of the Commission Implementing Decision on the Annual Action Programme 2016 (part 2)

Transcription

1 EN ANNEX 5 of the Commission Implementing Decision on the Annual Action Programme 2016 (part 2) 1. Title/basic act/ CRIS number 2. Zone benefiting from the action/location 3. Programming document 4. Sector of concentration/ thematic area 5. Amounts concerned 6. Aid modality(ies) and implementation modality(ies) Action Document: Forest governance and trade for better livelihoods Forest governance and trade for better livelihoods CRIS number: ENV/2016/ financed under Development Cooperation Instrument Miscellaneous Countries The action shall be carried out at the following location: Global Global Public Goods and Challenges (GPGC) Flagship on Forest Law Enforcement, Governance and Trade (FLEGT) Flagship on Biodiversity for Life (B4Life) Total estimated cost: EUR Total amount of EU budget contribution EUR , DEV. Aid: YES - with a contribution to the FAO FLEGT programme of EUR (co-financed in joint co-financing by DFID, Swedish SIDA and FAO for a total amount EUR ) - with a contribution of EUR to the Centre for International Forest Research (CIFOR) Project Modality Indirect management with the Food and Agriculture Organization (FAO) and with the Centre for International Forest Research (CIFOR) 7 a) DAC code(s) Forestry 75%; Forestry policy and administrative management 75%; biological diversity 25% b) Main Delivery Channel FAO CIFOR

2 8. Markers (from CRIS DAC form) 9. Global Public Goods and Challenges (GPGC) thematic flagships General policy objective Not targeted Significant objective Main objective Participation development/good X governance Aid to environment X Gender equality (including Women X In Development) Trade Development X Reproductive, Maternal, New born X and child health RIO Convention markers Not targeted Significant objective Main objective Biological diversity X Combat desertification X Climate change mitigation X Climate change adaptation X Flagship on Forest Law Enforcement, Governance and Trade (FLEGT) Flagship on Biodiversity for Life (B4Life) SUMMARY This action is part of the Global Public Goods and Challenges (GPGC) flagship on Forest Law Enforcement, Governance and Trade (FLEGT), through which the EU will provide sustained support to the implementation of the EU FLEGT Action Plan globally, and of the flagship Biodiversity for Life (B4Life), through which the EU responds to global threats to biodiversity and addresses the need to enable sustainable development as part of efforts to conserve ecosystems. The overall objective of the action is to contribute to improve forest and land governance, tackle illegal logging, promote trade in legal timber products, improve the access to nontimber forest products and fuel wood, and ultimately contribute to sustainable forest management and poverty reduction. The specific objective is to improve forest governance and law enforcement, to promote legal and sustainable forest industries, and to better understand the role of governance and trade on deforestation and livelihood. This will be enabled by delivering flexible, demand-driven support to forest stakeholders initiatives contributing to national FLEGT processes, including Voluntary Partnership Agreements (VPAs) as well as other forest governance and industry processes in non-vpa countries, and by producing policy options for increasing the impact of good governance on deforestation and livelihoods. This action includes a top-up to a previous contribution the EU has provided to the Food and Agriculture Organization (FAO) Forest Law Enforcement, Governance and Trade Trust Fund and a contribution to the Centre for International Forest Research (CIFOR). This action will respond to some of the recommendations of the recent evaluation of the FLEGT Action Plan, including activities to facilitate multilateral dialogue with major timber producing and consumer countries, strengthen successful private sector initiatives, the overall monitoring of the FLEGT Action Plan, and broaden the scope of the activities to tackle the 2

3 new drivers of deforestation and forest degradation. It will also explore the FLEGT interactions with governance in land-use and in conservation policies. The action will take into account the council conclusions on the FLEGT evaluation (28 June 2016, doc.10721/16).. This action will be closely coordinated with the work of the European Forest Institute (EFI), which continues to play an important role in supporting the implementation of the FLEGT Action Plan. 1. CONTEXT 1.1 Sector/Country/Regional context/thematic area The European Union is at the forefront of global efforts for improving forest governance. The EU FLEGT Action Plan sets out a programme of action -including support to timber producing countries in their efforts to strengthen forest law enforcement and curb illegal timber trade, activities to promote trade in legal timber, support for private sector initiatives, etc. 1. This Action Plan forms the EU s response to illegal logging and trade in associated timber products. The Voluntary Partnership Agreements (VPAs) are at the heart of the Action Plan. VPAs are legally binding treaties between the EU and timber producing countries to eliminate illegally-produced timber from a partner country s international trade with the EU and to support legal trade on the basis of a credible timber licensing scheme. The first 11 years of implementation of the EU FLEGT Action Plan have just been evaluated. The evaluation has produced recommendations in order to improve the effectiveness of the action plan and its impacts. This action will therefore address some of the main recommendations through an existing programme with FAO which has proved to be effectively delivering the planned outputs, taking into account the council conclusions on the FLEGT evaluation (28 June 2016, doc.10721/16). The growing number of countries involved in VPA negotiations confirms the consistency of the instrument with producer countries priorities. In most VPA countries, there is strong support from civil society which welcomes the participatory and multi-stakeholder approach to tackle forest governance issues. There is also support from part of the timber industry which expects benefits in terms of market access, improved reputation and reduced unfair competition, and which is willing to adjust and invest own resources to meet changing legal requirements and market demands. Many other countries are willing to work with the EU on Forest Law Enforcement Governance and Trade, without necessarily opting for a VPA. FLEGT processes embrace new approaches to policy making in the forest sector, introduce more accountability and transparency and challenge vested interests which resist change. VPAs bring to light challenges in terms of capacities, and more stringent enforcement and controls associated to the FLEGT licensing scheme require adaptation by all actors. Continued dialogue, awareness raising, capacity building and the creation of incentives are necessary to make VPAs operational. Key support measures include the promotion of multistakeholder processes to build consensus and support for timber legality reforms, the establishment of transparency and accountability mechanisms such as monitoring by civil society, engagement with the private sector to raise awareness on new market requirements etc. These measures are similarly relevant to countries not engaged in VPA processes

4 This action will give particular attention to the needs of the private sector which should play a key role in the development and implementation of improved legality assurance systems. Previous FLEGT actions with the private sector have shown that common challenges include unclear or inadequate legal frameworks, resistance to changes that challenge existing business models, in particular when illegal or informal, concerns about costs and incentives associated to new requirements, a lack of information -at national and global level- and capacities of operators, and a lack of sector organisations able to represent their constituencies meaningfully in FLEGT processes. Adaptation to new legal requirements and changing markets is particularly challenging for Micro, Small and Medium Enterprises (MSMEs) which tend to be left out in governance or industry processes due to their often illegal or informal activities. Successful experiences show that strategies exist to address these challenges. In Indonesia for example, furniture makers have recently joined forces to create a new association that has helped them secure the country s legal timber certification in 2013, to attend trade exhibitions, to gain improved access to markets and bank credit, and ultimately to increase their income 2. Country level studies will be undertaken during the inception phase of the programme to further identify challenges associated to FLEGT implementation. These studies will focus on the private sector in particular and will aim at mapping timber operators, assess their needs, and take stock of other initiatives with which synergies may be developed. Furthermore, other changes in the global context were highlighted by the various reports. First, more and more forests are being cleared for agriculture and other land uses (e.g. mining, urbanisation and infrastructure building). FLEGT instruments, in particular the VPAs, can help address challenges of illegal forest conversion through various levers and tools (governance, multi-stakeholder dialogues and public participation, legality definitions, forest surveillance). FLEGT, however, does not address the issue of legal forest conversion at a time when global political attention has shifted from illegal logging to the fight against deforestation and the role of forests in mitigating and adapting to climate change. Indeed, the FLEGT Action Plan was conceived and developed in the context of global discussions on deforestation although as such it does not address all drivers of deforestation Public Policy Assessment and EU Policy Framework FLEGT is a Commission corporate policy which is recognized as very innovative due to the fact that it goes beyond traditional aid, promotes coherence between actions in the EU and in producer countries and seeks to tackle complex and sensitive governance and law enforcement issues through a combination of supply and demand market instruments, political engagement and development cooperation. FLEGT currently involves all 28 Member States and over 20 partner countries. It involves legally binding VPA trade agreements with six countries, the FLEGT Council Regulation adopted in December , the EU Timber Regulation of the Council and Parliament COUNCIL REGULATION (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community. 4

5 adopted in and the related Commission Implementing Regulations 5. The EU and its trade partners have made specific commitments in Trade and Sustainable Development Chapters of recent Free Trade Agreements to effectively implement Multilateral Environmental Agreements, including the CITES and the Convention on Biological Diversity, as well as to combat illegal logging. This programme is relevant for the Agenda It contributes primarily to the progressive achievement of SDG 15: Sustainably manage forests, combat desertification, halt and reverse land degradation, halt biodiversity loss as well as SDG 12: Ensure sustainable consumption and production patterns, but also promotes progress towards Goal 13: Take urgent action to combat climate change and its impacts, 8: Promote inclusive and sustainable economic growth, employment and decent work for all, and 16: Promote just, peaceful and inclusive societies. FLEGT links well with COP21 targets as well as with broader global policies and commitments to the SDGs as well as EU policies such as the new EU Trade for All, the Corporate Social Responsibility and Public Procurement policies, and Circular Economy Stakeholder analysis The three main groups of actors involved in governance processes (in particular FLEGT) include governments, timber producers and traders, and civil society. These groups usually participate actively in VPA processes but sustained efforts are necessary to promote and improve their participation. Non-VPA countries don t always have the same multi stakeholder settings, which the programme will try to address. The main groups of stakeholders targeted by the action will include: Forest communities, smallholder producers, micro or family businesses: they usually sell timber on domestic markets, and take profit of other services provided by the forests as source of energy (fuel wood) or proteins (bush meat). Their timber products often enter the supply chain of larger producers and, in some cases, reach export markets. They are often part of the informal sector, face difficulties to comply with legal frameworks, and receive little attention in forest policies in many countries which favour large-scale timber operations oriented to export markets. Supporting them through their representative bodies is key to ensure the FLEGT process contributes to inclusive and sustainable growth and poverty reduction objectives. Formally established timber businesses: their interest in FLEGT processes often depends on the nature of their business and their market. Larger exporters mainly need information and business links, while smaller actors need more encompassing assistance. In most VPA countries, timber industries have expressed support for the agreements. The capacity of professional associations representing them in VPAs is often deficient. EU and international associations like the European Timber Trade 4 REGULATION (EU) No 995/2010 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market. 5 COMMISSION REGULATION (EC) No 1024/2008 of 17 October 2008 laying down detailed measures for the implementation of Council Regulation (EC) No 2173/2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community. 5

6 Federation play a complementary role, in particular to inform about market changes and stimulate demand for legal and sustainable timber. Government institutions: progress towards legality depends to a large extent on the clarification and improvement of the legal framework and the capacity of relevant institutions to enforce it. Focus is often placed on the forest ministry, but the enabling environment for legal forest enterprise depends on many other ministries, authorities and local government. VPAs aim to include all concerned institutions which usually support the agreement. Civil society is a major stakeholder of all governance processes. Environmental and social NGOs in particular have been actively engaged in negotiations and implementation dialogue mechanisms of FLEGT. NGOs are broadly supportive of FLEGT. They welcome in particular the multi stakeholder approach of VPAs and the opportunities the agreements provide for a more inclusive and transparent dialogue on forest issues. They play a key role in monitoring VPAs implementation and need further support for that function. Local communities, particularly indigenous groups, are often forest users and micro entrepreneurs advocating for use rights and access to their traditional forest areas. Indigenous groups request distinction from civil society and other stakeholders due to their desire for direct representation when advocating for their rights, which do not always align with mainstream civil society organisations Priority areas for support/problem analysis In 2014 the European Commission started an evaluation of the first 11 years of implementation ( ) of the EU FLEGT Action Plan. It covered all seven action areas of the Action Plan and included all actions undertaken by EU institutions, Member States and partner countries, including efforts of non-state actors and international organisations. The Evaluation gave particular attention to VPAs, which are at the heart of the Action Plan and have mobilised substantial resources by partner countries, the EC and some Member States. The evaluation process is concluded with the release of a Commission's Staff Working Document. In parallel, the EC carried out a review of the functioning and effectiveness of the EU Timber Regulation (EUTR) a major milestone under the Action Plan and submitted a Report to the European Parliament and the Council. This Report was also accompanied by a SWDi.In addition, the European Court of Auditors (ECA) carried out in 2015 a performance audit focusing on EU support provided to timber-producing countries under the Action Planii. The Action Plan evaluation has highlighted the need to: Continue support to VPA countries; Strengthen cooperation with timber producing countries not engaged in VPA processes but which have a major role in trading illegal timber globally; Step up international dialogue and diplomacy with other major consumer countries of timber for them to adopt domestic measures against illegal logging or to reinforce the international coalition to tackle the problem at global level; 6

7 Provide increased attention to the challenges that producer countries domestic timber markets pose to FLEGT and VPA implementation by increasing support for informal actors, SMEs, community and smallholder forestry, livelihood and revenues, and national public procurement policies; Step-up work to promote successful private sector initiatives including synergies between private certification schemes and VPAs; Improve the overall outcome and impact monitoring of the entire action plan as well as strengthen the management capacity for delivery of the Action Plan, especially at the central level, reaching out to related sectors, multi-lateral fora and across the EC. Take into account the new threats and drivers of deforestation, in particular agriculture (agri-business and smallholder agriculture), mining, energy and infrastructure, and study their impact on livelihoods and forest cover. On the other hand, governance challenges for natural resources are strongly interlinked, and are not limited to the forest sector. A recent technical study on the EU strategic approach for wildlife conservation in Africa (Larger than elephants) insisted on the needs for improving the governance of the conservation sector (in particular the protected areas) in order to maintain the provision of ecosystem services for local population (proteins, fuel wood). The need to improve the governance of international production and consumption systems (PCSs) and promote a transition to more inclusive business models is increasingly important. The way in which international demand for agricultural commodities from sub-saharan Africa has impacted actual land use transitions and livelihoods strategies on the ground remains poorly understood. 2. RISKS AND ASSUMPTIONS Risks: The risk is a loss of momentum and decreasing interest in VPAs in partner countries, as a result of difficulties to fully implement the agreements and operationalize their Timber Legality Assurance Systems. Risk level (H/M/L) L Mitigating measures This will be mitigated by the focus of the action which is precisely to promote continued stakeholder involvement and ensure alignment with the priorities of national stakeholders in partner countries. The risk of small producers exclusion. M/L This will be mitigated by the explicit priority given to supporting MSMEs. In addition, the programme will identify intermediary organisations with experience with small business development and synergies will be 7

8 The risk is that industry representatives view the action as distorting competition. L developed with complementary programmes such as the FAO s Forest and Farm Facility. The level of funding and the size of the target group are appropriately established. In addition, support will not target single companies but sector level organisations. The risk is a loss of momentum of the VPA process. L/M Engagement with EU business actors will contribute to address this risk. Another factor that can address this risk is the increased awareness and impact of the international momentum to establish a demand driven framework for legal timber including regulations in the EU, the US and Australia. Assumptions: There is sustained interest from the target groups in VPAs. The target group has sufficient capacities to participate in the FLEGT process. This refers in particular to MSMEs. The action is not perceived as favouring one kind of actor or providing direct or indirect subsidies directly to enterprises. Countries maintain their interest in VPAs despite EU s decreasing market share. 3. LESSONS LEARNT, COMPLEMENTARITY AND CROSS-CUTTING ISSUES 3.1 Lessons learnt The FAO has been supporting the implementation of the EU FLEGT Action Plan since A first phase of support worked in Africa, Caribbean and Pacific (ACP) countries began in November 2008 and ended in June Following the successful completion of this phase, a second four-year phase of support was agreed with the FAO and ended in April This second phase was extended beyond ACP countries to include countries in South-America and South-East Asia engaged in FLEGT processes (both VPAs and non-vpas) 7. Over the years, the programme has proven to be very useful to local stakeholders engaged in the FLEGT processes and has been carried out in an effective and efficient way. This was confirmed by a recent evaluation carried out in 2015 that concluded that the Programme is highly relevant and well placed to provide increased capacity development support for local 6 The ACP FLEGT Support Programme was funded by an EU financial contribution of Euro 9.85 million and co-financing of Euro 2 million from the FAO 7 This second phase (the EU FAO FLEGT Programme) was funded through a FAO multi donor trust fund financed by the EU (Euro 10 million), the UK Department for International Development, ( 1,408,833), and by FAO (Euro 1 million). 8

9 stakeholders. It has proven to be efficient and effective in delivering its support with important outcomes achieved that include, among others, improvements in national policy and legal frameworks, increased understanding and awareness around FLEGT concepts, increased joint decision making between state and non-state actors. In 2016 the programme has entered its third phase. With the third phase the programme not only continues to channel support to countries engaged in VPAs but it will also introduce new mechanisms to better engage with the private sector as well as more targeted assistance to countries not engaged in VPAs where there is an effective commitment to improve forest governance and timber legality. On the broader forest picture, recent studies highlight the growing impact of non-forest sectors on deforestation, calling for more informed action to tackle a broader range of "root causes" of deforestation. CIFOR has already conducted a range of studies related to forest sector and interactions with other sectors, with often a specific focus on livelihood and smallholders. For the EU, CIFOR was recently involved (PROFORMAL project) on producing policy recommendations for better integration of small scale logging in VPA processes and for proper involvement of local communities in REDD+ benefit sharing. 3.2 Complementarity, synergy and donor coordination The EU FAO FLEGT Trust Fund delivers work complementary to a number of international organizations, multi-lateral agencies and EU member state donor agencies working on FLEGT processes in producer and other consumer countries. The programme occupies an important niche, delivering financing directly to stakeholders working on FLEGT/VPAs. This includes direct assistance to governments or calls for proposals, targeted at NGOs, government agencies and private sector organisations. Projects support the development of new policies and improved legal frameworks (such as legality definitions), independent monitoring, domestic timber market issues, log tracking/traceability systems, or support to stakeholder organisations such as private sector associations. It therefore complements well the support provided through the EU FLEGT facility managed by the European Forest Institute (EFI), which provides targeted short-term technical assistance, knowledge and expertise to VPA stakeholders, partner country governments and EU institutions. Other FLEGT initiatives are funded in partner countries by the EU and EU Member States. These include long-term technical assistance and institutional strengthening to government agencies, the development of timber legality assurance systems, the funding of VPA facilitators, as well as initiatives from civil society and the private sector. The flexible small grants from FAO FLEGT programme are complementary to these other projects, which usually involve larger budgets. Donor coordination at national level can be different from one country to another. In VPA countries, the agreements provide a clear framework for coordination, offering a platform for policy dialogue and setting clear political priorities and action plans with which all FLEGT related actions should be coherent. 9

10 At global level, regular meetings are organised by the Commission such as the FLEGT/EUTR expert group, the FLEGT Ad-hoc Working Group with EU Member States and the FLEGT week involving all EU funded FLEGT projects. Activities implemented by EFI and FAO are also coordinated during the joint programme Steering Committee meetings. As EFI and FAO are directly involved in implementation, an independent organization is considered more appropriate for impact monitoring of FLEGT. CIFOR is well placed to carry on this task, through close exchanges with FAO and EFI 3.3 Cross-cutting issues Environmental sustainability is a clear objective of the action. The ultimate goal of the FLEGT Action Plan is to contribute to sustainable forest management. This is also the goal of this programme. Sustainable forestry will contribute to other environment benefits, such as climate change mitigation, adaptation, and the maintenance of ecosystem services. The model of forestry promoted by the program regularly includes environmental assessment and mitigation measures. Therefore, there is no need for an Environment Impact Assessment (EIA) for the project as such. The action will also strongly contribute to the promotion of good governance of forest and land. It will implement activities contributing to stakeholders participation in the policy dialogue on FLEGT issues, to improved transparency and forest information disclosure, to clarify land tenure and access to forests and forest resources by indigenous communities, etc. The participation of frequently marginalised stakeholders including women and youth groups will be promoted in governance processes, during trainings for government workers and in the context of private sector development. The action is also expected to contribute to address women s needs, in line with FAOs policy on gender, taking into account that women rely much on forest for additional income, mainly related to non-wood forest products, and mainly as informal actors. There is an explicit reference to the priority given to smaller and informal producers in this action. The inclusion of women in proposals and consideration of effects of rural livelihoods, especially women and youth, will be promoted as well as processes ensuring equitable access to resources, decent work and productive employment. 4 DESCRIPTION OF THE ACTION 4.1 Objectives/results The overall objective of the action is to contribute to improve forest and land governance, tackle illegal logging, promote trade in legal timber products, improve the access to nontimber forest products and fuel wood, and ultimately contribute to sustainable forest management and poverty reduction. The specific objective is to improve forest governance and law enforcement, promote legal and sustainable forest industries, and better understand the role of governance and trade on deforestation and livelihood. This will be enabled by delivering flexible, demand-driven support to forest stakeholders initiatives contributing to national FLEGT processes, including VPAs as well as other forest governance and industry processes in non-vpa countries, and by producing policy options for increasing the impact of good governance on deforestation and livelihoods. 10

11 The present action represents a response to the main recommendations of the recently released EU Action Plan evaluation. It will consist on one side of a top-up to a previous EU contribution (contract n. 2015/ ) to FAO, and on the other to a contract with CIFOR. As stated above, this action will be closely coordinated with the work of the European Forest Institute (EFI), which continues to play an important role in supporting the implementation of the FLEGT Action Plan. Therefore the current well-functioning distribution of tasks between EFI, FAO, EC and MS will be remain in place and managed by the respective Steering Committees. In order to keep the document easily readable, the results and activities of the action document linked to the above mentioned decision are repeated and the new results are added in bold italic. 4.2 Expected results and main activities Result 1: Voluntary Partnership Agreements contribute to improved forest sector governance and timber legality on domestic and international markets. Under this result the action will provide support to governments to lead and for stakeholders to participate in the preparation for, negotiation and implementation of VPAs in approximately 15 countries, corresponding to the number of countries currently negotiating or implementing a VPA. Indicative outputs include: Output 1.1: Stakeholders understand their respective roles in the VPA process; Output 1.2: Stakeholder capacity and skill needs to support VPA processes are assessed; Output 1.3: Stakeholders have the skills to fulfil their role in the VPA process; Output 1.4: Stakeholders participate effectively in the VPA process; and Output 1.5: Innovative forest governance and law enforcement initiatives are developed and tested Output 1.6: Government and private sector put in place in VPA countries procurement policies and incentive structures promoting the use of legal wood products. These outputs will be achieved primarily through the financing of demand driven initiatives from government institutions, the private sector and civil society in target countries, for which approximately 80 grants will be awarded. These initiatives will include activities such as assistance to build information that supports VPA processes (feasibility studies, gap analysis, evaluation of legal frameworks etc.), exchange of experiences between stakeholder groups, facilitation of consensus building and participatory processes, capacity development to promote best practices under the VPA process (i.e. independent monitoring, developing, testing or continued training to implement legality assurance systems, etc.). With the current action, the support to this result will be increased to respond to a recommendation of the evaluation. It allows providing additional, targeted support to partners in VPA countries where specific actions have been identified, or commitments made during negotiations, which will have direct and immediate impact. It will also allow doing more work on legal/sustainable procurement. FAO is overall responsible of the result 1. 11

12 Result 2: Forest governance initiatives that support legal and equitable production and consumption of timber are developed and implemented. Activities contributing to this result will be implemented in countries where there is an effective commitment to improved forest governance and timber legality, and a demand for support to coordinated multi stakeholder initiatives outside the framework of a VPA negotiation or implementation process. The programme will work in approximately 10 countries as well as at the regional level. Indicative outputs are as follow: Output 2.1: Stakeholder groups in target countries or regions demonstrate common understanding of FLEGT principles; Output 2.2: Inclusive forest governance and legal timber production and trade mechanisms are developed and adopted for implementation; Output 2.3: Government agencies and partner interventions are coordinated and build synergies to implement policies and strategies; and Output 2.4: Stakeholders are enabled to participate in processes to promote governance and legality. Output 2.5: Government and private sector put in place in non-vpa countries procurement policies and incentive structures promoting the use of legal wood products. These outputs will be achieved primarily through the financing of demand driven initiatives from government institutions and stakeholders. Funds will be made available to initiate or further develop country or regionally driven governance reforms or improvement programmes, including development of the overall objectives, a work plan establishing roles and responsibilities of the potential partners. Funding would then be made available to initiate activities. The programme will provide a full time technical support advisor and also jointly work to solicit additional in-country or regional support. Indicative activities include the provision of expertise and organisational support to develop and implement holistic forest governance strategies, support to clarify existing definitions of legality to facilitate understanding and compliance by all stakeholders, support to a common understanding of legal timber at regional level among the various actors involved in law enforcement to stem illegal transboundary trade, strengthening of law enforcement mechanisms, encouraging voluntary legality verification mechanisms, promoting best practices in forest user rights allocation and forest tenure schemes, promote government or voluntary legality verification as means of compliance to legal timber procurement, etc. With the current action, the support to this result will be increased to respond to a recommendation of the evaluation. This will increase FAO ability to support national processes which strengthen forest governance outside of the VPA context, and target regions which are strategic to fighting global illegal logging. FAO is overall responsible of the result 2. Result 3: The capacity of MSMEs to participate in the trade of legal timber has increased. This result should be seen as a cross cutting result that will support and complement actions under results 1 and 2. The programme will support initiatives of private sector organisations 12

13 and associations representing MSMEs 8 to (1) understand and overcome barriers to legal compliance; (2) understand market demands and opportunities; and (3) access markets. Indicative outputs include: Output 3.1: The landscape of local private sector actors, market dynamics and incentive structures that motivate private sector decision making in target countries are better understood; Output 3.2: Private sector in target countries understands obligations and opportunities that result from changing legal frameworks and market demand; Output 3.3: Policies and legal frameworks are reviewed and revised to promote equitable access, empower the private sector, in particular MSMEs, to participate in legal and sustainable timber production and trade, and increase productive employment in the forest sector as an engine for poverty reduction; Output 3.4: Private sector stakeholders are organised to participate in FLEGT processes and have the skills and knowledge to comply with legal frameworks and access markets; Output 3.5: MSMEs are better informed of opportunities to access finance, and micro finance systems to stimulate equitable capital ownership and test productive employment; Output 3.6: Synergies between VPA and Private Certification systems promoted by facilitating (at national level) or ensuring (at regional level) better coordination of related processes and support programmes. Indicative activities contributing to this result will include stocktaking of relevant private sector support actions, assessment of what has stimulated MSME engagement in governance processes, of target audience and its needs, of domestic market dynamics and barriers to formal production and possible incentives for legal production, support to business fora that support legality understanding, business to business dialogue, support to initiatives promoting MSMEs access to capital and other resources required for successful and legal businesses, etc. With the current action, the support to this result will be increased to respond to a recommendation of the evaluation. It will allow providing complementary support for stakeholder consultations and technical reviews/working groups/consultancies to inform mutual recognition and synergies between systems as part of VPA negotiations/implementation or certification standard/scheme development/review processes. FAO is overall responsible of the result 3. Result 4: Stakeholders, in both consumer and producer countries, demonstrate an improved knowledge of benefits from legal logging, international trade requirements and of best practices for forest law enforcement, governance and trade. 8 Support will target private sector organizations, including non-profit syndicate, federations, organizations representing chainsaw operators and charcoal producers, small scale unions or associations, and government offices working to promote legal management, production and marketing of timber and timber products such as chambers of commerce, business development centers, etc. 13

14 This result should also be seen as a cross cutting result that will support and complement actions under the other programme results. Indicative outputs include: Output 4.1: Eligible stakeholders are aware of and understand how to access support and information from the FAO FLEGT Programme; Output 4.2: Relevant country level FLEGT stakeholders are trained and supported to develop and implement FLEGT communication strategies; Output 4.3: Global FLEGT experience and knowledge are documented and shared; and Output 4.4: Outcome and impact monitoring system for the activities of the Trust Fund developed and implemented to ensure adaptive management, improved impact of initiatives funded under the programme, evidence based information sharing and case study research to verify and improve impacts of target actions (such as poverty reduction and gender equity). Output 4.5: Improved multilateral dialogue is facilitated between major timber products markets, notably the EU, US, Japan, Australia, Korea, India, Brazil and China on the problem of imports of illegally sourced wood products. Indicative activities would typically support research, exchange opportunities, publications, information fora, including organising a consumer countries conference, and visibility. With the current action, the support to this result will be increased to respond to a recommendation of the evaluation. The EU will maintain its overall responsibility of the result 4. FAO will act as facilitator of these outputs. For output 4.5. FAO will take on the role of facilitator of the organization of the multilateral dialogues, EFI's EU FLEGT Facility will continue its support to regional dialogues and process. Result 5: The progress, achievements and impacts of the FLEGT action plan are better understood and information is made available through updated, robust and user-friendly information system in close coordination with the Commission, EFI, FAO and Member States [1]. Output 5.1. Robust indicators for appropriate elements of the FLEGT action Plan are defined and tested in consultation with the Commission and other FLEGT partners, focusing on the overall impact of the FLEGT AP; monitoring of progress against indicators is conducted at global level and synthetised in an user-friendly information system in close coordination with the Commission and EU Member States (this will not replace National level VPA impact monitoring as articulated in the VPA agreements). Output 5.2. Support to national level impact monitoring of VPAs is provided on a demand led basis in response to demand from the Joint Implementation Committees or the national equivalents and building on support provided by EFI. Output 5.3. Independent monitoring of the international timber market (IMM). Result 5 is introduced as a new set of activities, contributing to address recommendations of the FLEGT Action Plan evaluation on monitoring. CIFOR will be responsible for the output 5.1, in collaboration with FAO and EFI, while FAO will be responsible for output 5.2 and 5.3. A clear division of labour between CIFOR, FAO and EFI will be defined during the contracting phase. As general rule, CIFOR contribution will focus on research-oriented and methodological issues, and macro-level analysis, while FAO will continue work at national level. IMM has so far been conducted by the ITTO which, in terms of mandate, is perceived as 14

15 the most appropriate institution to fulfil this function. ITTO is not in a position to continue this task for the moment. FAO role on IMM is envisaged to be temporary. It may be reattributed to ITTO once the organisation is able to fulfil this function. Result 6: The influence of trade and governance on livelihoods improvement and on forest cover is better understood. Output 6.1. Impact of commodity-based agribusiness and smallholder production on forests and people s livelihoods is monitored and innovative financing schemes for sustainable land are implemented. Output 6.2. Improved knowledge of the role of forests for food security and nutrition. Output 6.3. Analysis of and development of policy options for improving the fuelwood value chains and markets and their impact on livelihoods. Result 6 is a new set of activities corresponding to key knowledge gaps to fill and policy options to define on land and forest governance and access to resources. In each of the thematic domains (sustainable land-use, fuelwood, forest and nutrition), CIFOR activities will include production of scientific evidence, definition of policy and operational options, test in pilot sites and countries. The choice of the regions of interest will preferably be FLEGT countries. CIFOR is overall responsible for output 6.1, 6.2 and 6.3 in collaboration with FAO. 4.3 Intervention logic The logic intervention framework is detailed in Appendix 1. The overall objective of the action is to contribute to improve forest and land governance, tackle illegal logging, promote trade in legal timber products, improve the access to nontimber forest products and fuel wood, and ultimately contribute to sustainable forest management and poverty reduction. The specific objective is to improve forest governance and law enforcement, promote legal and sustainable forest industries, and better understand the role of governance and grade on deforestation and livelihood. This will be enabled by delivering flexible, demand-driven support to forest stakeholders initiatives contributing to national FLEGT processes, including VPAs as well as other forest governance and industry processes in non-vpa countries, and by producing policy options for increasing the impact of good governance on deforestation and livelihoods. The specific outcomes/outputs are listed together with the corresponding proposed activities. Both the outcomes/outputs and the activities will be further developed and adjusted during the project implementation and in cooperation with other resource partners and in general with forest international regional partners. The expected results/targets listed to be achieved in 2020 will also be adjusted accordingly. 5. IMPLEMENTATION 5.1 Financing agreement In order to implement this action, it is not foreseen to conclude a financing agreement with the partner country, referred to in Article 184(2) (b) of Regulation (EU, Euratom) No 966/

16 5.2 Indicative implementation period The indicative operational implementation period of this action, during which the activities described in sections 4.2 will be carried out and the corresponding contracts and agreements implemented, is 72 months from the date of adoption by the Commission of this Action Document. Extensions of the implementation period may be agreed by the Commission s authorising officer responsible by amending this decision and the relevant contracts and agreements; such amendments to this decision constitute technical amendments in the sense of point (i) of Article 2(3)(c) of Regulation (EU) No 236/ Implementation modalities Indirect management with an international organisation This action will be implemented in indirect management with UN Food and Agriculture Organization (FAO) and with the Centre for International Forestry Research (CIFOR), in accordance with Article 58(1)(c) of Regulation (EU, Euratom) No 966/2012. FAO will carry all the budget-implementation tasks corresponding to results 1 to 4 of the action, and output 5.2 and 5.3 under result 5. CIFOR will carry all the budget-implementation tasks corresponding to outputs 5.1, under result 5 and the totality of result 6 of the action. The implementation by these partners is justified because: This new programme builds on the previous and existing FAO FLEGT programmes, implementation of which has been very effective, as confirmed by the recent programme evaluation. FAO has adequate institutional capacities. It has presence in all target countries, through its network of country offices. It also has FLEGT officers based in the different regions targeted by the action. No other organisation considered for the management of this action possesses the same network and presence in the target countries. FAO also has adequate procedures to support tailored initiatives from different counterparts with different needs and capacities, as shown during the current FAO FLEGT programme. FAO has knowledge of the target groups, in particular forest communities and MSMES. It has also developed knowledge of the private sector through the first phases of the FAO FLEGT programme during which FAO has built relationships with timber trader federations. FAO has also a long and comprehensive experience of supporting rural communities, smallholders and small agribusinesses in developing countries, a target group and thematic that overlaps significantly with the focus of this action. FAO has a strong comparative advantage in the delivery of this programme by virtue of its global reach, perceived independence and track record. CIFOR is well positioned to implement the project given its track record, global presence and partnerships. CIFOR has a global reputation as non-partisan knowledge broker and over 20 years of experience working on issues around logging, drivers of deforestation, sustainable forest management and forest governance. CIFOR has a strong comparative advantage in addressing the complex problems created by the unsustainable use of forest and tree resources or by the threats of climate change. CIFOR also brings extensive project management experience in FLEGT, REDD+, global value chains and innovative financing, wood energy, forests, food security and nutrition. The Center has its headquarters in Bogor, Indonesia and three hubs in Nairobi, Yaoundé, and Lima that will support work in target geographies. CIFOR will leverage the skills and networks of a wide range of partners operating in project 16

17 countries for practical management, capacity building, policy engagement and public and media outreach. CIFOR has passed successfully the pillar assessment required for indirect management. The Commission authorises that the costs incurred by the entrusted entities may be recognised as eligible as of 1 January 2017 because the additional activities indicated needs to be urgently implemented as follow-up of the FLEGT Action's Plan Evaluation. 5.4 Scope of geographical eligibility for procurement and grants The geographical eligibility in terms of place of establishment for participating in procurement and grant award procedures and in terms of origin of supplies purchased as established in the basic act and set out in the relevant contractual documents shall apply. 5.5 Indicative budget EU contribution (amount in EUR) Indicative third party contribution, in currency identified Indirect management with FAO EUR Indirect management with CIFOR Evaluation & Audit (5.8, 5.9) Will be covered by another decision Total n.a. 5.6 Organisational set-up and responsibilities FAO component FAO will administer the implementation of its component of the programme which will be overseen by a Steering Committee composed of FAO and all donors of the Trust Fund. EFI and CIFOR will be invited to participate as observer. Additional organisations may also be invited as observer or as expert resource organisations to provide additional steering on demand. Regional advisory committees will meet periodically to ensure that technical objectives and implementation are relevant to the regional priorities. In addition, the programme envisages partnerships with EFI, EU Delegations, the Global Environmental Facility, UN agencies and programmes as well as other stakeholders. A Programme Management Unit will be established by FAO to implement and administer the programme. The program will deliver grants to government institutions, private sector and civil society organisations, in accordance with FAO s rules and procedures. The Programme will administer projects up to EUR directly. Complementary calls for proposals ranging from EUR to for most projects will be used to support initiatives 17