Ambiguity in Timber Trade Regarding Efforts to Combat Illegal Logging: Potential Impacts on Trade between South-East Asia and Europe

Abstract

Raised public concern in the European Union (EU) about the legality of its timber imports has pushed the European Commission to raise its standards and legality demands for wood imports. Combining literature reviews, structured interviews and trade data analyses, this study assesses the potential influence from Forest Law Enforcement Governance and Trade (FLEGT) (with its Voluntary Partnership Agreements (VPA) system and new legislation EU Timber Regulation (EUTR)), and third party verification schemes on the timber trade between tropical countries and Europe. These instruments have the potential to reduce the amount of illegally sourced timber being placed on the market, and they seem to have resulted in both increasing support of legality verification and certification uptake. However, there are signs of increased ambiguity in trade that could originate as a side effect of the transition towards a stricter regulation for tropical timber. Such ambiguity is explicitly taken into account here. Possible consequences from increased ambiguity are substitution of oak lumber for tropical hardwood lumber, and a diversion of exports of tropical timber to destinations with a less stringent regulatory framework than the EU. Evidence of these trade patterns in the literature reviews, OPEN ACCESSForests 2013, 4 731 interviews, and trade data analyses seems to confirm that ambiguity in international trade markets has actually increased since the introduction of these instruments.

Legality Constraints: The Emergence of a Dual Market for Tropical Timber Products?

“…Of course, the mainstream thinking about a shift in exports to less demanding markets, induced by stricter requirement in Northern countries, is still a possibility (e.g., [24]), and it could represent at least part of the shifts indicated by the results. In particular, although our results do not consider the size of the enterprises exporting timber from VPA countries or of those importing into final consumer markets, there is evidence of enterprise concentration.…”

“…Chinese imports, however, were increasingly meeting the growing industrial demand for both the domestic market and re-exports, while the imports of all major importers have diminished their imports during the last three years. The volumetric decline in tropical plywood imports is linked to many factors, including substitution with softwood and temperate hardwood plywood (e.g., birch plywood from Russia or eucalyptus plywood from Brazil) and other panels [24]. Additional effects are due to the introduction of stricter standards on formaldehyde emission levels for imported plywood by key importers such as Japan and the EU [45].…”

The opinions of some stakeholders on the European Union Timber Regulation (EUTR): an analysis of secondary sources

“…If the requirements of the EUTR are not fully understood, however, European importers may assess the risks associated with the value of the wood they want to purchase and opt for more reliable timber sources within Europe and North America. Hence, the general uncertainty around EUTR interpretation may become detrimental for tropical timber exports (Giurca et al 2013). …”

“…The EUTR was welcomed by many as a long awaited effort to curb illegal logging. However, particularly in the early stages of its implementation, the regulation could cause ambiguity in international timber markets, when the effects and/or the requirements are not fully understood or known by agents and stakeholders (Giurca et al 2013). These issues are likely to arise when each Member State (MS) transposes the new regulation into its own policy framework.…”

“…The new regulation has, however, generated a lot of discussions in the media and the opinion of some stakeholders is already in the public eye. There is, however, currently a high degree of ambiguity around the new regulation in this early stage of its implementation (Giurca et al 2013). In order to further the understanding of how the EUTR is perceived by different stakeholders, opinion statements have been collected and summarized.…”