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Questions and answers on the EU and Indonesia agreement on illegal timber

European Commission - MEMO/13/828   30/09/2013

Other available languages: none

European Commission

MEMO

Brussels, 30 September 2013

Questions and answers on the EU and Indonesia agreement on illegal timber

What is a Voluntary Partnership Agreement?

Voluntary Partnership Agreements (VPAs) are bilateral agreements between the EU and timber exporting countries to put an end to illegal logging. These agreements commit both sides to trade only in verified legal timber products. Under the agreements, only timber and timber products that have a Forest Law Enforcement Governance and Trade (FLEGT) Licence may enter the EU market. The FLEGT Licences certify that they have been harvested and produced in compliance with the laws and regulations of the partner country and that information can be traced back through the whole supply chain. These are issued through control systems agreed under the VPAs.

Partner countries that conclude VPAs identify legislation that should be complied with in order to identify legal timber. This is done through a participatory process and takes into account environmental, social and economic aspects. The EU provides technical assistance and capacity-building to help ensure the participation of all actors and the development of robust control systems for timber.

What is the EU Timber Regulation?

The EU Timber Regulation is an EU law that entered into application in March 2013. It prohibits the sale of illegally harvested timber and derived products in the EU. It also requires EU operators to exercise “due diligence” in order to minimise the risk of illegal timber in their supply chain. The due diligence exercise requires the gathering of information about the timber supply and assessment of this information in order to determine that the risk of illegal timber in the supply chain is negligible.

What is the Forest Law Enforcement, Governance and Trade (FLEGT)?

The Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan is the EU's response to the problem of illegal logging. To address the issue at EU level, the European Commission adopted the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. The plan aims to close the EU market to illegal timber products through several actions, amongst which two key elements are the EU Timber Regulation and the Voluntary Partnership Agreements. FLEGT-licenses are issued through a control system that assures the legality of timber and timber products

How do VPAs fit with the EU Timber Regulation?

The EU Timber Regulation recognises the legality of FLEGT-licensed timber. EU operators using FLEGT-licensed timber and timber products are therefore relieved from further due diligence requirements. It is expected that EU operators will therefore favour such timber, provided it also meets other criteria for quality etc. The EU Timber Regulation and the FLEGT VPAs are complementary in that the former covers EU demand for timber while the latter covers supply of timber to the EU.

How important is the problem of illegal logging?

The world's forests play a key role in environmental protection through climate mitigation, providing a habitat for numerous species and preventing erosions and desertification. The ecosystem services provided by these forests such as timber, fuel-wood and non-timber forest products account for an estimated 180 billion euros of income per year.

Illegal logging is a significant problem in many developing countries, contributing to deforestation and forest degradation, biodiversity loss and climate change. It leads to lost economic opportunities and an estimated 7 billion euros of lost revenues per year and constitutes a major social problem to the millions of people whose livelihoods depend on forests. It also challenges sustainable forest management and undermines the efforts of legal operators.

Indonesia has played a key role in the international debate on illegal logging and related trade since 2001.

How will the legality assurance system work in Indonesia?

Indonesia has defined key principles for forest production and processing in laws and regulations depending on the type of forest. For each of these principles criteria, indicators and verifiers have been developed to prove compliance. The licensing system in Indonesia will be “operator-based licensing”. Operations of timber producers, traders, processors and exporters will be audited annually by independent auditors that verify the legality of their operations. If compliant, the audit bodies then deliver FLEGT export licences. This will be complemented by independent monitoring by civil society and periodic evaluation of the overall legality assurance system.

Why did Indonesia sign the Agreement?

Since the 1990s Indonesia has suffered from severe illegal logging and rapid deforestation that have resulted in a loss of economic opportunities, social problems and environmental degradation.

To tackle these problems, in 2003 Indonesian stakeholders started a process to find a definition of legal timber production for the forest industry. A broad agreement was reached in 2007, which allowed the Indonesian government to set up a country-wide system to verify and provide assurance that its timber production is legal (Sistem Verifikasi Legalitas Kayu). This system is now being implemented. This also formed the basis for the FLEGT Voluntary Partnership Agreement between Indonesia and the EU.

The EU is a key market for Indonesian forest products with the total average annual value of timber and paper exports from Indonesia reaching US$ 1.2 billion which is around 15% of Indonesia’s exports.

Indonesia does not export unprocessed products such as logs and rough sawn timber, and the main timber products destined for the EU are paper, paper board, wooden furniture and plywood. The main destination markets within the EU are Germany, United Kingdom, the Netherlands, Belgium, French, Spain and Italy.

Which other countries have signed VPAs?

The first Voluntary Partnership Agreement to be formally concluded was with Ghana, followed by Cameroon, Republic of Congo, Liberia and Central African Republic. Negotiations are on-going with Gabon, Democratic Republic of Congo, Ivory Coast, Guyana, Honduras, Malaysia, Vietnam, Laos and Thailand. Indonesia is the first Asian country to have signed a VPA.

Are VPAs and the EU Timber Regulation a form of trade restriction?

VPAs and the EU Timber Regulation aim to make sure only legal timber and timber products are traded. They provide a level playing field for all market participants. The EU Timber Regulation does not discriminate between imported and domestically produced timber – both are equally subject to the prohibition and due diligence requirements under the EU Timber Regulation.

The VPA will benefit Indonesia by helping its timber industry to strengthen its market position in the EU and elsewhere and managing its forest resources in a sustainable way.


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