Consumer Goods and Deforestation

Analysis of Extent and Nature of Illegality in Forest

Conversion for Agriculture and Timber Plantations

5th PEFC Stakeholder Meeting 20 November 2014

Kerstin Canby
Forest Trade & Finance
Forest Trends
Outline

• Consumer Goods and Deforestation Report

• Summary of report findings
• Methodology
• Conversion Timber
• Agricultural Commodities

• Update on China and Greater Mekong region

Results: Summary

* Midpoint estimates used in sensitivity analyses *

11/20/2014
Illegality in major countries

11/20/2014
 Scope of Impact

 Deforestation: 21m ha of tropical forests illegally cleared

2000-2012 in order to supply agro-commodities for export

 Climate change: Emissions from illegal deforestataion

from commercial agriculture average 1.47 gigatonnes CO2
per year – equivalent to ¼ EU’s annual fossil fuel-based
emissions

 Trade: Value of agro-commodities produced on land

illegally converted from tropical forests estimated at $61
billion / year. Largest buyers: EU, China, India, Russia, US

11/20/2014
Results: Sensitivity analysis

11/20/2014
Results: Commodity exports

11/20/2014
Definition of Legality / Illegality

 Legality determined by laws & regulations of producer

countries, at the time of deforestation
 Illegalities of past 20-30 years only, directly or
indirectly caused by commercial agriculture
 Does not include international commitments (ILO
169, UNDRIP, etc)
 Does not include customary rights unrecognized by
statutory law

11/20/2014
Definition of Legality / Illegality

Only focuses on violations with large impact

 Issuing of licenses / permit
 Corruption / bribery
 Example PNG: Parliamentary Inquiry found 90% Special
Agriculture and Business Leases (SABLs) obtained
through corrupt/fraudulent means
 Clearance
 No permit, permit non-compliance, in advance of permit
 Clearance in prohibited zones
 Failure to compensate affected communities
11/20/2014
Conversion Timber

• Tropical timber in global markets being sourced from

land clearance projects
• 13% low 31% medium 49% high scenario
• Role of conversion timber in the profitability of
agricultural development projects
• Are the legality issues different from conventional
forest concessions?
• More emphasis on early processes of land acquisition,
auctions, permitting, degazetting of forest estate

11/20/2014
Conversion Timber

• Mechanisms designed to address illegal logging

were designed in the 1990s and early 2000s before
agricultural land boom
• Certification standards and legality verification schemes
• VPAs now focussing on this, or are being reviewed
• Engagement of agricultural ministries or land
management

11/20/2014
Agricultural Commodities

• Calls to replicate FLEGT mechanisms for illegal

agricultural commodities
• EUTR, Lacey, VPA processes
• Impatience with voluntary approaches (RoundTables, RSPO,
voluntary Zero Deforestation commitments

• Very different dynamics politically

• Fewer number actors, major multi-nationals who are producers /
traders / processors, more money, more political

• Private sector interest in asking governments to get their legal

house in order > basic improvements in investment climate

11/20/2014
Agricultural Commodities

• Will the land be “forever illegal”?

• Informal processes for conflict resolution
• Blanket amnesty
• Fines
• Offsets

11/20/2014
Outline

• Update on China and Greater Mekong region

 China: timber product imports by volume
and product type

100

80
m3 RWE Millions

60

40

20

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Logs Sawnwood Wood chips Veneer sheet Charcoal

Particleboard Wood furniture Fiberboard Plywood Other
 China: timber product exports by volume
and product type
60.0

50.0
Millions

40.0
m3 RWE

30.0

20.0

10.0

0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Plywood Furniture Fiberboard Flooring Other Joinery Lumber Veneer Sheet

11/20/2014
 China: Rosewood Imports
800
other
700 DRC
Volume 1000 m3

600 Mozambique
500 Lao PDR
Myanmar
400
Nicaragua
300 Ghana
200 Togo
100 Benin
Gambia
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Vietnam
China: Rosewood Furniture Exports
450'000
400'000
350'000 other
300'000 France
Quantity

Macau
250'000
United States
200'000
Hong Kong
150'000 Taiwan
100'000 Singapore
50'000 Japan
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
China: Timber product imports by volume
and source country
120

100
m3 RWE Millions

80

60

40

20

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Russia Canada New Zealand
Vietnam United States Thailand
European Union Australia Africa
Indonesia Papua New Guinea Other
 China: Hardwood log imports
14
Middle East/Central Asia
Other Oceania
12
Latin America/Caribbean
Other Asia
Millions

10
North America
Europe
m3

8
Other Africa
Malaysia
6
Equatorial Guinea
Cameroon
4
Congo
Myanmar
2
Russia
Solomon Islands
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Papua New Guinea
 EU-27 timber imports by region and
exposure to 3rd party verification (2011)

Includes all products in CN44 (wood) and wood products in CN94 (furniture).
Based on FII Ltd/European TTF analysis of Eurostat and data derived from certification/legality system websites and Keurhout
Legality of China Wood Supply

• Illegal harvest not problem

in domestic supply – main
issue is rights of local
people
• Bigger question: how to
handle imports from high
risk countries?
Legality of China Wood Supply

• Illegal harvest not problem

in domestic supply – main
issue is rights of local
people
• Bigger question: how to
handle imports from high
risk countries?
Legality of China Wood Supply

• International laws (EUTR, US Lacey) are obliging

traders to question government documents in countries
that are unable or unwilling to enforce their own laws
• This is not in the draft China State Forest
Administration Timber Legality Verification System
• Chinese Forest Management System has just been
endorsement by PEFC this year
• Challenge – uptake of FMSystem linked to chain-of-
custody and leading to on-label logo use
Vietnam – the next China

• Ministry of Industry
and Trade,
November 2014:
temporary ban on
import of logs and
sawntimber from
Laos and Cambodia
starting Dec 8, 2014
Thank you
Kerstin Canby
kcanby@forest-trends.org
www.forest-trends.org