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ClientEarth Communications

4th June 2021

Forests & trade
Illegal Logging
EUTR Newsletter

EUTR News - March 2021 - May 2021

This issue of the EUTR News provides an update on the operation of the EU’s law to address illegal logging, the EU Timber Regulation (EUTR), from March 2021 to May 2021. As with all of our previous editions, this issue will include information on what both the European Commission and EU Member States are doing to ensure the proper application of the EUTR, and provide updates on similar legislation internationally.

A new feature of the Newsletter:

As explained and first introduced in our previous Newsletter in March this year, we now include a new feature in addition to our regular Newsletter items: a section where we in ClientEarth identify an important and topical EUTR-related issue and provide a brief legal analysis of it for your information.

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 on:

Recent developments – EU and Member States

Blurred lines for the future of the EUTR and the upcoming proposal for a regulation on deforestation

On 17 March 2021, during the webinar hosted by Fern on Enforcing Due Diligence regulation for forest risk commodities, the representative of the European Commission’s Environmental Directorate, Mr Hugo-Maria Schally, spoke about the current state of play of EU action on deforestation (including the ongoing fitness check of the EU laws against illegal logging – the EUTR and the FLEGT Regulation). According to his presentation, the Commission – having acknowledged the high and low points of the existing legal framework – seems to be investigating the possible synergies between the EUTR with the upcoming proposal for a new regulation on deforestation. Based on the outcome of this work, the Commission may propose new legal solutions regarding the regulation of the timber trade in the EU which could involve a future merger of the EUTR with the new regulation on deforestation. The Commission’s presentation echoes the interim findings of the fitness check that were presented in the third Expert Group/Multi-Stakeholder Platform on Protecting and Restoring the World’s Forests (EUTR and the FLEGT Regulation) held on 24 February 2021. In the Multi-stakeholder Platform meeting, the Commission also stated that it found the interim findings regarding voluntary partnerships agreements under the FLEGT Regulation to be underwhelming and mooted the possibility of using alternative mechanisms such as Forest Partnerships without the licencing element. Materials from that meeting (including the minutes and the presentations) are available here, and the presentation of Mr Hugo-Maria Schally can be watched here (1’17’’).

Dutch competent authorities tackle illegal teak from Myanmar

On 8th of April, the Environmental Investigation Agency (EIA) published an information note about the ongoing proceedings concerning illegal timber trade in the Netherlands.  According to the note, the Dutch competent authorities have undertaken a legal action against several European timber operators and traders involved in illegal imports of Myanmar teak into the EU. In the course of the proceedings, 500 m3 of teak has been seized, which EIA estimates to be valued at approximately 3 million USD.

Unprecedented fine of 3.3 million EUR for importing Myanmar teak in Germany

On 27th April, the Hamburg district court ordered a German company WOB Timber GmbH to pay 3.3 million EUR in fines for illegal timber imports from Myanmar between 2008 and 2011. The order was accompanied by a penalty of 21-months suspended prison sentence and a fine of 200,000 EUR imposed on Stephan Bührich, the director of the company. EIA has more about the case here.

EU and Honduras sign agreement to reduce illegal timber logging

On 27th of April, the European Parliament adopted a non-legislative resolution regarding the draft Council decision on the conclusion of the voluntary partnership agreement (VPA) between the European Union and the Republic of Honduras. This resolution follows the agreement on forest law enforcement, governance and trade in timber, which – after several years of negotiations – the EU and Republic of Honduras have reached at the end of February this year. It aims at ensuring that timber and timber products from Honduras that enter the EU market have been legally sourced and licensed, and thus fulfill the requirements of the EUTR.

Publications and resources

EIA releases a report containing evidence of tax evasion in teak exports from Myanmar

Published on the 17th of March 2021, Taxing Questions is based on an in-depth analysis of shipments documentation and trade data concerning Myanmar teak sales. It identifies a pattern of apparent tax evasion by companies exporting timber products from Myanmar, depriving the Myanmar Revenue of a significant sum of tax income every year. Taxing Questions complements EIA’s investigation over illegal timber accessing the EU market through Croatian entry points, captured in the report published last year, The Croatian Connection Exposed.

Myanmar teak accessing the EU market through Italian entry points

On 9th of April, EIA published an information note about continuous exports of Myanmar teak conducted by Singaporean company, Gold Teak Holding, that places this timber on the EU market through, inter alia, Italian entry points.

ITTO reports the discussion on the future of the EUTR and the FLEGT Regulation

Published on 16th of April, the The article explains the possibility of covering the trade of all forest-risk commodities (incuding timber) under one regulation and raises concerns about the future of the EUTR, the FLEGT Regulation and the existing FLEGT-based voluntary partnership agreements which, through their development and finalisation, have contributed to decreases in illegal logging rates and improved forest governance in tropical countries.

Preferred by Nature releases a report on legality risks of timber from China

On 26th of April, Preferred by Nature (formerly NEPCon)  introduced an assessment report of timber legality risks in China. The report contains a robust analysis of key legality issues concerning wood sourcing, trade and transport. For more risk assessment reports covering other countries, visit the Source Hub by .

NGOs statement on strengthening FLEGT and Forest Partnerships

On 27th of April, a group of more than 40 non-governmental organisations issued a statement calling on the Commission to strengthen the implementation and enforcement of the FLEGT Action Plan and the EUTR, to develop effective Forest Partnerships and to address the obstacles that undermine the efforts in tackling illegal logging.

WWF publishes a report on stepping up the enforcement of the EUTR

Published on 27th of April by WWF, Lift it up - How to make the EU Timber Regulation (EUTR) 'fit for purpose' provides a variety of recommendations for EU decision-makers that would enhance the effectiveness of this law.

Preferred by Nature publishes a guide for the timber industry on handling certified timber

In May 2021, Preferred by Nature (formerly NEPCon) published a guide for the timber industry on handling certified wood and wood products under the EUTR. It provides a step-by-step introduction to best practice in conducting due diligence on certified timber and timber products under the EUTR framework.

NGOs recommendations for the proposed EU regulation on deforestation

On 6th of May, a coalition of environmental non-governmental organisations (ClientEarth, Conservation International Europe, EIA, Fern, Global Witness, Greenpeace, and WWF) released a paper on the proposed EU regulation on deforestation, which was expected to be published by the Commission in 2021 but has now been pushed back to Autumn. The document outlines recommendations for future regulation to address the forest, ecosystem, and human rights impacts associated with products placed on the EU market.

The role of the EUTR in investigating corruption in Brazillian timber imports

On 24th of May, Forest Trends published an article How did the EUTR and Lacey Act help instigate investigations into potential corruption in the Brazilian forest sector?. The authors, Kerstin Canby and Marigold Norman describe the role that the key laws against illegal timber trade worldwide – the EUTR and the US Lacey Act – played in detecting the potential corruption of Brazilian public officials, including Brazil’s Minister of Environment – Ricardo Salles, involved in timber trade imports to the European Union and the United States. You can read more about the case here.

UK Timber Regulation Q&A session – a webinar held by Timber Trade Federation

the Timber Trade Federation hosted a webinar on UK Timber Regulation with the participation of the Office for Product Safety & Standards (OPSS) – the competent authority for enforcing the UK Timber Regulation (presentation of Mr Adrian Hawkes, the OPSS representative, can be downloaded here). The webinar provided the audience with relevant information about main changes in regards to the timber trade in Great Britain and Northern Ireland, which are also to be found in the Guidance on the UK Timber Regulations, released earlier this year. Amongst other things, the speakers highlighted that although should it be considered as a great supporting tool, certification alone does not meet UK Timber Regulation requirements – due diligence is mandatory regardless of product risk level or its certification status.

EU Forestry Crime project – events in June held by WWF, Interpol and ClientEarth

On the 1st and 2nd of June, the EU Forestry Crime project group held workshops for civil society organisations on forestry crime. The event aimed at providing the participants with practical knowledge on tackling illegal logging and related issues, and presenting the main results of the report  Recommendations for improvement of forestry crime law enforcement, which deals with main gaps in forestry legal frameworks of Belgium, Bulgaria, France, Romania, Slovakia, and Ukraine.

The final conference evaluating the project will be held on 15th and 16th of June. The event is addressed to both EU and national decision-makers dealing with the EUTR, foresters, customs agents, prosecutors, judges, competent authorities, police, investigation and anti-corruption bureaus, representatives of environment/agriculture ministries, as well as civil society organisations. The event will be available in Bulgarian, English, French, Romanian, Slovakian, Ukrainian. Registration to the conference can be done using this link.

ClientEarth analysis: Analysis of the role of certification schemes in the context of EUTR obligations

In each edition of our Newsletter, this section will contain a short analysis by ClientEarth of an important and topical EUTR implementation issue. In this current edition, we analyse the role that certification schemes can potentially play in helping timber operators to comply with their EUTR obligations to assess and mitigate the risk of placing illegally harvested timber on the EU market.

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.

 What is a certification scheme? 

Certification in the forestry sector is a voluntary market-based mechanism aimed at assessing the quality of forest management and manufacturing and value chains of commodities obtained from forests. The set of requirements, which has to be fulfilled in the process of certification, can include implementation of certain sustainable practices, compliance with applicable laws (including environmental, customs, revenue and labour rules), and a variety of social and environmental standards.

While well-recognised certification schemes for wood can support the due diligence process of the EUTR, it is important to emphasise that such schemes on their own do not and cannot fulfill the legal responsibility of timber operators to ensure that timber placed on the EU market has been logged in compliance with applicable laws. The Commission has acknowledged the need to more clearly identify the role of certification schemes in helping economic operators to meet their EUTR obligations and have commissioned a study on the issue which is currently being carried out by Preferred by Nature (formerly NEPCon).

The role of certification in EUTR

 The EUTR requires that where a timber operator places timber on the EU market for the first time, that operator must develop, use and evaluate a due diligence system that enables the operator to gather information about each timber supply and to identify and subsequently mitigate the risk of placing illegally harvested timber on the EU market. One of the main phases of a due diligence process is the investigation on the compliance with applicable legislation, which can be conducted with the use of relevant certification or other third-party-verified schemes (Article 6(1)(b) of EUTR).  Additionally, third-party verification may also be included to help mitigate the risk of illegally harvested timber being placed on the EU market (Article 6(1)(c) of EUTR).

It is also important that, for certification and other third-party verification schemes to be valid, they must meet the criteria established in Article 4 of Commission Implementing Regulation (EU) 607/2012 which include: a publicly available system of requirements, appropriate checks, timber traceability at any point in the supply chain and controls to ensure that illegal timber does not enter the supply chain.

Certification – a risk mitigation tool? At best!

Fulfillment of the criteria summarised above does not guarantee that a certification scheme provides reliable results that satisfy the due diligence requirements. The label of “certified” does not necessarily mean “compliant with the EUTR. According to the Commission’s guidance on the EUTR, prior to making use of a third-party verification, “an operator must determine whether the scheme incorporates a standard that includes all the applicable legislation”. Thus, the responsibility for ensuring compliance with the EUTR does not pass from the operator to a certifying organisation, as the operator is always accountable for verifying the scope and credibility of the auditing process. Each scheme presents a different level of quality and scrutiny of enforcement and should be subject to individual assessment by the timber operator that considers the relevance of certificate requirements, auditing measures, and qualifications of the auditors.

Therefore, the role of certification schemes in ensuring compliance of timber and timber products with the EUTR should not be misunderstood or overestimated. They do not – and should not – remove the obligations on operators to assess specific information about timber and its origin or to assess and mitigate the risk that it was illegally harvested. Entities placing timber on the EU market for the first time must still conduct due diligence. Compliance is ultimately the responsibility of timber operators and certification is just one tool that can be considered in the risk assessment and mitigation process, but in no way releases those operators from their obligations to comply.

Looking ahead                                                                                  

Certification schemes will not eliminate illegal timber trade. Even more, this is not their aim.  Third-party verification schemes are market services that are intended to, first and foremost, be sold to companies that advertise timber or timber products to consumers. Unfortunately, certain studies and investigations have shed light on dubious practices that seem to be accepted by some certification schemes.  Indeed, some recent literature concludes that certain schemes would rather accept "greenwashed" exploiting methods in their systems, than scare off potential clients with a more rigorous approach.

The ongoing EU fitness check of the EUTR and the FLEGT Regulation provides the Commission with an ideal opportunity to identify the gaps and weaknesses in the implementation of the EUTR and to address those weaknesses by clarifying responsibilities and reinforcing monitoring and enforcement obligations. The current study on certification and verification in the forest sector suggests that the Commission is giving serious consideration to the role such schemes can play under the EUTR. In this pursuit, we consider it essential for the Commission to remember that certification must not be considered by timber operators as a way to outsource their responsibilities for risk assessment and mitigation.

To read more about the fitness check of the EUTR and the FLEGT Regulation, see our previous newsletter edition.