Business Trends Abroad – February/March 2022

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Brazil – According to the International Wood Products Association (IWPA), recently, Brazil’s Institute of the Environment and Renewable Natural Resources (Ibama) issued Normative Instruction No. 24, which establishes criteria and procedures for the export, commercial purposes, of wood products and by-products of the new timber species included in the Annexes of the Convention on International Trade in Endangered Species of Wild Flora and Fauna of the genera Handroanthus spp., Tabebuia spp., Roseodendron spp., Dipteryx spp., Cedrela spp. and the species Swietenia macrophylla.

IWPA understands that export of wood products and by-products of these species will only be allowed when coming from Sustainable Forest Management Plans or from plantations duly approved by the competent environmental agency and including AUTEX or AUTEF document along with transport documents identifying all stages of the production chain from forest to export.

For Ipe and Cumaru, the CITES license will be required from 180 days after the entry into force of the Normative Instruction on February 1, 2023 (i.e. July 31, 2023).

IWPA is seeking additional information about Normative Instruction No. 24 from Brazilian Authorities and will share it with members as soon as possible.

Europe – As reported by Fordaq, the European Council and the European Parliament agreed on the text regulation to minimize the risk of deforestation and forest degradation associated with products that are imported or exported from the European Union.

The agreement will continue to be provisional until it is formally adopted by both institutions.

The regulation of deforestation-free products is a part of the European Green Deal and it builds on the 2019 European Commission communication on stepping up to protect and restore the world’s forests. The Commission has announced four action items on deforestation: reducing the footprint of EU consumption, stepping up international cooperation, improving sustainable financing and boosting research and innovation.

This new regulation builds on the first step of the commission by recognizing that the EU is complicit in global deforestation through domestic consumption. This compliments the 2030 Forest Strategy where the EU is aiming to strengthen their efforts in reforestation and conservation in the region and will replace the EU Forest Law Enforcement Governance and trade regulation (FLEGT), which includes the EU Timber Regulation (EUTR).

This provisional agreement sets mandatory due diligence rules for all operators and traders who place, make available or export the following commodities from the EU market: timber, palm oil, coffee, cocoa, beef, rubber and soy. (The last two items were not formally regulated under the EUTR. A review will be conducted in two years to see if there are other products that need to be covered.)

The Council and Parliament agreed to define “deforestation” as “the conversion of forest to another land use independently of whether human-induced or not,” which is in accordance with the definition established by FAO for forest monitoring purposes in their Global Forest Resource Assessment (FRA). This definition refers to deforestation as the change in land use, not in tree coverage.

This definition is also dependent on the definition of “forest”, which in the FRA combines physical criteria (minimum thresholds of 10 percent canopy cover, 0.5-hectare area and 5m in height) and a notion of the predominant land use, excluding tree covered areas where the predominant use is agriculture or urban.

The legislation will not impose a prohibition on products from conversion of “other woodland” with sparser tree cover (like scrublands or savannas) as the European Parliament proposed last July, since they have accepted the FAO definition of deforestation.

The legislation will prohibit the placing of any regulated commodity derived from deforested land or forest degradation on the EU market, in accordance with this definition irrespective of whether the deforestation or degradation is legal or illegal in the country of harvest.

The co-legislators have agreed on stringent due diligence obligations for operators, which will be required to trace the products they are selling back to the “plot of land,” identified by geolocation coordinates, where it was produced. These new rules have also been designed to avoid duplication of obligations and reduce administrative burden for operators and authorities. There is also the added possibility for small operators to rely on larger operators to prepare due diligence declarations.

There has been a benchmark set in place by both the Council and Parliament, which will assign a third of EU countries a level of risk related to deforestation and forest degradation (low, standard, or high). These risk categories will determine the level of specific obligations for operators and member states’ authorities to carry out inspections and controls. This would facilitate enhanced monitoring for high-risk countries and allow for a more “simplified due diligence” for low-risk countries.

The Council and Parliament have tasked competent authorities with carrying out checks on operators and traders, asking them to check on nine percent for high-risk countries, three percent for standard risk, and one percent for low risk, making sure that they are effectively fulfilling their obligations as set by the new regulations. These authorities will also carry out a check on nine percent of the quantity of each of the relevant commodities and products placed, made available on or exported from their market by high-risk countries.

The human rights aspects linked to deforestation have also been taken into account in the legal text that was agreed on by the European Council and the Parliament, this includes the right to free, prior and informed content by indigenous peoples.

This agreement maintains the provisions regarding effective, proportionate and dissuasive penalties and enhanced cooperation with partner countries, as proposed by the Commission. It also provides that fines proportionate to the environmental damage and the value of the relevant commodities or products concerned should be set at the level of at least four percent of the operators’ annual turnover in the EU and includes a temporary exclusion from public procurement processes and from access to public funding.

Vietnam – According to the Vietnam Administration of Forestry, forestry exports in 2022, which included timber and wood products, are estimated to be over $16.9 billion, up 6.1 percent from 2021. VietnamPlus reported that this value included about $15.85 billion worth of timber and wood products, rising by 7 percent and $1.1 billion worth of non-timber products, falling by 1.3 percent.

The U.S., Japan, China, the EU and South Korea were the main markets, purchasing $15.48 billion worth of forestry products from Vietnam, equivalent to over 90 percent of the total.

Exports have been increasing despite global crises, such as the Russia-Ukraine war and COVID-19 pandemic. Exports have been able to increase in part to the Vietnamese governments directions, ministries and sectors’ moves, as well as businesses’ efforts to surmount the difficulties the past year has brought.

Imports into Vietnam for timber and wood products have increased by 4.1 percent to $2.82 billion. This has resulted in a trade surplus of $14.1 billion, up 6.5 percent from 2021.

The forestry industry plans to achieve $17.5 billion worth of forestry exports in 2023, a growth rate of 5-5.5 percent in forestry production value.

Switzerland – The Swiss Federal Council approved a report that outlines the options for action between 2023 and 2030 to adapt the forest climate change, including guidelines for afforestation. It serves as the basis for the development of an integral forest and wood strategy for 2050, that should be in place by 2025.

The Federal Council’s main goal is that the Swiss forest remains diverse, resilient and this adaptable ecosystem with its services. Also, with increased CO2 binding in the forest, long-term storage of CO2 in wood and the increased substitution of fossil materials and energies should make a significant contribution to reducing climate change.

The federal government is also analyzing potential scenarios that may support the future use of hardwood. Consumers should ask for Swiss wood, even if the wood species and product ranges change.

Russia – The Program for the Endorsement of Forest Certification (PFEC) has clarified that the validity of the conflict timber clarification has been extended indefinitely and will be regularly monitored by the PEFC International Board.

The conflict timber classification was first implemented in March 2022 as a response to the Russian government’s and President Putin’s “military aggression” against Ukraine, which was in “direct opposition” to the PEFC’s values.

This meant that all timber originating from Russia and Belarus were and have been considered “conflict timber” and cannot be used in PEFC-certified products.

United Kingdom – The government in London has now extended the recognition of the CE marking for the British market to also include building products. Until June 30, 2025, these can still be delivered to the United Kingdom marked with the CE mark and the corresponding CE Declaration of Performance (DoP).

Businesses that have been preparing to use the UKCA mark due to the original year-end deadline are also permitted to use this mark with the associated UKCA DoP. For Northern Ireland, the CE marking continues to apply unaffected.

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By Miller Wood Trade Publications

The premier online information source for the forest products industry since 1927.

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