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Australian Developments in
Trade of Legal Timber
Stephen MitchellSustainability Programme Manager
www.timber.net.au www.tdansw.as.au www.illegallogging.com.au
This presentation
• Who is Timber Development Association?
• Australian economy and some stats
• Illegal Logging Prohibition legislation
• Key issues for Aust. importers and domestic
• Drivers for legal timber
• Promoting use of timber in Australia
Timber Development Association
• Established: 1938
• Objective: Develop markets for timber products in
construction
• Represent: Supply chain – forest growers,
manufactures, wholesale (inc. importers)
and merchants
• Focus: Technical and market research projects and
education to specifiers
• Work with: Other industry associations, timber
companies, governments
Australian economy
• Annual GDP growth: 3.8% and
rising
• Unemployment rate: 5.2% and
steady
• Dwelling investment: AUD $71
billion
– New res. construction (60% of exp.):
below av. - expect to rise
– Alts and adds (40% of exp.): steady
Sawn wood & ply: consumption
Source: ABARE (2012) Australian forest and wood products statistics: September/December quarters 2011. Published 22 May 2012. Available at
http://www.daff.gov.au/abares/publications
Sources of sawn wood 2010/2011 - by volume
Sources of plywood 2010/2011 - by volume
Hardwood & ply import: trendsQuarterly hardwood timber imports 2004-2012 –
volume by source
Quarterly imports of wood panels and
engineered wood products 2004-2012 –
volume by source
Australian domestic supply
• Only ~10% of Australian forests SFM certified
(PEFC/AFS, FSC or both)
• All major sawmills, pulp mills and most (~75%)
timber wholesalers (inc. importers) have CoC
certification
• ~90% of domestic sawn wood and 100% of supply of
domestic plywood from COC certified sources
• Major imports of sawn wood (NZ, Europe, Nth
America) also mostly SFM certified
• About 50% of Australian hardwood and most
hardwood imports are not SFM certified.
Furniture imports: trends
0
50 000
100 000
150 000
200 000
250 000
300 000
2007
2007
2007
2007
2008
2008
2008
2008
2009
2009
2009
2009
2010
2010
2010
2010
2011
2011
2011
2011
AU
D $
,000
Furniture imports, select countries 2007-2011
China Indonesia Malaysia
Thailand Vietnam
Source: ABARE (2012) Australian forest and wood products statistics: September/December quarters 2011. Published 22 May 2012. Available at
http://www.daff.gov.au/abares/publications
Illegal Logging Prohibition (ILP)
Legislation:
• Action supported by all major parties
• Govt. wanted voluntary approach – code of conduct for importers
• Major domestic industry and ENGOs – wanted sustainability certification (FSC or PEFC) of all imports
• Importers wanted due diligence for legality mandatory for all importers
• Hence → legislation
• Passed Australian lower house – expected to pass upper house “late 2012”
• Does not impose any requirements or restrictions on sovereign nations or exporters
• However importers may be seeking information about suppliers and request further assurance if not low risk
ILP Legislation - Key Elements
A. Illegal Logging Prohibition Act
1. Prohibition (two parts)
2. Due diligence requirements (importers)
3. Customs declaration (importers)
4. Due diligence requirements (Aust. processors)
5. Annual statement to DAFF (Aust, processors)
6. Govt. monitoring, inspection and enforcement
B. Supporting Regulations
1. Prohibition (part 1)
• Applies from day one (late 2012)
• Prohibited to:
– Import illegally logged wood products
– Process domestic logs that have been
illegally logged
• Penalty - Up to 5 years jail and/or
fine ($55k for individual, $275k for company)
+ forfeiture
• Level of proof - must have done it
knowingly, intentionally or recklessly.
1. Prohibition (part 2)
• Applies to importers and processors of
regulated timber products after 2 years
(late 2014)
• Prohibited to:
– import illegally logged wood products
– process domestic logs that have been illegally logged
• Penalty - Up to 5 years jail and/or fine ($55k for
individual, $275k for company) + forfeiture
• Level of proof - must have imported/processed
negligently
Definition of illegally logged
“means harvested in contravention of laws in force
in the place (whether or not in Australia) where
the timber was harvested.”
2. Due Diligence: Importers
• 2 years after enactment (late
2014)
• All importers of regulated timber
products
• Must undertake due diligence
– Defined in regulations, probably:
• Gather information
• Risk identification
• Risk mitigation
• If DD not undertaken →
– Fines $33k for individual or $165k for company
– Easier to prove negligent
3. Customs Declaration
• After 2 years (late 2014)
• Required for all importers of regulated timber
products for each consignment
• Requires importers to declare they have
undertaken due diligence requirements in
accordance with the Act
• Fines up to $11k for individual or $55k for
company
4. Due Diligence:
Australian Processors
• After 2 years (late 2014)
• All processors of domestic
raw logs must also undertake the
due diligence requirements
• Specifics in regulations
• Must make statement of
compliance
• Fines up to $11k for individual or
$55k for company
Supporting Regulations:
Priorities
1. List of regulated timber products
2. Specific due diligence requirements
3. Form of customs dec. and statement of
compliance
4. Recognition of existing Australian state and
territory processes to align with the ILP Act
“Regulated Timber Products”
• Based on Harmonised Tariff System codes
• What’s definitely in:
– Sawn timber, plywood, mouldings
• What’s “maybe” in:
– Veneer, doors, window joinery
– Pulp and paper products
– Wood furniture
ILP: Key issues for importers
• Major importers:
– Most comfortable with due-diligence but concerned
about details. E.g.
• What are low risk / not low risk sources?
• What are acceptable mitigation/legality assurance?
– Concerned about additional costs and paperwork
– Want to make it tougher for irregular importers
• Irregular (and furniture) importers:
– Don’t know (or want to know) anything about
legislation
Drivers for legal timber
Drivers for legal timber (cont)
ILP: Identifying supply chain risk
• Aust. Govt have said they don’t want to decide -
up to market / industry (and courts)
• Resources:
– Aust Govt. funded Pöyry report and
criteria (on DAFF website)
– FSC & PEFC bodies and auditors
– FSC controlled wood country-wide
assessments
– ENGO reports
– EU/FLEGT VPA countries
– Trade Federations’ reports / guidance
ILP: Acceptable legal assurance
• Aust. Govt have said they don’t want to decide
• Up to the market/industry (and courts)
• Resources:
– Aust Govt. funded URS report and criteria (on DAFF
website)
– FSC & PEFC auditors
– EU/FLEGT/VPA acceptance
– TDA reports / guidance (forthcoming)
– Trade Federations’ reports / guidance
– Proforest assessment?
Acceptable legal assurance?
Legality assurance guidance
-
1.0
2.0
3.0
FS
C C
WS
AF
S F
M
FS
C P
&C
SG
S -
TLT
V
SW
VLC
MT
CS
TF
F L
C
SV
LK
GF
S L
VS
Cert
isourc
e
LA
C
AS
EA
N
TLS
Level o
f assu
ran
ce
Verif ication Audit Governance
High
Moderate
Low
Source: URS (2010) A framework for differentiating legality verification and chain of custody schemes. Prepared for Australian Government
http://www.daff.gov.au/forestry/international/illegal-logging
Assessment of legal compliance schemes in Asia Pacific
FSC Controlled wood risk
assessment for Australia
• Six independent members
• Classified Australia low risk for all four
indicators for illegal harvesting
Source: FSC Australia (2009) Approved Controlled Wood Risk Assessment Matrix for Australia. http://www.fscaustralia.org/policies-and-standards/controlled-wood
Current and future work - TDA
• Stage I - Understanding current due-diligence
practices:
– Interviewing ~60 importers and dom. processors
– Report for Forest and Wood Products Australia
• Stage II - When legislation passes into law:
– Develop tools and guidance for importers and
domestic processors
Marketing Timber in Australia (Australian and
imported timber products)
Wood. Naturally Better™
Make it Wood. Planet Ark
WoodSolutions™
Terima kasih
Project :: Kooyong Residence
Architect:: Matt Gibson Architecture + Design
Image :: Shannon McGrath