Combating illegal timber trade: Promoting sustainable development and good governance

How can trade policies promote and support governance reforms in developing countries so that forest resources contribute to sustainable development? A panel discussion on the FLEGT initiative hoped to provide an answer to this question. The session, moderated by Jussi Viitanen, Head of the EU FLEGT and REDD Facilities at the European Forest Institute, took place at the recent WTO Public Forum in Geneva.

by EU FLEGT Facility

This is the World Trade Organization’s largest annual outreach event bringing together 1500 participants, including trade and development practitioners from civil society, business, governments, the media, inter-governmental organisations and academia.

The EU FLEGT Action Plan, published in 2003, promotes trade in legal timber products and requires that timber being traded in the EU is legal. Other markets (USA, Australia, Japan) have adopted similar policies. The session presented the FLEGT approach – which combines trade with strong country ownership, multistakeholder participation, capacity building and technology – and discussed potential lessons for other sectors.

Panel members agreed that the FLEGT approach, originally born out of a G7 initiative, differs from traditional development cooperation. Herbert Christ, Head of the International Forest Policy Program at the German Agency for International Development, explained that the motivation behind FLEGT was twofold: concern about deforestation, and about illegal timber entering the EU market. At the time the EU was the biggest market for imported timber internationally. “From my perspective working in an international development organisation, FLEGT is a unique approach. We did projects with countries, in tropical forests, but we did not deal with any of the market forces at the time,” he said. “That was the first thing that was different about the FLEGT Action Plan – looking at supply and demand, market forces, not just blaming producer countries for bringing illegal timber on the market.”

Hannah Mowat, Campaigns Coordinator at Fern, a European NGO focusing on forests, explained that the root causes of deforestation are consumption and poor governance, meaning concretely “a lack of transparency, corruption, a lack of coordination between government departments, and very low civil society capacity to hold their governments to account.” She explained that Fern had been working on certification, but a lot of it was happening in a context with weak governance. “The ‘T’ in FLEGT gave a carrot and also a stick for countries to address problems of governance. In return for doing that, they would have access to the EU market,” she said. “It’s a real incentive to get to the real root of the problems – that’s why we’re involved.”

Panellists agreed that impacts in producer countries are significant, even if only one country so far issues FLEGT licences, long seen as the ultimate goal of the process. Harrison S. Karnwea, Sr., Chairman of the Board of Directors of Liberia’s Forestry Development Authority, spoke about the broader benefits that the FLEGT process has brought Liberia. “The FLEGT VPA [or Voluntary Partnership Agreement, a forest sector trade agreement between the EU and Liberia] has engendered a new sense of transparency – communities, the private sector, government and civil society now meet monthly, the joint implementation committee (JIC) [of the VPA, monitoring implementation of the agreement] now meets regularly, and we now have several regulations to safeguard the implementation process. 

“We have benefitted from the training and capacity building that VPAs bring”, he said, adding that “capacity of private sector companies has been built as well.” 

Karnwea also told the audience that the benefits have been shared with affected communities. Liberia has a benefit sharing scheme that is subject to independent audit. Thirty percent of the land rental fees paid by logging companies go to communities living in the vicinity of forestry operations. Mowat agreed that the Liberian benefit sharing mechanisms have been a success. “Two million USD is the amount the Liberia government is handing over to communities in land rental fees,” she said. “This has led to eight schools, seven guesthouses and three clinics being built.” She also mentioned civil society’s ease of access to government and parliament as a major success of the FLEGT processes. Karnwea added that through the VPA, NGOs “can scrutinise the process to ensure it is done the way that it should be done.” Christ said “the main advantage of the VPA process is that it is participatory – you bring the private sector and civil society to the table,” even if the private sector’s interest sometimes wanes if VPA negotiations take a very long time. But time is essential in any democratic process according to Mowat. “To pin the success of the FLEGT programme on the transaction of [FLEGT] licenses is short-sighted,” she stressed. “When you have a JIC, change is slow, but this is what democracy looks like. There will always be work to do – you have to see it as a work in progress.”

Panel members agreed that FLEGT could offer lessons to other sectors. Mowat pointed out that “what has worked very well with FLEGT and is a lesson for approaches to other commodities is a demand- supply-side approach” with a penalty system on the European side. “One of the reasons we won’t reach the 2030 goal of ending deforestation is because at the moment we are relying on voluntary commitments from companies,” Mowat said. “There are no incentives for companies who have made commitments – or the laggards who haven’t taken commitments – to end deforestation.” Ultimately, said Christ, “we need to take responsibility about our consumption and the world’s forests.”