Index

Expert Opinion: Illegal Trade in Tropical Timber

By Chen Hin Keong

Illegal logging and illegal timber trade not only undermines conservation, but also results in reduced profitability of legal trade, loss of foreign revenue and currency exchange, uncollected forest-related taxes and depleted forest resources and services.

Illegal logging not only affects the main tropical timber producing countries in Southeast Asia, Central Africa and the Amazon, but also the temperate forests of regions such as the Caucuses and the Russian Far East. There are no reliable statistics of the percentage of timber entering international trade that is illegal, though figures of between 20-80 per cent have been reported. Even ranges of figures for individual countries vary widely, with the figures for Indonesia, ranging between 40 to 80 per cent of total wood production.

One reason why these figures are difficult to quantify is because illegal logging and illegal timber trade encompasses a wide range of practices. This may include illegal occupation of forest lands; obtaining logging concessions through bribes; logging protected species; logging outside of concession boundaries or within protected areas; illegal timber transport, trade and smuggling; transfer pricing and other illegal accounting practices; undergrading, under-measuring, under-valuing; misclassification of species; and illegal processing of timber.

The lack of an internationally accepted definition of what constitutes legality of timber products further complicates the issue. In the simplest form, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) provisions of using a permit and certificate system, through the provisions of the text relating to legal procurement, is a proxy for ensuring that timber that is traded is not illegally obtained. However, the legality or illegality of shipments of timber in international trade may vary at different points of the trade chain.

Logging should therefore not be examined in isolation from the trade in timber. To a large extent, the latter drives the former and is one of the main causes of uncontrolled logging and illegal logging. There are a number of elements that contribute to illegal timber trade, one of which is lack of transparency. Increased transparency, in particular the analysis and comparisons of data for timber exports and imports, could provide valuable indicators of possible illegality. The discrepancy in international timber statistics is a serious issue as statistics are one tool by which governments and other stakeholders can monitor the situation of forestry in countries.

Trade discrepancies may also be an indicator of illegality, though a number of factors could contribute toward such trade discrepancies. These may vary from “routine” practices, such as changes in fiscal year, method of product valuation, time lag between export and import, exchange rate fluctuations, and conversion of product weights to volumes, combined shipment of mixed products, to possible illegal activity, mis-specification of product characteristics, fraudulent trade data and smuggling.

There are a number of international initiatives to address issues in illegal logging and timber trade. In 2001, the Forest Law Enforcement and Governance and Trade (FLEGT) processes were initiated in Asia, followed by similar initiatives in Africa in 2004, and in Europe and North Asia in 2005. At the 2002 World Summit on Sustainable Development (WSSD) in Johannesburg, the Asia Forest Partnership (AFP) and the Congo Basin Forest Partnership (CBFP) were announced. In recent years, some governments have resorted to bilateral or regional agreements with their trading partners in an attempt to gain urgent support and focus on issues relating to illegal logging occurring within their countries. The International Tropical Timber Agreement (ITTA), as the only tropical timber commodity agreement between producer and consumer nations, is solely concerned with international tropical timber trade and places illegal logging high on its agenda for action.

Pre-dating these international initiatives, CITES already provides a mechanism to regulate trade in CITES-listed timber species and products. CITES is, in fact, considered the only international mechanism that could regulate international trade in wild species including timber trade between CITES parties.

At the national level, timber tracking systems can provide a chain of custody to a level of confidence that can assure consumers that the majority of timber products leaving those countries are from legal domestic or imported sources. Most developing countries already have some form of timber tracking systems for logs and some primary processing, though these are by no means comprehensive.

Approval granted by the authorities for one segment of the chain, in many cases, has no bearing on the approval to be given at the next stage in the chain. Hence, illegally sourced timber products could find their way into international markets even if regulatory conditions and documentation for export and import is met. For instance, illegal export from one country may be acceptable as legitimate import into another as long as the import requirements are met.

Therefore, the burden of combating illegal logging and illegal timber trade should be the responsibility of both producer and consumer countries, including stakeholders in governments, industry, civil society and consumers.

Chen Hin Keong, from Malaysia, is the Senior Forest Trade Advisor to TRAFFIC International, based in Malaysia.