IUCN China Liaison Office - December 2007

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ILLEGAL LOGGINGAND TRADE INITIATIVES

A BASIS FOR ACTION AND LEADERSHIP BY CHINA

ILLEGAL LOGGINGAND TRADE INITIATIVESA BASIS FOR ACTION AND LEADERSHIP BY CHINA

IntroductionThe failure of forest governance, driven by and causing illegallogging and other predatory practices, is a significant problem fortimber producing countries as well as consumer countries. Inaddition to environmental damage, illegal logging and other forestcrime results in significant revenue losses for governments,companies and communities. The World Bank estimates the valueof annual losses from illegal cutting of forests at over US$10 billionmore than six times the total amount of development assistancedirected towards sustainable forest management1 .

In China, forest protection and reforestation have become majorpriorities. The nation-wide logging ban established in 1998 followeddevastating floods that were linked to erosion caused by seriousdeforestation.

China is also increasingly engaged in national, regional andinternational efforts to address illegal logging and internationaltrade in illegally logged timber and the products derived therefrom. Given China's growing importance as a forest productsconsumer and importer, its response to these initiatives will haveimplications for sustainable forest management around the world.

This leaflet provides an overview of illegal logging and tradeinitiatives that have emerged at the international, regional, nationaland private sector levels. It also explores the implications of theseinitiatives for China and the basis for further action by China tocombat illegal logging and the international trade in illegally loggedtimber.

Illegal Logging and Trade InitiativesA wide range of initiatives and processes aimed at curbing illegallogging and trade, and more broadly improving forest governance,have emerged in different parts of the world. These exist at theinternational, regional and national levels, and although they canbe categorized as government, private sector and civil societyschemes, they are very often based on multi-stakeholder dialoguesand heavily interlinked.

Group of Eight (G8)

In May 1998, the G8 launched an Action Programme on Forests,which can be viewed as the first high-profile international initiativeaimed at curbing illegal logging. The programme gives a high priorityto eliminating illegal logging and illegal timber trade, seeks tocomplement actions undertaken at the regional and global levels,and affirms the G8's commitment to identifying actions in bothproducer and consumer countries. Illegal logging will also be apriority for discussions at the 2008 G8 Summit, to be hosted byJapan.

1 The World Bank. August 2006. Strengthening Forest Law Enforcement and

Governance: Addressing a Systemic Constraint to Sustainable Development.

The World Bank and the RegionalFLEG Ministerial ProcessessThe G8 Action Programme motivated a partnership on forest lawenforcement and governance (FLEG) between the World Bank,UK, US and others. This led to the first regional Ministerial FLEGconference in the East Asia-Pacific (EAP) region in September2001.

EAP-FLEG Although only 5% of the world's forests are locatedin Southeast Asia, the region accounts for nearly 25% of globalforest loss over the past decade illegal logging is a major forcedriving this deforestation2 .

After the Bali Conference, a regional FLEG task force was created,which first met in Jakarta in January 2003. The participantsrepresenting governments, NGOs and private sector organizations produced action plans and committed to pushing for specificnational and regional actions to address forest degradation. Inaddition, Indonesia signed Memorandums of Understanding (MoUs)with the UK and with Japan to combat illegal logging. The EAP-FLEG process has now been integrated into ASEAN s forestgovernance activities (see Box 1).

The World Bank has also supported regional FLEG processes inAfrica (AFLEG) and in the Europe and North Asia region (ENA-FLEG). All three regional FLEG processes have resulted in ministerialcommitments to identify and implement actions to combat illegallogging, and have fed into other regional forest governance schemes.Stakeholder engagement has played a key role in these regionalministerial conference processes, which have over time increasinglybrought together governments, civil society and the private sector.

AFLEG The AFLEG Ministerial Conference took place in October2003, in Yaound Cameroon, resulting in the AFLEG Declarationand Action Plan.

Efforts are being made to integrate AFLEG objectives and actionsinto existing initiatives and regional processes, such as the NationalEconomic Plan for African Development (NEPAD) and regionalforestry bodies3. For example, the Central African Forests

Commission (Commission en charge des For s d'Afrique Centrale- COMIFAC) has established an AFLEG task force. COMIFAChas also formulated an official Plan of Convergence for Forestsof Central Africa (Plan de Convergence), an action plan that setsout priorities for the period 2003-2010.

ENA-FLEG Forest cover in the Europe and North Asia regionis substantial: for example, in Belarus, Bosnia and Herzegovina,Georgia, and Russia, forests cover up to 50% of the nationalterritory4 .

The ENA-FLEG Ministerial Conference was organised in St.Petersburg in November 2005. The Conference brought togethernearly 300 participants from 48 countries and yielded the St.Petersburg Declaration, a commitment by 44 governments toaddress illegal logging.

ILLEGAL LOGGINGAND TRADE INITIATIVESA BASIS FOR ACTION AND LEADERSHIP BY CHINA

Forest Law Enforcement, Governanceand Trade (FLEGT)The FLEGT Action Plan refers to a European Union (EU) process tocombat illegal logging. In October 2003, the European Commission (EC)adopted the Action Plan. The Plan targets key regions and countries thattogether contain nearly 60% of the world's forest and supply a largeproportion of internationally traded timber - Central Africa, Russia, SouthAmerica and Southeast Asia.

The goal of the Action Plan is to encourage sustainable forest management,with ensuring the legality of timber as a vital first step5 . The Plan focuseson governance reforms and capacity building, particularly in developingcountries, and sets out measures in seven broad areas:

Support to timber-producing countries; Activities to promote trade in legal timber; Promoting public procurement policies; Support for private sector initiatives; Safeguards for financing and investment; Use of existing legislative instruments or adoption of new legislation

to support the Plan; Addressing the problem of conflict timber6.

Another key element of the Action Plan is the development of a voluntaryscheme to ensure that only legally harvested timber is imported into theEU. In December 2005, a FLEGT Regulation was adopted which allowsfor control of the entry of timber from countries entering into bilateralFLEGT Voluntary Partnership Agreements (VPAs) with the EU.

Once agreed, the VPAs are expected to include commitments and actionfrom both parties to halt trade in illegal timber (see Box 2). A FLEGTCommittee has been established to assist in the implementation of theFLEGT Regulation. More detailed rules about how the Regulation willbe implemented are under discussion7.

National initiativesA number of countries around the world are pursuing illegal logging andforest governance initiatives at the national level. For example, the twoEntity governments of the Federation of Bosnia and Herzegovina andthe Republika Srpska have become increasingly concerned with forestsector governance and illegal logging. Supported by the World Bank, theEntities are formulating an action plan to target illegal activities in theforest and wood-processing sectors, including theft and corruption8 .

An increasing number of countries (including France, Germany, Japan,New Zealand and the UK) have adopted "green" public procurementpolicies requiring timber and timber products to be from legal andsustainable sources9 .

Malaysia, for example, has also developed a timber certificationscheme to enable its forests and timber products to be certifiedas legal, allowing access to European markets. For example,theThe Malaysian Timber Certification Council (MTCC) schemeassesses Forest Management Units (FMUs) using the MalaysianCriteria, Indicators, Activities and Standards of Performance forForest Management Certification, which are based on the 1998International Tropical Timber Organisation’s Criteria and Indicatorsfor Sustainable Management of Natural Tropical Forests10 .

The Australian Forest Certification Scheme (AFSC) is based onthe Australian Forestry Standard (AFS), which is endorsed byan international assessor of sustainable forest management, theProgramme for Endorsement of Forest Certification (PEFC). Thescheme is used to certify native forests and plantations, andincludes a Chain of Custody Standard to track forest and woodproducts through the supply chain. By January 2007, 13 majorforest managers had achieved certification, accounting for morethan 9 million hectares of forests and plantations11 .

Private sector and civil societyinitiativesThe private sector and civil society are also actively involvedin illegal logging and forest governance activities. In responseto moves by governments to further regulate the timber industry,as well as increasing public pressure from civil society andconsumers, private sector actors are developing policies andpractices to ensure illegally harvested timber does not enter theirsupply chains.

The UK Timber Trade Federation, for example, is developing a“Code of Conduct” and a “Responsible Purchasing Policy” thatwill assist companies to comply with UK governmentrequirements12. Several major banks, such as HSBC, have alsoestablished policies to ensure clients are not associated withillegal logging activities.

IKEA, a major purchaser and seller of wood products, hasparticipated in regional FLEG processes, and works with NGOsto develop audited timber procurement chains certifying thelegality of its wood products13.

International organizations, NGOs and research institutes alsoplay an important role in promoting actions to combat illegallogging and trade and implementing sustainable forestry activities.The World Wide Fund for Nature (WWF), for example, activelypromotes private sector engagement with these issues, andorganisations such as Global Witness and TRAFFIC are involvedin monitoring and investigation of illegal logging and trade, amongother activities.

Multilateral agreementsThe problems of illegal logging and unsustainable forestrypractices have attracted attention in the international communityand are now addressed in a number of international multilateralagreements and forums.

10 MTCC. "MTCC Scheme". http://www.mtcc.com.my/mtcc_scheme_intro.asp

11 Australian Forestry Standard. 2007, Australian Forest Certification Scheme.

http://www.forestrystandard.org.au/files/AFCS.pdf

12 Gulbrandsen and Humphreys 2006, in Strengthening Forest Law Enforcement

and Governance. 13 "A Review of Actions Taken to Address Illegal Activities in the Forest Sector

in Southeast Asia". 14 Ibid15 Forest Trends. 2006. China and the Global Market for Forest Products:

Transforming Trade to Benefit Forests and Livelihoods.

Organizations such as the United Nations Forum on Forests(UNFF), the International Tropical Timber Organisation (ITTO) andthe Food and Agriculture Organisation (FAO) continue to advancethe international agenda on illegal logging and forest governance,and in the case of the latter two organizations, also supportimplementation of appropriate measures.

The Convention on Biological Diversity(CBD) includes illegal loggingin its programme of work on forest biodiversity. The Conventionon International Trade in Endangered Species of Flora and Fauna(CITES) can also potentially contribute to curbing illegal loggingand forest degradation. Although limited to certain tree speciesand dependent on national implementation, CITES is currently theonly multilateral agreement that allows importing countries to seizeillegally imported timber from species that are endangered orthreatened14 .

China and Illegal Logging and TradeChina is now the second largest timber consumer in the world andfaces a widening imbalance between supply and demand. Therapid expansion of manufacturing for both domestic consumptionand exports in a nation with very limited per capita forest resourcesis fuelling a significant rise in timber imports. Between 1997 and2005, China's total forest product imports more than doubled invalue and more than tripled in volume, from 40 million to 134 millioncubic meters (round wood equivalent)15 .

There is a growing recognition in China of both the country's placein the global forest products trade and the impact that this canhave on forests at home and overseas. Chinese governmentdepartments and agencies, as well as NGO and private sectorrepresentatives, are addressing illegal logging and trade and forest

ILLEGAL LOGGINGAND TRADE INITIATIVESA BASIS FOR ACTION AND LEADERSHIP BY CHINA

IUCN The World Conservation UnionFounded in 1948, The World Conservation Union brings together States,

government agencies and a diverse range of non-governmental

organizations in a unique world partnership: over 1000 members in all,

spread across some 148 countries.

As a Union, IUCN seeks to influence, encourage and assist societies

throughout the world to conserve the integrity and diversity of nature and

to ensure that any use of natural resources is equitable and ecologically

sustainable.

The World Conservation Union builds on the strengths of its members,

networks and partners to enhance their capacity and to support global

alliances to safeguard natural resources at local, regional and global

levels.

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governance through the following:

Government and NGO participation in FLEG meetings, includingthe 2001 EAP-FLEG Ministerial meeting in Bali and the 2005 ENA-FLEG meeting.

A December 2002 MoU between the Chinese and Indonesiangovernments on co-operation in combating the illegal trade offorest products.

A proposal by Chinese President Hu Jintao to establish anAsian and Pacific Network on Rehabilitation and SustainableManagement of Forests at the 15th APEC meeting in 2007.

The State Forestry Administration's (SFA's) co-hosting of theEU-China FLEG Conference in September 2007, which discussedthe importance of FLEG and practical steps to enhance policycooperation. The results of the conference includedrecommendations regarding: strengthening inter-agencycooperation; promoting stakeholder engagement; taking concertedaction throughout the supply chain; and supporting sustainableproduction from domestic forests16 .

Commissioning research through the Ministry of Commerceinto sustainable global supply chains in sectors including timber.

SFA's process of developing standards, such as creating acertification system for China's forests and issuing in April 2007"Guidelines on Sustainable Forest Management in OverseasCountries for Chinese Enterprises".

The continued implementation of measures and initiatives, suchas FLEGT, will have implications for China's participation in theglobal forest products trade. For example, FLEGT will affect forestgovernance and law in producer countries where Chinese operatorsare active. In important markets for Chinese wood products suchas the EU, FLEGT as well as national and private sector initiativesand growing consumer awareness will increase the demand forverifiably legal timber products.

China's engagement in initiatives addressing illegal logging andtrade and weak forest governance, its expanded role in the globalforest products trade, and its international commitments (underCITES and the CBD, for example) will necessitate furtherconsideration of China's impacts on forests in other parts of theworld, and of its own forest productivity. Discerning policies onthe part of the Chinese government and the private sector have

the potential to drive good governance and combat illegal activitiesin both China and producer countries, and provide an opportunity forChina to demonstrate leadership regionally and globally.

IUCN is supporting China’sengagement on these issues.IUCN's global Forest Conservation Programme works to influence,encourage and assist societies throughout the world to conservebiological diversity in forests and to ensure that the use of forestresources is equitable and ecologically sustainable.

IUCN's vision is to promote locally and nationally appropriate forestgovernance arrangements that directly improve local livelihoods anddeliver sustainable forest management. Equity, transparency,participation and action should be the cornerstones of responses atall levels to illegal logging and other predatory forest practices. Ourunderlying premise is that illegal logging is a symptom and result ofpoor forest governance. Therefore, law enforcement actions will notdeliver lasting change without broader forest governance reform.

As part of the Forest Conservation Programme, IUCN's Livelihoodsand Landscapes Strategy (LLS) examines the rights and accessof the rural poor to forest products in the context of the entire landscapein which people and forests interact. In China, LLS will demonstrateapproaches to optimize the biodiversity and productivity of forestlandscapes, including Forest Landscape Restoration (FLR) measures,and deliver livelihood benefits to the rural poor.

Successful FLR contributes to greater transparency and accountabilityand better governance practices. Our growing experience is showingthat FLR can help promote forest governance arrangements thatimprove livelihoods and promote sustainable forest management,complementing initiatives that address FLEG.

IUCN China is also a partner in a series of Dialogues on IllegalLogging in China, in cooperation with the UK's Royal Institute ofInternational Affairs (Chatham House) and Forest Trends. The initiativeaims to establish a regular, open meeting place for stakeholders andto foster constructive discussions about the international trade ofsustainable and legal forest products with key producer and consumercountries.

In addition, IUCN is building multi-stakeholder coalitions linking Chinaand West and Central Africa in support of improved forest governance.This project will work at the local and national levels in six Africanproducer countries: Ghana, Liberia, Democratic Republic of Congo,Republic of Congo, Cameroon and Gabon. Through this project, Chinaas a key consumer of Central and West African forest products willbe engaged in discussions about forest governance in Africa.

Beginning in 2008, IUCN will also implement a project with the WorldBank and WWF in Russia, Armenia, Azerbaijan, Belarus, Georgia,Moldova and Ukraine, which will include tripartite dialogue withinChina on demand and illegal forest activities in exporting countries,and information sharing with Chinese stakeholders on ongoingexperiences with VPAs and other initiatives.

16 Co-chairs’ summary and conclusion of The EU China Conference on Forest

Law Enforcement and Governance (FLEG), Beijing, 19-20 September 2007.