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Report from
Europe
Action required now by tropical wood suppliers to
meet EUDR requirements
Tropical wood exporters to the EU need already to be
collecting the due diligence data - including evidence that
wood is legal and deforestation-free and the geo-
coordinates of all the individual plots of land (defined as a
single real estate property) from which all wood products
are sourced - to ensure they can meet the requirements of
the EU Deforestation Regulation (EUDR) when
enforcement begins on 30 December 2024.
This was the key message in relation to EUDR from the
ITTO Annual Market Discussion held on 14 November in
Pattaya, Thailand, as part of the 59th Session of the
International Tropical Timber Council (ITTC). The theme
of this year’s Market Discussion was “Tropical Timber
Industry: Challenges and Opportunities from Changing
Priorities”.
The urgent need for wood products exporters to act now so
that their EU customers can demonstrate conformance to
the EUDR was emphasised by Mr. Franz-Xaver Kraft of
GD Holz, the German timber trade association, in his
presentation on "The EU Deforestation Regulation:
Implications for Producers and Importers".
Kraft said that the EUDR applies to wood harvested after
29 June 2023 and placed on the EU market after 30
December 2024. The obligations of importers include
having to apply a due diligence system (DDS) prior to
placing imported wood on the market. The DDS must
cover issues such as deforestation, forest degradation and
harvesting in accordance with local laws.
Importers must prove that products do not originate from
land where deforestation or forest degradation occurred
after 31 December 2020. Satellite images, official
documents, certification or audits could serve as evidence,
among others. It was stated that there is no exemption for
wood covered by FLEGT or CITES. FLEGT can serves as
evidence of legality but evidence of no deforestation or
forest degradation still needs to be proven.
Turning to information required to successfully fulfil the
EUDR, Kraft pointed out that importers will have to
heavily rely on the assistance of producers. These need to
provide geo-coordinates of all plots of land where wood
was harvested, date of harvest, scientific name of the
timber, evidence that the wood was harvested legally and
evidence that the wood doesn’t originate from a plot of
land where deforestation or forest degradation have
occurred after 31 December 2020.
For so called ‘high-risk-countries’, additional information
and risk mitigation measures may be necessary. If this
information is not available, EU customs authorities will
not allow the wood to enter the EU.
A follow-up presentation by Mr. Nils Olaf Petersen,
speaking on behalf of the European Timber Trade
Federation (ETTF), focused on actions taken by ETTF in
relation to EUDR. Petersen said that the ETTF represents
timber product importers’ interests across Europe, as well
as non-importing merchants, distributors and traders. The
ETTF operates on a united base representing and lobbying
on behalf of the entire industry to national and EU
authorities and key decision makers in the marketplace.
The ETTF comprises 15 member EU timber associations
and federations.
In relation to EUDR, the ETTF has been active providing
information to its members and supplier countries through
webinars, newsletters and workshops and has regularly
conducted stakeholder consultations and communicated
with stakeholders in other commodity sectors.
Petersen emphasised that, for timber harvested after June
2023 and placed on the EU markets after 2024, the EUDR
applies so that it is important that suppliers and importers
work together to gather the required information.
The ETTF is of the opinion that the timber industry needs
a much longer transition period to allow suppliers and
importers to be confident in satisfying the requirements of
the EUDR to avoid timber shipments being seized and
companies being penalised and/or blacklisted. On
implementation, the ETTF has called for a harmonized
system within the EU that supports fair competition.
The process of implementation and enforcement by EU
member countries is still evolving but what is clear in the
EUDR, according to Petersen, is that any person can
declare a concern and that the authorities are obliged to
investigate immediately, which may lead to uneven
application (eg some countries have more active NGOs).
Petersen said that the European Commission has indicated
that the conditions for satisfying the EUDR will vary
according to a ranking system for different countries under
three categories; low risk, standard risk, and high risk.
Depending on the ranking decided by the European
Commission, differing standards in fulfilling due diligence
requirements will be applied. When the EUDR entered
into force in June 2023 all countries were classified as
standard risk. At the end of 18 months the Commission
will classify countries and parts thereof as low or high risk
and publish this list.
Petersen concluded “No sector is better prepared than the
forestry sector but currently no-one is well prepared”
adding “it will be extremely difficult for many supplier
countries and EU importers to comply with the EUDR
especially the smaller companies”. Especially transferring
the regulation into practice remains a challenge as many
practical questions are still unanswered. During the
presentation it was pointed out that trade federations were
only involved in the development of the EUDR at a quite
late stage.
Petersen also said the aim of the regulation, to avoid
deforestation and forest degradation, is undebatable and
welcomed by ETTF stakeholders. Regarding its
implementation there are some serious challenges and now
trade federations need to collaborate closely to prevent
further damage to their members.
Issues surrounding implementation of EUDR featured
heavily during the question-and-answer session with
members of the Council that followed the presentations to
the Annual Market Discussion.
The delegate from Ghana commented that the EUDR
appears to be an attempt to influence governance in
producer countries. The delegate asked for clarification on
how timber harvested from trees planted on land on which
the forest cover was destroyed by fire would be dealt with
under the EUDR. Responding on behalf of ETTF, Petersen
said the EUDR is not flexible and as it stands now, timber
from trees planted on land which was once forest but was
destroyed by fire would not meet the requirements of the
EUDR.
The delegate from Ghana also asked whether countries
with VPAs should continue pursuing FLEGT licensing.
Petersen said that the view of the ETTF was
“emphatically, yes, it would be advisable to complete the
FLEGT licensing process”. He added that he has observed
improvement in monitoring capacity, governance and
sustainability as countries move to FLEGT licensing and
this will help in meeting the requirements of the EUDR.
Also, the legality requirements of the EUDR can be
addressed through the FLEGT process. Petersen noted that
no country pursuing FLEGT should forget that it will help
reduce the burden of information requirements under the
EUDR.
A delegate from Vietnam commented on the lack of
linkage between the EUTR and the EUDR. He pointed out
that Vietnam has committed considerable resources
preparing for the VPA but now the focus in Vietnam is the
EUDR. He requested that preference should be given to
those countries that are trying to conclude VPAs and are
still actively preparing for their implementation.
On the enforcement of the EUDR, the delegate from
Vietnam pointed out that timber supply chains can be very
complicated. He said that Vietnam uses domestic acacia
and rubberwood and imported timber from over 100
countries for the manufacture of wood products for export
to the EU.
The domestic timber is supplied by small landowners,
many of whom cannot read or write. He wondered how
can they be expected to understand the requirements of the
EUDR and provide geo-coordinates for the harvested
wood and how can Vietnamese importers obtain geo-
coordinates for the vast number of species imported from
around the world to prove they are deforestation free? He
commented that there is not enough time to prepare for the
EUDR given the complexity of the sector.
The Market Discussion Chair, Rupert Oliver, commented
that many in the timber trade were startled by the time
scale for implementation of the EUDR. For large
companies which have the financial and manpower
resources it may be possible but for small operators it will
be very difficult, especially where there are complex
supply chains.
Both speakers from the ETTF shared the concerns of the
delegate from Vietnam but did not have a solution.
One indicated that he is aware the EC has some initiatives
to work with smallholders but has no details, adding that it
is important for domestic timber associations to aid small
scale suppliers.
He added that support for small scale suppliers is also a
challenge in Germany where forest ownership is very
scattered with thousands of forest owners with just one or
two hectares, a problem shared by other European
countries. He added that the EC needs to be aware of this
and provide a precise guidance document.
On Vietnamese overseas suppliers, Petersen for the ETTF
recommended that all overseas suppliers be advised on
what information and documentation they will need to
provide so the requirements of the EUDR can be satisfied.
The representative from the IWPA asked if any studies
existed on the potential economic impact of the EUDR or
impact on consumer demand and also whether studies
have been done on the potential impact of the EUDR on
small and medium-sized enterprises.
The Market Discussion Chair said he was unaware of any
economic analyses except for the fitness test conducted by
the EC.
This, he said, indicated that the costs of implementation
were believed to be quite low but it was unclear if the
private sector was consulted.
Petersen for the ETTF considered the work done by the
EC insufficient and fears that some products may
disappear from the EU market because the supply chains
are too complex making it impossible to gather the
required information to satisfy the EUDR.
To give an example on costs he quoted an example from
Germany where creating an IT-based due diligence system
for the EUDR was estimated to cost up to 400,000 euros,
and this was only the development cost. He added an SME
could not afford such a system and it would also be very
difficult for them to afford the extra staff to maintain a
robust system. He informed the meeting that he
understands the EC is planning an impact assessment at
some time in the future.
A delegate from Ghana made an intervention saying
Ghana is on the brink of issuing the first FLEGT license in
Africa which should be a reason to celebrate but
satisfaction has been replaced by frustration as achieving
FLEGT licensing has been diminished by the EUDR
which does not recognize FLEGT licenses, CITES or
certification.
He added that Ghana was convinced there were synergies
between FLEGT and certification and first thought
FLEGT would be simple but eventually realised it
involved considerable domestic reforms, not just on
legality but also on SFM. He commented that the EC has
adopted the EUDR and relegated the VPA and asked what
reason Ghana now has to celebrate. He next turned to the
risk ranking of countries to be determined by the EC and
asked what benchmark will be used and whose law and/or
judgement will be applied.
On development of plantations, he agreed that this is the
future but there is an issue of finding enough land to plant
trees on. In Ghana there are degraded forests but future
plantation timber from such land will not be accepted
under the EUDR, so the country is in a quandary.
As a final comment he reminded delegates that the
extractive industries (e.g. mining, oil/gas, etc.) are a major
source of deforestation, but the EUDR does not cover
these industries. He requested clarification as to why are
these sectors not included in the EUDR.
At the end of the discussion a delegate from the EC
intervened reminding everyone of the international
commitment to end deforestation by 2020, adding that the
EUDR is an environmental measure designed to help
achieve this objective.
He said that he had taken note of concerns regarding
smallholders, stating that this issue has been raised by
some authorities but when the EC held discussions with
smallholders they were usually positive and claimed they
could see the benefits from the EUDR.
The delegate from the EC commented that FLEGT
negotiations are ongoing with many partners and with
some the EC is close to reaching the license stage.
However, it is not possible to say countries should
continue pursuing FLEGT as it is not appropriate for all
countries.
On the issue of guidance documents raise by speakers
from the ETTF the delegate from the EC indicated the
Commission was ready to address this, adding that the
FAQ are already available. He confirmed that there will be
an impact assessment of the EUDR at some point in the
future.
On the potential impact of the EUDR, the delegate from
the EC stated that assessments have been undertaken in
Thailand, Laos and Malaysia and the conclusions for some
were quite positive. In Thailand, for example, where
rubber is a major commodity under the EUDR, the impact
assessment showed that the Thai authorities are already
well prepared.
The delegate from the EC said we should not overestimate
the difficulties. We know there will be some but through
cooperation with the EC/EU, they should be manageable.
He concluded that the regulation has now been passed so
we should all work together to make sure the timber trade
is not negatively impacted.
Following the Market Discussion, Mr. Barney Chan (TAG
Co-coordinator) presented the Statement from the Trade
Advisory Group (TAG) to the ITTC, which also focused
on the EUDR, noting that the regulation “will have a
significant impact on the tropical timber trade in EU” and
“serious implications in tropical timber producing
countries”.
The TAG Statement notes that “timber is the only
commodity within the scope of EUDR for which an
increase in demand can enhance the value of forests,
actively discourage deforestation, and promote increased
investment in sustainable forest management, as well as
help address climate change”.
In view of this, the TAG Statement notes the “significant
responsibility on the part of EU and the architects of
similar regulations in other consumer markets to ensure
that laws developed with the best of intentions to help
reduce deforestation, do not inadvertently increase barriers
to the trade in legally sourced wood products as such
regulations are more likely to undermine than enhance the
value of standing forests.”
After highlighting some aspects of EUDR which,
according to the TAG, “have the potential to create
unnecessary barriers to the sustainable development of
tropical forest resources and trade in tropical timber
products”.
The Statement concluded by welcoming “the EU
commitment in Article 30 of EUDR to evolve Forest
Partnerships with tropical countries that ‘allow the full
participation of all stakeholders’, alongside the recent
announcement of ‘Team Europe Initiative on
Deforestation-free Value Chains’ which aims to ‘facilitate
an inclusive transition to deforestation free and legal
supply chains to the EU.’”
Presentations made during the 2023 ITTO Annual Market
Discussion and the TAG Statement are available at:
http://www.itto.int/ittc-59/presentations.
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