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Rules and More Rules

This year has seen a frenzy of regulations with regard to the legality of harvesting and international trading of wood and wood products such as furniture produced in Asia. It has also seen a steady increase in demand for sustainable materials and sustainable products, not least because governments and national green building organisations are actually beginning to interact very strongly with wood product industries.

By World Hardwoods

Certified Furniture Tvilum Quadra

Demand is being driven now by regulation rather than by government procurement policies which, at least in Europe, have become less relevant. For some manufacturers, the whole business is becoming a minefield and to others there are suspicions that certain regulations are being used as nontariff barriers. The enlightened see the long term benefits of providing consumers with confidence that harvesting trees can lock up carbon and make way for regenerating growth to capture more CO2. In any case wood products, including wood-based panels and furniture, are now firmly in the regulation limelight. This trend is not new to the architectural profession and construction industry, but the furniture industry has been slower to respond. Anecdotal evidence suggests that most furniture consumers profess to want ‘green’ products, as long as it doesn’t cost a premium; but price, design and quality remain their main focus. ‘Green’ points and labels have generally been absent from the furniture on display by most retailers.

The great irony of all this is that just when the world of professionals, and hopefully consumers, are coming to understand the positive environmental credentials of wood, its use may be threatened by bureaucracy and legislation, the fear of crossing the line, or just lack of understanding of how it all works. Even within the wood industries directly affected there continue to be misunderstandings and confusion as to what is out there for anyone trading in international wood product markets. FSC, PEFC, MTCC, SFI, Lacey, EUTR, AILL, CARB, LEED, BREAM, SGBC, FLEGT, SVLK, VPA, TLAS and MYTLAS and so on, can all be relevant to international furniture manufacturers and traders. Some are mandatory and some voluntary and some advisory for better business. Some are international and some are national or regional. So this column is an attempt to clarify and simplify – coupled with a warning to check out the details which are readily available online:

PEFC certified mixed forest in France

CERTIFICATION

Forest certification is a tried and tested mechanism to provide evidence for sustainable forest management and, through Chain of Custody (COC) certification, assist producers in bringing product assurances to the market. The Forest Stewardship Council (FSC) was the first, and thus most well-known, forest certification system. The Programme for the Endorsement of Forest Certification (PEFC) followed and is now the largest. Both are international and provide forest certification and COC through the harvesting, processing and trading of certified wood by independent third party audits. The Malaysian Timber Certification Council (MTCC) and Sustainable Forestry Initiative (SFI) in USA are two examples of national certification schemes endorsed by PEFC. The main difference between FSC and PEFC is that FSC certifies forests directly, whereas PEFC endorses 31 national certification schemes around the world, which meet international criteria, but are designed to address local conditions. Certification is increasingly demanded for wood products in many markets, although to date the majority of the world’s forests are uncertified, even if they may be sustainably managed


REGULATION

The Lacey Act in USA, protecting endangered plants and animals, was amended quite recently to protect against the trade in illegally harvested wood products throughout the supply chain to the end consumer, with possible prison as a deterrent to those found guilty. The Act now makes it unlawful to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any plant, with some limited exceptions, taken in violation of the laws of a U.S. State, or any foreign law that protects plants. The Lacey Act also makes it unlawful to make or submit any false record, account or label for, or any false identification of, any plant.

By contrast the due diligence required by the new European Union Timber Regulations (EUTR) is limited to first placers (importers or manufacturers receiving products direct from overseas) and not specifically to secondary receivers, who are only required to keep records rather than undertake due diligence. The new Australian Illegal Logging Law also seeks to prosecute traders of illegally harvested wood. All these laws are intended to outlaw illegal wood and wood products from their marketplace but have no jurisdiction in the country of origin.

PEFC labled wood
The EUTR, which came into force in March 2013, forms part of the EU’s efforts to stamp out the international illegal timber trade which, according to the European Timber Trade Federation is “still estimated to be worth billions of Euros a year”. According to Interpol “the trade in illegally harvested timber is highly lucrative and estimated at US$30 billion annually.” It is also believed to contribute to deforestation, deprive often poor producer countries of tax revenues and curb the ability of local populations to derive a legitimate income from sustainable and legal forestry and timber production.

Such regulations now affect the ability of furniture manufacturers to export to certain markets without material purchasing protocols and systems to track it through production and eventual transparent presentation to buyers. And it is important to note that furniture manufacturers in countries that have not yet established national forest certification
systems, or do not yet have a VPA, can still offer furniture with certified material through COC certification of their own manufacturing facility. The EUTR makes it an offence to ‘first place’ illegal timber on the EU market, whether that’s sourced from outside the EU or grown within it – and the definition of illegal is that of the country of origin.

The EUTR also obliges all companies, which first place timber or wood products on the EU market, termed ‘Operators’ under the Regulation, to assess the risk that they come from illegal sources. To do this, they must operate a sound due diligence risk assessment system (DDS), which satisfies the Regulations’ legality requirements. (www.ettf.info)

    Acronym Description Jurisdiction Status website
Forest Stewardship
Council
FSC Direct Certification of Forests & COC by Independent 3rd Party Auditors Global Voluntary fsc.org
Programme for the Endorsement of Forest Certification PEFC ‘Not for Profit’ Scheme for Endorsing National Forest Certification Schemes & COC Global Voluntary pefc.org
Sustainable
Forestry Initiative
SFI Independent National Forest Certification Scheme in N. America endorsed by PEFC USA & Canada Voluntary sfiprogram.
org
Malaysian Timber
Certification Council
MTCC Independent National Forest Certification Scheme in Malaysia endorsed by PEFC Malaysia Voluntary mtcc.com.
my
Lacey Act
Amendment
Lacey Law in USA to protect endangered species, amended to include trade in illegally harvested trees USA Mandatory cbp.gov
(trade/
Lacey)
European Union
Timber Regulation
EUTR New Law in all 27 EU Member States designed to outlaw the trade in illegal wood and paper products All EU
Member
States
Mandatory euflegt.
efi.int
Illegal Logging
Prohibition Act
  New Law in Australia to outlaw trade and use of illegally harvested wood Australia, excluding
External Territories
Mandatory comlaw.
gov.au
Sistem Verifikasi Legalitas Kayu (Timber Legality Assurance System) SVLK Indonesian Government scheme to licence exporters of legally harvested wood & wood products Indonesia Signed, but not yet ratified lei.or.id
VPA Voluntary Partnership
Agreement
VPA Mutual Agreement between EU and Foreign Governments to accept licenced exporters to EU EU and partner
countries
On-going euflegt.
efi.int
MYTLAS Malaysia Timber
Legality Assurance
System
MYTLAS Malaysian scheme to assure buyers that timber has been legally produced Malaysia Work in
progress
mtib.gov.
my
LEGALITY

In response to these laws, some countries have embarked upon Voluntary Partnership Agreements (VPAs) with the European Union under the EU Forest Law Enforcement Governance and Trade (FLEGT) Action Plan. VPAs aim to guarantee that the wood exported to the EU from the partner country is from legal sources and to support those countries in improving their own forest regulation and governance. As part of the VPA, partner countries commit to development of comprehensive legality licensing procedures for all timber exported to the EU. In some cases, VPA countries are extending these procedures to cover exports to all countries. VPA licensed timber imported into the EU is exempt from the due diligence requirements of the EUTR.

Indonesia moved a step closer in September to becoming one of the first suppliers of timber licensed as legal under the EU FLEGT. When available, this will satisfy the requirements of the EUTR without additional due diligence risk assessment. Indonesia’s Forestry Minister Zulkifli Hasan and EU Environment Commissioner Janez Potočnik have signed the country’s FLEGT VPA. This marks the culmination of six years’ work, from the start of its VPA negotiations, to establish a watertight forestry and timber legality assurance framework that meets the parameters of the EU anti-illegal timber FLEGT initiative. Central to the process has been the establishment of Indonesia’s definition of illegal timber. It has also had to set up a legality assurance system (LAS), and associated licensing, auditing and monitoring
mechanisms and organisations, with the input of as wide a range of stakeholders as possible. So far 19million ha of Indonesia’s production forests and over 700 timber processing companies have been audited under its LAS – named its SVLK system. The latter has issued documentation for 53,000 timber consignments, a total of 5.4million m3. It has also run trial timber shipments to the EU under its associated V-Legal licensing operation, effectively a test-bed for the systems for ultimately issuing and auditing FLEGT licences.

Certified American Cherry

Next Indonesia and the EU have to ratify the VPA, which covers a specific list of named timber and wood products, into their respective laws. Both must be then be finally assured that the LAS is up to the task, before the listed goods can enter the EU as FLEGT-licensed and, subsequently, automatically legal under the EUTR. No definitive deadlines have been set, but the hope is that Indonesia will start issuing FLEGT licenses in 2014. Fourteen other countries in Asia, Africa and Latin America are developing EU VPAs and ten more are in initial exploratory talks. (ettf.org)

In the case of the USA, which does not have a VPA with the EU, independent studies have been made to provide evidence of low risk (less than 1% chance) that American hardwood is harvested illegally. This can be used as part of the EUTR due diligence process along with other evidence that the US hardwood forest resource has been, and is being, sustainably and legally managed. The industry is also working towards providing American Hardwood Environmental Profiles (AHEPs) which give environmental impact data with every individual consignment of hardwood delivered to any market in the world. (American hardwood.org)

Regular U.S. Forest Service inventories demonstrate that between 1953 and 2007, the volume of U.S. hardwood growing stock more than doubled from 5,210 million m3 to 11,326 million m3. There was a 15% increase in growing stock between 1997 and 2007 despite strong growth in demand for hardwoods during this period. The U.S. Forest Service forecasts indicate that further increases of 15 - 20 % are expected in the hardwood growing stock inventory through 2030. Projections of hardwood growth and removals nationwide indicate that growth will continue to exceed removals through to 2050. (americanhardwood.org)

MARKET RESPONSES

One of the most frequent questions is how wood processors and furniture manufacturers can benefit their business through certification, when they have no control over forest resources as in most cases. COC certification is available for the purpose of processing certified wood material to provide evidence of sustainable wood. However for legal reasons the European Union cannot recognise certification as complete evidence of legality and requires due diligence, or FLEGT-licenced wood, in order to be compliant.

Nevertheless, EUTR acknowledges that certification is a valuable tool for due diligence and many large importers have given certification a central role in their programmes for EUTR conformance. So too have US importing companies to minimise risk of prosecution under the Lacey Act. And in all markets, large timber trading and retailing companies remain very conscious of the potential damage to their brands if found in possession of wood from illegal or other poorly managed forests.

What has been clear for many years is the fact that there is no premium for ‘green’ products – certified or uncertified. But what is also clear is that suppliers, whether of raw material or finished products such as furniture, increasingly need to provide evidence of legally harvested and sustainable materials in their products and provide evidence of it. Finally, the development of these rules and regulation issues is far from complete. Rupert Oliver of Forest Industries Intelligence sums it up when he says, “I think there is a growing recognition that existing COC and certification procedures are neither infallible nor sufficient – and for many suppliers may not be the “right” response. New technologies, such as DNA, RDIF tags etc., may yet make paper-based certification less relevant. The logic of EUTR and Lacey is that there should be more emphasis on credible regional risk assessments and Controlled Wood approaches, while at the same time there is growing recognition that environmental issues associated with wood go well beyond forestry; with new LCA and EPD tools being developed to recognise this new reality.” That is as may be, but meanwhile manufacturers and exports have to work within the laws now established and with the tools of certification and COC as are available.