Assessment of additional measures to exclude illegal timber from EU marketsOutline of potential additional measures (second draft)

Duncan BrackAssociate Fellow, Energy, Environment & Development Programme, Chatham House

Chatham House workshopChatham House, 3 April 2006

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Problems identified in national studies

• New legislation only worthwhile if it can help to solve or short-circuit practical problems identified in national studies:• Lack of cooperation with foreign enforcement agencies• Continuity of evidence• Difficulties with showing intent• Definition of ‘illegal timber’

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Options for new legislation

1. Ban on import of unlicensed products regardless of origin

2. Prohibition on import (and purchase, sale, possession, transport, etc.) of illegal products (similar to Lacey Act)

3. Improving international cooperation frameworks

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3 International frameworks

• CITES: of some use, but limited• WCO, Interpol: may help with international

collaboration, but do not provide legal basis for action• UN Convention on Transnational Organised Crime

– not likely to be useful• Not covered: ITTO, CBD, WTO, private sector

schemes, US Bioterrorism Act

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1 Trade measures

• Requirement to show proof of legality at the border regardless of origin

• Presumably would require certification, FLEGT license, or equivalent documentation (not existing papers)

• Similar in principle to procurement policies, but extending economy-wide

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1 Trade measures: WTO considerations

• Legality requirement could conflict with GATT:• Trade restriction• Possible discrimination between WTO members• Possible discrimination between ‘like products’

• In all cases, could possibly be saved by GATT Article XX, particularly XX(d), on deceptive practices

• Unusual – protection of laws in country of export• But major problem of discrimination between imports

and domestic production – unless domestic products also required to prove legality

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1 Trade measures: Civil society initiative

• FERN / Greenpeace / WWF proposal, December 2004

• Requires ‘valid and verifiable documents’ demonstrating legality

• Covers all cases of movement of timber and timber products within the Community

• If documentation the same, would possibly survive WTO test

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1 Trade measures: conclusions

• Still possible WTO challenge as a trade restriction• Would only be saved under Article XX(d) if

‘necessary’ to achieve objectives• WTO dispute panels tended to interpret ‘necessary’

as ‘least trade-disruptive’• Highlights practical problem with proposal – it is

highly trade-disruptive• Would require licensing of 85–90% of trade that is

not illegal

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1 Trade measures: other options

• Reciprocal export and import bans – e.g. Indonesian request to EU to ban import of logs, sawn timber

• Most easily applied through FLEGT license scheme• Extensive export bans not very realistic

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2 New criminal legislation

• Prohibition on import (and purchase, sale, possession, transport, etc.) of illegal products

• Similar principle as US Lacey Act (mainly fish and wildlife) (highlighted in FLEGT Action Plan)

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2 US Lacey Act: marking offence

• Unlawful to falsify labels or records of any fish or wildlife transported in foreign commerce

• Violation is criminal offence; fine of up to $10,000 or imprisonment of up to five years or both

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2 US Lacey Act: trafficking offence

• Unlawful to ‘import, export, transport, sell, receive, acquire or purchase in … foreign commerce … any fish or wildlife taken, possessed, transported or sold … in violation of any foreign law’

• Specific intent to knowingly import illegal products: felony (fine up to $250,000, sentence up to 5 years)

• Should have known that illegal products: misdemeanour (up to $100,000, 1 year)

• Negligent violation: civil penalty (fine up to $10,000)• In all cases: forfeiture of products (no ‘innocent

owner’ defence)

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2 US Lacey Act: in practice

• Often used by US prosecutors• Proving illegality not always straightforward• Does not require cooperation with foreign country

(though much easier if does cooperate)• Regarded as useful

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2 Lacey Act and illegal fishing

• Lacey Act used widely against IUU fishing• Similar principle incorporated in legislation of some

south Pacific countries• FAO International Plan of Action incorporates

principle …• … as does EU Community Action Plan (2002) …• … and conclusions of High Seas Task Force (March

2006)• UK considering possibility of including legislation in

Marine Bill

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2 A Lacey Act for the EU?

• Clear advantages compared with national criminal legislation

• Wide range of triggers, not restricted to theft• Does not require proof beyond reasonable doubt;

effectively creates requirement for due diligence• Impact on suppliers: negotiate contracts which shift

risk

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2 Legislation at EU level

• Lacey Act: ‘import, export, transport, sell, receive, acquire or purchase’

• Imports and exports can only be regulated at Community level

• Community competence probably exists

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2 Legislation at member state level

• Lacey Act: ‘import, export, transport, sell, receive, acquire or purchase’

• Member states can regulate sale, purchasing, etc.• German draft Virgin Forests Act prohibits possession

and marketing – though by requiring proof of legality, i.e. not like Lacey Act

• Introduction by individual member state – would need to consider whether created barrier to trade within the EU (Article 30 EC Treaty)

• Dispute cases suggest would be acceptable

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2 Speed of implementation

• EU: FLEGT regulation – three and a half years from first idea; two and a half years from Action Plan

• Member state, e.g. UK: Inquiries Act 2005 – nine months; Marine Bill – 4–5 years? (but Lacey Act-type legislation much simpler)

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2 Issues around Lacey Act (1)

• Is Lacey Act restricted to fish and wildlife because of greater volume of timber trade?

• No evidence from history; and fish imported in comparable volumes (though timber causes more of a problem with processed products)

• Would European courts resist Lacey Act-style legislation because requires interpretation of foreign law?

• No; fairly common experience in transboundary disputes

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2 Issues around Lacey Act (2)

• Clash with European human rights legislation?• No• Would Lacey Act-style legislation cause WTO

problems?• Not a trade measures, applied at the border; and not

discriminatory

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Conclusions

• Existing frameworks: not likely to be useful• Requirement for proof of legality: effectiveness high,

but cost of universal licensing scheme also very high• Introduction of Lacey Act-style legislation: does

possess advantages, but not panacea – would also impact trade, though much less than previous option

• Ideal solution in long-term is world-wide licensing system, but not feasible now

• EU legislation modelled on Lacey Act would underpin FLEGT licensing scheme