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25th Jun 2018

Brussels avoids crackdown on illegal timber

After a series of delays, the European Commission unveiled on Friday (17 October) a legislative proposal to tackle the scourge of illegal logging.

However, the EU executive has acceded to demands from some sectors of the timber trade that it police itself.

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  • Illegal logging bleeds billions of euros from the coffers of developing world governments every year (Photo: Wikipedia)

Instead of requiring that traders halt timber imports to the EU from illegal sources, the commission's proposal only demands that they "seek sufficient guarantees" that no laws are being broken when the wood is harvested.

"Developed and developing nations must unite to protect the world's remaining forests," said environment commissioner Stavros Dimas, who is believed to have supported a more robust approach that what was ultimately agreed upon.

"We must ... send a firm message to timber suppliers that illegal timber or timber products will not be tolerated on the EU market," he added.

According to the commission, some 19 percent of timber imports to the bloc comes from sources involved in the illegal harvesting of timber, a practice that is a major cause of biodiversity loss and deforestation. Deforestation, in turn, is responsible for around 20 percent of global greenhouse gas emissions.

Corruption in forestry is a variegated phenomenon, according to the EU's executive, involving give-away logging concessions, log smuggling, and logging without permits, as well as fraud and tax evasion.

It most often occurs in developing and emerging economies, particularly in the Amazon basin, central Africa, southeast Asia and the Russian Federation, although within the EU, it has also been known to occur in Estonia and Bulgaria.

Illegal logging is often financially linked to organised crime, money laundering and civil wars. In conflict zones, revenues from the trade are often used to buy arms and pay soldiers' salaries.

Moreover, third-world governments lose an estimated €15 billion a year in lost taxes, stumpage fees - fees paid to cut wood on public land - and export duties due to illegal logging, representing a full third of the €46 billion the 27 EU member states give annually in development aid.

However, illegal logging is also extremely profitable for the timber trade. Depending on the wood product category, the price of timber coming into the EU drops by an estimated seven to 16 percent via the practice, according to the OECD.

A nefarious sector

Those sections of the timber trade that tend to be closer to the consumer, such as home improvement shops and lumber yards, have long supported strict pan-European laws against the trade, as they are very worried that their efforts to paint wood as a renewable, environmentally friendly, ethically produced resource are being undermined by exposes of abuses and are afraid that wood could become stigmatised as a nefarious sector in the same way that diamonds and coffee have been in recent years.

At the same time, say environmental groups, who want the sale of illegal timber made a criminal offence - just as it is a criminal offence for a pawn shop to knowingly sell a stolen ring, those companies further down the supply chain with less of a publicly recognisable brand to manage are not as concerned.

Worried that an expected commission proposal to tackle illegal logging might endanger profits, sector trade associations including the European Confederation of Paper Industries (CEPI), the European State Forest Association, and the Confederation of European Forest Owners (CEPF) wrote joint letters to European Commission President Jose Manuel Barroso twice, once in May and again in September, demanding a meeting to outline their concerns and complaining about the access of green NGOs to forestry officials within the EU executive.

Due diligence system

Under the proposal unveiled on Friday, operators would be required to "minimise the risk" of putting illegally harvested wood on the EU market via the "due diligence system," in which a trader has to seek reasonable assurance of the legality of the timber he buys and sells.

The standard, whose enforcement rests with the member states, is much weaker than a blanket prohibition on the placing of illegally harvested timber on the European market - an option the commission considered but in the end rejected, as it was considered "too burdensome for the EU industry," according to the commission.

Additionally, the proposal makes an exception for wood products used in energy production. The commission argues that sustainability criteria currently being developed for biofuels will be sufficient.

Greenpeace points out that this will produce a double standard: "Wood-based biofuels and biomass would need to be sustainable but not necessarily legal, whereas all other wood products would need to be legal but not necessarily sustainable," the group said in a statement.

The environmental group says that there could be a reliable traceability system, tracking wood products from forests to retailers - as the EU currently demands of food via "farm-to-fork" monitoring. This would involve third-party verification, an independent public monitoring system to assess the performance of private schemes, and a public information system to help operators identify high-risk products or suppliers.

The campaigners also want to see a regulator with the powers to control timber products, investigate crimes and prosecute offenders.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Analysis

Beyond US dispute, EU still aiming at China

On the day it outlined its reaction to US tariffs on steel and aluminium, the EU commission also launched a case against China on property rights - an issue on which EU and US are working hand-in-hand.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

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