SUMMARY RECORD OF THE FLEGT/EUTR EXPERT GROUP MEETING 23 NOVEMBER 2017

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1 EUROPEAN COMMISSION DIRECTORATE-GENERAL ENVIRONMENT Directorate F - Global Sustainable Development ENV.F.3 Multilateral Environmental Cooperation SUMMARY RECORD OF THE FLEGT/EUTR EXPERT GROUP MEETING 23 NOVEMBER Approval of the agenda The agenda of the meeting was adopted, with points 6 a) and b) merged and point 5. b. added. 1. Nature of the meeting The meeting was not public. Member States (MS) were represented by the EUTR/FLEGT Competent Authorities (CAs). 2. List of points discussed Update on EUTR implementation In a tour de table, all MS CAs provided an update on the number of checks performed on domestic operators and on importers in accordance with their annual plan, on any fines imposed, seizures, or ongoing court cases, on particular cases relating to imports from some source countries or on new national legislative proposals under development. Some MS CAs reported that they planned awareness raising work on EUTR implementation by operators and some reported on joint investigations. The tour de table was followed by a discussion on substantiated concerns relating to the placing on the market of timber from Myanmar, and particularly on the steps taken by MS regarding operators dealing in teak. MS also discussed the importance of a coherent approach across all MS in addressing this matter and that the approach agreed during expert group meetings should be adhered to. It was highlighted that should a CA receive verified documentation that is satisfactory in showing full traceability, then this should be shared with the EC and other MS in a timely way. It was noted that a new letter from Double Helix was received the day before the meeting, stating that they would be conducting checks at a sawmill and that MTE had granted them permission to start field checks on a short term basis. The conclusions from the September meeting concerning the documentation of Double Helix were reiterated, in that currently there is insufficient information for operators to demonstrate the actual origin of the timber which would enable them to carry out a full risk assessment or mitigation in the exercise of due diligence. The day of the meeting also a statement of the Ministry of Natural Resources and Environmental Conservation (MONREC) of Myanmar was released, in which some improvements as regards traceability and transparency were announced. The statement 1

2 was welcomed, but it was noted that the improvements announced still seem to fall short of what is needed to ensure full due diligence, in particular with regard to pre-2017 coups. An update on the developments relating to the current infringement cases was also provided. EUTR guidelines development The guidance document on Risk Mitigation Measures requires final clarification on a small number of points raised by MS CAs. Three MS volunteered to work together with the Commission to address these and the updated draft will be shared with MS CAs for final approval. The guidance document on Substantiated Concerns was adopted, following small changes agreed by the Expert Group at the meeting. Information points a) Reporting on Informal EUTR Enforcement Group Meeting One of the topics of discussion was on companies which are based outside of the EU and place timber on the EU market, through subsidiaries. In such cases, where the subsidiary company conducts all relevant customs procedures of release of timber products for free circulation is regarded as the operator. MS CAs also discussed the changing of HS codes by operators to avoid either EUTR or CITES controls, VRKISH documents issued by India, Mexico s new environmental police, the development of legislation similar to the EUTR in Kosovo, and the situation in Ukraine with regard to forest management and timber trade. Other topics included the substantiated concerns raised by Greenpeace relating to the murder of 9 rubber trappers, timber sample testing and the provision of training to operators. b) Update on impact assessment on possible changes to the EUTR annex A public consultation is expected to be launched in January 2018 and will remain open for 12 weeks. A potentially revised Annex to EUTR could be adopted as a Delegated Act in the second half of c) Update on EUTR Reporting The EC is finalising the consolidated EUTR report, on the basis of a background analysis of MS national reports. The background analysis will be shared with MS for comments. d) Update on support services for implementing the EUTR and FLEGT Regulation UNEP-WCMC provided an overview of the results of the analysis of the national reports on EUTR implementation and enforcement, which were submitted in MS CAs will received the analysis for review and UNEP-WCMC asked MS CAs to assist with clarifying outstanding points. A draft timber trade analysis is being reviewed by the EC and UNEP-WCMC provided a demonstration of the online interactive visualisations of the trade data, which allows MS CAs to explore the data according to their needs. e) Feedback from the TAIEX mission in Ukraine 2

3 A mission by TAIEX to Ukraine, in which on MS s CA also took part, gathered information relating to EUTR implementation and also provided Ukrainian authorities with information on the EUTR requirements. The mission identified weaknesses in the functioning of policy development, management and controls of the forestry sector, with overlaps of functions across agencies without sufficient cooperation. Estimates of the prevalence of illegal logging are around 5-10% or even 20%, although the State Forest Agency quote different figures, referring to less than 1%. Questions also remained over the apparently excessive practice of sanitary logging, the lack of thinning instead of clear cutting and the potential risks associated with free sales of the timber left over after unsuccessful timber auctions. It was noted that the timber tracking system developed in the country is still under development and that at this stage it only covers around 70% of the production and does not provide a complete chain of custody. The EC, as well a MS, who had sent a separate mission to Ukraine recently, are exploring a number of ways to further support forest sector reforms in Ukraine and EUTR implementation. f) Customs data and the need to know for EUTR Competent authorities Under EUTR, MS are, inter alia, required to carry out checks of operators putting on the EU market for the first time timber originating from Third countries on the basis of a risk assessment (Article 10 paragraph 2 of the EUTR). Without a complete set of basic data on all operators and the import of timber and timber products, a meaningful risk analysis is not possible. If the CAs do direct access to the data themselves and need to obtain it from other public entities, the MS are under the obligation to ensure the necessary data transfer from these public entities to the CAs. In view of data protection concerns regarding the transfer of data e.g. from customs to a CA raised in some MS, the Commission confirms that where the implementation of a legal act like the EUTR requires the processing of data by public authorities, within this need to know it is allowed to transfer data from one public authority (here customs) to the one that needs the data for carrying out its legal obligations (here the Competent authority for the risk based planning and carrying out the checks of operators). From a data protection perspective, the MS have to ensure in their national legislation that these kinds of data transfer are regulated. They can do this through a general clause in their national data protection law allowing data transfer, whenever and in as far as there is a need to know for the correct implementation of legal acts, complemented, e.g., by Memoranda of Understanding between the entities involved, which define the scope of the need to know, the periodicity of data transfers, etc. Or they need to adopt specific legislation defining which data flows are considered necessary to implement the EUTR correctly. The Commission underlines that the EUTR is directly applicable in all MS, and therefore also elements relating to the need of the CAs to access information from authorities which dispose of them, like e.g. customs. Furthermore, it highlights that the Union Customs Code is not intended to restrict access to customs data where there is a need to know for authorities to implement and enforce an EU Regulation. Several MS present their national systems set up to ensure an exchange of data between customs and CAs and, in some cases, between CAs of different MS. Nordic-Baltic cooperation: Report on checks on timber imports from China The Finnish CA presented on the ongoing collaboration between the Nordic-Baltic countries on issues relating to EUTR enforcement in general, which aims at fulfilling 3

4 Article 12 of the EUTR. The CA specifically provided insights into the steps taken by the group recently to identify operators which import timber products from China into a number of the Nordic-Baltic countries. This allowed countries to then carry out coordinated/joint checks of these. Client Earth presentation Client Earth provided a background on the organisations areas of work, which includes the provision of legal support and advice to NGOs, with a focus on the EU, China and Africa. They engage in legal advocacy work, including the analysis of key concepts under the EUTR, training of civil society and judges and looking at legal procedures. In the future, substantiated concerns were expected be submitted on their own behalf instead of solely providing support to other NGOs. They compile quarterly EUTR newsletters and produced short briefings on 11 MS on implementation and enforcement of the EUTR. Update on the implementation of the FLEGT licencing scheme a) MS experience with the implementation of the FLEGT licencing scheme and the FLEGT Regulation MS provided updates on the number of FLEGT licences they have received and expressed their satisfaction with the newest version of FLEGIT. The level of fees charged by some MS for the processing of FLEGT licences was discussed, with Finland reducing their fees and Belgium confirming that fees only apply for shipments above a certain volume. CAs reported that there were still mismatches between licence and shipments, particularly for furniture. Some CAs highlighted that where the shipments are entering the EU in one MS but are destined for another MS, they cannot currently easily access the relevant FLEGT licence information in the Indonesian SILK system; shared EU access was suggested to resolve these situations. The Netherlands reported on a test shipment from Ghana and noted similar issues to the ones faced with Indonesia. b) Non-paper "FLEGT Licencing Scheme with Indonesia: handling of cases with mismatching information" Comments made by MS were taken on board in the non-paper and an updated version will be circulated once more, so that MS can provide any final comments, otherwise it will be considered agreed. c) Report on FLEGT Joint Expert meeting in Indonesia, October 2017 Several points were discussed, such the draft report of the first periodic evaluation/ independent audit of the system, which will lead to a 2018 action plan to be agreed in the JIC to address any shortcomings. Progress is being made in addressing technical problems with licensing through a mini action plan covering HS classification issues, quantity mismatches and communication. Actions include to reach out to the private sector and to build capacity of LIUs specifically regarding furniture and handicrafts, which are also the problematic products for licencing. LIUs may possibly work on a 24/7 basis so that issuance of the FLEGT licence and the shipment are much closer and Indonesia are looking at the option to check the actual shipments. Indonesia intends to strengthen capacity of LIUs in communicating, including through standard form to be 4

5 used for CAs to submit enquiries. Concern regarding potential negative incentives for the private sector to use FLEGT licenced timber through licencing fees were raised by Indonesia. The EC informed Indonesia of the discussion on the matter in the Expert Group and that so far no complaint has been received from the EU private sector. The EC invited MS to inform the EC if any new fees are to be introduced. d) Update on FLEGT reporting The Commission reported on its work towards an Inter-Service Consultation on the Report from the Commission on the annual synthesis report on FLEGT Licensing Scheme for the year e) Updated FLEGT reporting template An updated draft of the reporting format was submitted to the MS for review, with feedback to be provided by 8 th of December 2017 and was also presented by the EC The option to move to online reporting is to be considered. MS asked to use FLEGIT to extract the licence information needed; this data would need to be checked and complemented for the purposes of the national reports. Update on the FLEGT process a) FLEGT Action Plan Evaluation: information on the development of the FLEGT draft working paper towards a work plan EC has prepared the final draft version of the FLEGT work plan which will be shared with MS for further review and discussion before the end of 2017 or early b) Ghana shipment testing update The TLAS is in the final stage of implementation and testing was undertaken by three MS for four shipments; resulting observations are being assessed. Ghana is shifting from paper to electronic processes and is working on solving any issues. c) VPA negotiations: Honduras The negotiations are progressing well. The TLAS is not ready but everything else is expected to be finalised this moth; everything is being done in two languages, which creates additional delays. The aim is to finalise in the second week of January. d) VPA negotiations: Guyana The negotiations are progressing and field testing was undertaken in June, which resulted in recommendations to be integrated into the VPA text. The legal framework needs to be strengthened; while the Forest Act has been adopted, the implementing legislation has not. A way forward may be an agreement in principle and Guyana needs to address the implementation issues of the Forest Act before initialling can take place. e) VPA negotiations: Vietnam The EC mission to Hanoi in November was successful and the internal process for signature has started. A joint committee will oversee the implementation process. A new multi-stakeholder core group will be involved in work on implementing VPA. Vietnam 5

6 has shown strong commitment to implement the VPA and ratification is expected in summer Discussion relating to issues with illegal logging in Cambodia and crossborder transport took place, with Vietnam confirming the taking of measures to better control cross-border trade. Update on FLEGIT Version 3 is completed was deployed in October CERTEX (the customs single window) will be operational in beginning 2018 and an Excel form for reporting obligations will be deployed. There are more than 14,000 licences in FLEGIT for the time being. 10. A.O.B. No A.O.B. was raised. 3. Conclusions/recommendations/opinions See individual points 4. Next steps See individual points 5. Next meeting The next FLEGT/EUTR Expert Group meeting will take place on 26 February List of participants Organisation Federal Forest Office FOD Volksgezondheid, Veiligheid van de Voedselketen en Leefmilieu Executive Forest Agency Bulgarian Customs Ministry of Agriculture Department of Forests Cyprus Customs Ministry of Agriculture Environment Ministry Country AT BE BG BG HR CY CZ CZ DK 6

7 The Finnish Agency of Rural Affairs Ministère de l'agriculture Bundesministerium für Ernährung und Landwirtschaft (BMEL) Bundesanstalt für Landwirtschaft und Ernährung (BLE) National Food Chain Safety Office Department of Agriculture, Food and the Marine Ministry of agriculture food and forestry policies Ministry of agriculture food and forestry policies State Forest Service Customs Department State Consumer Rights Protection Authority Ministry for the Environment, Sustainable Development, and Climate Change Norwegian Environment Agency Ministry of Finance Instituto da Conservação da Natureza e das Florestas Ministry of Agriculture and Rural Development of the Slovak Republic National Forest Centre Ministry of Agriculture, Forestry and Food, Republic of Slovenia Ministry of Agriculture and Fisheries, Food and Environment Skogsstyrelsen Ministry of Economic Affairs Nederlandse Voedsel en Warenautoriteit Department for Business, Energy and Industrial Strategy - Regulatory Delivery FI FR DE DE HU IE IT IT LV LT LT MT NO PL PT SK SK SI ES SE NL NL GB 7

8 Regulatory Delivery GB 8