Over the last 12 months the European Commission has been investigating the potential to introduce EU-wide legislation designed to prevent imports of illegal wood.
To guide policy development on the issue a wide-ranging public consultation exercise was held during 2007 and an independently-commissioned impact assessment was completed earlier this year. This process has indicated that there is a very high level of support for such legislation from EU regulators, environmental groups and the timber industry throughout the EU. The governments of countries currently engaged in negotiating FLEGT Voluntary Partnership Agreements (VPA) with the EU (Ghana, Indonesia, Malaysia and Cameroon) also seem supportive since this would boost market prospects for timber licensed as legal under the terms of the VPA. An EC Communication containing a recommendation for EU-wide legislation is expected to be issued within the next few weeks.
While there is underlying support for such legislation, agreeing on the details of a workable framework is proving to be much more complicated. Essentially two options for legislation have been considered, each with very different implications for the European import trade:
- An import-ban or sales-ban on timber that is not verified as legal;
- Legislation styled on the US Lacey Act, making the import/sale of illegally-sourced timber illegal with the EU.
The first option essentially places the burden of proof on timber suppliers, requiring them to demonstrate that all wood is legal. This option would give a strong boost to FLEGT VPA licensed timber. It tends to be favoured by environmental groups who argue that such legislation would be easier to enforce than a “Lacey-style” approach. However there are some significant legal and practical objections to this type of legislation. It would effectively criminalise within the EU any timber that is not verified as legal. Best estimates suggest that perhaps 10% of global industrial roundwood supply derives from illegal sources, so legislation requiring that all wood must be verified as legal seems disproportionate to the scale of the problem. Such legislation reverses the usual burden of proof (timber traders are guilty unless they can prove their innocence), which is something that European courts are only rarely willing to do. Such legislation would also be difficult to apply to countries with large numbers of small owners (which makes traceability difficult), such as the US. There is also the problem that, in order to meet WTO obligations, the EU would have to place a similar burden on timber producers within the EU. For all these reasons, this option is not particularly favoured by the EU private sector.
The alternative “Lacey-style” approach places the burden of proof on the prosecution that would have to demonstrate that wood is from an illegal source. Again there are legal objections. Such legislation would require EU courts to make “extra-territorial” judgements on the laws of other countries, something which they are only rarely willing to do. And the challenges of establishing a chain of evidence and bringing prosecutions would be considerable. On the other hand, this approach has the benefit of imposing a reduced burden on the private sector and would better target high risk imports. It would have the effect of encouraging due diligence on the part of importers in order to reduce their risk of prosecution.
Due to the difficulties associated with both legislative options, the European Commission has signalled that the forthcoming Communication may actually recommend a third legislative option. There is talk of a law that would directly impose a requirement for due diligence on EU importers. Timber importing companies above a certain size may be required to demonstrate that they have taken effective precautions to minimise the risk of purchasing wood from illegal sources. Another possibility is that the EU might simply impose new import declaration requirements to ensure more accurate reporting of country of harvesting.
Whatever the outcome, there is little doubt that the EC and many EU Member States are increasingly determined to implement effective measures to prevent imports of illegal wood. The deliberations on additional legislative options have potential to profoundly impact on the long term future of the EU wood import trade.