SUMMARY RECORD OF THE FLEGT/EUTR EXPERT GROUP MEETING 19 APRIL 2018

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1 EUROPEAN COMMISSION DIRECTORATE-GENERAL ENVIRONMENT Directorate F - Global Sustainable Development ENV.F.3 Multilateral Environmental Cooperation SUMMARY RECORD OF THE FLEGT/EUTR EXPERT GROUP MEETING 19 APRIL Approval of the agenda and of the minutes of previous meeting The agenda of the meeting was adopted as it stood. 2. Nature of the meeting The meeting was not public. EU Member States (MS) and Norway were represented by delegates from the EUTR/FLEGT Competent Authorities. 3. List of points discussed Update on EU Timber Regulation implementation Substantiated concerns: Member States were asked for an update on substantiated concerns regarding the placing on the EU market of timber from Myanmar or other high-risk countries such as Brazil and Peru. Some MS received substantiated concerns from Greenpeace regarding companies buying timber from the Pará region in Brazil. This concerns so-called blood timber (timber harvested in a region, where a sawmill owner is accused of having systematically used violence and murder to drive landowners off their land or 'persuaded' them not to claim their land use rights) and permits based on an inflated Ipé tree density in concessions bordering nature protected areas. The conclusion of the EUTR Expert Group meeting of 20 September 2017 was reiterated. For the time being, it is not possible for timber imports from Myanmar to mitigate to negligible the risk of illegal harvest. "None of the assurances that the CAs have received can be relied upon as sufficient for demonstration of compliance with the EUTR due diligence obligations", but developments are encouraging. The EC will share information on such developments with the MS. Member States updates on other issues related to the EUTR implementation: A presentation on a recent TAIEX mission to Ukraine showed that many EU countries import timber from Ukraine, which is considered a high-risk country. A substantial corruption risk can be found in every supply chain and is widespread throughout the whole country. There is currently not enough evidence publicly available to convince EU operators of the risks linked to Ukrainian timber. 1

2 With support from the EC TAIEX-EIR Peer2Peer programme, Portugal is organising a workshop on 5-6 June 2018 in Lisbon to enhance cooperation between Mediterranean CAs, harmonise the implementation of the EUTR and share good practices. Participants will also go through their respective penalty systems and share their risk assessment methodologies. MS gave the state-of-play on the performing of checks on operators and on monitoring organisations (including joint inspections) according to their 2017 and the 2018 check plans, and on the procedures launched in case of bad implementation of the EUTR requirements. Revised draft overview of CA checks and enforcement actions: The contractor presented the results of an overview of checks and enforcement actions performed by the CAs over the period June-November This overview is available on EUROPA. The number of checks performed was: 467 on domestic operators, 385 on importing operators, 300 on traders dealing with domestic timber, 177 on traders dealing with imported timber, 3 on Monitoring Organisations. There is growing evidence that some sectors dealing with timber products still have a very incomplete awareness and understanding of the EUTR. A collective reflection is needed on how MS can further improve awareness and harmonise the implementation of the EUTR across sectors and how the EC can support them in this exercise. Update on development of EUTR guidance documents The EC received concerns from the private sector regarding different treatments of third party verification among MS or even within some MS. The objective is to clarify the existing guidance and to achieve a common understanding among MS, as well as to provide additional guidance to operators on this subject. More clarity in how third party certification can contribute to due diligence is in the interest of all operators, in particular in the risk assessment and mitigation processes. There is a need to differentiate the types of existing certification schemes. The EC received complaints on the lack of harmonisation in the EUTR implementation. Reflection is needed on how to increase regulatory pressure to implement the EUTR better. Information points Update on the Impact Assessment on the EUTR product scope: Apart from most of the EU MS, entities from China, Indonesia, Malaysia and Mexico provided input to the online questionnaire on EU Survey on a possible change to the EUTR product scope. An amended annex to the EUTR could be in place at the beginning of

3 Update on the publication of the COM biennial EUTR Report: The report is finalised and is in the internal EC process, which may still take a few more weeks. Some of the conclusions are: o Further effort to promote uniform and effective application of the EUTR is needed; o The number of checks remains too low; o The number of operators is not always available (while it is needed for sound plans for checks); o A consistent approach to ensure a certain quality of the checks is needed; o Technical capacity and resources at the CAs do not always correspond to the needs. Next steps: The EC will strengthen its cooperation with MS, enhance synergies between FLEGT VPAs and the EUTR, facilitate communication through Capacity4Dev, promote the use of the TAIEX-EIR Peer-2-Peer instrument (to share expertise, good practices and lessons learnt) and promote the use of the support services contract with WCMC. Update on the alignment of reporting obligations for the EUTR and FLEGT Regulation: A proposal for a reporting alignment (to be adopted and published soon) will amend the reporting obligations for the EUTR and the FLEGT Regulation. Update on support services for implementing the EUTR and FLEGT Regulation: The briefing note covering the period February-March 2018 has been made available. Three country overviews have been finalised: China, Myanmar and the Russian Federation. Interviews were conducted on the cost of the EUTR to industry and the application of the EUTR by operators, in parallel with an online survey. A report and an interactive dashboard have been made available to present a timber trade analysis covering the period WCMC has compiled the CA checks performed and the annual synthesis report on FLEGT. Country overviews: China, Myanmar and the Russian Federation: These country overviews are being produced to assist the EC and the MSCAs in assessing the situation in the main provider countries. A public version will be made available on EUROPA. Periodic updates are planned. Presentations Overview of EU timber and timber product imports: The Monitoring Organisation Conlegno produced a report on the above and, in a presentation, showed the level of imports of round wood, paper and furniture in each MS, with a distinction of origin of the timber (from within or outside the EU). They showed: A ranking of the first five supplier countries: 1. China, 2. US, 3. Brazil, 4. Russia and 5. Switzerland. 3

4 The ranking of imports of EUTR products by MS: 1. UK, 2. Germany, 3. Italy, 4. Netherlands, 5. France, 6. Belgium, 7. Spain, 8. Sweden, 9. Poland, 10. Austria. These ten MS imports account for 85% of all timber imports into the EU. The countries with the highest increase (in value) of their timber imports. The value of imports from countries with a CPI (Corruption Perception Index) above or below 50. EUTR compliance through the lens of a Monitoring Organisation: The Monitoring Organisation NEPCon presented its approach to due diligence. The NEPCon Sourcing Hub platform was set up to provide free-of-charge information to operators, including a cost-free online due diligence system. NEPCon also provides LegalSource Services (training, data platforms, due diligence support, timber testing, supplier audits and LegalSource certification). NEPCon acts as a MO only when operators choose to be LegalSource certified. LegalSource standards are based on the EUTR. The NEPCon Sourcing Hub includes information on timber, palm oil, beef and soy. Document guides for many countries are provided there too. There are risk assessment guides for 78 countries and proposed risk mitigation measures. Update on FLEGT processes Reporting by Ghana on the FLEGT VPA process: The FLEGT Voluntary Partnership Agreement between Ghana and the EU was signed ten years ago. Since then, technical systems were developed, the legislation was reviewed, and institutions were established to put the TLAS (Timber Legality Verification System) into effect. The development of systems and institutions has been performed through a multi-stakeholder approach. Ghana has an automated forest control process now. They mentioned what the Field Legality Verification Audit does. The protocols for audits provide for civil society participation in routine audits. Three independent audits were conducted on the Ghanaian TLAS. Ghana also reported on the JMRM (Joint Monitoring and Reporting Mechanism) annex amendments under discussion. Ghana has only one designated Licensing Authority, the Timber Industry Development Division of the Forestry Commission. A shipment test was completed, in cooperation with three EU Member States. Ghana has a protocol in place to deal with imported timber. Indicators from the various reports on the work carried out show that the materialisation of licencing is close, for which Ghana will consider an electronic system. Next steps: Ghana to submit changes to the VPA annexes to the EU for ratification, conduct joint assessment of TLAS, JMRM to receive final report of joint assessment, JMRM announces readiness for licencing and launches procedures for licencing, and EU starts procedures to amend the FLEGT Regulation. EU-China Bilateral Coordination Mechanism: The 9 th meeting of the EU-China Bilateral Coordination Mechanism took place on 7 March 2018 with some MS representatives. The EC encouraged MS to participate in the future BCM meetings in Brussels or in China. 4

5 Discussions covered: o An agreement on the 2018 Work Plan, o Legality developments in China, o The work with third countries including bilateral memoranda of understanding, o The development of import management measures (with the organisation of a workshop with stakeholders), o An update by China on their Timber Legality Verification System, o A specific session with private sector and NGOs, o The EU-China-Africa dialogue (a major conference took place in China), o The trilateral cooperation with Indonesia (for recognition of FLEGT licenses by China), o Bilingual information on the window website. VPA negotiations Update on Vietnam, Thailand and Laos: On Vietnam, good progress towards the start of the formal ratification process. A proposal should be formally submitted by the EC to the Council and European Parliament in June 2018, for the agreement to be signed in end Vietnam is moving rapidly on the implementation of the agreement, notably on the development of the new components of the Vietnamese TLAS. They will adopt legislation on due diligence. A lot of work is still needed in Vietnam before FLEGT licencing can start. Vietnam is aiming at launching FLEGT-licencing in 4-5 years from now. On Thailand, a joint expert meeting took place in March 2018, showing good progress at technical level. There are challenges with the political situation in the country as there has not been a full return to democracy. The handling of imported timber is a major issue. Thailand is reflecting on how to address it through a due diligence approach. Thailand is keen to learn from the EU, Indonesia and Vietnam. They have been implementing a logging ban on natural forests for decades now, so, the main domestic challenges are illegal logging of CITES-listed species such as rosewood and timber from private land. The second negotiation meeting is planned in Bangkok for mid-july The EC is not in a position to conclude the negotiations before a democratic government is in place. On Laos, a second negotiation session is planned for June There is a continued strong commitment of Laos to address illegal logging and ongoing discussions on wider national reforms at national level. Results of the FLEGT Ad Hoc meeting of 18 April: There was a constructive discussion on the revised version of the FLEGT Work Plan , including both a narrative and a table. The EC will finalise the Work Plan taking into account the comments/amendments discussed on 18 April and make it public. It was decided in the meeting that a more detailed FLEGT Work Plan would be developed, based on the annex, with identification of the actors for each action. The afternoon session was dedicated to a discussion on the state of play of VPAs in Honduras, Vietnam and Cameroon. 5

6 Update on the implementation of the FLEGT Licensing scheme Report on matters related to the VPA implementation in Indonesia: A summary of the results of the Joint Implementation Committee (JIC) meeting held in Jakarta on 2 March 2018 was circulated to MS prior to the meeting. A periodic evaluation was carried out and a public summary is available. The ongoing work on addressing the licencing issues resulted in a report, which was submitted to the JIC and agreed. There is common understanding on how to deal with specific HS codes, while for other HS codes further investigations are needed. Indonesia gave instructions to their licencing authorities and public sector. An independent monitoring report by JPIK covering the period on the Indonesian FLEGT is publicly available. Member States updates on the implementation of the FLEGT Regulation: Some MS are still facing problems to communicate with Indonesia, which is creating problems for the operators, as discrepancies in the documents cannot be resolved. Access to SILK, the Indonesian system, is not fully operational either. There are still cases of mismatching information regarding the HS codes. Update on the publication of the COM FLEGT Annual Synthesis Report: The internal EC process is almost finalised. The EC should be able to publish the report very soon. FLEGT reporting Online Reporting System: Under Article 8 of the FLEGT Regulation, MS are requested to submit a report by 30 April of each year. The deadline for the Commission to submit a consolidated report is 30 June. Update on FLEGIT The version with the reporting utility has been deployed recently. The next utility will enable to search for licenses from specific countries. The integration with CERTEX (single window system with customs) is planned for ,754 licenses have already been registered in FLEGIT, whereof 11,864 have been cleared. Many MS do not put information related to clearance in the system, which makes reporting inaccurate. The integration with the single window will improve the situation. 4. Conclusions/recommendations/opinions See individual points 5. Next steps See individual points 6. Next meeting The next FLEGT/EUTR Expert Group meeting will take place on 19 June

7 7. List of participants Organisation Country Federal Forest Office AT Federal Public Service Health, Food Chain Safety and Environment BE Executive Forest Agency BG General Directorate of Customs CZ Forest Management Institute CZ Ministry of Agriculture of the Czech Republic CZ Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH DE Bundesanstalt für Landwirtschaft und Ernährung (BLE) DE BMEL DE Environment Ministry DK Ministry of the Environment EE Ministry of Foreign Affairs and Cooperation ES Permanent Representation of Spain ES Finnish Agency for Rural Affairs FI Ministère de l'agriculture et de l'alimentation FR Office for Product Safety and Standards GB Ministry of Agriculture HR National Food Chain Safety Office HU Department of Agriculture, Food and the Marine IE Ministry of agriculture food and forestry policies IT Arma Carabinieri IT Customs Department LT 7

8 State Forest Service LV Ministry for the Environment, Sustainable Development and Climate Change MT NVWA NL Ministry of Agriculture, Nature and Food Quality NL Norwegian Environment Agency NO Ministry of Finance PL Chief Inspectorate of Environmental Protection PL Instituto da Conservação da Natureza e das Florestas PT Ministry of Waters and Forests RO Swedish Board of Agriculture SE Swedish Forest Agency SE Ministry of Agriculture and Rural Development of the Slovak Republic SK National Forest Centre SK 8