EU Timber Regulation

American hardwood industry endorses EU efforts to eradicate illegal timber trade

As the representative trade association of one of the world’s largest hardwood exporting industries, the American Hardwood Export Council (AHEC) has a considerable stake in eradicating illegal wood from trade. A major concern for AHEC is that neither the value nor the reputation of legally harvested products is undermined in world markets by competing products from illicit sources.

For this reason, AHEC was a leading supporter, through membership of the U.S. Hardwood Federation, of the U.S. Lacey Act Amendment of May 2008. This makes it an offence within the U.S. to possess any plant (excluding agricultural crops but including wood and derivative products) "taken, possessed, transported, or sold" in violation of any relevant foreign or state law.

AHEC has also been closely involved with, and fully supports, the efforts by the European Union to enforce the EU Timber Regulation from 3 March 2013. This regulation imposes mandatory requirements on companies that “first place” forest products on the EU market to implement a “due diligence system” to minimise the risk of illegal wood entering the EU.  Any such company failing to demonstrate due diligence, or found to have placed illegally harvested wood on the EU market, is subject to legal sanction.

Innovative risk based approach to supply chain management
A key strength of the EUTR is that while it establishes tough sanctions for any failures in due diligence, it is flexible on the mechanisms by which legality may be demonstrated. This responds to the reality of complex international supply chains and highly variable regulatory systems in timber supplying countries.

Nor does EUTR impose unnecessary new controls on suppliers in regions where the existing legal framework is effective. The law does not require European regulatory authorities to capture or monitor individual shipments to ensure they are legal. Instead it focuses on ensuring that EU timber importing companies have effective management systems to reduce the risk of trade in illegal wood. By doing so, it builds on existing due diligence systems that have been applied by responsible European traders for many years.

EUTR requires that the EU importer is able to identify for every product group the "country of harvest and, where applicable, the sub-national region and the concession of harvest".  Information on origin beyond country of harvest is required only in those circumstances where the EU importer judges that the risk of illegal harvesting varies between sub-national regions or between concessions within those regions.

Under EUTR, the importer’s due diligence system must "provide access to documents or other information indicating compliance of those timber and timber products with the applicable legislation". No specific requirements are established for the types of documents and other information most appropriate to meet this obligation. However, they must be of appropriate quality, credibility and scope to allow the EU importer to determine that a timber product is of negligible risk in terms of illegal supply.

Demonstrating EUTR conformance with U.S. hardwoods
In the case of U.S. hardwoods, this requirement is satisfied through the comprehensive “Assessment of Lawful Harvesting & Sustainability of U.S. Hardwood Exports”  commissioned by AHEC and undertaken by Seneca Creek Associates, a team comprised of well-regarded and independent analysts and experts in the field of U.S. forest policy and forest certification. The Seneca Creek team compiled detailed information on the scope, effectiveness and enforcement of federal, state, and local regulatory programs across all the U.S. hardwood producing states.

The Seneca Creek assessment remains the only comprehensive sector-specific and peer-reviewed study to quantify the risk of any wood being derived from a controversial source, including illegal harvesting, in line with both the FSC Controlled Wood standard and the PEFC Chain of Custody standard. 

The Seneca Creek study demonstrates that there is less than a 1% risk of any illegal wood entering the U.S. hardwood supply chain. This result emerges from the robust institutional framework for hardwood forest management in the United States which combines clear and fully enforced property rights, multi-generational family forest ownership, respect for the rule of law, and a strong civil society.  All U.S. trading companies are also subject to the rigours of the Lacey Act, further mitigating any perceived risks that may be associated with sourcing U.S. hardwood products.

Drawing on the Seneca Creek study, together with recent analysis of other data sources such as the Transparency International Corruption Perceptions Index, the FSC Global Risk Register concludes that the United States is low risk against all 4 FSC Controlled Wood criteria established for legality. This conclusion is currently undergoing further review as part of the on-going process to prepare an FSC Controlled Wood National Risk Assessment for the United States.

The EC Guidance on EUTR  indicates that credible third party studies like the Seneca Creek assessment, and independent sources such as the FSC Risk Register, where these demonstrate negligible risk of illegal logging in specific regions or for specific product groups, are an appropriate form of documentation for EU importers to meet their legal obligations.

While EUTR places the due diligence obligation firmly on the importer, AHEC has prepared specific guidance for AHEC Members to ensure that U.S. hardwood exporters are fully briefed on the EUTR obligations and therefore better able to assist their EU customers. The guidance has been prepared drawing on active participation in the process to develop EUTR over the last 5 years, meetings with European Commission and EU Member State officials, and close analysis of the EUTR and supporting documentation. This guidance can be downloaded here.

Need for consistent communication and EU-wide enforcement
AHEC believes that the EU now needs to move forward and commit sufficient resources for consistent communication and effective enforcement of EUTR. It is clearly a very significant challenge to successfully roll out a complex and untried piece of legislation across tens of thousands of operators in the EU. However, if properly enforced, EUTR should play a major role to level the playing field for responsible suppliers of timber into the EU.

According to AHEC European Director David Venables, “EUTR is an opportunity to highlight the leadership role of the timber sector to develop genuinely sustainable supply chains.  With passage of the EUTR, the industry will be the first major materials sector able to demonstrate that 100% of raw material supplied into the EU is low risk of being illegally sourced.”

EUTR is also an opportunity for the wood industry to move beyond fire-fighting negative publicity surrounding illegal logging and to build more proactive communication efforts demonstrating the strong environmental credentials of wood compared to non-wood materials.

AHEC’s robust response to the EUTR is part of a much broader strategy by the U.S. hardwood industry to demonstrate real sustainability.  “The results of AHEC's on-going Life Cycle Assessment (LCA) project, together with our EUTR response, clearly demonstrate that U.S. hardwoods have a very powerful story to tell, particularly when environmental issues are taken in the round, on a full cradle to grave basis,” says Venables.