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On 21-23 June 2017, the European Commission met in Brussels with stakeholders from across the

world on tackling illegal logging and deforestation. The conference involved more than 250

representatives from timber producer and consumer countries, private sector and civil society,

indigenous and local communities, European Union Member States, and international organisations.

It served as a platform for discussions on the future development of a multi-year work plan for the

implementation of the EU FLEGT Action Plan, as well as on opportunities to step up EU action on

deforestation and forest degradation.

European Commission Conference on Illegal Logging and Deforestation

21-23 June 2017

Summary report

Disclaimer: This summary of the conference has been prepared by a note taker. It is published for information only and may not necessarily reflect accurately the views of the Commission, any of the speakers or the conference participants.

Introduction

Addressing the global challenges of illegal logging and deforestation have been and continues to remain a priority for the European Union (EU) especially in the light of the 2030 Sustainable Development Agenda and the Paris Agreement on climate change. Following the recent reviews1 of its flagship initiative to address illegal logging and the associated trade - the EU Action Plan on Forest Law Enforcement Governance and Trade ("FLEGT Action Plan") - the European Commission has been working towards the development of a work plan to guide strategic management, planning and monitoring for FLEGT implementation. At the same time, the European Commission is also considering the feasibility of options to step up EU action to combat deforestation and forest degradation as a follow-up to the 7th Environment Action Programme and the 2013 EU Forest Strategy.

In this context, the European Commission (EC) invited stakeholders on 21-23 June 2017 to take stock of progress, achievements and challenges as well as to explore opportunities for enhancing implementation of the EU FLEGT Action Plan, as well as for potential further EU action against deforestation. The conference, co-organised by DG DEVCO and DG ENV in Brussels, gathered more than 250 representatives from timber producer and consumer countries, private sector and civil society, indigenous and local communities, European Union Member States, and international

1 European Court of Auditors Special Report No 13/2015 and the independent evaluation

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organisations. It was organised in two parts: the first part focused on illegal logging, in particular on future implementation of the EU FLEGT Action Plan and the second part on the challenges of deforestation.

On FLEGT, the conference confirmed the strong commitment to the implementation of the EU FLEGT Action Plan and served as a useful platform to obtain stakeholders' input on the draft working paper for FLEGT implementation prepared by the EC. On the issue of deforestation, the conference demonstrated the strong interest from a wide range of stakeholders on stepping up EU action and provided an opportunity to present preliminary findings of the ongoing feasibility study and obtain initial input to inform the completion of the study.

Karmenu Vella, Commissioner for Environment, Maritime Affairs and Fisheries, said in his opening speech that the conference was a major opportunity for international partners and stakeholders to exchange views and provide input to shape future EU action to tackle illegal logging and wider deforestation challenges. Stefano Manservisi, Director-General for International Cooperation and Development said in his opening speech that forests are a global public good and the EU’s efforts to address the challenges forests face — including through the FLEGT Action Plan — are part of the wider agenda for development.

Frances Seymour who after several years at the Center for Global Development in Washington recently re-joined the World Resources Institute offered her facilitation skills in guiding the panels and the audience through the conference.

Simultaneous interpretation from and to English, French and Spanish was available while the conference was streamed live on the web and a hashtag (#TDIL) was introduced on Twitter allowing for an even wider participation and expression of views.

PART I: Illegal Logging and FLEGT

Wednesday 21st June

INTRODUCTORY SESSION:

EU FLEGT Action Plan Review outcome and current European Commission thinking on

future work for its implementation

Moderator: Frances Seymour, World Resources Institute

Speakers: Chantal Marijnissen – EC, Head of Unit DG DEVCO.C2

Florence Van Houtte – EC, Head of forests sector DG DEVCO C2

Luca Perez – EC, Team Leader – International forests issues DG ENV F.3

In advance of the formal opening of the conference in the afternoon, the morning session consisted in a technical session on the outcome of the EU FLEGT Action Plan Reviews and on the current thinking of the EC on the future work plan for FLEGT AP implementation. The basis for the discussion

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was a draft working paper developed by DG DEVCO and DG ENV which had been made public2 in the conference website. In her introductory speech, Chantal Marijnissen summarised the findings and recommendations of the recent FLEGT Action Plan reviews and invited participants to contribute to the development of the next steps for FLEGT implementation. The EC current thinking on future work to implement the EU FLEGT Action Plan was presented by Florence Van Houtte and Luca Perez. Florence focused on supply-side measures and Luca on demand-side measures, the multilateral framework and operational issues. Supply-side measures Florence Van Houtte stressed the need to put FLEGT implementation in the context of current policies and capabilities as well as challenges and opportunities since the adoption of the EU FLEGT Action Plan. While trade and governance will remain central in the framework of the new work plan, the different Action Areas will be more clearly prioritised and support will be better tailored to realities on the ground using a range of existing support mechanisms, and taking into better account capacities, political will and resources. With regards to VPAs, effective implementation of the FLEGT licensing scheme, currently active with Indonesia, will be a key priority, as well as supporting countries that are making progress towards start of licensing. Concerning other VPAs, the need to increase efficiency will steer future action and a stock-taking exercise on achievements and the feasibility of reaching agreed milestones will enable to identify the best way forward (e.g. reinforced roadmap, different ways of engagement, etc.). Opening up new VPA negotiations requires certain enabling conditions and an extensive preparatory period may be helpful to maximise chances of success. Participants engaged in a good discussion that focused on the key elements presented, namely the objectives of the new work plan, the role of resources and the scope of the different ways of engagement on FLEGT: Participants commented on the level of ambition in future work on FLEGT implementation notably with regards to: the prominence of available resources as a guiding principle for priorities-setting and the re-balancing of the objectives in favour of governance, as well as the link between the focus on legality and the higher objective of sustainable forest management. In its response the European Commission recalled that while the Action Plan focus on legality, legality is pre-requisite for sustainable and the FLEGT AP implementation aims at reflecting the three pillars of sustainability. This means that the overall contribution to sustainable forest management remains an important objective of the FLEGT AP. The reviews reaffirmed the design of the Action Plan and the European Commission is looking to improve effectiveness and efficiency in delivering results on the three, mutually reinforcing pillars – Governance, Trade and Law enforcement. Resources constraints and varying levels of progress require a realistic approach and flexible instruments to optimise impacts. As regards in particular the VPA financing issue the European Commission underscored the need to fully consider their sustainability beyond the EU´s financial support. A participant commented on the seemingly decreased attention to the issue of conflict timber and requested clarification as to the actual intentions of the new work plan. The EC rejected the claim

2 http://illegallogging-deforestation-conference.eu/wp-content/uploads/2017/06/FLEGT_working_paper.pdf

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and said that the intention is to take into account all forest related conflicts, while ensuring that the role of the VPAs as well as the EU Timber Regulation in addressing conflict timber is clarified. The EU Action Plan against Wildlife Trafficking3 will be also an avenue to address possible gaps. A few participants highlighted the limited emphasis on the private sector and the missing links to certification despite the clear call of the Action Plan's reviews. The EC clarified that stepping up engagement with the private sector was one of the areas highlighted in the plan, but nit yet well developed, and stressed the new opportunities available through a range of mechanisms, including investment platforms. It also invited the industry and the SMEs to provide concrete ideas on how to improve the private sector' involvement in the achievement of the FLEGT objectives. Concerning certification, it was highlighted that synergies between FLEGT and certification will continue to be explored where appropriate, also depending on how different countries decided (or not) to incorporate private certification schemes in their national systems. Comments stressed furthermore the key role of political will as a driving force for change and asked how this could be strengthened. The EC agreed that a deficit of political will have hampered progress in several VPA countries and that in the new context of political priorities this is a factor that has to be taken into account when planning future work. A stock-taking exercise for relevant VPAs should clarify the circumstances surrounding these processes and show the most appropriate way ahead. Several participants asked clarification over these (stock-taking) exercises notably with regards to the overall goal, the methodology of the assessments as well as the recommended remedies. Participants insisted on the need for a joint assessment with the partner countries involving all relevant stakeholders and with the aim of increasing engagement rather than of justifying termination of VPAs in question. The EC confirmed that analyses should be made together with partner countries on the basis of the country situation and the feasibility of meeting the objectives through a range of options for engagement. Some participants requested further clarifications with regards to the other options for engagements and warned about the risks of undermining the FLEGT principles if abandoning established processes (VPAs) that have the potential for impacts but that do not always work in the pace the EU would like to see. The EC reaffirmed that the VPAs remain very much an EU priority and that it is important to reinforce what works well. At the same time, as stressed by the evaluators, it is also necessary to explore ways to address what doesn’t work through means that suit better the country context in terms of technical capabilities, political commitment and overall priorities. A range of engagement mechanisms are needed also in countries where VPAs are not considered as an appropriate option. Synergies with other processes (e.g. REDD+, EITI), regional collaboration, tackling other drivers of deforestation were identified as de facto ways of working together towards common goals. Demand-side measures, International Cooperation and Operational issues Luca Perez explained that the overall priority of the EU will be the uniform and effective enforcement of the EU timber regulation. The EC will continue its compliance assurance strategy and work closely with Member States to support implementation of EU Timber Regulation (EUTR) through a range of action to enable all players to better apply the regulation, e.g. Competent authorities, private sector including SMEs. Bilateral dialogue with other major importing and

3 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, COM(2016) 87 final

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processing countries (e.g. China, USA, Japan, Australia, etc.) will also be a key central area of work. The impact assessment for a reviewing the EUTR product scope will be completed. At the same time, the European Commission will continue to promote the development of green public procurement policies by Member States. At a multilateral level, the EU will continue to raise the profile of illegal logging and to seek synergies with other relevant initiatives and organisations, including on aspects of law enforcement. On operational issues, the EC explained that in the context of the necessary prioritisation, resources will have to be used with a clearer results orientation, and monitoring will be strengthened to allow for a better understanding of progress and achievements.

The discussion focused especially on implementation and sustainability of FLEGT VPAs and the relationship between them and the EU Timber Regulation. Participants recalled that the EU Timber Regulation was devised to incentivise the VPAs but that until now its implementation and enforcement continues to be perceived as being weak. Many questions were raised to clarify the functioning of the EUTR. The EC highlighted that the EU Timber Regulation is starting to change the behaviour of operators, as demonstrated in the recent review of the Regulation. While implementation initially faced challenges across the EU Member States, notably with regards to human resources, enforcement efforts have started yielding results as non-compliances are being addressed and not necessarily through sanctions. The private sector remains very positive and works to raise awareness. SMEs were emphasised, as needing specific considerations for FLEGT implementation. On public procurement, in reply to an EU Member State representative, the European Commission clarified that indeed while FLEGT focuses on legality, public procurement may address legality or sustainability or both and different MS have different policies in place. A comment underlined the need for more information about the long term plan for sustainability of financial assistance for VPA implementation. It was highlighted that different strategies can be put in place by partner countries. In Indonesia, for instance, the government has put in place a timber legality assurance system which adopts a third-party certification approach and that private sector contributes financially to the implementation of the scheme. As part of the discussion it was also highlighted that a successful timber industry relies not just on legality and sustainability certification, but other macro and micro economic factors, and also design and quality of products. The EU can support certain efforts but these are complementary and not strictly within the scope of VPAs. Several participants highlighted the risk of focussing on strengthening legality enforcement, in contexts where, notably due to corruption, laws were inadequate to really ensure good governance and uphold rights of stakeholders. This risk has been at the centre of the FLEGT approach from the onset and will need continued attention.

OPENING OF THE CONFERENCE

Forests for sustainable development: vision and priorities to reduce poverty, address

climate change and halt biodiversity loss

Master of ceremony: Roberto Ridolfi, EC - Director DG DEVCO.C

Speakers: Karmenu Vella, EU Commissioner for the Environment Maritime Affairs and Fisheries

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Stefano Manservisi, Director-General for International Cooperation and Development

Roberto Ridolfi, director at DG DEVCO, hosted the official conference opening session. He framed the discussion by underlining that future actions by the EU to tackle illegal logging and deforestation depended on the engagement of partners and stakeholders, whose contributions are appreciated. Karmenu Vella, EU Commissioner for the Environment Maritime Affairs and Fisheries, gave an address in which he underlined the EU’s commitment to protect forests, halt biodiversity loss and achieve the Aichi targets. But the task is complex and requires joint work. The focus of the conference is to reflect on how to strengthen implementation of the FLEGT Action Plan, ‘our best tool to combat illegal logging’; and on how to widen the fight against deforestation, notably by stepping up action on agricultural commodities that are the major drivers of deforestation. The FLEGT Action Plan has contributed to real improvements in forest governance. Consumption of illegal timber in the EU is falling and the first FLEGT licensed timber is coming in. But we need to improve planning, monitoring and reporting, respond to changing global situation, and set a realistic timeline with milestones to mark progress. The EU is also considering options to better tackle causes of deforestation other than illegal logging, such as agricultural expansion. Any action in this area, will have to build on a wide range of already existing commitments, be tailored to different realities and prioritise working with countries most affected, while recognising the multidimensionality of the issue from a sustainable development perspective and the need to balance environmental, social and economic dimensions. The EU commissioned a study in order to address the complex issue and this conference will contribute to dialogue on future action. Stefano Manservisi, Director-General for International Cooperation and Development, described the new EU vision and policy for development cooperation – the EU consensus on development - that translates UN SDGs into EU policy to guide the Commission and Member States. The EU has an ambition to play a stronger role at international level. He mentioned the need to mobilise private investment, and provide security, and the role that forest ecosystems play in human livelihoods, development and the green economy, hence highlighting the importance of addressing deforestation. In Agenda 2030, the environmental SDGs are still lagging behind and more qualitative action is needed. FLEGT matters because it addresses governance and this drives other areas. Better governance of forests can contribute to better governance in the whole country. For countries and businesses, in many cases FLEGT has turned from a burden to a matter of responsibility: “It is now normal. Businesses take care of it.” The FLEGT Action Plan is a framework, to which everyone must contribute, it is an instrument that goes beyond development assistance.

Session I – Thematic Breakout Groups:

Tackling illegal logging and related trade through the FLEGT Action Plan - challenges,

lessons learnt and ways forward

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The conference divided into breakout groups to discuss three topics: partnerships with timber-

producing countries; private sector engagement; and demand-side measures.

THEMATIC GROUP 1

Working in partnership with timber producing countries: strengthening forest governance and law

enforcement and promoting trade in legal timber

Moderator: Robert Simpson, FAO FLEGT Programme

Panellists: Chantal Marijnissen, EC - Head of Unit DG DEVCO.C2

Dr Ida Bagus Putera Parthama, Indonesia – Dir. Gen., Ministry of Environment & Forestry

Yvonne Sansa, Democratic Republic of Congo - focal point for VPA negotiations

Cesar Augusto Rey Angel, Colombia – director, Ministry of Environment

Jussi Viitanen, EU FLEGT Facility - Head of FLEGT and REDD Unit

----------------------------------------------- Robert Simpson of the FAO/FLEGT Programme moderated a panel discussion and exchanges with the audience. The panel comprised representatives from the EC, Indonesia (the first country to be issuing FLEGT licences), Democratic Republic of Congo (negotiating a VPA), and Colombia (engaging in FLEGT outside the VPA context). Chantal Marijnissen for DEVCO put forward two questions: for countries in the process of negotiating or implementing a VPA, what do we want to keep and build on? And how can we go forward in the most efficient way? The discussion focused on requests by stakeholders (from NGOs and producer countries) to have more time to comment on the proposed work plan, for the work plan to be translated into French, and for more detail on how the EC applies standards on human rights and land tenure rights in VPA agreements, with concern that a VPA might give a legal stamp to practices not in line with international human rights commitments. There was a request for the EU to demonstrate commitment to the process by more high-level engagement in the partner country. For Indonesia, Dr Ida Bagus Putera Parthama, said the most important factor that drove Indonesia to negotiate a VPA was to rid itself of the stigma of being a country of massive deforestation, with law enforcement not adequate to tackle the issue. A second driving factor was pressure (and support) from NGOs to eliminate illegal logging. Added to these was a concern for the Indonesia’s long cooperation with consumer countries, and a willingness to convince the private sector that VPAs were the best option. He advised other countries in the process of negotiating VPAs to involve all stakeholders from the outset; to take care of their SMEs; to test the system before implementation and to persevere through difficult negotiations. On the benefits of licensing, he detailed the significant improvement in forest governance, the normalisation of involving stakeholders, progress towards achieving sustainable forest management and the multiple benefits to industry and the country more widely. Asked what he would like to have done differently, he said a shorter period of negotiation (than the seven years it took), and a step-wise approach allowing them to improve the system while they implement, rather than waiting for the system to be perfect.

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Challenges encountered by the Indonesian government include expectations from the private sector on the expected higher price of products resulting from the FLEGT licence, and a demand for better communication to EU operators on the fact that FLEGT licences are a sufficient guarantee of timber legality. Indonesia also needs to help SMEs meet the costs of FLEGT licences, although most are now certified. In terms of impacts, about 12 000 FLEGT licences to the EU have been issued since the start of licensing, and USD 450 million worth of products have been exported under licence. Responding to questions, he said it was too early (six months after the FLEGT licensing system started) to assess the impact on trade; that certification had been revoked from companies found to be breaking rules; and that FLEGT licensing needed better promotion to ensure buyers confidence. Yvonne Sansa, the focal point for VPA negotiations with the DRC, explained the thinking in DRC behind negotiating a VPA. Country leaders had been keen to support better governance of forests and the development of the forestry sector, and were committed to FLEGT objectives. They were also keen to include artisanal wood, an important sector in the DRC, combat poverty and address concerns of people living in and dependent on forests. Negotiations began in 2010, but progress has now stalled for some years, due to internal political events, lack of resources, and influenced by external trends (exports to the EU accounted for 80% of timber from DRC in 2007, but by 2014 had fallen to 33%, while the Asian market now accounts for 57% of exports). Also, forest conversion has become the main cause of deforestation. Nevertheless, she considers that DRC should pursue the VPA process and that the EU market remains important, but they need a realistic and tangible strategy and a rate of progress in line with national circumstances. A step-by-step approach would be good. She highlighted the need to avoid the preconception that DRC timber entails risks of illegality. Cesar Augusto Rey Angel for Colombia described his country’s approach to addressing forest governance and illegal logging through a multi-stakeholders approach enshrined in the national pact for legal timber (Pacto Intersectorial por la Madera Legal en Colombia). Following Colombia’s peace agreement with the FARC rebels and hence enhanced rule of law in broader territories, the government is working on four strategic points: strengthening community management of forests; the need to increase sustainable exploitation of forests; installing a monitoring system, complementary with REDD and other projects; and increasing the wellbeing of people living in forests, acknowledging the importance of biodiversity and human dignity. For Colombia, FLEGT cooperation with the EU has been instrumental to support the national process and offers a means to build greater trust and create confidence in the market. It has developed a system for forest management plans and built harmonised procedures and capacity for its sub-national institutions, as well as other processes, with support of the EU, notably in the context of FLEGT. Questions and comments concerned issues of financing of VPA negotiations; challenges for non-VPA transit countries, which need support with processing documentation and to manage the risk of leakages through cross-border trade; the need for a definition of private sector operators, differentiating between small-scale operators including chainsaw loggers and others. What came out of the discussion was a clearly expressed demand to learn from other countries’ experience, which the EU will aim to support, while recognising that each country has specific issues. Jussi Viitanen of the EU FLEGT Facility summarised the session. It had underlined the need for more learning and exchange between countries and the need to be careful to address the diversity of

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SMEs. The request for translation of the working paper would be taken into account. Better publicity about FLEGT licences is clearly needed, and so is partnership, to maintain high-level political dialogue and/or the technical level, depending on the bottlenecks to deal with. Ensuring resources and keeping FLEGT a priority is a job for everyone, to continue progress.

THEMATIC GROUP 2 Private sector: Deepening its contribution to the attainment of FLEGT objectives

Moderator: Philippe Deletain (MAE / France)

Panelists: Roberto Ridolfi – European Commission DG DEVCO

Samuel Nketiah - Tropenbos International

Marco Kaiser - Finance in Motion

Jacqueline Van der Pol - Association Technique Internationale des Bois Tropicaux (ATIBT)

------------------------------------------------ Setting the scene, Roberto Ridolfi DG DEVCO Director asked this working group to explore how FLEGT could further contribute to reducing poverty by stimulating sustainable investment and decent jobs, framed by legality. The private sector is central to FLEGT, at the heart of both VPA negotiations and of sourcing responsible timber. A number of areas need to be addressed: promoting transparency in the forest sector, and SME engagement. Samuel Nketiah presented the experience of Ghana. The EU Timber Regulation and changing markets has influenced a change in companies’ behaviour towards sustainable forest management. Compared to private certification schemes, many companies saw VPA as an easier step, since the government was in charge. The VPA process has been very rewarding, as it has given Ghana the opportunity to improve the legal framework and give communities fairer treatment and the chance to engage. Even though Ghana has not exported FLEGT-licensed timber, the country has achieved a lot and production has increased by 20%. Also, Ghana made efforts to regularise the domestic market, and not just focus on exports. It has also embarked on massive afforestation to increase the resource base. Marco Kaiser of Finance in Motion, an asset management entity focused on development finance, outlined the challenges of finding investors for forestry, especially where land tenure and legal framework is not clear and law enforcement weak. One solution could be to offer blended finance: using public funding to mobilise the private sector. The company has set up a forest plantation investment fund, Arbaro, with different sustainability criteria. A representative for smallholders in Honduras described the challenges facing smallholders. Large landowners set prices (meaning no incentive or profit for SMEs), and certification is difficult for small owners due to cost and economic risk. SMEs control one third of the land but have much less access to market. A study has shown that SMEs get 12% of the sale price of timber; many are looking at substitution crops. There are hopes that the VPA will transform this situation. According to Jacqueline Van der Pol of the Association Technique Internationale des Bois Tropicaux (ATIBT), the private sector needs clear, commonly applied rules, improved legislation and steady legality grids. There was a consensus on the need to address corruption through joint stakeholder efforts. Transparency is vital in this respect, and private sector and civil society need to work together to

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highlight cases, although success in tackling corruption depends on improved governance and effective sanctions.

THEMATIC GROUP 3 Demand-side measures (EU Timber Regulation, bilateral cooperation with other importer and

producer countries) Moderator: Jorge Rodriguez Romero, European Commission DG ENVIRONMENT

Panellists: Satu Glaser, UNEP – World Conservation Monitoring Centre

Alexander Hinrichs, EU FLEGT Facility

--------------------------------------- This group considered lessons learned from the EUTR, and an overview of demand-side measures in other countries. UNEP-WCMC gave an overview of key outputs of WCMC’s work for the EC in support of the implementation of the EUTR and FLEGT regulations, including the first FLEGT annual analysis for 2016 and EUTR 2nd biennial report for March 2015 – February 2017 under preparation. The presentation prompted a number of questions from the participants and clarifications from the EC. The EC offered clarifications on the EU Timber Regulation. It was clarified that the EUTR applies to all countries and all timber placed on the EU market (both domestic and imported) and that its enforcement cannot be "selective" depending on any stated commitment or goodwill by different countries. The only way for an EU operator to avoid EUTR due diligence obligations and related checks is to have FLEGT licences or CITES permits. Cooperation with countries such as Russia and Ukraine (in the top 5 exporters of timber to the EU) is crucial. Information is needed to support due diligence, which is the operator’s obligation. Updated EUTR guidance4 states that official documents are not sufficient to provide evidence of legality, in countries with high risk of corruption. This was confirmed in court cases in EU Member States. Regarding recognition of FLEGT licenses in non-EU markets: this would strengthen the value of FLEGT Licenses, but care needs to be taken to ensure that recognition does not extend to weaker evidence of legality. The EU is working on this with China, Australia, Japan and others. EUTR and VPA processes are mutually complementary. EUTR creates an incentive for tackling illegal logging and pursue governance reforms. At the same time, VPA processes enhance transparency and can help countries in meeting demands from international markets, already before start of FLEGT licensing. This information can be very useful to ensure also effective enforcement both in the EU and in partner countries. Member States arrange coordination between their designated competent authorities and CITES, to exchange lessons learned and examine potential for fraudulent CITES permits being used as an EUTR loophole. Thus far, no problems have been detected. When it comes to reporting requirements, Member States produce EUTR reports every two years, and on FLEGT licences received each year, and the EC reports at the EU level.

4 COM(2016) 755 final

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While certification contributes to meeting the due diligence requirement, it is not automatically recognised as proof of legality under the EUTR. Recent cases have shown the need for Member State competent authorities to apply additional checks in case of doubt. The EU FLEGT Facility gave an overview of demand side developments in the EU, USA, China, Japan, Republic of Korea and Australia, responsible for about 50% of the global timber trade. All are engaged in the development and/or implementation of provisions to ensure trade in legal timber. Approaches differ widely. The EU is cooperating closely with countries such as China, Japan, USA and Australia, and sharing information to support demand-side measures with the aim of closing possible gaps at the global level. The issue of recognition of FLEGT licences in these countries is central in these bilateral discussions, and the EU is determined not to lower legality levels set in the context of the FLEGT Action Plan, both in VPAs and EUTR. The need to increase the exchanges with these countries was recommended by participants.

Thursday, 22 June

Session II:

FLEGT processes (cont.) and illegal forest conversion

Moderator: Frances Seymour, World Resources Institute

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The conference on FLEGT continued for the morning of 22 June. During the first part of the session, the plenary heard summaries of discussions in the previous afternoon’s thematic breakout sessions. Additional feedback covered the following points:

• The government of Indonesia was commended for its efforts to protect forests, and establish good cooperation with NGOs and civil society.

• A call was made for law enforcement officials on the ground to be more closely involved, as stakeholders, in VPA processes.

• Some participants underlined that FLEGT wasn't just about legality, but about governance and progress on sustainable development goals, carbon emissions, biodiversity, and wellbeing of local communities and responsible management of forests by communities.

• It was mentioned that the demand-side private sector, e.g. EU private sector, had been overlooked in discussions, but has a considerable role to play.

• An example for successful public private partnership was given, where timber private sector and the Ministries of Finance and Agriculture in Colombia associate to apply VAT to all enterprises (formal and informal) and to run a campaign on buying legal timber.

• There were further calls for stakeholders to be granted more time to reflect on the work plan and provide feedback to the Commission.

• The European Commission acknowledged that many issues could not be addressed in sufficient detail to meet everyone’s interests, but that it was keen to promote an exchange of views and incorporate contributions into a work plan as far as possible.

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Illegal forest conversion

Moderator: Frances Seymour World Resources Institute

Speakers: Lea Turunen, EFI, EU FLEGT Facility

o Luca Perez, European Commission –DG ENVIRONMENT o Thiago Lima, Brazilian Forest Service o Silas Siakor, former Director of the Liberia-based Sustainable Development Institute

(SDI), Goldman Environmental Prize winner o Donaldo Allen, Chairman of National Confederation of Autochthonous Peoples of

Honduras (CONPAH) o Moray Mcleish, Asia Vice President for Corporate Responsibility and Sustainability,

Olam o Emmanuel de Mérode, Director of the Virungas National Park, Democratic Republic

of the Congo

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This session marked a transition from discussions of the FLEGT Action Plan to a consideration of the changing drivers of deforestation and the importance of illegal conversion of forests, especially to agriculture. The focus was on the actions that can be taken to address these drivers both within FLEGT and beyond.

Lea Turunen introduced the topic with a presentation of what constitutes forest conversion. Definitions of forest conversion are many. For example, converting a natural forest into a timber plantation, such as eucalyptus, is not always considered conversion, depending on country. Yet this may be a case of slash-and-burn agriculture.

Forest conversion happens at a large and small scale, and there may be a process of degradation before conversion occurs. Several steps of decision-making are usually involved in the process, such as a decision on land-use, on the right to harvest and cultivate, etc.

Conversion is not illegal by definition, although in practice it mayoften violate laws related to clearing forests without respect for due processes and land rights. Conversion is also a source of significant amounts of commercial timber: according to some estimations half of tropical timber traded comes from conversion.

As to the role of FLEGT and VPAs in forest conversion, FLEGT focuses on illegal logging and trade, within which VPAs work to improve forest governance, but not necessarily on broader issues of land governance. In some countries, this is addressed in the legality definition, but thus far all VPA countries have decided to include all timber resources as part of their VPA. New VPA processes are more directly addressing conversion: Vietnam includes land-use change requirements, as do Guyana, Honduras and Laos. But FLEGT is limited in how it can address the non-forestry drivers of conversion. For this, there exist complementary issues, such as land-use planning, land tenure reform, REDD+ and other measures.

Luca Perez said that stakeholder’ suggestions on how to best use FLEGT tools to better address forest conversion were welcome. At the same time, it stressed that besides FLEGT, the European Commission has other tools it can use to work on forest governance, and on incentives to producer

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countries to prevent further forest conversion and the EC was looking forward to receive the views from stakeholders also on other entry points and initiative that could complement FLEGT work.

Silas Siakor, Goldman Prize Winner in 2006 for his work on illegal logging, described how the Liberian government had decided against developing a regulation on forest conversion following consultation with the multi-stakeholder platform set up for the FLEGT VPA. It was felt that there were already clear rules on deforestation; a recent proposal to convert a forest to palm oil plantation and export the timber, although approved initially, was reviewed with civil society to determine that the timber would instead be destined for domestic consumption. The existence of a ‘very open space for this conversation to take place’ was critical, he said, although it was a challenge to ensure that existing timber concessions operate in a legal fashion.

Donaldo Allen reported that forest conversion was a difficult topic for indigenous people in Honduras. With no official recognition of their historical land rights, they have not been able to enter into discussions with the state regarding use of territorial resources. Now that CONPAH has joined groups involved in the FLEGT negotiations they are seeking commitments from the government to engage in dialogue and genuine consultation with indigenous people. “Our view is that a series of laws should be changed to reflect the interests of indigenous people and ensure we can be fully involved in the process,” he said.

In the eastern DRC, around Virunga National Park, weak governance has allowed forests in the protected area to be destroyed for charcoal production and agriculture. The resource extraction funds armed conflict. “There is a trade-off between local families´ immediate needs and protection of this land,” said Park director Emmanuel de Mérode. “So you have a fundamental problem of human injustice. What we need is a solution that goes to the heart of the economic problem and needs of the people.” The park’s solution has been to work with the private sector and civil society to transform illegal resource extraction into a formal economy, in tourism development, and renewable energy (hydropower) production. “1000 jobs are created for every MW of electricity, and 5-10% of these jobs are filled by ex-combatants. When people are empowered, they have the choice to control their future and move into productive society, away from armed groups.”

In the Amazon, the challenge for the government of Brazil is that much of the forest is on private land, said Thiago Lima of the Brazilian Forestry Service. Forest conversion is permitted only on a percentage of that land if it is on legal property. The rest (176 million hectares) is permanently protected, and the government has to inspect this land, according to legislation from 2012. The system uses satellite monitoring to check the status of forests on private land and monitor forest conversion. Brazil also works with the FAO on management of forest concessions that preserve the value of the forest and ensure that timber is legal and sustainable, while tackling deforestation particularly in the Amazon region.

Clear rules on forest conversion help the private sector, said Moray McLeish of Olam, an agri-business that works in 77 countries dealing with 45 commodities. As legal forest conversion is a sovereign issue, the company takes its own stance, and has a forest policy, stating notably that none of its products will come from high conservation value areas or peatland, and that their cultivation has fully respected free, prior and informed consent. It aims to increase productivity by improving technology for smallholders and reducing waste along the supply chain (in storage, transport and processing). “FLEGT has been a very effective approach,” he said. “Natural and managed landscapes must coexist for food and fibre production and ecosystem conservation. We need clear rules so everyone is clear where food can be grown and where forests should be left in a natural state.”

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Following the panel discussion, comments raised issues such as demographic pressure driving conversion, the need to develop sustainable energy production, the importance of applying a rights based approach and consider local people´s wellbeing, and the need for a clearer definition of conversion and for it to take into account considerations besides legality (notably biodiversity values, which are lost when natural forests are converted to plantations).

CLOSING OF THE FIRST PART OF THE CONFERENCE

Frances Seymour in a summary of the key highlights of the discussions during the FLEGT part of the conference stressed the continued commitment of most stakeholders to the FLEGT Action Plan's objectives and the recognition of the implementation challenges; the recognition that VPAs are the cornerstone of the Action Plan but that the EU should also continue to support FLEGT objectives through a range of instruments; the agreement that VPA success isn’t only linked to licensing, but also to wider achievements in terms of better forest governance; the acknowledgment that VPAs are resource-intensive requiring reinforced engagement; recognition that the EUTR is a central element of the Action Plan that has started changing the operators’ behaviour; and the conclusion that to fight forest conversion a rights-based approach must be taken.

Concluding this part of the conference on FLEGT, Roberto Ridolfi of DG DEVCO summed up key takeaway points: the contribution that the EU FLEGT Action Plan has made to building partnerships and transparency, but also the need for it to adopt more flexible approaches in the future. The question of resource provision remains a challenge, which could be addressed by more financing by Member States or by budget allocations in partner countries; also innovative financial engineering to encourage investment in the forest sector. He confirmed that the draft work plan would be translated into French and Spanish and that the European Commission would accept comments after the conference by e-mail5, and requested that these be specific and concrete.

5 Indeed the French and Spanish translations of the paper were uploaded in the website and until the deadline of 5 July several contributions were received.