COUNCIL OF THE EUROPEAN UNION. Brussels, 10 December /04 AGRI 336 FORETS 39 DEVGEN 254 ENV 675 RELEX 635 JUR 492

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1 COUNCIL OF THE EUROPEAN UNION Brussels, 0 December /04 AGRI 336 FORETS 39 DEVGEN 54 ENV 675 RELEX 635 JUR 49 REPORT from: Working Party on Forestry to: Coreper Dated: 0 December 004 No. Cion prop.: 656/04 - com(004) 55 final Subject: Proposal for a Council Regulation concerning the establishment of a voluntary FLEGT licensing scheme for imports of timber into the European Community I INTRODUCTION. On July 004, the Commission submitted a Proposal for a Council Regulation concerning the establishment of a voluntary FLEGT licensing scheme for imports of timber into the European Community.. The above Proposal is to be seen in the general context of the Communication that the Commission presented on 6 May 003 to the Council and the European Parliament on a Community Action Plan on forest law enforcement, governance and trade (FLEGT). The purpose of that communication was to define a process and a package of measures to address the problem of illegal logging and related trade. Doc. 656/04 Doc. 9944/03 58/04 RD/gt DG B II EN

2 3. Following on from the Commission s communication, the Proposal establishes the legal framework necessary for the introduction of a timber import licensing scheme. This scheme will be implemented by means of voluntary partnership agreements to be concluded with partner countries. With a view to concluding such agreements, the Commission has submitted, jointly with the Proposal for a Regulation, a proposal for a negotiation mandate to the Council. II. OUTCOME OF PROCEEDINGS 4. During the Netherlands Presidency, the Working Party on Forestry undertook a thorough examination of the Proposal, pursuing a dual objective: firstly, clarifying the relationship between the licensing scheme and the negotiation mandate; secondly, making the text of the Proposal better suited to implementation by Member States customs authorities. 5. In carrying out this exercise, the Working Party identified a number of elements that would be better placed in the negotiation mandate or in the preamble rather than in the enacting terms of the Proposal. These changes led to a substantial restructuring of the text. In addition, a number of key provisions and definitions were reworded, in order to take due account of concerns raised by customs experts who participated in the proceedings of the Working Party. 6. At the request of the Presidency, the Council Legal Service provided a legal opinion on the validity of the legal basis of the Proposal, namely Article 33 TEC. In fact, a number of delegations thought the Proposal should be based on Article 75 TEC. In its opinion, the Council Legal Service concluded however that Article 33 TEC was the correct legal basis. 7. In order to consolidate the state of progress achieved so far, the Netherlands Presidency has drawn up the attached Presidency text (see Annex). Although the text is subject to a general reservation of a number of delegations and still contains quite a number of elements that need substantial further examination, it constitutes a good basis for continuation of the Working Party s proceedings. Doc. 397/04. The detailed examination of the negotiation mandate will begin under the Luxembourg Presidency. Council document 4767/04: Contribution by the Legal Service to the proceedings of the Working Party on Forestry. 58/04 RD/gt DG B II EN

3 8. During discussions under the Netherlands Presidency, two key issues emerged on which all delegations expressed reservations and for which the Working Party would like to obtain political guidance. These issues, which are included in the questionnaire set out in document 5996/04, are briefly explained below. A) How to avoid circumvention of the licensing scheme? 9. In order to ensure the effectiveness of the licensing scheme, circumvention or attempts at circumvention should be prevented. To this end, the Proposal provides that import to EU Member States of timber products which are covered by the Regulation but which do not come from a FLEGT partner country, can only take place with a valid certificate of origin (Article 3a). 0. Delegations in the Working Party expressed differing views on this part of the Proposal: - Some delegations were not convinced that the proposed certificate of origin requirement would effectively solve the problem of circumvention, mainly for two reasons: either they doubted whether adequate tracking and control mechanisms are in place to produce reliable certificates of origin for all timber products covered by the Regulation, or they questioned whether a certificate of origin is a relevant means to verify the origin of timber used in processed timber products. In addition, they thought that the certificate of origin requirement could be considered as hindering trade in timber and timber products. - Other delegations agreed with the Commission that the present circumvention provision is a necessary requirement to ensure the effectiveness of the licensing scheme. In this respect, they referred to a similar provision, included in the CITES Regulation" (Council Regulation (EC) No 338/97 of 9 December 996 on the protection of species of wild fauna and flora by regulating trade therein). OJ L 6, , p.. 58/04 RD/gt 3 DG B II EN

4 B) What timber products should be covered by the licensing scheme?. The timber products to which the licensing scheme would apply are set out in Annex II to the Regulation. According to the Commission Proposal, the licensing scheme would initially cover a limited range of timber products (roundwood, railway sleepers, roughly sawn wood, veneer sheets and plywood), owing to the difficulties of ascertaining the origin of more highly processed timber products.. All delegations agreed that product coverage was a crucial element of the licensing scheme, which needed very careful examination. With regard to the product coverage proposed by the Commission, they took different stands. Some delegations considered the product coverage too restrictive and would like to see it extended, by including inter alia particle board, fibreboard and woodpulp. Other delegations agreed to the product coverage proposed and considered that the licensing scheme could be extended to more highly processed timber products at a later stage. III. CONCLUSION 3. The Working Party on Forestry suggests that the Committee of Permanent Representatives take note of the progress so far achieved in the examination of the Proposal and of the two key issues for which political guidance is required at this stage. It also suggests that the Committee of Permanent Representatives decide to submit this report jointly with the questionnaire set out in doc. 5996/04 to the Council (Agriculture and Fisheries) for consideration by the Council at its session of and December /04 RD/gt 4 DG B II EN

5 ANNEX Presidency text 09 December 004 Proposal for a COUNCIL REGULATION concerning the establishment of a voluntary FLEGT licensing scheme for imports of timber into the European Community SCRUTINY RESERVATION ON THE WHOLE TEXT BY DK, CY AND PT. THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 33 thereof, Having regard to the proposal from the Commission, Whereas: () The Council and Parliament welcomed the Communication on an EU Action Plan on for Forest Law Enforcement, Governance and Trade (FLEGT) as a first step to tackle the urgent issue of illegal logging and associated trade (, ) () The Communication on an EU Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT)( 3 ) states the need for a voluntary FLEGT licensing scheme as a measure to ensure only legal timber enters the EU. (3) Implementation of the FLEGT licensing scheme requires that imports of relevant timber products into the territory of the Community be made subject to a system of checks and controls seeking to guarantee the legality of harvesting and export procedures. (4) The FLEGT licensing scheme will be entered into through voluntary Partnership Agreement between the EU and third countries and regional organisations. Under such partnership agreements, exports of timber from partner countries and regional organisations to the EU will be accompanied by a unique export licence, to be granted if the timber has been harvested in conformity with relevant national legislation. Timber originating from a partner country or region and arriving in the EU at a point designated for release for free circulation without such a licence will not be released. 3 OJ C 68, 07//003 P Parliament document 704/04. COM(003) 5. 58/04 RD/gt 5

6 (5) The validity of licences for the relevant imported timber products should be properly verified by the competent authorities of the Community, and be subject to periodic independent audit and third-party monitoring to be agreed with partner countries. (6) Each Member State should determine the sanctions applicable in the event of a breach of this Regulation. (7) The measures necessary for the implementation of this Regulation are to be adopted in accordance with Council Decision 999/468/EC of 8 June 999 laying down the procedures for the exercise of implementing powers conferred on the Commission ( ). Prev art. (3) [Entering into a partnership agreement will imply a specific and binding political commitment on the part of partner countries and regions to join the FLEGT licensing scheme within an agreed schedule stipulated in the said partnership agreement.] Prev art. (4) [Partnership agreements should include elements of institutional support, capacity building and technical assistance to facilitate implementation of the licensing scheme described herein, and additional actions to combat illegal logging and improve forest sector governance. Such elements will be designed to meet circumstances and needs in partner countries and regions and will thus be described within the specific partnership agreements.] Prev art. 3 () [Partner countries and regions shall join the FLEGT licensing scheme by entering into partnership agreement with the Community]. Prev art. 3 (3) Partnership agreements shall reflect the needs and circumstances of partner countries, but must include provisions for third-party monitoring to ensure transparency and credibility of the FLEGT licensing scheme. Prev art. 3 (4) The Commission will present recommendations for a negotiating mandate for such partnership agreements, on behalf of the Community, under the provisions set out in Article 300 of the EC Treaty. (New initiated by GR) Implementation of the FLEGT licensing scheme requires qualified, well-trained competent authorities personnel, as to ensure effective control, facilitate procedures and necessary formalities and to implement checks where shipments are introduced. OJ L 84, , p.3. 58/04 RD/gt 6

7 HAS ADOPTED THIS REGULATION: CHAPTER I SUBJECT MATTER AND DEFINITIONS Article. This Regulation establishes a Community system of rules for the import of certain timber products for the purposes of implementing the voluntary FLEGT licensing scheme, as set out in the Communication on an EU Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) ( ).. The voluntary licensing scheme shall be implemented through partnership agreements with timber producing countries ( ). 3. Deleted. 4. Deleted. 5. Deleted This Regulation applies to the products set out in Annex II Article For the purposes of this Regulation the following definitions shall apply: (a) (b) Forest Law Enforcement, Governance and Trade licensing scheme (hereinafter FLEGT licensing scheme ) means the issuing of licenses for timber products for export to the EU from partner countries or regional organisations and its implementation in the EC, in particular its provisions on border controls; 4 partner country means any state or regional organisation that signs a FLEGT Partnership Agreement ; COM(003) 5 Scrutiny reservation by ES, UK. Scrutiny reservation by BE, SE. Scrutiny reservation by DK, UK. Scrutiny reservation by PT. 58/04 RD/gt 7

8 (c) (d) (e) (g) partnership agreement means the agreement between the EU and a partner country or regional organisation through which the EU and partner countries or regional organisations commit themselves to work together in support of the FLEGT Action Plan and to implement the FLEGT licensing scheme; regional organisation means an organisation comprised of sovereign states that have transferred competence to that organisation, granting it the capacity to sign an agreement on their behalf, in respect of matters governed by the FLEGT licensing scheme; FLEGT licence means a document of a standard format which is to be forgeryresistant and tamper proof, verifiable, and which refers to a shipment of timber products as being in compliance with the requirements of the FLEGT licensing scheme, duly issued and validated by a partner country or regional organisations licensing authority; licensing authority(ies) means the authority(ies) designated by a partner country or regional organisation to issue, validate and verify FLEGT licences; (g) bis competent authority(ies) means the authority(ies) designated by the EU Member States to validate and verify FLEGT licenses; 3 (h) (j) timber products means the products set out in Annex II, to which the FLEGT licensing scheme applies, and which are imported to the EU for commercial purposes; 4 imports means the actual movement of products into the EU and the release for free circulation of products within the meaning of Article 79 of Council Regulation (EEC) No. 93/99; 5 (l) Deleted 6 (m) (n) shipment means a specifically identifiable consignment of timber products, as set out in Annex II; export means the physical leaving or taking out from any part of the geographical territory of a partner country or regional organisation Scrutiny reservation by DK, FIN. Scrutiny reservation by DE, ES, FR, UK. Scrutiny reservation by DE, ES, FR, UK. Scrutiny reservation by BE, DE, EL, FR, UK. Scrutiny reservation by Cion, DK, DE,EL, ES, FR. Scrutiny reservation by Cion, DK. 58/04 RD/gt 8

9 CHAPTER II LICENSING SCHEME Article 3. This FLEGT Licensing Scheme shall apply only to imports from partner countries or regional organisations which agree to take part in it.. An agreed schedule for implementing the commitments thereby entered into shall be specified in the partnership agreement. [Article 3a] The import of timber products from third countries shall be subject to the presentation of a valid certificate of origin following the provisions of Articles 47 of Commission regulation no. 454/993 as last amended. Article 4. Imports into the Community of timber products originating in partner countries shall be prohibited unless the consignment of timber products is accompanied by a FLEGT licence.. Where schemes already exist to verify the legality of timber products originating from partner countries, such schemes may form the basis of the FLEGT licence. This would be on condition that those schemes have been assessed and approved to agreed requirements in accordance with the procedure laid down in Article (), so as to provide the necessary assurance as to the legal origin of the timber products concerned. [3. Timber products of species listed under Annexes A, B and C of Council Regulation (EC) No 338/97 of 9 December 996 on the protection of species of wild fauna and flora by regulating trade therein shall be exempt from the requirements set out in Articles 4. [and 3bis]. The Commission shall review this exemption, in accordance with the procedure laid down in Article (), five years after the entry into force of this Regulation.] Scrutiny Reservation by DK, FI. Scrutiny Reservation by FI. 58/04 RD/gt 9

10 Article 5. The FLEGT licence shall be presented at the same time with the customs declaration for release for free circulation in the Community. The competent authority shall keep the original FLEGT licence together with the customs declaration.. The competent authority shall provide the Commission, or persons or bodies designated by the Commission, with access to the relevant documents and data, in the event that problems arise which impair the effective operation of the FLEGT licensing scheme. 3. The competent authority shall grant access to the relevant documents and data to persons or bodies designated by partner countries or regional organisations responsible for the independent monitoring of the FLEGT licensing scheme The competent authority shall decide on the need for further verification of shipments using a risk-based approach In case of doubt as to the validity of the licence, the competent authority will undertake additional verification and seek further clarification, as laid down in the Partnership Agreement with the exporting country or regional organisation Detailed requirements for the implementation of this article and in particular the FLEGT licence may be established in accordance with the procedure laid down in [Article ()]. Article 6. If a competent authority establishes that the conditions in Article 4 are not fulfilled, it proceeds in accordance with customs legislation in force.. The Member States shall notify the Commission of any information suggesting that the provisions of this Regulation are being, or have been, circumvented Scrutiny reservation by EL, FI. Scrutiny reservation by UK. Scrutiny reservation by UK. Scrutiny reservation by EL, ES. Scrutiny reservation by DE, FR. 58/04 RD/gt 0

11 Article 7. Member States shall designate the competent authority(ies) for this Regulation and for communication with the Commission.. The Commission shall provide all competent authorities of the Member States with the names and other relevant details of the licensing authorities designated by partner countries and regional organisations, authenticated specimens of stamps and signatures attesting that a licence has been legally issued, and any other relevant information received in respect of licences. Article 8. Member States shall be required to submit a yearly report for the preceding year January to December by the end of April of each year which includes the following details: (a) volumes of timber products entering the Member State under the FLEGT licensing scheme, as per HS Headings specified in Annex II and per each partner country or regional organisation. (b) the number of FLEGT licences received, as per HS Headings specified in Annex II and per each partner country or regional organisation. (c) [Volumes of timber products entering the Community from third countries, presenting a valid certificate of origin as per HS Headings specified in Annex II and per each partner country or regional organisation.] (d) the number of seizures and the volume of timber products seized per partner country or regional organisation, as well as the follow-up measures.. The Commission should determine the format of this report in order to facilitate monitoring of the working of the FLEGT licensing scheme. 3. The Commission shall prepare a yearly synthesis report by June of each year, based on the information submitted by the Member States for the previous calendar year and disseminated according to Regulation 049/00. 58/04 RD/gt

12 CHAPTER III GENERAL PROVISIONS Article 9 The Commission shall present to the Council [X] years after the entering into force of the first Partnership Agreement a report on the implementation of this Regulation, in particular based on the synthesis reports mentioned in article 8. and the reviews of Partnership Agreements. This report shall be accompanied, where appropriate, by any suitable proposal. Article 0. The Commission may amend the list of partner countries and regional organisations, and their appointed licensing authorities as set out in Annex I in accordance with the procedure laid down in [Article ()].. The Commission may amend the list of timber products [with a HS code] listed [in chapter 44 or 48] in Commission regulation 789/003 to which the FLEGT licensing scheme applies, as set out in Annex II, in accordance with the procedure laid down in [Article ()]. Article deleted Article. The Commission shall be assisted by a FLEGT Committee (hereinafter referred to as the Committee ) or the [Customs Committee established by depending on the subject].. Where reference is made to this paragraph, Articles 4 and 7 of Decision 999/468/EC shall apply. The period laid down in Article 4(3) of Decision 999/486/EC shall be set at three months. 3. Where reference is made to this paragraph, Articles 5 and 7 of Decision 999/468/EC shall apply. The period laid down in Article 5(6) of Decision 999/486/EC shall be set at three months 4. The Committee shall establish its rules of procedure. Scrutiny reservation on the whole article by BE, DK, EL, ES, FR, IE, AT, PT. 58/04 RD/gt

13 Article 3 merged with article Article 4. & 4. deleted, 4.3 merged with article 6 Article 5 deleted Article 6 deleted Article 7 Each Member State shall determine the penalties to be imposed where the provisions of this Regulation are infringed. Such penalties shall be effective, proportionate and dissuasive. Member States shall also determine how to deal with timber products seized when the provisions of this Regulation are infringed. Article 8 deleted Article 9. This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union. It shall be applicable as from the entry into force of the first partnership agreement implementing the FLEGT licensing scheme. 3. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, [ ]. For the Council The President [ ] Scrutiny reservation by the Cion and DK on the deletion of paragraphs 5.; 5.4 & 5.5 Scrutiny reservation by DK, DE, ES, SE. 3 Scrutiny reservation by DK, UK. 58/04 RD/gt 3

14 Annex I List of partner countries and regional organisations in the FLEGT licensing scheme and their duly appointed licensing authorities [ Annex II ] HS Heading Products to which the FLEGT licensing scheme applies Description Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared Railway or tramway sleepers (cross-ties) of wood Wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or end-jointed, of a thickness exceeding 6 mm Sheets for veneering (including those obtained by slicing laminated wood), for plywood or for other similar laminated wood and other wood, sawn lengthwise, sliced or peeled, whether or not planed, sanded, spliced or end-jointed, of a thickness not exceeding 6 mm. 44 Plywood, veneered panels and similar laminated wood. 58/04 RD/gt 4