01December 2017

The overall figures looked good. Since the launch of licensing last November, 35,897 licences were issued to timber and wood product shipments to the EU, valued at €1.1 billion.

Under its FLEGT VPA, Indonesia also applies the same legality assurance standards to exports to other markets, issuing these with V-legal documents. In the same period it issued 190,836 of these to cargoes worth US$10 billion.

The JEM also discussed the continuing rollout in forestry and timber sectors of Indonesia’s SVLK, the timber legality assurance system which lies at the heart of its FLEGT licensing operation. So far 23m hectares of forest and 3,498 forest-based enterprises have been SVLK-certified.

The JEM concluded that implementation of FLEGT licensing went smoothly overall. But it also recognised shortcomings and discussed lessons learned in the last 12 months, which could be used to strengthen the system. It was announced that an EU/Indonesian ‘mini action plan’ has been initiated to address licensing technical issues.

02 Interview with EC Director General for the Environment Daniel Calleja Crespo

04 Perspectives from Indonesia05 FLEGT viewpoints from EU trade

and Federations08 Indonesia shares its FLEGT experience

Contents

In October, Indonesia’s first year of FLEGT licensing came under scrutiny from an EU/Indonesian Joint Expert Meeting (JEM).

FLEGT by numbersBecoming the first country to start licensing, a range of speakers told the 275-strong private and public sector audience, was a major achievement, as was the export by Indonesia over the year of over €1 billion worth of FLEGT-licensed timber and wood products to the EU.

The multi-national make up of delegates also underlined the growing interest in the FLEGT initiative around the world. Besides EU diplomatic representation, there were attendees from Japanese, South Korean, Chinese and other embassies.

Donor agencies, such as US Aid, Japan’s JICA and Germany’s GIZ, were also there.

While there were expressions of pride at the accomplishment so far, however, there were no signs of complacency. It was acknowledged that there were some ‘growing pains’ with licensing administration and there were calls from the audience for a further EU FLEGT awareness-raising drive. It was also agreed that FLEGT licensing and the SVLK legality assurance system that underpins it in Indonesia had to be subject to continual improvement and development.

Indonesia’s Minister of Environment and Forestry Siti Nurbaya Bakar set the tone of the event.

“Indonesia is committed to improve forest law enforcement and governance through responsible trade of legal and certified timber,” she said. “This contributes to our economic development and broader socio-environmental benefits, including climate action. One year after FLEGT licensing’s launch, it’s time to assess implementation so we can amplify the successes and address any teething problems.”

The Jakarta event was addressed too by representatives of the UK FLEGT Competent

Authority, Regulatory Delivery. They reported that they had processed nearly 4,000 licences to date without any being rejected. With Indonesian counterparts they had also “worked to improve the means by which licences are processed”.

Interestingly, speakers from Japan and South Korea voiced the potential for recognition of FLEGT licences as contributory evidence of legality under their existing or developing timber market legality regulations.

Indonesian speakers also expressed the willingness of their private and public sectors to share their FLEGT VPA and licensing experience to assist other VPA countries through the process (see p8).

Support was voiced too for highlighting and developing the sustainability assurance elements of FLEGT licensing and SVLK auditing.

But perhaps the core message from delegates was the need to raise the profile of FLEGT licensing and secure greater ‘brand recognition’, notably among the EU trade and consumers. Now much of the hard work had been done in implementing licensing and with ongoing rollout of the SVLK system, they said, the wider market needed to know about it.

But overall discussions in Jakarta were constructive and the mood positive, made more so by ambassador Vincent Guérend’s expression of EU commitment to the FLEGT initiative.

“We came together to recognise what FLEGT licensing has brought to Indonesian and European stakeholders and take stock of our experience,” he said. “FLEGT partnerships aim to benefit people and planet. They strengthen rights, increase prosperity and help Indonesia manage its forests sustainably. And we confirm our support and trust to the Indonesian Ministry of Environment and Forestry.”

The event held at the end of November in Jakarta to mark the first year of Indonesian FLEGT licensing was a celebration.

ETTF NewsDecember 2017

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FLEGT LIcENsING ANNIvErsAry EDITION

Above right: Siti Nurbaya Bakar

and Vincent Guérend mark the occasion

in Jakarta.

Right: Delegates participated at

the event

The Indonesian forest. PHOTO: CIFOR

FLEGT so far and into the future

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ETTF: Do you regard the first year of FLEGT licensing by Indonesia as a success?Daniel Calleja Crespo: The start of FLEGT licensing by Indonesia has been a significant milestone for both Indonesia-EU timber trade and the EU FLEGT Action Plan. It’s shown that it’s possible to develop systems to bring complex supply chains under effective control and verify legality of timber products. In doing so it’s reinvigorated support for the implementation of the FLEGT Action Plan as a whole, including from the EU timber trade.

The progress achieved by Indonesia in policy reform and engagement in the FLEGT progress is certainly remarkable. While it still faces significant challenges in terms of protecting its forests, the forestry sector is now largely under control and illegal logging is not the same challenge it was. Over 23m hectares of forests, including 13m hectares of natural forests, are now SVLK-certified, as well as 3,498 forest-based enterprises, and

almost 36,000 FLEGT licences have been issued for exports to the EU worth €1.1bn, accounting for around 25% of EU tropical timber imports. This is big.

So one year later, we’re pleased that overall the implementation of this novel scheme has been relatively smooth. Thanks to thorough preparation, both EU and Indonesian private sectors have adapted to the new requirements and there’s very good cooperation between EU and Indonesian authorities on implementation and achieving the wider objectives of the VPA in forest governance. Challenges remain, but these are teething problems that don’t detract from FLEGT licensing’s added value.

ETTF: What have been the key impacts for the EU timber of FLEGT licensing? DCC: It’s too early to come to conclusions on market impacts, but there’s no doubt that there’s increased confidence in Indonesian timber legality in international markets. Indonesia worked hard on this and began seeing the benefits even before the official start of licensing. However when it did start, with the additional controls in place in the EU to bar unlicensed Indonesian timber from the market, it gained visibility and credibility vis-à-vis EU importers and customers. The EU private sector has also welcomed FLEGT-licensed timber as a means of simplifying EU Timber Regulation (EUTR) compliance. Feedback from a recent ITTO survey showed over 73% of EU respondents would favour FLEGT–licensed timber over non-licensed. This is remarkable considering that FLEGT is new to the market and that there’s still room for improvement as other market players gain understanding of and confidence in SVLK and FLEGT licences from Indonesia.

ETTF. some in the EU trade feel there’s still lack awareness of FLEGT licensing further down the supply chain and among consumers. so is more communication needed?DCC: I’d agree that knowledge about FLEGT among the public remains limited and that we need all players to step up communication efforts about what is really behind a FLEGT licence. The EU and Indonesian private sector in particular needs to play a more proactive role in telling the FLEGT story. The Commission and EU Member States have invested significant resources in communicating the FLEGT Action Plan and in progress made in individual countries, including Indonesia. However, while supporting others’ efforts, we don’t have the timber industry’s direct connections with business and customers, or with civil society organisations, with their campaigning capacity.

ETTF: There’s particular concern in the EU and Indonesian trades that the wider impacts of a FLEGT vPA beyond legality assurance aren’t sufficiently known. Do these especially need highlighting?DCC: Yes. For too long, communication around FLEGT licensing has been framed around how it facilitates trade through compliance with legality requirements, such as the EUTR. But FLEGT VPAs have also been instrumental in supporting

Daniel Calleja Crespo

In this exclusive interview with the ETTF, European Commission Director General for the Environment Daniel calleja crespo describes the first year of FLEGT licensing by Indonesia as a great start. Now, he says, it’s the responsibility of all stakeholders to capitalise on the opportunities presented by this unique timber legality initiative and to take the wider EU FLEGT Action Plan forward.

FLEGT is big, says Director General for the Environment

continued...

Furniture from Surya Alam Semesta (SAS)

Plantation development at Indonesian forester, plywood and timber products manufacturer Kayu Lapis

Beach Tent Vlieland, built using angelique/basralocus, ekki and opepe from FLEGT VPA implementing country Cameroon. PHOTO: WIJMA

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establishment of far-reaching national processes leading to major policy reforms, participatory decision-making, better law enforcement, increased transparency and access to information. This contributes not just to better forest protection, but also protection of the rights of individuals, local communities and indigenous peoples.

ETTF: some in Indonesia also feel the EU could 'promote' FLEGT licensed goods in the marketplace. How would you address that?DCC: As I said, FLEGT-licensed timber has special recognition under the EU’s legal framework, making it attractive for the private sector. FLEGT licences are automatically deemed compliant with EUTR requirements and are recognised as proof of legality under all EU Member States timber procurement policies. This means their use is promoted by our legal framework.

Also the voluntary green public procurement criteria developed by the EC explicitly recognise timber legality as a core criterion and a FLEGT licence as a means of proof. Some expect now that FLEGT licences would also be recognised as means to demonstrate sustainability. But there is not yet an agreed set of sustainability criteria for timber at EU level and Member States currently apply their own. There are potential arguments to support recognition of FLEGT licences in terms of sustainability, but to obtain this each partner [supplier] country must demonstrate how their national systems match the objective and criteria of sustainability established by various EU Member States.

At the same time, the Indonesian government and timber industry cannot disregard the need to market and promote FLEGT licensing themselves, or the industry rely solely on it for future growth. Quality, prices, delivery time and ability to attract foreign investment or meet other market requirements remain essential for the success of the Indonesian forestry sector.

ETTF: How important has Indonesia's successful start of FLEGT licensing been in aiding other FLEGT vPA countries through the process? DCC: Indonesia is pioneering the first FLEGT licensing scheme and generating global interest for it. Fellow VPA partner countries, as well as Indonesian neighbours and competitors, are looking to learn from their experience and to follow in their footsteps. Other major markets, for instance China, have also expressed interest in exploring the role FLEGT licences from Indonesia can play in their systems to ensure and demonstrate supply chain legality. Both the EU and Indonesia have been documenting lessons learned and we are actively promoting their exchange among VPA partner countries.

ETTF: should the priority now be on supporting existing FLEGT vPA supplier countries towards FLEGT licensing, or getting more countries to become signatories?DCC: We may need to do both, but in a smart manner. Current VPA implementing and negotiating countries already account, remarkably, for over 80% of EU tropical imports. On one hand, it’s clear we need to ensure that those agreements already concluded achieve their intended results in terms of forest governance and progress towards FLEGT licensing. Where this isn’t happening, we need to understand why and agree with partner countries the best options to move forward together. On the other hand, the EU has initiated VPA negotiations with several countries which are important for forest resources or timber trade. Here there is merit in concluding negotiations, given shared commitment on both sides to make progress. However, given limited EC resources, we need to consider investment in those countries where VPA negotiations are not advancing, so it can be re-directed to where it’s needed most.

ETTF: some in the EU favour refocusing support towards their biggest suppliers among FLEGT vPA countries. What’s your response to that?DCC: I agree with investing resources where they deliver higher return. But I’d question whether this should only be measured in terms of timber trade with the EU. FLEGT VPAs are as much about improving forest governance and law enforcement in countries where, while current trade levels with the EU may be

limited, often forest cover is significant and the forestry sector plays a central role in sustainable development.

ETTF: How important has been the continued support of the EU trade for the FLEGT vPA initiative? DCC: You don’t sustain a policy initiative such as FLEGT for such a long time without the support of all stakeholders, including the EU trade. There’s also a sense now that, after some years of fatigue, the start of FLEGT licensing and availability of licensed timber has reignited the interest and support of the private sector. We hope this renewed interest will also translate in to more systematic efforts to inform markets across the EU about FLEGT.

ETTF: How do you now see the FLEGT vPA initiative and FLEGT licensing developing? DCC: Following an evaluation, all EU institutions and Member States have confirmed support for FLEGT. In the future, we want to see more countries being able to start FLEGT licensing, but also VPA processes serving as a basis for a continuous striving towards sustainable forest management. In parallel, there’s a lot of discussion in the EU about how to better tackle drivers of deforestation that lie outside the forest sector, particularly agricultural expansion.

ETTF: How important is winning acceptance of FLEGT licensing as contributory evidence of legality outside the EU. DCC: This is a major priority for the EU FLEGT Action Plan. The more markets that recognise the efforts made by our partner countries, the more difficult it will be for others to place illegal timber in less scrupulous markets and the greater the pay-off for producer countries. For instance, joint activities with China on this continue, including with a view to exploring means to recognise FLEGT licences under their future [legality] measure. We have also raised the matter with international partners such as Japan, which have recently adopted new timber legality measures.

FLEGT is big... continued

FLEGT licensing engages a wide range of forest and timber stakeholders, including SMEs

Indonesian school co-funded by Kayu Lapis, one of the first companies to ship FLEGT-licensed goods

Feature

December 2017 04

The Indonesian timber sector and their EU customers are in general agreement. FLEGT licensing, they maintain made a solid start and a year on is demonstrating economic, marketing, social and forest governance benefits. At the same time, it is seen as a work in progress with scope to improve and evolve.

In terms of commercial impact, Dr Rufi’ie, Director of Forest Product Processing and Marketing in Indonesia’s Ministry of Environment and Forestry, said licensing’s numbers speak for themselves.

“Our timber product exports to the EU from November 2015 to November 2016 were US$852 million. From November 2016, when licensing launched, to November 2017 they were US$1.2 billion, a 42% increase,” he said. “The EU FLEGT Independent Market Monitoring Project confirmed this performance, as well as reporting positive perceptions of licensing in the EU timber sector.”

After just 12 months, say Indonesian companies, it is difficult to assess precisely the extent to which FLEGT licensing contributed to this upturn alongside other commercial factors, and which elements drew the customers. But clearly, it played a role and the fact that licensing amounts to EU recognition of Indonesia’s SVLK timber legality assurance system, granting products

a pass through the EU Timber Regulation (EUTR) without further due diligence, was among key attractions.

“Under SVLK [obligatory for obtaining FLEGT licences] and FLEGT, Indonesian exporters have a controlled supply chain from timber’s point of origin, which satisfies buyers' requests for verified legality,” said Julidar Amiruddin, door maker PT Corinthian Industries’ General Manager Indonesia.

“Some EU customers suspended transactions until we obtained SVLK certification and we attracted more afterwards,” said Sas Bourjot, Director of furniture manufacturer Surya Alam Semesta (SAS). “Since FLEGT licensing started, we’ve also widened EU sales coverage.”

Ms Bourjot was also convinced FLEGT licensing was improving the image of the Indonesian forestry sector.

“It ensures accountability of timber and forest industries, with all wood production and usage verified legal by independent auditor,” she said, adding that another outcome of the accounting and auditing process was to improve Indonesian businesses’ general management.

According to Christian Purba, Director of the Independent Forest Monitoring fund set up to finance CSO bodies in their FLEGT and SVLK monitoring activities, the latter have also proved largely effective. “The independent monitors’ reporting system still needs strengthening,” he said. “But their complaints have been acted on by certification bodies and government.”

The Indonesian authorities can still do more under their FLEGT VPA obligation to be more open with forest sector information, said Mr Purba, but have also made improvements here too.

“CSOs and Forest Watch Indonesia are pushing for new regulation in Ministry of Forestry and Environment information services. But there’s more transparency and monitors have easier information access, including via the SILK digital timber legality information system.”

Part of the Indonesian timber sector which seems yet to be convinced it is reaping the full rewards of FLEGT licensing is small to medium-sized enterprises. They have a less demanding route to SVLK accreditation via Suppliers Declarations of Conformity, provided they’re using ‘low risk’ timber. But said consultant Agus Djailani, a former participant in the UK-backed Indonesian Multi-stakeholder Forestry Programme 3 (MFP3), some need more support.

“SVLK-certified SMEs report more enquiries in 2016/17,” said Mr Djailani. “But furniture and handicraft association HIMKI is suggesting SMEs should not themselves need to get certification, instead buying verified legal timber from certified upstream forest producers. And apparently the Ministry of Industry is now considering a ‘materials centre’ to supply SMEs.”

One area where Indonesia urges more EU action is on ensuring uniform enforcement of the EU Timber Regulation, given that a core incentive for EU importers to buy FLEGT licensed products is that it saves on EUTR due diligence.

“The ‘green lane’ via the EUTR for FLEGT licensed products will provide most benefit to Indonesian timber if the Regulation is fully implemented by all EU states,” said Dr Rufi’ie.

He added that under Indonesia’s EU FLEGT Voluntary Partnership Agreement (VPA), the EU also undertook to promote efforts ‘supporting public and private sector procurement policies that ensure a market for legally harvested timber products’. But currently, while all EU Member states recognise FLEGT licences as proof of legality, they take varying positions on their status with regards sustainability.

Sas Bourjot agreed this should change. “Indonesia’s FLEGT VPA was ratified by Indonesian and EU governments, so licensed goods should be accepted under public procurement policy equally across the EU.”

There’s also the question of FLEGT licensing promotion in the EU. The Indonesian industry feels licensing demands more proactive marketing to raise its profile beyond importers. Indeed, said Dr Rufi’ie, this was another commitment from the EU under Indonesia’s VPA.

Sas Bourjot voiced her support for this as well. “EU and Indonesian stakeholders should work together to promote FLEGT licensing to the benefit of our forest industries and joint efforts to combat illegal logging,” she said.

Promotion, profile, recognition Indonesian stakeholders would like to see increased efforts to raise FLEGT licensing’s international market profile and consolidate its success so far.

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Sas Bourjot

An independent monitoring group meeting

Sofa from Suryam Alam

Semesta (SAS)

Corinthian Industries' door factory

Benoît Gommet, Director France Timber, importer, FranceLicence processing in France, bar early customs misunderstandings, has gone smoothly. We’ve had no problems with the central FLEGIT licence registration system and the authorities are proactive on inquiries.

However, while there’s been business-to-business communication on FLEGT in the timber sector, it has yet to be tackled at a b2c level; to specifiers and customers’ customers. As a result there’s little consumer awareness and the market continues to request [sustainability] certification, even though it may not satisfy EUTR due diligence requirements.

This is more important given that Indonesia’s poor timber sector image from previous times has persisted, despite having cleared up its supply chain and curbed illegal logging. So

we must communicate FLEGT licensing more downstream to consumers.

Bruce Uhler, Environmental Ambassador, Kährs flooring, sweden While we buy little timber outside the EU, we have purchased merbau flooring from Indonesia since its VPA

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and FLEGT licensing approval. It’s important to support these programmes, even though the marketplace isn’t accepting so much tropical wood today.

We’d also welcome more information about this programme. It would help the forest and forest owners/indigenous people if more was forthcoming, so consumers understand that all tropical species are not bad; that some are very good, very attractive, durable, EUTR compliant and, if supported and consumed, very helpful to the local population where legal sourcing is occurring.

chris sutton, Managing Director, James Latham, UK We welcomed the start of FLEGT licensing as a 'big statement' and we stand by that. To be able to buy high quality tropical hardwood products

with the FLEGT licence has given us more confidence in our Indonesian supply base and our purchases, of plywood and doorblanks, are on the increase.

While we don’t have to, we continue to conduct due diligence on licensed products as that’s how we operate, but a FLEGT licence simplifies and saves significant time on the process.

Where I feel the industry should do more is create greater awareness around FLEGT licensing, including its sustainability aspects.

I also think it’s vitally important for others to follow Indonesia’s lead, especially countries supplying tropical species. Customers need to feel they’re asking for no risk products. And we could drive this more through the UK Timber Trade Federation – promoting the need for other countries to progress their FLEGT VPAs and achieve FLEGT licensing.

christian cordes, Managing Director Osmo Holz & color, importer/processor, Germany There still seems a lack of end consumer awareness in Germany about FLEGT licensing. Only well-informed timber importer/

exporters and dealers know about it.But licensing has given Indonesia a

marketing edge and helped as an easy-to-use tool in timber legality verification and meeting EU Timber Regulation requirements.

Where we’d like to see FLEGT licensing now become established in particular is South America, as we source the same species there from various countries and the one that achieves licensing first will get great benefits.

It has though already helped the timber trade’s environmental image across the EU, underlining its commitment against illegal timber.

However, we’re not finished yet as German government still wants FSC or PEFC-certified timber for use on its own projects, as FLEGT means legal but not sustainable. So we have more steps ahead to get FLEGT from legal to sustainable in the next few years.

Gijsbert Burgman, International sales Director, Wijma, hardwood producer/ importer, Netherlands While Indonesia has managed to start FLEGT licensing, after 14 years of the wider EU FLEGT initiative, it’s clear

there’s a way to go before tropical licensed products are available on a large scale.

However, the various initiatives to stop import of illegal timber combined (EU Timber Regulation FLEGT licensing, Lacey Act etc) are successful. The EUTR already changed our procurement strategy, resulting in a more severe risk assessment screening of suppliers and reduction in their number and a certificate of legality from an independent accredited body is becoming the minimum due diligence requirement.

But for the FLEGT licensing initiative to develop, it’s also important that it is adopted by other main timber markets, like China, Vietnam, India and the Middle East.

Katerina Germanis, Group Environmental compliance Manager, Brooks Bros Timber, importer/distributor, UKWe haven’t expanded our Indonesian product range since licensing started. However, it has opened the door to

additional suppliers for existing products. But communication about it should be

Flamebreak doors in situ and on arrival

continued...

so far, so goodEuropean importers, traders and processors welcomed the start of FLEGT licensing. Now they’d like to see it develop further.

Benoît Gommet

Kährs has added FLEGT-licensed merbau flooring to its range

Bruce Uhler

Chris Sutton

Christian Cordes

Gijsbert Burgman

Katerina Germanis

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clearer. The most valuable aspect of the FLEGT VPA process is work undertaken to strengthen forest governance. But FLEGT licensed is being marketed as ‘sustainable’ when it offers legality assurance.

And while FLEGT licensing does make it easier to import timber by doing away with EUTR due diligence requirements, it also has two unintended effects. First it can reduce demand for [certified] sustainably sourced timber. Secondly, due diligence provides a platform to understand your supply chain and build stronger relationships with suppliers. Once licensing is in place, suppliers are often less collaborative.

Peter Pieper, Director FEPcO, plywood importer, BelgiumTaking the total of licensed cargoes shipped, 36,000, worth €1.1 billion, then FLEGT has proved a success.

And clients appreciate receiving plywood under this system. We communicate when we’re supplying them licensed products and they feel more

confident about them. Where we still have work is making FLEGT

licensed products acceptable alternatives in projects where sustainable products are specified but unavailable. For instance an EU construction project in Luxemburg accepted only FSC or PEFC products, and eventually used Russian birch ply. It doesn’t make sense that the EU is investing so much in the FLEGT initiative, only for such projects not to use licensed products.

Acceptance of FLEGT licensing in the EU must be even further promoted and encouraged.

Geneviève standaert, Export Manager, vandecasteele, importer/ international trader, BelgiumFLEGT licensing has benefited us by reducing our due diligence and facilitating customs clearance. It’s also given Indonesia a market advantage. It’s provided them with a business tool no other

supplier country currently has. But FLEGT licensed timber has not been as

visible on the EU market as some hoped.We’d also expect, given the investment

made, that more FLEGT VPA countries would have reached licensing or implementation stage by now.

In addition we’d like to see more EU support given to help supplier companies achieve certified sustainability. This would further encourage them to invest in legality as an element of sustainability and make the EU market a more attractive proposition.

Currently FLEGT licensing and the wider VPA initiative risks reducing demand for certified products. We used to buy Indonesian FSC Bangkirai, but it’s become less important as more customers require legality only. We should be pushing both legality and sustainability.

so far, so good... continued

Peter Pieper

Geneviève Standaert

Andreas von Möller, President European Timber Trade FederationIt’s proved a huge advantage for importers not having to exercise due diligence on FLEGT-licensed timber. And for exporters it brings

easy market access. It also highlights our trade's commitment to eradicate illegality .

I understand feelings expressed in Indonesia that FLEGT licensing may not have yet had the publicity in the EU they'd like. But the ETTF plays an active role in promoting FLEGT-licensed timber and the VPA process and we urge more activity in this area from relevant authorities.

We’d also like to see FLEGT licensed timber accepted under those EU member state government procurement policies which currently only prescribe sustainably produced material, going beyond FLEGT's proof of legality, and we think the EU has further work here.

We now urge more importers to source FLEGT-licensed goods. Recent experience shows how difficult exercising EUTR due diligence can be to the satisfaction

of our Competent Authorities. FLEGT-licensed timber frees us from that burden.

David Hopkins, Managing Director UK Timber Trade Federation The UK was among the first and most

ardent supporters of the EU Timber Regulation and the wider EU FLEGT Action Plan, including FLEGT licensing. The UK Timber Trade Federation also has a zero tolerance policy of illegal timber, as reflected in our own obligatory Responsible Purchasing Process and our close liaison with UK EUTR and FLEGT Competent Authorities to aid trade compliance.

So we strongly applauded Indonesia’s achievement in issuing the first FLEGT licences. But where more needs to be done, particularly given the UK’s Indonesian imports fell in the last year, is to promote FLEGT licensing downstream and raise awareness among timber merchants and their customers. We see this as a shared responsibility between the EU, supplier countries and EU consumer markets. That’s why next year we are holding a FLEGT awareness event in London, delivering the demand side messaging about what lies behind a FLEGT licence that we feel has been lacking.

We’d also like other FLEGT VPA countries to follow Indonesia’s success in reaching FLEGT licensing stage so we can show the positive impacts of a viable, commercially successful timber trade and demonstrate that a forest that pays is a forest that stays.

Ingrid Hontis, Environmental coordinator Fedustria, Belgium There were some problems in the Belgian trade at the start of FLEGT licensing in using the central FLEGIT

Andreas von Moller

David Hopkins

FLEGT-licensed and FSC-certified bangkirai decking

PHOTO: BROOKS BROS UK

Ingrid Hontis

continued...

National timber trade federation members of the ETTF say further communication of FLEGT licensing is vital for broader EU market awareness and support.

FLEGT communication is key

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administrative website, but these were quickly resolved. And, in common with other EU countries, we have some issues with mismatches between customs HS code and Indonesian licence codes.

But communication on FLEGT generally is OK. Our Competent Authority, the Federal Public Service runs, an effective helpdesk, and it communicated about licence fees via Fedustria to our members.

One comment our trade has, however, is on licence processing fees. There should be a level EU playing field here, but Belgium charges one (albeit just €50 per shipment >500kg) while some other EU countries don’t.

On market acceptance, Belgian government recognises FLEGT licences as meeting their timber procurement policy legality criteria.

Looking forward, we’d like to see more countries issuing FLEGT licences and joining the FLEGT VPA initiative.

Nils Olaf Petersen, Head of Foreign Trade, GD Holz, GermanyFLEGT licences have already proved a time saver for importers. One said he was spending half a week assessing suppliers for EUTR compliance. Efficient processing by our Competent Authority (BLE) and customs

mean FLEGT licences are turned round in half a day.

There have been some glitches connected with where BLE and customs’ responsibilities lie and discrepancies between Indonesian and German customs HS code allocation. But, with communication from GD Holz to members about licence handling, this hasn’t caused significant issues.

Another issue is that FLEGT-licensed goods are not automatically accepted as ‘sustainable’ under German federal and state government procurement policy. Further initiatives are needed here.

On ‘competition’ between certification schemes and FLEGT licensing, some procurement policies will continue to specify sustainably certified, but there are already sustainability aspects in the FLEGT process, and once the FLEGT system is established worldwide, more could be included.

Patrick Baraize, EUTr Officer Le commerce du Bois, FranceSo far FLEGT-licensed products may not have had a great commercial impact in France, but that’s only to be expected after just one year. However, after some

initial complexities with the EU FLEGIT administrative website, licence processing has operated well, with licences validated within 48 hours, as promised.

Le Commerce du Bois (LCB) also worked closely with the French FLEGT Competent Authority and trialled licensing systems so we could pass information to members.

Communication on FLEGT and FLEGT licensing has, however, overall been a weak point in France. LCB has helped members comply with the EU Timber Regulation and FLEGT licensing rules. But other industry sectors have been less proactive and still lack basic understanding.

There have been concerns in France too that FLEGT licensing might lead to buyers settling for ‘only legal wood’, eroding market share of certified sustainable timber. We’ve advised FSC and PEFC to communicate to counter this.

To support the FLEGT licensing initiative we must also ensure uniform EUTR enforcement across the EU and particularly improve communication about it to smaller businesses.

Getting more VPA countries to FLEGT licensing stage must also be our objective. But we mustn’t rush the process if we want it to be effective.

stefano Dezzutto, chief Executive Fedecomlegno, Italy A key attraction for our members in sourcing FLEGT licensed timber is that they are not left, as we say, holding the lighted match when it comes to judging

if timber is legal or not. Under the EUTR, the onus is on them to make that call. With a FLEGT licence it is already made. In addition, of course, it saves time and money on EUTR due diligence. While Italian importers have to pay a ‘tax’ for every licence processed, it’s nothing compared to the cost of risk analysis under the EUTR. So, while market forces resulted in a decline in Indonesian imports in Italy over the last year, importers widely welcomed FLEGT licensed goods.

There were some initial problems with excessive controls, leading to slow processing of licences and delayed release of cargoes from customs, but we resolved this with our Competent Authority (CA).

Where we still see room for improvement is in implementation of the EUTR. This must be equal across the EU so all importers are on the same legality assurance footing and have the same incentive to source EUTR due diligence-exempt FLEGT-licensed timber.

FLEGT communication... continued

Nils Olaf Petersen

Patrick Baraize

Stefano Dezzutto

First FLEGT-licensed plywood to arrive in Antwerp

Ekki decking in Sweden from Sweden. PHOTO: WIJMA

08

Feature

December 2017

In August a fact-finding mission from Ghana visited Indonesia to get under the skin of its FLEGT-licensing system.

With their country now at an advanced stage of EU FLEGT Voluntary Partnership Agreement (VPA) implementation and expected to be next to start FLEGT-licensing, the Ghanaian group were there to learn how their Indonesian counterparts surmounted the final challenges of their VPA and to quiz them on the launch of their licensing system last year and how it’s operated since.

They included representatives of government, public and private forestry and timber sectors, and civil society organisations (CSOs). They were hosted by the Indonesian Ministry of Environment and Forestry (MOEF) and met with civil servants, businesses and the civil society groups charged with providing independent monitoring for FLEGT licensing and its supporting SVLK timber legality assurance system. They also visited a door factory to see how licensing impacts daily business.

The wider significance of the trip is that it wasn’t an isolated occurrence. Since starting licensing, Indonesia has shown itself a willing teacher, open to sharing its expertise and experience across the FLEGT VPA and licensing process.

It has communicated with countries at a wide range of stages of the initiative, and discussed issues with them at international events. It has also hosted visits from others besides Ghana. To date these include Vietnam, Thailand, Myanmar and Laos, plus key trading partners not directly involved in the VPA programme, but with a vested interest in it, notably China.

As a result, a year later, Indonesian FLEGT licensing is not seen just as an end in itself, but a reference point for the wider EU FLEGT initiative. It would be wrong to describe it as a template for other VPA supplier countries, as their agreements and licensing systems will evolve to reflect their individual social, political, economic and environmental conditions. But it is, they maintain, providing key lessons and pointers.

Dr Phuc Xuan To, senior policy analyst with Forest Trends in Vietnam, focused on Indonesia’s approach to achieving broad stakeholder engagement.

“We can learn from them about establishing third-party verification and monitoring for their FLEGT VPA framework and from their comprehensive inclusion of local NGOs in FLEGT VPA negotiations,” he said.

According to Ghanaian Forestry Commission Timber Validation Department Director Chris Beeko, Indonesia’s example had also shown the importance in VPA implementation of political and social consensus. “It presents a picture of coordinated effort in all areas of policy making,” he said. “We’ve taken that message on board.”

Guyana-EU FLEGT facilitator Alhassan Attah agreed that Indonesia had demonstrated the significance of civil society engagement, especially with respect to indigenous groups. “That’s critical to achieving the good timber and forestry sector governance a VPA demands,” he said, adding that the Indonesian example also highlighted that private certification and a FLEGT VPA are “mutually enforcing”. He said too that Indonesia’s experience gave other FLEGT VPA countries a more accurate idea of the cost of achieving licensing stage, while the sales impact of their licensed products revealed both the market opportunities and challenges they faced.

Over the last 12 months Indonesian CSOs have also liaised with their opposite numbers in other FLEGT countries. “We mostly communicate remotely, but CSOs in Laos, Myanmar, Thailand and Vietnam have all visited Indonesia and we’ve been to Myanmar to share perspectives,” said Mardi Minangsari, of Indonesia’s Environmental Investigation Agency and a prominent figure in the country’s CSO umbrella group and official FLEGT monitor, the Independent Forest Monitoring Network (JPIK).

From their communication with Indonesian counterparts, said Warangkana Rattanarat, Thailand Country Program

Coordinator for the Center for People and Forests, Thai CSOs had learned the potential of a FLEGT VPA to raise industry standards, and facilitate SME involvement. “It presented a vision of forest and trade governance that was transparent, accessible, decentralized and credible,” she said.

Myanmar CSOs have also been active in their links with Indonesian groups. “They have some parallels with us on political issues and we've learned how CSOs mobilised, engaged with stakeholders and advocated to government, international NGOs and the EU,” said Salai Cung Lian Thawng of Myanmar’s Pyoe Pin public/private sustainable development programme.

According to their report, the Ghanaians ended their mission to Indonesia with plenty of practical ideas for their FLEGT VPA process. That included providing greater access to their online Wood Tracking System, based on the example of Indonesia’s SILK timber legality information system.

They were also wished success in reaching FLEGT licensing stage by MOEF Director General of Sustainable Forest Management Dr Putera Parthama, who said the more FLEGT-licensed products on the EU market, the greater consumer confidence they would generate.

And confidence is another outcome of their contacts with Indonesia, said other FLEGT VPA country representatives.

“Previously people asked if it would ever be possible for a country to issue FLEGT licences,” said Harrison Karnwea, former Liberian Forestry Development Authority Managing Director. “Now they have the answer. Indonesia’s success has reawakened belief that it’s achievable and practical.”

Other FLEGT VPA countries are now looking to Indonesia to learn from their VPA and FLEGT licensing experience.

Trialing the Ghana Wood Tracking system

The Ghanaian mission at

Corinthian Doors

@ettf1 www.ettf.info www.flegtlicence.org

One of the meetings on the visit of Ghana

stakeholders to Indonesia

Indonesian sharing boosts FLEGT licensing belief