{"id":81595,"date":"2021-12-13T06:52:27","date_gmt":"2021-12-13T06:52:27","guid":{"rendered":"https:\/\/tin.happy-projects.ro\/mixed-verdict-eutr-effectiveness\/"},"modified":"2025-09-19T08:56:38","modified_gmt":"2025-09-19T08:56:38","slug":"mixed-verdict-eutr-effectiveness","status":"publish","type":"post","link":"https:\/\/www.timberindustrynews.com\/ro\/mixed-verdict-eutr-effectiveness\/","title":{"rendered":"Mixed verdict on EUTR effectiveness"},"content":{"rendered":"
\n

The long awaited \"Fitness Check\" of the EUTR and the FLEGT Regulation was published on 17 November alongside the EU's Deforestation regulatory proposal. The stated objective of the Fitness Check is to assess whether \"these two instruments are fit for their purpose to halt illegal logging and related trade as set out in both Regulations\" and the main conclusion is that \"the general objectives of the two Regulations have not yet been fully met\".<\/p>\n

According to the Fitness Check, \"while there are tangible signals that both Regulations together have been moderately successful in their aim to prohibit the placement of illegally logged timber on the EU market, it is difficult to conclude (based on the data available) that they have had a significant effect on illegal logging globally\".<\/p>\n

On the specifics of the VPA with Indonesia, the Fitness Check is more positive noting that \"the implementation of the FLEGT licensing scheme with Indonesia has worked well\", a fact which is attributed to \"the Indonesian SVLK [being] fully integrated in a wider reform of the national forest governance system and not seen as an 'add-on' only inspired by trade concerns\".<\/p>\n

The Fitness Check notes that many elements of FLEGT licencing \"have been implemented successfully both by Indonesia and EU member States, and processes and systems are continuously updated and improved\".<\/p>\n

It is also noted that \"the level of exports from Indonesia to the EU has risen since licencing commenced (although less so than overall imports to the EU).<\/p>\n

Remaining challenges are addressed as they arise\u2026.The SILK database for Indonesia shows that from 2013 there was improvement in operator compliance as expected in advance of FLEGT licensing\".<\/p>\n

More widely with regard to the FLEGT VPAs, the Fitness Check notes that a \"great amount of learning can be drawn from the Indonesian experience\" and that \"there is evidence of VPA partner countries taking steps in the right direction and putting in place the foundations for improvements in the future, i.e. concerning governance, civil society participation, clarifications around existing definitions and legislation\".<\/span><\/p>\n

Despite these positives, the Fitness Check concludes that, overall, the FLEGT VPAs have \"not delivered\" and their \"effect has been limited, with only one country issuing FLEGT licences and no evidence that the VPAs have contributed to reduced illegal logging\".<\/p>\n

A number of factors are identified as having constrained the FLEGT VPA process. It is noted that \"negotiating, concluding and implementing VPAs proved to be a long and complex process\" and that \"such processes are fraught with challenges in many partner countries such as the required high standards of a TLAS (weak overall governance, lack of institutional capacity, absence of political willingness, often widespread corruption), difficulties in gaining agreement from multiple regions in partner countries, insufficiently effective measures and weak law enforcement\".<\/p>\n

The Fitness Check also claims that the VPAs have suffered from a \"high focus on process (strengthening governance elements such as stakeholders\u2019 participation, etc.) to the detriment of the main objective: stopping illegal logging and associated trade\". This, it is alleged, \"may have led to disincentives for VPA countries to bring the preparatory processes to an end, since they continue to receive the EU economic support for activities while at the same time selling the majority of their timber to less discerning markets, such as China\".<\/p>\n

The Fitness Check goes on to suggest that \"the VPA processes as designed by the EU provide funding to establish participatory forest governance processes, but do not address the economic drivers of illegal logging in the forest sector, nor the underlying corruption in the administrations and at the political levels that are benefitting from illegal logging\".<\/p>\n

\"These factors prevented VPA processes from creating the expected improved transparency in all financial transactions related to the forest industry, the processing industries directly linked to it and the export volumes of goods sourced from forests\".<\/p>\n

Another weakness of the VPAs, according to the Fitness Check, is that \"many important exporters to the EU, which are considered to be high-risk countries regarding illegal logging, have never shown interest in engaging in the VPA process, e.g. Russia, Ukraine and Brazil\".<\/p>\n

It is suggested this is due to several factors: \"a perception that VPAs are designed solely for developing tropical countries, a \u2018demand-driven\u2019 approach for the selection of partner countries, doubts about the economic benefits of VPAs in terms of greater EU market access, and the potential reputational damage of withdrawing from negotiations once started\".<\/p>\n

The Fitness Check includes a critical cost-benefit analysis of the FLEGT VPA process, suggesting that \"Considering that timber and derived products followed by FLEGTlicenses cover only 3% of timber imports into the EU, the costs and administrative burdens seem immense\u2026.. its benefits may not seem to justify its costs\". The total investments by the EU and Member States in the preparation, negotiation and implementation of FLEGT VPAs since 2004 is estimated in the Fitness Check at \u20ac1.5 billion shared between the EU and the Member States (much of it apparently spent on preparation and negotiation rather than actual implementation).<\/p>\n

This excludes the amount invested by VPA partner countries the level of which \"has been proven difficult to quantify as this was partly in the kind i.e. time and effort invested by authorities and stakeholders\".<\/p>\n

The annual costs of running a FLEGT licensing system are estimated in the Fitness Check using data from Indonesia as the only country that has reached that stage. \"The total costs for Indonesia, MS [EU Member States] customs and importing operators in handling the approximately 35000 licenses per year are in total \u20ac11.5 million\", according to the Fitness Check. This includes the support and costs for certification of forest areas in Indonesia but excludes costs related to support to SMEs and family holdings. On this basis, cost per license issued is estimated at approximately \u20ac330 and the cost per tonne of import into the EU about \u20ac336-338.<\/p>\n

The Fitness Check argues that \"there is limited potential to reduce the costs of the VPA system\". This is because the \"FLEGT\/VPA system makes it necessary for the VPA countries to develop and implement a licencing scheme, undertake inland and border inspections, certify forests and plantations, as well as control and verify transports and traders, warehouses and processing industry, which leads to complex enforcement systems with high administrative costs that exceed the capacities of some partner countries\".<\/p>\n

On the positive side, the Fitness Check notes that \"there is evidence that FLEGT licences are reducing the costs of timber import for those EU operators mainly or fully sourcing their products from Indonesia, as they do not need to exercise DD [due diligence] under the EUTR\", although the value of this saving is not quantified in the Fitness Check.<\/p>\n

It is also noted that \"there is some evidence that once the FLEGT licencing starts, exporters experience a benefit. But overall the benefit to Indonesian exporters has been limited to date. The trade data shows that Indonesian exports to the EU increased by only 3.6% from 2015-18 (relative to a 10% growth in all [EU] imports) and by only 0.4% between 2016-18 (relative to a 12% growth in all imports)\".<\/p>\n

Mixed verdict on EUTR effectiveness<\/strong><\/p>\n

The Fitness Check verdict on the effectiveness of the EUTR is equally mixed, suggesting it has had only a limited impact on illegal flows globally, although this partly reflects the inherent difficulties of measuring such flows, but that it has focused efforts by European traders on removing illegal wood from trade and has equipped the EU to work closely together with other consumer countries implementing similar legal frameworks.<\/p>\n

The Fitness Check notes that \"The requirements of improved transparency and information gathering to fulfil the DD obligations on evidence of the place of harvest and no breaches of applicable legislation have put pressure on all actors along the supply chains\".<\/p>\n

Furthermore, \"most stakeholders consider that the EUTR has led to a positive change in transparency and the availability of information and documentation around timber supply chains (in particular regarding species and origin) and as such has put pressure on the supply chains to ensure legality of the wood based products being exported to the EU\".<\/p>\n

On the other hand, \"a number of implementation and enforcement challenges have been identified regarding the functioning and effectiveness of the due diligence system, in particular the way the EUTR has been enforced in MS [EU Member States]\".<\/p>\n

The Fitness Check highlights that while EUTR due diligence systems have been widely applied by large operators to cover the majority of wood based products placed on the EU market, \"smaller operators are less inclined to implement them, not least because they face a number of challenges in developing and implementing DDSs, including limited awareness and understanding of their obligations\".<\/p>\n

The use of the concept of \u2018negligible risk\u2019 in the DD provisions of the EUTR has also complicated implementation and enforcement. \"The term is subjective, which makes it more difficult to select which information to gather and complicates the determination of wherever a risk is \u2018negligible\u2019 for operators, Competent Authorities and the courts\u2026.Difficulty proving \u2018non-negligible risk\u2019 in court has also led to some hesitations in bringing cases to court\".<\/p>\n

It is noted that while all EU Member States have established legislative frameworks to implement the EUTR, the level of enforcement differs.<\/p>\n

\"Evidence exists that operators clearly see a variation in the stringency with which the EUTR is enforced across MS (e.g. number of checks, level of penalties), which leads to attempts observed to import riskier timber via specific MS\".<\/p>\n

The Fitness Check is also critical of the fact that Member States lack the power to redraw or halt marketing of products already placed on the market even when there is clear evidence of inadequate due diligence and verifiable determined negligible risk.<\/p>\n

According to the Fitness Check, this means that \"market powers keep traders and retailers sourcing from questionable operators if the price is low enough. This may drive operators to continue sourcing wood based products from high-risk countries like Myanmar, Belarus and Ukraine\".<\/p>\n

It is noted that \"the trade data also presents mixed signals. Intra-EU trade (lower risk generally than extra-EU imports) grew less over the period of implementation relative to imports as a whole, as did imports from \u2018lower risk\u2019 countries. Furthermore, there was an absence of significant changes in trade patterns towards more transparent countries\u2026..looking specifically at imports from countries where issues were specifically identified over the implementation period (Ukraine and Myanmar), [these] continued and actually grew in the case of the latter\".<\/p>\n

The total costs of EUTR implementation per year are very uncertain and estimated to be between \u20ac71 million (low estimate) and \u20ac1071 million (high estimate) with a central estimate of \u20ac714 million. This draws on a range of studies undertaken between 2015 and 2021 \u2013 all reliant on only a small sample of operators \u2013 indicating average annual costs per operator between \u20ac1000 and \u20ac15000.<\/p>\n

The Fitness Check notes these costs \"need to be seen in the light of the total import value of products under the scope of EUTR, which was \u20ac24.5 billion on average between 2015-2019 giving a range of estimated costs between 0.29% and 4.3% of the import value before customs and taxes\".<\/p>\n

The closing statement in the Fitness Check essentially sets out the EU's rationale for the new deforestation legal proposal: \"If the EUTR were to be repealed without a system to replace it, the risk of illegal timber entering the EU market would considerably increase. However, by covering a wider commodity range in a new legislation, this issue could be addressed while also covering important elements of sustainability.<\/p>\n

\"In contrast, if the FLEGT Regulation were to be repealed, it would free considerable resources - not only financial but also human - currently dedicated to negotiating VPAs or monitoring their implementation. Those could be used in the context of a different, new approach that addresses the issue more effectively and more efficiently \".<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

The long awaited “Fitness Check” of the EUTR and the FLEGT Regulation was published on 17 November alongside the EU’s Deforestation regulatory proposal. The stated objective of the Fitness Check is to assess whether “these two instruments are fit for … Continue reading →<\/span><\/a><\/p>","protected":false},"author":1,"featured_media":95917,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[4716,4715],"tags":[3291,3387,3853,3983],"class_list":["post-81595","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-trends","category-market-analysis","tag-eu","tag-eutr","tag-tropical-logs","tag-vpa","topic-forestry","topic-sawmilling","area-africa","area-asia-middle-east","area-europe","area-south-america"],"acf":[],"yoast_head":"\nMixed verdict on EUTR effectiveness - Timber Industry News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.timberindustrynews.com\/ro\/mixed-verdict-eutr-effectiveness\/\" \/>\n<meta property=\"og:locale\" content=\"ro_RO\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mixed verdict on EUTR effectiveness - Timber Industry News\" \/>\n<meta property=\"og:description\" content=\"The long awaited "Fitness Check" of the EUTR and the FLEGT Regulation was published on 17 November alongside the EU's Deforestation regulatory proposal. 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