substantiated concerns

      • The EUTR offers a tool for public participation in the form of substantiated concerns, but unfortunately this mechanism is significantly underused. The Deforestation Proposal sets out an explicit requirement on Member States to adopt a legal framework that would facilitate the use of substantiated concerns (Article 29). It also ensures that every applicant is informed about the results of the submission of substantiated concern and guaranteed access to justice (Article 30).

Increased transparency

      • The EUTR lacks provisions to enhance the information flows between competent authorities and the Commission. The Deforestation Proposal tries to address this shortcoming and proposes the establishment of a central information system – which will be accessible to the public in an anonymised format – providing information about the due diligence processes, as well as basic information about the operators and traders active in the EU (Article 31).

 

In this review, we aim to provide our readers with a compact analysis of the major positive changes that the Deforestation Proposal offers in the context of the EUTR. Please note that the format of this section naturally limits the scope of issues we can analyse. If you seek a more detailed analysis of the Proposal, please see two Briefings on the Deforestation Proposal on our website on the subjects of What is in the Commission’s proposal and what is left out? and How the Deforestation Proposal compares to the EUTR. Please also be informed that a further analysis of the consequences of the Deforestation Proposal for the FLEGT Regulation, Voluntary Partnership Agreements (VPAs) and relations with third countries will be finalised and published in Spring 2022.

Picture credits: Chris Skwaji via Unsplash

[1] See ClientEarth, Contribution to the public consultation on the Fitness Check of the EUTR and the FLEGT Regulation, 2020.