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Report from
Europe
Benefits of FLEGT licensing to European market
prospects
A survey of over 130 companies in the EU+UK, including
a significant proportion of the region¡¯s largest importers of
tropical timber products, highlights that FLEGT licensing
has helped boost market prospects for Indonesian
products. It also shows that implementation of the EU
Timber Regulation (EUTR) and associated rising
dependence on certified products has led to a narrowing in
the range of tropical companies supplying the region
overall.
But while EUTR contributed initially to the fall in share of
tropical timber products in the EU+UK market, the survey
reveals that this effect may be moderating and a significant
minority of respondents now suggest that the existence of
EUTR is helping to reduce reputational problems
surrounding trade in tropical timber.
The survey was undertaken in 2020 by the FLEGT
Independent Market Monitor (IMM), the ITTO project
supported by EU funding, and covered tropical timber
trading companies in six countries (Belgium, France,
Germany, Italy, the Netherlands and the UK) which
together account for over 90% of EU+UK timber imports
from VPA partner countries.
The 2020 survey built on earlier IMM surveys undertaken
each year between 2015 and 2019 and covered a broad
range of private sector players, including importers and
agents as well as manufacturers, retailers, wholesalers and
building contractors.
In response to a question on which country respondents
believed would be the most important supply country for
tropical timber five years from now, Indonesia received by
far the most individual votes in the 2020 survey,
overtaking all four countries identified as potentially more
important when the same question was asked in 2018
(Cameroon, Brazil, Malaysia and Congo Republic).
Indonesia received 45 out of a total of 293 votes in 2020
(survey respondents were allowed multiple answers),
compared to 38 votes for Malaysia, 36 votes for
Cameroon, and 32 votes for Brazil. Vietnam ranked only
9th in the 2020 survey, a result likely due to the fact that
most respondents are importers of HS44 wood products,
rather than furniture which dominates imports from
Vietnam.
India (3 votes) emerged for the first time as a potential key
supplier in the 2020 survey. Over the last decade, Indian
exports of wood products and especially furniture
increased substantially to a number of countries in the
EU+UK including Germany, the Netherlands, the UK and
France.
Brazil made a sharp recovery in 2020, after a drop to just
12 votes and 9th place in the ranking in 2019.
However, according to survey respondents, doubts still
persist regarding the political situation in Brazil and the
implications for timber legality and EUTR due diligence.
Several other South American countries were mentioned
as having potential to gain in importance as suppliers to
Europe, including Peru (8 votes), Bolivia (3 votes) and
Suriname (3 votes). Among South American VPA partner
countries, Guyana (3 votes) was considered to have
slightly more potential as a supplier than Honduras (1
vote) in 2020.
Surveyed companies were asked whether FLEGT
Licensing and the introduction of the EUTR has had any
direct impact on the share of tropical timber in their
overall timber imports.
Two thirds of respondents confirmed fully or partially that,
where possible, they would give preference to FLEGTlicensed
timber from Indonesia over unlicensed timber
from competing sources. The proportion of respondents
reporting small increases in Indonesian timber product
imports due to introduction of FLEGT-licensed timber
rose sharply to 28% last year; this compares to 12% in
both 2018 and 2019. A few respondents indicated that
Indonesia had gained market share from South American
and Malaysian suppliers.
Nevertheless, a significant majority (71%) of respondents
reported that FLEGT-licensing has led to ¡°no change¡± in
the share of Indonesian products in their purchases, a fact
at least partly due to Indonesia supplying limited, even
negligible, volumes of some key timber products (notably
rough sawn hardwood).
The 2020 survey also showed that 60% of respondents
found that the administrative process of importing
FLEGT-licensed timber was easily understandable and
manageable, a rise from around 50% in 2019 and less than
20% in 2017 survey. The number of respondents
highlighting challenges in the FLEGT licensing procedure
stabilised at a low level in 2020, after declining sharply in
2018 and again in 2019.
The number of respondents stating that they are ¡°fully
aware of the FLEGT process and what it involves¡±
increased by 10 percentage points to nearly 60% between
2019 and 2020, the third year of increase. The proportion
of respondents that was partially aware was close to 40%
in 2020 and those stating they were ¡°unaware of FLEGT¡±
fell to a negligible level in 2020.
EUTR shifting from negative to a positive factor for
tropical timber
On the impact of EUTR, the proportion of respondents
reporting either small or large decreases in the share of
tropical timber in their overall timber imports due to
introduction of EUTR fell from 38% in 2019 to 24% in
2020. In 2020, 67% of respondents said there was no
change in their purchase of tropical timber as a result of
EUTR and 8% said the regulation was encouraging
increased purchases of tropical timber.
Respondents who noted an increase in tropical timber
imports due to EUTR said that this was a result of an
increased level of trust in the legality of tropical timber
amongst their customers. Although only a minority had
this view, it seems to be a rising trend. No respondents in
2018 and just 2% of respondents in 2019 said their imports
of tropical timber had increased as a result of EUTR.
Survey respondents reporting negative impacts on market
share of tropical timber said that EUTR due diligence had
narrowed their supply base in tropical countries. Also
noted was an increasing concentration of tropical timber
and timber product import trade in the hands of
¡°specialist¡± exporters and importers. This means that
overall volumes produced and traded are not necessarily
declining, but the number of companies involved in trade
is, with larger companies typically taking over from
smaller competitors.
Respondents also indicated that EUTR has caused the
sector to reconsider its supply chain relationships, which
sometimes resulted in increasing substitution of tropical
hardwoods with alternatives, including temperate
hardwoods and chemically or thermally modified timber
as a result of EUTR.
Around two thirds of respondents reckoned that the
preference for certified timber products has increased
since introduction of EUTR, although not necessarily to a
large extent and with FSC benefiting more than PEFC.
12% of respondents noted a big increase in the share of
FSC certified tropical timber and an additional 43% a
small increase due to EUTR. This compares to 5% noting
a big increase and 32% a small increase in share of PEFC
certified tropical timber as a result of EUTR.
Some respondents to the survey suggested that the extent
to which certified products has increased share is
significantly constrained by capacity and cost constraints
for certified tropical timber against the background of
limited further progress towards forest certification in
tropical countries.
As a result, the stronger focus on certified products, both
to support EUTR compliance and to achieve goals set by
procurement policies, has, according to a number of IMM
survey respondents, further intensified substitution of
tropical timber products with alternatives made of
temperate wood, which are much more readily available
with FSC or PEFC certification.
Interaction between certification and licensing
When asked whether the market introduction of FLEGTlicensed
timber from Indonesia has had any impact on
their purchases of certified timber a large majority of
respondents (around 80%) answered ¡°no change¡± in 2020,
similar to previous IMM surveys. Only a very small
proportion of respondents (less than 5%) suggested that
introduction of licensing had reduced the share of tropical
timber certified by FSC or PEFC.
In 2020, there was a significant change with several
respondents from the Netherlands and the UK, in
particular, reporting increases in the share of certified
timber due to FLEGT-licensing. These companies said
that they had started buying from Indonesia as FLEGTlicensing
had increased their trust in the country¡¯s
environmental performance. However, due to company
policy they still only buy certified products, so
certification benefitted indirectly from FLEGT-licensing
in Indonesia.
In short, the evidence from this survey is that FLEGT
licensing does not detract from market demand for
certified tropical wood. Instead, it can assist market
development of certified timber from countries also
offering FLEGT licenses by improving confidence in the
overall framework of forest governance in those countries.
While the IMM survey indicates that confidence in
certified products may be boosted by FLEGT licensing, a
significant proportion of respondents believed that FLEGT
Licenses should themselves be recognised as evidence of
sustainability in procurement policies.
In 2019, 42% of survey respondents either fully or
partially agreed that Licensing should be recognised as
evidence of sustainability. In 2020, this proportion
increased sharply to 61%. Only 12% of respondents fully
or partially disagreed with such a recognition in 2020,
down from 22% the year before. The remaining
respondents were neutral on the subject.
On the other hand, the response to another question
implied a greater level of uncertainty in the European trade
on the extent to which FLEGT licensing should be
regarded as evidence of sustainability. In each annual
survey between 2018 and 2020 respondents have been
asked to indicate the extent to which they agree or
disagree with the statement ¡°FLEGT means ¡®just legal¡¯
and has nothing to offer in terms of sustainability¡±.
In every survey to date, the proportion wholly or partially
agreeing with this statement (and thereby implying that
FLEGT did not provide proof of sustainability) has been
significantly higher than those disagreeing. In 2020, 55%
wholly or partially agreed while 25% wholly or partially
disagreed (20% were neutral). This result was less
favourable than in 2019 when 43% tended to agree and
33% tended to disagree.
This highlights the still significant need for consistent
communication on FLEGT and what it delivers in relation
to sustainability. It also emphasises that if FLEGT
licensing is to fulfil its full market development potential,
it needs to be endorsed more widely as evidence of
sustainability in public sector and corporate procurement
policies.
Further details are available from the FLEGT Independent
Market Monitor (www.flegtimm.eu)
IMM webinar on tropical timber trade trends during the
pandemic
Tropical timber trade trends through the pandemic and the
latest on FLEGT, including UK promotion of the
initiative, are topics of an Independent Market Monitor
(IMM) webinar at 10 am-12 noon on CET June 24. The
IMM¡¯s mandate is to monitor trade impacts and
perceptions of FLEGT Voluntary Partnership Agreements
(VPAs) and market performance of FLEGT-licensed
timber in the EU and UK.
The webinar will feature IMM¡¯s analysis of the tropical
trade over the last 12 months and the effect of the COVID-
19 health crisis on supply and demand. It will also include
a summary of recommendations and conclusions around
the FLEGT initiative from four years of IMM market
surveys and trade consultations.
A key point voiced by the trade in IMM studies is the need
to raise the market profile and awareness of FLEGT. The
UK Timber Trade Federation is among the most active
players in promotion of the initiative and will outline the
initiatives and impacts of its FLEGT communications
programme to date and plans for the future.
To sign up to this free event visit:
https://us02web.zoom.us/webinar/register/WN_vwZH7iihS061CM2JN5vX6w
Record penalty imposed for illegal timber import into
the EU
According to a report by the Environmental Investigation
Agency (EIA), WOB Timber, a logging company based in
Hamburg, Germany, has been ordered by a court to pay a
€3.3 million fine for illegally trading Myanmar timber.
The April 27 decision was one of the highest financial
penalties for this type of crime in the European Union.
On 27 April, the Regional Court in Hamburg found that
WOB Timber had evaded the EU sanctions on 31 separate
shipments of timber worth millions of euros from 2008-11,
when the previous military junta ¨Cthe State Peace and
Development Council (SPDC) ¨C was sanctioned by the
EU.
According to an investigation by EIA, many of the
shipments involved timber being processed in Taiwan
P.o.C and declared as originating from that country, rather
than Myanmar, to evade the sanctions.
In addition to fining the company, the Court sentenced
director Stephan B¨¹hrich to a 21-month suspended prison
sentence and a fine of €200,000 and warned further cases
would result in even harsher penalties.
More details at
https://eia-international.org/news/germanfirm-investigated-by-eia-convicted-for-breaking-eusanctions-by-trading-illegal-myanmar-teak/.
EU and Honduras sign FLEGT agreement
On 27 of April the European Parliament adopted a nonlegislative
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 ¨C
after several years of negotiations ¨C the EU and Republic
of Honduras 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 thereby fulfill the requirements
of the EUTR.
TTF webinar on UK Timber Regulation
The Timber Trade Federation hosted a webinar on UK
Timber Regulation with the participation of the Office for
Product Safety & Standards (OPSS) ¨C the competent
authority for enforcing the UK Timber Regulation.
The webinar provided the audience with detailed
information about the scope, contents, enforcement and
potential market implications of the UK Timber
Regulation, particularly how it compares to the EU Timber
Regulation. It highlighted that a major distinction lies in
the fact that all imports of wood products into the UK
from the EU must now be subject to due diligence and
that, even if certified, wood imported from the EU can no
longer be assumed to be legally sourced.
In addition only direct imports into the UK of FLEGT
licensed timber from Indonesia are exempt from due
diligence. Indirect imports by way of the EU are not
exempt.
The full webinar can be viewed at:
https://www.youtube.com/watch?v=JUhmiYQPoxw
EU Forestry Crime project ¨C events 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¡±.
This report can be downloaded at
https://www.wwf.de/fileadmin/fm-wwf/Publikationen-PDF/Wald/WWF-EU-Forest-Crime-Recommendations.pdf.
It is notable for the focus on illegal logging in European
countries dealing with the main gaps in forestry legal
frameworks of Belgium, Bulgaria, France, Romania,
Slovakia, and Ukraine.The final conference evaluating the
project is being held on 15th and 16th of June.
The event is addressed to both EU and national decisionmakers
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.
Details of the conference are at:
https://hopin.com/events/joining-forces-against-illegal-timberon-the-eu-market
Claim of rising European harvest relies on flawed
reading of satellite data
Is forest harvesting increasing in Europe? Yes, but not as
much as reported last July in a controversial study
published in Nature. This is the conclusion of a response
article published in April, also in Nature, joint authored by
30 scientists from 13 European countries which set out to
demonstrate that the large harvest changes reported by the
European Commission¡¯s Joint Research Centre (JRC) was
the result of methodological errors.
The contents and implications of the response article are
explained in a blog posted by Dr Marc Palah¨ª, the Director
of the European Forest Institute (EFI), on the EFI website
in May
See:https://blog.efi.int/is-forest-harvesting-increasing-in-europe/
Dr Palah¨ª, who co-led the response, notes that the original
report authored by the JRC in Nature, entitled ¡°Abrupt
increase in harvested forest area over Europe after 2015¡±,
used satellite data to assess forest cover and claimed an
abrupt increase of 69% in the harvested forest in Europe
from 2016. The JRC suggested that this increase resulted
from expanding wood markets encouraged by EU
bioeconomy and bioenergy policies.
According to Dr Palah¨ª, the publication of the JRC report
in Nature triggered a heated debate, both scientific and
political, as the EU Parliament and Council were
discussing the Post-2020 EU Forest Strategy. This
encouraged preparation of the co-ordinated response from
forest scientists across Europe.
Dr Palah¨ª states that ¡°our response showed methodological
errors, relating to satellite sensitivity improving markedly
over the period of assessment, as well as to changes in
forests due to natural disturbances ¨C for example drought
and storm related die-back and tree-falls ¨C being often
attributed wrongly to timber harvests¡±.
¡°In the future forest information should be more carefully
assessed, taking into account a wide variety of
methodological issues and factors, before drawing hasty
conclusions. This requires enhanced collaboration as well
as scientifically robust and common approaches between
the European Commission and Member States to enable
better informed forest-related policies in the context of the
EU Green Deal.¡±
In his blog, Dr Palah¨ª goes on to quote Professor Gert-Jan
Nabuurs from Wageningen University, an IPCC lead
author who contributed to the response: ¡°the harvest
across Europe¡¯s forests has increased in recent years, but
by just 6%, not the 69% claimed by the JRC study.
This is due primarily to a moderate economic recovery
after the 2008¨C2012 recession. What is really striking is
the unprecedented levels of natural disturbances affecting
our forests in many parts of the continent in recent years.¡±
Dr Palah¨ª concludes ¡°The implications of the errors found
by Palah¨ª and colleagues are of global relevance, as many
studies to inform policy-makers and society at large on the
state of the world forests are nowadays based on remote
sensing.
The analysis of products based on satellite imagery is
becoming key for instance to understand the extent of
global deforestation, and thus we need scientifically robust
remote sensing methods for sound policy-making¡±.
More than enough wood in European forests,
according to EFI experts
In a related EFI blog post, Professor Gert-Jan Nabuurs,
Bas Lerink and Mart-Jan Schelhaas argue that the sharp
increases in timber prices worldwide since the middle of
2020 do not reflect any long-term shortfall in the supply of
wood. Rather the trend is due to the combined effects of a
spike in demand driven by economic stimulus measures at
a time when supplies have been severely disrupted during
the pandemic.
The authors argue that in Europe the supply imbalance
will even out in the medium term but that does not mean
that changes to forestry policies and practices are not
needed to help satisfy the anticipated long-term rise in
demand for carbon-neutral wood products. Specifically,
there needs to be increased harvesting (not an easy process
by the way), more investment in reforestation and efficient
processing capacity, and increased recycling.
The authors note that during the corona lockdowns, many
people in Europe and North America started home
renovations or building new homes. These and other
construction activities have been boosted by central bank
policies in the EU and USA, which have kept interest rates
record low. Also, fiscal stimulus packages due to the
corona crises have supported public investments, for
example to fund construction. All these activities
contributed to increasing demand for wood.
In addition, say the EFI authors, there is simply a shortage
in wood processing capacity so that supply has been
lagging behind demand now for several years. In addition,
in 2020 as many sawmills and logistics were partly closed
down due to corona restrictions, the supply of timber
declined and deliveries were delayed.
The EFI authors also suggest that the US softwood dispute
with Canada has contributed to rising timber prices. As
early as 2018, to protect the US domestic market, the
Trump administration significantly increased import tariffs
on Canadian timber. As a result, Canada now supplies
timber to China, and the United States purchases much
more softwood from Europe, including from Austria,
Germany and Scandinavia.
With increased demand for European timber, there are
now shortages, according to the EFI authors. Even the
oversupply from Germany and Czech Republic caused by
the increased loggings in forests affected by bark beetles
have not made up for these shortages, as a fair share of
their supply was exported to China. Also, in this central
European region, coniferous log prices are still below the
level of five years ago.
The EFI authors ask the question, ¡°Is there really a
shortage of wood [in Europe]?¡± and offer the response,
¡°No, definitely not¡There is more wood in the European
forests than at any time since the late Middle Ages.
Including countries in eastern Europe such as Ukraine and
Belarus, this stock of wood amounts to almost 35 billion
cu.m. Due to forest growth, a billion cu.m of wood is
added every year. The harvest is only 600 million
cu.m/year. So there is certainly no physical shortage¡±.
They note that building more buildings with wood in
Europe would do little upset this supply balance: ¡°even if
the EU were to build 30% of its new homes with wood
(equivalent to 300 000 dwellings per year), that would
mean only an extra demand of 15 million cu.m of sawn
timber (for comparison: Sweden alone produces annually
18 million cu.m). A small increase¡±.
The EFI authors also emphasise that ¡°For clarity, it is
important to stress that the current price increase has
nothing to do with the bioenergy market, because these are
completely different types of wood and qualities¡±.
They conclude ¡°If we must get rid of fossil fuels, the
demand for wood may increase. That is possible under two
requirements: we should further improve efficiency and
reuse of wood products. And in addition, we need to
invest in good forest management and reforestation. The
EU Green Deal and Timmermans¡¯ Green Deal¡¯s 3 billion
trees are a good start¡± (a reference to the EU¡¯s ambitious
strategy published last year to plant 3 billion trees
alongside other measures to protect the region¡¯s natural
resources for which EU aims to raise €20 billion per year).
See
https://blog.efi.int/more-than-enough-wood-in-the-europeanforest/
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