10. Tracking Timber to End Market

Though a broad range of information is of potential use in helping improve the effectiveness of EUTR or Lacey, an independent investigation will ideally make a direct connection involving the EU or US.

The starting point: Point of export or the market

There are two possible methods for making connections between illegal timber in source and destination countries: tracking forwards from the source, and tracking backwards from the destination:

STARTING FROM SOURCE: Following specific products known or suspected to be illegally sourced from a producer country to and through a consumer country

STARTING FROM DESTINATION: Tracking high-risk products backwards from a consumer country to their source, to find out whether they are or might be illegally sourced

Employing both approaches in the same case may be necessary or fruitful. For example, if efforts to trace a supply chain for a specific product onwards from the source country are ineffective, it might be necessary to fall back on attempting to connect to the same supply chain by tracking relevant products backwards from the destination country.

How far should the supply chain be tracked?

How far the supply chain is mapped out within the consumer country, beyond the importer,will depend on the law that is being used and the ultimate goal of the research. In the EU, the key element of the EUTR only applies to the companies which first sell the wood product within the EU (the “first placer”).24 No enforcement action is possible against companies further down the supply chain. However, it may be worthwhile investigating further in order to “name and shame” other companies buying the timber from the first placer. If the research is starting from the market end, it might also only be possible to identify importers of specific products by working back from retailers.

Starting From Source

Obtaining information from shipment records

In some cases, information on overseas buyers might be obtained from producer country governments. Official export-related documents submitted to government agencies (including customs declarations and specific permits such as CITES Export Permits), or information contained within them, can be sought through formal requests under Freedom of Information laws where applicable (see Freedom of Information Laws). However, it is likely that even where Freedom of Information laws do exist, identities of buyers will be considered commercially confidential and exempt.

For some countries it is possible to access detailed information on individual shipments of timber and wood products from online shipment databases. This normally includes a description of the goods in each shipment, the quantity, and the identity of the supplier (‘shipper’) and often also the buyer (‘consignee’). Such databases are often based on vessel manifests maintained by major shipping lines, and are available via paid subscription services for exports from and/or imports to a number of major timber supplier and consumer countries. For example, the Environmental Investigation Agency used US import shipment records25 to help connect illegal Russian oak flooring supplied by a company in China to US company Lumber Liquidators (see Case Study 9).

Though no equivalent databases exist for other major consumer countries such as the EU member states, Canada, Australia or Japan, shipment databases which include consignees in those countries are available for exports from many high-risk source countries, including Russia, Ukraine, Indonesia, Brazil, Colombia, Bolivia, Ecuador and Mexico. Though less useful for making supply chain connections, shipment databases providing only the identities of exporting companies are available for a number of other countries in Latin America.

Where individual shipment records are not available for a country, it may still be possible to obtain collated data regarding imports or exports by specific companies during a particular time period. In China, for example, it is possible to determine which companies imported what quantity of a given wood product category (as defined in detailed customs codes) from a specific supplier country over a given period. In the UK, the government publishes lists of all companies which have imported products under a particular customs code in a given month, though it does not provide quantities or a breakdown by source country.

One common drawback of shipment databases is that the identity of the seller and buyer is often omitted or concealed behind freight forwarding or logistics firms. In such instances, it is important to examine other information about a shipment included in the database, such as the detailed commodity description or information on markings, which may contain the name of the buyer or supplier, or codes or abbreviations which give their identity (see Using Certification Scheme Codes). In the Lumber Liquidators case, for example, shipment records had the identities of both shipper and consignee missing from the relevant fields, but the information was nevertheless contained within the product description (see Case Study 9).

Caution is also required when searching such databases. Because the information usually comes from different documents to those officially submitted to customs agencies, it is common for incorrect information to be included regarding customs codes or countries of origin.

Obtaining information using undercover approaches or fieldwork

The remote undercover methods described in Section 9 can be used to try to find out information directly from exporting companies about their overseas customers. Where suppliers are reluctant to name existing customers to investigators posing as prospective buyers, an approach as a journalist or academic researcher may prove more fruitful. Additional information can be obtained through direct observations. Though the best opportunities for such observations come from undercover company visits (which are not advised without specialist training), if investigators know the location of a supplier company (see Building company profiles) it can be possible to view wood or wood products in company yards, visible from the outside. These products will often have markings that provide some clue as to the identity of the overseas buyers.

Starting From Destination

The probability of connecting a product to a specific illegal source are slim when working backwards from the end of a supply chain. Nonetheless, useful results can still be obtained even where the source is not conclusively identified. For example, it may be possible to prompt a company to stop buying from a particular source if it can be demonstrated that a product comes from a high-risk, unknown source, especially if it can be shown that the buyer’s claims regarding the origin of the product are false.

In the EU, such evidence is particularly powerful, as it could be used to trigger an enforcement action under the due diligence requirements of the EUTR. If a company does not know – or has even been duped regarding – the source of the timber, then the risk of illegality cannot have been properly mitigated.

Identifying retailers of high-risk products and obtaining information on sourcing

The first step in an investigation that begins at the end point of the supply chain is to narrow the search down to a specific high-risk wood product. The choice of wood product will depend on an analysis of risk, which considers factors including the level of illegality in the source country and the species used. Tropical wood species are commonly high-risk, for example, and are typically used in a relatively small range of wood products. Analysis of publicly accessible bilateral trade data (from UN COMTRADE29 or Eurostat30) can be used to help determine products of interest, particularly where the trade data break down products to a level which allows higher- risk products to be distinguished from lower-risk ones (see Using Trade Data).

Once a specific high-risk wood product is identified, the next step is to identify the main companies trading that product in the consumer country of interest. Where they exist for exports to or imports by the country concerned, shipment records are one starting point (see Obtaining information from shipment records). Another is an examination of membership records for relevant trade associations. General web searches can also be productive (see Online sources of information).

After a shortlist of companies is established, further information on relevant products sold or traded can be obtained from company websites and brochures. Once publicly available information is exhausted, direct contact can be made with the company to find out more, either undercover, in the guise of a prospective purchaser, seeking re-assurance regarding the product’s origin, or openly. If only information on the next step backwards along the supply chain can be obtained (such as the local importer), then the same questions can be directed to that company.

In addition to searches of publicly available information and contacts with the companies concerned, examination of markings on products or packaging during visits to retail outlets, timber yards or distribution depots can also reveal information about the supplier. Such investigations require some knowledge of markings used in the source countries (see Log Markings and Using Certification Codes), and evidence of illegality within those countries.

Information about other companies involved at different stages of a supply chain, other than in harvesting, can also be ascertained by markings on products or packaging. In some cases, the name of suppliers, manufacturers, importers or retailers may be given. Even where it is not, other markings may provide a clue. Many major timber suppliers, buyers and traders also use a specific logo, which may be spray-painted on to logs, sawn timber or plywood even if the full name is not given. Abbreviations or initials of suppliers or buyers may also be shown, perhaps as part of a code for a particular shipment. Codes from certificates issued to a supplier guaranteeing the quality, health and safety or sustainability of a product may also be included, and can be used to identify the supplier (see Using Certification Scheme Codes).

Evidence Within the Wood

Information can be obtained by studying the wood products themselves, using various technologies of a range of complexities (see Tech for Identifying Species & Origin). This is an emerging area, currently limited to quite specific uses but with considerable potential.

Commonly, it is limited to determining whether a wood product is comprised of a specific wood species. Such determinations, made using wood anatomy, DNA or fibre analysis, can be employed to demonstrate that a product is not what a buyer claims it to be. On its own this could lead to an enforcement action (for false declaration under Lacey, or breaches of the due diligence provisions of the EUTR), or otherwise prompt a buyer to switch supplier and drop a high-risk and potentially illegal source. In the UK, for example, the EUTR Competent Authority used wood anatomy to demonstrate failures of due diligence by importers of Chinese hardwood plywood; 70 percent of the samples assessed had a face veneer of a different species to that claimed.

Occasionally, information on the wood species may go further and help demonstrate illegality. It might demonstrate, for example, that a product is made from a protected or specifically regulated wood species. In 2010, US NGO the World Resources Institute conducted fibre analysis of paper products from Indonesia on sale in the USA, and found fibres of Ramin, a species banned from harvesting in Indonesia and subject to international trade regulation under CITES.32In another example, the largest seizure of illegal wood to-date in the UK occurred in 2002, when customs agents used wood anatomy to show that a large shipment of Ramin picture frame mouldings from Indonesia had been imported under a false species name without the necessary CITES paperwork.33 Falsification of the wood species in the plant import declaration required under the Lacey Act is an offence in the USA, even if there is no other evidence to suggest the wood was illegally sourced.

To a limited extent, examination of species may also provide useful information regarding geographic origin. For example, it may be possible to demonstrate that the species cannot have originated in the country of harvest which a company claims, because it is not part of its natural range. DNA and another technology, Stable Isotope Analysis, can go further and provide information regarding the geographic origin of a sample of a given species. For example, isotope analysis has been used by both EIA34 and WWF35 to demonstrate that oak products on sale in the US and UK were manufactured from oak originating in the Russian Far East, a particularly high-risk region with regard to illegality.

The usefulness of these techniques for determining geographic origin remains severely restricted, however, by the absence of sufficiently detailed reference databases of samples from known locations. At present, available information can at best determine country of origin for Oak and a number of major commercial tropical wood species from Africa, Southeast Asia and Latin America. Only in quite unique circumstances could a determination of country of origin alone indicate illegal harvesting, though it can falsify claims and demonstrate lack of due diligence, and might also be used to prove illegal trade, such as falsification of Lacey Act declarations.