After a year of significant global challenges, with everything from lockdowns to a blocked Suez canal, we look ahead to what 2022 will bring for timber supply chains and legality requirements placed on businesses.
Swiss timber regulation – Coming January 1st
Switzerland will begin enforcement of the Timber Trade Ordinance (Holzhandelsverordnung – HHV/L’ordonnance sur le commerce du bois – OCBo/La nuova ordinanza sul commercio di legno – OCoL) from 1st January 2022.
The new regulation will be equivalent to the EU Timber Regulation (EUTR), requiring operators (first-placers) placing timber products onto the market to implement due diligence and perform risk assessments.
EUTR Fitness Check shows limited success and need for urgent changes
The EU Commission has published the results of the Fitness Check of the EUTR and FLEGT regulations. Its findings suggest the general objectives of the EUTR and FLEGT – preventing the placing of illegally harvested timber in the EU market, and preventing illegally harvested timber being exported from producer countries – have not been met.
Regarding the efficacy of the EUTR, the due diligence system based solution, it states, has been a limited success. The key challenges have been:
- Inconsistent application across the EU, to the extent that operators see variations in the stringency of enforcement (e.g. number of checks, level of penalties) and attempt to import and place on the market riskier products via specific member states.
- Difficulties for smaller operators to implement due diligence.
- Difficulties in validating information on supply chains, particularly where there is poor governance from exporting countries.
- The concept of negligible risk was always subjective. This has affected enforcement when the very interpretation of what is needed for negligible rating is unclear.
The EU Commission estimates that the EUTR may have led to a reduction in imports of illegally harvested timber imports to the EU of between 12-29%. However, it has been less successful in halting illegal logging globally. Exports from known high risk countries (Ukraine, Myanmar, Belarus) actually grew.
Global Traceability participated with our feedback in the Fitness Check, and the conclusions tally with our experiences providing risk assessment services to a variety of clients.
The EU’s ambitions over the European Green Deal should change the focus away from mere legality towards sustainability. As we see with the proposed Deforestation Proposal, it is hoped the flaws inherent in the EUTR are removed.
EU’s Deforestation Proposal – New due diligence rules for commodities related to deforestation
The EU Commission has proposed new measures to limit deforestation caused by commodities such as soy, beef, palm oil, wood, cocoa and coffee farming. This could see tighter rules and due diligence requirements soon introduced for EU businesses importing and exporting these products.
The new proposed regulation will build upon and eventually replace the EUTR – which targeted only the import of certain wooden products to ensure they were legally harvested in their country of origin.
The other key differences with the EUTR:
- Applies to products produced and then exported from the EU, the EUTR only applied to imports to the EU.
- Expands the scope so that large traders as well as operators have to implement due diligence.
- Introduces a ‘deforestation free’ criteria so that due diligence must be undertaken to ensure the products not only comply with the forest laws of their country of origin but are also not associated with any deforestation or degradation. This would mean products cannot be sourced where deforestation occurs within the local laws.
- Obligation on authorities to implement a minimum level of checks per year to avoid the inconsistent enforcement seen under the EUTR.
- Strengthened national penalty schemes for non-compliance.
Happy holidays from the Global Traceability Team
We’d like to take this moment to wish all our clients and partners a Merry Christmas, with good health to you and your families going into 2022. We thank our clients and colleagues working across the globe in challenging circumstances and look forward to an exciting year ahead.
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