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Due diligence origins

The European Timber Trade Regulation (EUTR) is best practice worldwide! .... and still has gaps that you should know about.
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This makes it easier for you to make your own assessment of an existing offer for a timber delivery with due diligence documents. So  you can then make your municipal procurement decision for or against, provide arguments or obtain further information.
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You should also keep in mind that European due diligence has so far only been available for wood, not for other materials that are imported into the EU. That's not to say other materials don't need it at least as much, just that wood is better monitored.

​​​​ The EUTR with the VPA and what they regulate

 

The European timber trade regulation EUTR aims to ensure that no illegally felled timber reaches Europe.

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The European Union wants to prevent overexploited timber from being traded in Europe with a complex system, the European Timber Regulation (EUTR). The European Timber Regulations (EUTR), with the FLEGT regulation and due diligence, is a highly complex system, but quite ambitious worldwide.

 

In the European FLEGT regulation, so-called VPA agreements (Voluntary Partnership Agreements) are signed with the countries that import wood to Europe . Basically, these are initially nothing more than declarations of intent by the countries to behave in conformity with the requirements of the EU. However, VPA “Agreements” are not legally binding contracts that would entail penalties or otherwise. However, this does not mean that only countries with VPA "agreements" are allowed to import wood into the European Union.
 

The intention of those countries that sign a VPA agreement is of course to be able to participate preferentially in trade with Europe. In the VPA with Indonesia, for example, Article 13 (market incentives) states (loosely translated):

 

"Taking into account its international obligations, the Union promotes a favorable position in the Union market for the timber products covered by this Agreement. Specifically, these efforts will include measures to support: (a) public and private procurement policies that recognize and ensure a market for a supply of legally harvested timber products; and (b) a more favorable perception of FLEGT-licensed products in the marketplace Union market”.
 

The actual control, including all the necessary costs, takes place in the EU itself, in the individual EU countries. These must implement the so-called Due Diligence Regulation .

 


VPA agreement

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VPA agreements are statements of intent, not control


The European FLEGT regulation (ec.europa.eu/environment/forests/flegt.htm) requires partner countries that want to supply wood to the EU to enter into so-called “FLEGT Voluntary Partnership Agreements (VPAs)”. VPA agreements are declarations of intent by the exporting countries.

 

“The first VPA was signed with Ghana, then with Republic of the Congo, Cameroon, Indonesia, Central African Republic, Liberia and Vietnam. The EU has concluded negotiations with Honduras and Guyana”. “Negotiations are currently underway with Ivory Coast, the Democratic Republic of the Congo, Gabon, Laos, Malaysia and Thailand. Indonesia is the first country in the world to start issuing FLEGT licenses on 15 Nov 2016”. "FLEGT licenses are issued by the Licensing Authorities, which are independent organizations registered with the Ministry of Environment and Forestry of the supplying country" (www.euflegen)

 
Malaysia was one of the first countries (since 2007) to start negotiations on a Voluntary Partnership Agreement (VPA) with the EU. The Malaysia-EU VPA negotiations are the most protracted VPA negotiations yet, partly due to the complexity of Malaysia's political situation. However, negotiations have been in limbo since late 2014 while the EU awaits a signal from Malaysia that it is ready to resume negotiations involving the state of Sarawak.

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  • VPAs have also been concluded with countries where it is known that the proportion of illegally felled wood in products can be comparatively high (e.g. Congo, Vietnam, Ghana, including some Indonesia).

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  • On the other hand, there are countries with which no VPA agreement could be reached at all, where massive deforestation is still taking place, such as Brazil.

 

  • And there are countries with which there are no VPA agreements, but in which no deforestation is taking place today (eg Uruguay).

 

  • So the VPAs actually say little about how high the risk is of deforestation taking place in the country.

 

  • A VPA does not mean that overexploitation will be ruled out in the country concerned in the future.

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  • VPAs do not prevent wood from old-growth forests from entering the EU. They are only intended to regulate that no illegally felled wood reaches Europe.

 

  • In the VPA, 'illegally felled' usually only means that no timber should come to Europe for which NO felling concessions have been issued by the state. In many countries, however, the state awards logging concessions in the primary forest, such as Malaysia, Indonesia, Congo, Brazil, Russia, etc.

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  • The VPA should also regulate and, in principle, the responsible authorities should also check whether there has been any mixing with illegally felled timber on the way. How exactly they implement this in practice is not described, only that this has to be confirmed with officially signed documents.

 

 

VPA are NOT an "everything OK document"
 

One must be aware that VPAs are primarily intended to facilitate access to the European market for countries that have VPA agreements with Europe. Access here is associated with significantly fewer conditions. This is exactly the reason why countries with tropical forests like Cameroon, Ghana, Indonesia, Malaysia, Congo, Liberia, Central African Republic, Vietnam etc. sign VPA agreements in the first place.
 

VPA documents are anything but "everything OK documents" ... without controls maybe even sometimes the opposite.

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For example, from an environmental point of view, it is not initially clear why a public body should rather advertise wood from the Congo (with VPA) or Indonesia (with VPA) (see marketing article in the individual VPA) than wood from Uruguay (without VPA) due to a VPA .   
 

From the point of view of those municipalities that want to continue sourcing wood from these regions, it is important to emphasize that VPA could under no circumstances "replace" the controls (due diligence spot checks) in Europe (see DD controls). All municipalities that still want to continue using tropical wood from these regions should get more clarity here themselves.

 

 

For information on VPA agreements, the VPA of the countries be read (www.eufglich.efi.int/home). Make up your own mind about previous VPAs   
 

 

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​​Due Diligence  
 

The actual control of the EUTR takes place in the individual EU countries. These must implement and comply with the so-called due diligence regulation. The European due diligence regulation is unique worldwide and should also be imitated in other parts of the world and above all in other raw material groups! ... However, it is not (yet) certain.  
 

For due diligence, every importer into the European Union must submit a due diligence system, with which he must prove that he has minimized the risk that wood from illegal sources or overexploitation is contained in the shipments that he first enters the European Union introduces.

 

It should be noted that supplies that have been imported into the EU for the first time and are now imported and exported within Europe's borders across national borders are no longer subject to due diligence.

The WCMC (World Conservation Monitoring Council) of UNEP publishes EU Timber Regulation Checks every six months. Although these are only based on questionnaires, i.e. ultimately on self-assessments by the respective countries, these few results to date are nevertheless very revealing.


According to the report "Overview of Competent Authority EU Timber Regulation checks, July - December 2018 by WCMC, a total of 805 importers from a total of more than 127,500 importers into the EU were checked by all EU states during this reporting period (Tab. 1.1). That is < 0.6% of all importers into the European Union. Of these only 805 importers checked, the majority did NOT have an adequate due diligence system.

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According to the WCMC report, Belgium, Estonia, Finland, Latvia, Luxembourg, Sweden, England had 50 - 100% of importers do not have an adequate due diligence system. Many countries such as Bulgaria, Croatia, Greece, Hungary, Iceland, Liechtenstein, Lithuania, Portugal, Romania and Slovakia have either not reported at all or importers were examined but no results were reported, which speaks for itself. Germany, Italy and Romania took the highest sample numbers in Europe, but only Germany and Italy reported the results.


Even in Germany, 47% of the checked importers did not have an adequate due diligence system. This could mean that every second m3 of wood imported into Germany from outside the EU could come from unsafe sources.

As a conclusion from the WCMC reports, one must (unfortunately) say that due diligence has not (yet) been able to guarantee that no illegally felled timber will reach Europe.


The gaps in the European due diligence system that have been pointed out are fatal for the European processors, because even if they act in the best of faith, this can (!) ultimately mean that they still use illegally felled wood for the wood, semi-finished goods and wood products cannot be ruled out.

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Distortions of competition and loopholes due to inconsistent implementation of due diligence in Europe

 

Different countries in Europe have different risks under the European Timber Regulation and their authorities apply different standards . 


Therefore, the application of the EUTR differs greatly in the individual countries, which means that certain ranges are only imported in selected countries "because in the rest of Europe it is no longer possible to import these goods in accordance with the EUTR" ( DG Wood website).“The uneven implementation of the EUTR is leading to a movement of potentially illegally harvested timber to countries with lower standards. The import of illegally felled timber can only be effectively prevented if all participating states create equal framework conditions” (GD Holz).

It is also problematic that once timber imported into the EU, including tropical timber, has been placed on the EU market for the first time via an entry country, nothing is checked for legality in intra-European trade. If, for example, wood comes from Belgium and the Netherlands, where tropical wood is transported to the major overseas ports (e.g. Rotterdam) arrives and has been inspected, it can be traded in Europe without any restrictions. It is particularly fatal that in such entry hotspots to Europe no one (Belgium) or only a few (1/3rd) of the importers (Netherlands) was able to prove an adequate due diligence system in 2018.

 

A large proportion of the wood products imported into Belgium and the Netherlands are re-exported (cf. Eurostat), above all within Europe. The EU should pay particular attention to the hot spots of entry into the EU (cf. EU foreign trade statistics). Particular caution is also required with products in which the type of wood is no longer recognizable, such as energy wood or panels such as plywood. With plywood from China, how should a customs officer or a control authority be able to tell whether the panel contains, for example, parts of endangered tree species? Not at all.
Problem of false declarations.


An expert from the Thünen Institute shows in an interview on the "Forest Cultural Heritage" website of the Federal Ministry of Food and Agriculture that "occasionally" there are "incorrect declarations" of tropical timber arriving on the European market.

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Article and figure, Bruckner and Strohmeier, January 2021. The authors are responsible for the content. Literature and WCMC reports Literature lists HVH / LCT or from WCMC itself  www.unep-wcmc.org

 

Conclusion
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As before, there is simply still a great deal of uncertainty when it comes to timber imports, especially from tropical countries into the European Union. Every procurer has to ask himself if he has this uncertainty  wants to enter. Or whether he would prefer to rely on wood that is easy to use, as can be proven with the HOLZ VON HIER (HVH) resp. LOW CARBON TIMBER (LCT) certificate. 
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