2. Illegal Logging & the Global Response
What is illegal logging?
In many major timber-producing countries, a majority of wood production is estimated to be illegal in some way. Illegality is widespread from the tropical forests of the Amazon, Congo and Southeast Asia, to the boreal forests of Russia. Altogether, it has been estimated that more than 100 million cubic metres of timber are illegally cut each year: enough logs to stretch ten times around Earth.
While in the past most illegal timber production came from selective harvesting of individual high-value trees, a growing proportion now comes from illegal conversion of entire forests to other uses. In Indonesia, 80 per cent of deforestation for commercial agriculture and timber plantations is illegal. In the Brazilian Amazon, it is 90 per cent.  Globally, it has been estimated that at least half of all the tropical forest cleared during the first 12 years of this century was cleared illegally.
‘Illegal logging’ is commonly misunderstood to refer only to illicit harvesting of trees by criminals in protected forests. In reality, such activity represents a small part of the true face of illegal logging today. Most illegal logging is carried out by licensed companies in licensed forests, but which nevertheless violated one or many of a range of laws. Most illegally sourced timber is laundered into “legitimate” supply chains or unidentified as illegal and therefore traded openly, not smuggled. Often the most important laws being breached are those relating to the rights of local communities.
This guidebook uses the most common definition of illegal logging, including all felling of trees, processing and trade in wood which takes place in contravention of national legislation or regulations. This captures a wide range of different offences, including (but not limited to) practices such as the illegal issuance of permits to harvest trees, corruption in permit allocation, over-harvesting within licensed areas, tax evasion and the violation of statutory social safeguards. Most importantly, it also includes logging and forest conversion which takes place in contravention of the rights of local and indigenous communities, who are often dependent on the forests for their livelihoods and who stand to suffer most from deforestation.
The response to illegal logging in major markets
Illegal logging is driven by sales of illegally sourced wood, much of which enters international trade. The EU and the USA are among the world’s largest importers and consumers of illegally sourced timber and wood products. In an attempt to address their complicity in this global crisis, both have in recent years passed legislation meant to prevent import and sale of illegally sourced wood. The effective implementation of these laws – the US Lacey Act and the European Union Timber Regulation (EUTR) respectively – is essential if broader efforts to halt illegal logging are to be successful.
Though the specific purpose of these laws is limited to halting imports of illegal wood into their own markets, their real value goes much further. They are focusing increasing pressure on other major consuming countries, such as China and Japan, to enact similar legislation and further strangle the market for illegal wood. In Europe, the EUTR is a critical component of a much broader package of actions aimed at improving forest governance. The most important of these are bilateral agreements the EU is developing with many of the largest timber producing countries in the tropics.
These agreements, known as Voluntary Partnership Agreements (VPAs), are having a host of positive impacts. They are driving the development of legality verification systems which will block access to all markets – including domestic markets – for illegal wood. Most importantly, they are getting to the root of the problem of illegal logging by improving transparency and accountability, governance reforms that can have positive impacts far beyond forests. Without a properly-enforced EUTR, there is much less incentive for countries to implement these agreements.
For these reasons, the success or failure of these laws has much broader implications in the fight to tackle illegal logging and better protect the rights of forest dependent people globally. Further detail on these laws and how they can be harnessed to tackle illegal logging using information supplied by civil society is provided below.
The US Lacey Act
In 2008, the US became the first country in the world to ban the import of timber which was illegally sourced in another country. It did this through amendments to pre-existing legislation (the Lacey Act of 1900) which previously only applied to animals and animal products. The amendments made it an offence to import, export, transport, sell, receive or acquire any plant which was illegally sourced. Though they apply to all plants generally and to domestic as well as foreign sources, the main purpose and effect of the amendments was to ban import and sale of illegal wood from overseas.
The Lacey Act counts wood as illegally sourced where it was harvested, transported or sold in violation of foreign laws that protect or regulate the harvesting of trees, without payment of relevant source-country taxes, or in contravention of timber-related export controls. Potential penalties under the Lacey Act range from fines through to custodial sentences, depending on the severity of the offence and whether the offending company knew (or should have known) of the illegality. Wood products imported in violation of the Act can be seized regardless of the severity or foreknowledge.
An important additional requirement included as part of the 2008 Lacey Act amendments was the import declaration. Phased in gradually, this now requires that all companies importing most solid wood products must submit a formal declaration (the Plant Product Declaration) stating the species and the country of harvest. Shipments that arrive without an accurate declaration can be seized, and companies found to have deliberately provided false information in a declaration can be prosecuted and fined.
As of April 2016, there have been three major illegal timber import cases brought under the amended Lacey Act. The first involved Gibson Guitars, and related to import of ebony which originated in Madagascar. Though the illegal origin of the wood was a pertinent factor, the case also involved allegations of illegal export from a third country (India) and mis-declaration at import into the USA. The second involved a consignment of tropical sawn timber from Peru which arrived in 2009 and was confiscated under the Act’s declaration requirement, on the basis that it had been deliberately misclassified as finished wood products. There was also evidence that the exporter did not have legal title to the wood.
The most recent case involved flooring manufactured in China from timber cut in the Russian Far East and Myanmar. In October 2015, the company involved (US wood flooring retailer Lumber Liquidators) pled guilty to smuggling illegal wood into the US, and was required to pay more than US$10 million in fines and other penalties. The company pled guilty to five separate offences, four of which involved false declaration of either country of harvest or species in Plant Product Declarations.
The Peruvian case resulted from a tip-off from a trader. Both the Gibson and the Lumber Liquidators cases were triggered by information collected by NGOs.
EU Timber Regulation
In 2010, the European Union followed in the footsteps of the US in enacting legislation which made it an offence to import wood which had been illegally sourced in the country of origin. The legislation, known as the European Union Timber Regulation (EUTR) came into effect in March 2013. Though it was enacted for the same reason, the EUTR differs from the Lacey Act in a number of important ways:
- Supply chain applicability: The EUTR only applies to the companies which harvest or import (“place on the market”) illegally sourced wood, and not companies further down the supply chain.
- Product scope: The EUTR only applies to a specific list of wood products. Important exemptions include charcoal, musical instruments, picture frames, printed books and some types of wood furniture.
- Due Diligence: In addition to making it an offence to import illegally sourced wood (the ‘prohibition’), the EUTR also places a legal requirement on importers to practice ‘due diligence’ when buying wood. Failure to exercise due diligence is also an offence.
- Monitoring organisations: To assist with implementation of the due diligence requirement, the EUTR also includes rules for the formal recognition of (and checks on) third party ‘Monitoring Organisations’ which companies can hire to help them with due diligence.
The due diligence requirement is perhaps the most important difference. It means that companies are legally required to follow certain procedures in order to minimise the risk that the wood they are importing is illegally sourced. Failure to do this is a prosecutable offence on its own – it is not necessary for officials to prove that the wood is illegally sourced. The threshold of evidence required to make a case under EUTR is therefore much lower than under the Lacey Act. This means that a broader range of evidence can be useful in aiding implementation and enforcement.
Like the Lacey Act, the EUTR only applies to specific types of illegality in the source country. In this case, relevant illegalities include any that contravene legislation governing rights to harvest, harvesting processes (such as environmental controls), timber harvesting-related taxes, and forest-sector-specific trade and customs controls. Unlike Lacey, the EUTR also specifically includes breaches of laws governing use and tenure rights of local people affected by logging.
Though the EUTR applies to all member states of the European Union, it is the responsibility of each member state to pass national laws that define penalties, to establish authorities tasked with implementing the law, and to enforce it within their borders. As of March 2016, all of the member states except Hungary had taken the basic legal and regulatory steps. This does not necessarily mean that the other countries are all implementing the law effectively or that their penalties are ‘dissuasive’, as the EUTR requires.
Though the maximum penalties applicable under the EUTR are substantial in many member states, to date there have been no prosecutions under the prohibition element, and no major penalties levelled for breaches of the due diligence requirements. Ongoing cases of interest under the due diligence element of EUTR include one involving a Dutch company regarding the import of sawn tropical wood from Cameroon, and a Swedish company for import of teak sourced in Myanmar and traded via Thailand. The former stemmed from evidence provided by an NGO.