First Class Crisis English FINAL

8/12/2019 First Class Crisis English FINAL

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ILLEGAL LOGGING RATESIN MOZAMBIQUE

In January 2013, EIA conducted ananalysis of the discrepancy betweenreported Chinese imports of Mozambicanlogs and sawn timber, and Mozambicanlicensed harvests and licensed exports,

to estimate illegal logging and timbersmuggling rates for the country. Theanalysis suggested that 48 per centof logging in Mozambique in 2012 wasin excess of licensed harvests, dueentirely to Chinese imports ofMozambican timber.

In February 2014, MozambiquesUniversity of Eduardo Mondlane (UEM)

issued a study estimating illegallogging in Mozambique that incorporatedfigures on domestic consumption.UEM aggregated estimated domesticconsumption volumes with globallyreported imports of Mozambican timber,

to produce a baseline for actualconsumption. This actual consumption taken as a proxy for harvested

volumes across the country wascompared to official licensed harvests.

UEM found that on average 66 per cent ofall logging between 2007 and 2012 wasunlicensed, amounting to 2,666,942 m3.2

Despite finding very high levels ofunlicensed harvesting, the UEM reportlikely under-estimates the volume ofillegal logging over the 2007-2012period. This is because UEM comparedactual consumption (reported global

imports plus domestic consumption)with licensed harvests, rather thanwith registered harvests.

"Licensed harvests" are volumes theGovernment permitted to be harvestednationwide in any one year, whileregistered harvests are those officiallyrecorded to have been actually removed

by licensees, within the scope of alarger licensed volume. Registeredharvests are therefore a moreappropriate measure of actual legalharvests by licensed operators.

Extrapolating UEMs statistics foractual consumption into 2013, andcomparing them to official Governmentrecords of actual registered harvests,

suggests that between 2007 and2013 an average 81 per cent ofharvesting was not registered and was

therefore illegal.3

The largest discrepancy occurred in2013, when 890,220 m3 in excess ofregistered harvests were consumed

through domestic consumption andexports, resulting in a 93 per centillegal logging rate.

The huge drop in registered harvestsin 2013, which dramatically raises theillegal logging rate above average, is

a result of numerous simple licenseholders reportedly ceasing operationsdue to being unable to comply with anew 2012 simple license law thatrequired more stringent harvestingobligations.4 It is clear most continuedand increased harvests regardless.

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THE SCALE OF THE CRISIS

FIGURE 1: ILLEGAL LOGGING CRISIS IN MOZAMBIQUE (See Annex for figures and sources)

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ABOVE:Felled tree in a forest

concession in Cabo Delgado,

northern Mozambique.

2013 saw a 93per cent rate ofillegal logging overreported harvests.

2007 2008 2009 2010 2011 2012 2013

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

Registered Harvests

Unregistered Harvest(Illegal)

Actual Consumption

Cubicmetres

76% 77% 79% 77% 78% 80% 93%

% OF HARVESTS UNREGISTERED (Illegal Logging Rate)


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DRIVERS OF ILLEGAL LOGGING

While domestic consumption has beengrowing steadily, and significantlyexceeded both licensed and registeredlegal harvests annually from 2007

to 2013, it is not the key driver oframpant illegal logging in

Mozambiques forests.

In 2009, globally registered importsof Mozambican logs and sawn timber

boomed, nearly doubling in a singleyear. Such trade has also risensignificantly faster than domesticconsumption since 2009 and hasexceeded domestic consumptionevery year since 2011.

Consequently, overall growth trendsfor actual consumption since 2007are shaped far more by Mozambiquesexport trade than by domestic use,

dramatically increasing illegality ratesand taking total required harvests wellbeyond sustainable limits.

CHINESE IMPORTSDOMINATE CONSUMPTION

Between 2007 and 2013, Chinese importsof Mozambican timber amounted to2,273,807 m3 accounting for an averageof 96 per cent of globally registeredimports of Mozambique wood. In some

years, China recorded 99 per cent oftotal globally recorded timber importsfrom Mozambique. Chinese demand isclearly responsible for nearly all timberexports from Mozambique, which are in

turn now responsible for the majority ofthe 93 per cent illegal logging ratecurrently blighting the country.

In 2012, the discrepancy betweenlicensed exports and reported Chineseimports suggested that 48 per cent ofMozambican timber imported into China

was smuggled out of the country.5

Updating this for 2013 shows a similartrend, with 235,500 m3, or 46 per cent oftotal Chinese imports from Mozambique,of 516,296 m3being unlicensed onexport, and therefore illegal.

Between 76 and93 per cent ofMozambican timberimported intoChina was illegal

at source.

FIGURE 2: CHARTING FOREST & TIMBER TRADE CRIME IN MOZAMBIQUE

(See Annex for figures and sources)

ABOVE:Trucks drive day and night to

Mozambique's ports.

2007 2008 2009 2010 2011 2012 2013

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

Registered Harvests

Licensed Harvest

Actual Consumption

Chinese Reported Imports

Global Reported Imports

Domestic Consumption

Lower AAC

Higher AAC

Licensed Exports

Volume

inCubicMetres


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However, with 76 per cent ofMozambiques 2013 export volumes

being produced in excess of reportedharvests, and factoring in the 93 percent illegal logging rate in Mozambique

the scale of illicit timber in this trade isamplified. It could be argued that between76 and 93 per cent of Mozambican timberimported into China was illegal at source.

Logging for the Chinese export markethas undoubtedly transformedMozambique's forestry sector into acompletely unsustainable crime scene in

the space of five years.

Chinas imports of Mozambican timberwill vastly increase during 2014. In thefirst quarter alone China importedUS$112 million of logs and sawn timber,a 37 per cent increase on 2013 firstquarter imports, and amounting to almost46 per cent of total 2013 imports.6

For the first quarter of 2014, as for thewhole of 2013, China has registeredMozambique as the biggest source of

African timber imports by value,demonstrating the countrys increasingimportance to Sino-Africa timber trade.

UNSUSTAINABLE TRADE

In July 2013, the Director ofMozambiques Forest Authority (DNTF),Simao Joaquim, was quoted as saying

that log or plank exports to the Asianand European markets is being carriedout in line with current legislation, and

that the unbridled exploration of forestresources will not affect the survival offorest species, because Mozambiquestill has 29,000 square kilometers of

virgin forest.7 Plenty of evidence

suggests that not only is most tradeillegal, but key commercial speciesare fundamentally threatened byunsustainable trade levels on top ofalready high domestic consumption.

Domestic consumption in Mozambiquehas never exceeded the Lower Annual

Allowable Cut (lower AAC) of 515,000m3. The AACs set boundaries for thesustainable harvests of Mozambiquescommercial timber, beyond which thesurvival of forests and commercialspecies are threatened.

By contrast, in 2013 global imports ofMozambican timber alone exceeded thelower AAC, as predicted in EIAs

January reportFirst Class Connections,due almost entirely to rampant growthin shipments to China.

Similarly, while actual consumption(domestic consumption and globalreported imports) has exceeded theLower AAC since before 2007, in 2009it surged above the Upper AAC (set at640,000 m3) in just one year, as a directresult of a boom in Chinese imports.

Actual consumption has significantlyexceeded the upper AAC since 2010.

Since 2007 actual consumption exceededthe lower AAC by 30 per cent and theupper AAC by 11 per cent. 2013 saw ahuge 46 per cent of harvests for actualconsumption in excess of the lower

AAC, and 34 per cent above even thehigher AAC.8

If Mozambique were to stop exports butmaintain domestic consumption harvests

would immediately fall below both theupper and lower AACs. However, ifMozambique were to stop all domesticconsumption while allowing continuedexports (an untenable proposition),harvests would remain above the lower

AAC, and likely exceed the upper AACwithin two years.

These facts clearly point to export

trade as the primary cause ofunsustainable logging in Mozambiqueover the past six years, with China in

turn virtually the only driver of theseincreased exports.

The export tradeis the primarycause ofunsustainablelogging in

Mozambique,due almostentirely to China.

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TOP:Chinese investment billboard

in Beira Mozambique.

ABOVE:Log truck heading south along

a highway in Cabo Delgado,

northern Mozambique.

LEFT:Port of Beira.

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KEY SPECIES UNDER ATTACK

UEM estimated that 85 per cent ofurban domestic consumption focuses ononly three species: Chanfuta, Umbila and

Jambirre.9This matches testimony EIAinvestigators heard from traders, whosuggested that 90 per cent of exports toChina consisted of just five species,Chanfuta, Umbila, Jambirre, Mondzo andPau Ferro.10All of these are classified asfirst class species, meaning exportsof these logs are banned. Around

10 per cent of Chinas 2013 importsfrom Mozambique were likely PauPreto logs, classified as Precious woodsin Mozambique.11

That 85-90 per cent of actualconsumption is focused primarily ononly 5-6 species raises obvious concerns

that AACs for these have been massivelyexceeded over the past seven years. EIAanalysis suggests that up to 2.2 million m3

of these five species have been harvestedover and above their combined AACs,

threatening their long-term viability.12

The Mozambican Governments 2007Forest Inventory estimated that thecommercially available standing stockof First and Precious class species (asclassified by the girths of specific species)

was 31,600,000 m3.13

Between 2007 and 2013, actualconsumption (domestic consumption

and global reported imports) rose byan average of 8 per cent per annum.Assuming total consumption continuesgrowing at 8 per cent per annum, thestanding stock of first and preciousclass species would be completelylogged out by 2029, in just 15 years.Clearly, growth of consumption at ratesseen in the past five years would bedevastating for key species andMozambiques forests more broadly.

Up to 2.2 millionm3 of five keycommercial specieshave been harvestedover and above

their combinedAACs since 2007.

Booming Chinese

demand will seeKey species loggedout in 15 years.

FIGURE 3: UNSUSTAINABLE LOGGING: ESTIMATED HARVESTS (85% OF CONSUMPTION) OF CHANFUTA,

JAMBIRRE, MONDZO AND PAU FERRO COMPARED TO THEIR COMBINED AAC, IN m3

FIGURE 4: FIRST AND PRECIOUS CLASS SPECIES STANDING STOCK (2007)

DEPLETION PROJECTION AT 8% PER-ANNUM CONSUMPTION GROWTH

ABOVE:Log yard in Beira with all key

commercial species.

2007 2008 2009 2010 2011 2012 2013

900,000

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0

Estimated harvests/consumption of Chanfuta,Umbila, Mondzo, Jambirre & Pau Ferro

Combined AAC for Chanfuta, Umbila,Mondzo, Jambirre & Pau Ferro

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

-5,000,000

Cubicmetres


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OFF DUTY FORESTGOVERNANCE

Illegal logging and timber smuggling iscosting Mozambique vital developmentrevenues through lost duties and taxes.

No Government data on tax collectionfrom either timber harvests or exportsis published, but under Mozambicanlaw, exploration taxes are to be leviedagainst volumes of timber cut bylicensed operators, and export taxesagainst volumes exported.

EIA estimates that in 2012 Mozambiquelost almost US$30 million in uncollectedexploitation and export taxes dueentirely to timber smuggling to China.14

However, this sum is calculated purelyon the degree to which Chineseimports were unlicensed on export byMozambique, and how import volumesexceeded licensed harvests.

On the basis that exploration taxes arepaid against registered harvests (theGovernments record of what was cut

by licensed operators), and working onthe more comprehensive estimates ofunregistered, unlicensed and illegallogging detailed above, EIA nowestimates that between 2007 and 2013Mozambique potentially lost US$102million in exploration taxes alone.15

A further US$44 million in timber export

taxes was also likely lost to the state

between 2007 and 2013 from unlicensedglobal exports the vast majority of

which were illegally shipped to China.16

While such taxes could not have beenlegitimately collected because theactivities taxed would be illegal(unlicensed and unreported logging, and

timber smuggling), the analysis showsthe degree to which forest and tradecrimes deprive the Mozambican peoplenot just of future resources but of vitalfuture revenues.

The lost US$146 million could havecovered 30 years of MozambiquesNational Forest Programs law enforcementsystem, based on current budgets.17

Clearly the existing enforcementprogram is desperately inadequate.

Alternatively, these tax losses wouldcover almost twice the 2014 state

budget for poverty alleviation socialprograms,18 in what is now the secondleast developed nation on Earth.19

The loss of exploration duties isparticularly galling. The 2002 ForestRegulation determines that 20 per centof exploration taxes should go to poorrural communities, with the aim ofincentivising community foreststewardship and promoting communitydevelopment. But the rate of unregisteredharvests suggests that between 2007and 2013, rural communities inMozambique lost a potential

US$20 million in taxes due to them.

Mozambiquelost US$146 millionin taxes due toillegal loggingand timber

smuggling since2007.

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BELOW:Working for peanuts:

Mozambique loses millions in

tax to the detriment of poor

communities.

BOTTOM:Workers stuff illegal flitches into

containers destined for China.


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Case Studies in Continued Crime

FAN SHI TIMBERIn 2013, EIA revealed how the company Fan Shi illegallyexported first class logs to China by paying bribes.35

Fan Shi Timber is part of a group of family-run businessesowned by three relatives from Fujian; Fan Guoyong, FanJinglin and Fan Jinghui. In September of 2013, EIAinvestigators phoned Fan Shis Chinese hub and were onceagain offered illegally exported Mozambican Umbila logs.

SENLIAN

EIAs 2013 report detailed an undercover meeting withMr Xu from Senlian Corporation during which he mentioneda previous shipment of illegal logs being detained and plansto resume such illicit exports in 2013.36 In a September 2013phone call by EIA, staff of Shanghai Senlian Timber IndustrialDevelopment Co Ltd said that their timber coming out ofMozambique was half illegal and offered EIA 20cm thickWenge flitches - square logs in violation of MinisterialDiploma no 142/2007.37

PINGOS MARINHA & DONGGUAN YETONG TRADINGEIAs 2013 report detailed how Chinese firm Pingos Marinhacircumvented Mozambiques log export ban by adding simplerelief carvings to the sides of oversized wood blocks andreclassifying them as finished products. The companyshipped nearly 1,000 containers of raw timber a year in thismanner to its Guangdong-based affiliate Dongguan YetongTrading.38 During a phone call with Dongguan Yetong Tradingin September 2013, company staff boasted how they are stillable to smuggle banned Mozambican Umbila logs hidden incontainers of sawn timber.

XINFEIYUANIn September 2012, EIA investigators met with MozambiqueFirst International Development (MOFID), which boasted thatit was one of the few firms to still be able to ship logs toChina, due to high level connections. MOFID had its licensesuspended in Mozambique for one year in June of 2013 forattempting to smuggle illegal timber to China.39 Despite thissuspension, during a phone call by EIA investigators toMofids affiliate in China in September 2013, Xinfeiyuanimplied that it was still able to import illegal Pau Ferro logs

into China.

FOSHAN BOYIDA IMPORT AND EXPORT CO LTDIn 2009 a Chinese-owned company in Mozambique calledKings Way was caught attempting to smuggle illegal timberto China and subsequently fined.40 In 2013, Kings Way wascaught smuggling illegal timber from Mozambique again,for which it lost its license to operate for one year.41

Kings Way belongs to Guangdong-based trading company BoYi Da Group, with Foshan Boyida Import and Export Co Ltdfunctioning as the groups headquarters in China. Duringa phone call with Foshan Boyida in September 2013, stafftold EIA investigators the firm was still able to importprohibited Mozambican Wenge and Mondzo logs intoChina, despite Kings Way losing its license to operatein Mozambique.

REPEAT OFFENDERS

In September 2013, EIA investigators posing as buyers contacted sellers of Mozambicanfirst class logs in China already exposed in EIAs January 2013 report. The findings revealthat illegal first class timber is still being exported from Mozambique by these firms.

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FOREST GOVERNANCE CHAOS

ABOVE:Stranded logs in a village in Cabo

Delgado, northern Mozambique.

SECOND CLASS ENFORCEMENT

In July 2011, the Director of the ForestAuthority (DNTF) of Mozambiquevisited China and met with seniorofficials of the Chinese State Forestry

Administration (SFA) to agree a

Memorandum of Understanding (MoU)on joint objectives toward sustainableforest management.20 Priority co-operation

themes included law enforcement,technical and financial capacity buildingof Chinese companies owning forestconcessions in Mozambique, and thedevelopment and sharing of databasesabout logging and timber trade.21

However, the agreement was not signedand, as of October 2013, was reportedlystill under discussion and due to besigned by the end of that year.22

No announcement of the MoU havingbeen signed has since been made.

Following the publication of EIAs 2013report, international donors, and inparticular the Finnish Embassy inMozambique,23 sought credible responsesfrom the Mozambique Government to

the allegations made. This led the PublicProsecutors Office to announce anofficial investigation into the involvementof the current and former Ministers of

Agriculture in the illegal timber trade .24

Both issued denials.25 Mozambican civilsociety reacted with scepticism, callingon the investigation to be free of politicalinterference26 as the Prosecutors

Office has been roundly criticised forbeing ineffective and politically biased.27

The remaining companies exposed byEIA were to be investigated by the

Department of Wildlife and Forests(DNTF) and the Ministry of Agriculture.

In May 2013, the Chinese SFA andMozambiques DNTF, organised a

workshop for a number of Chinesecompanies, including some featured inEIAs report, such as Mofid and PingosMarinha.28The purpose of the workshop

was to remind participants thatMozambican forest laws should be complied

with, and to introduce participants tothe SFAs Guide on SustainableOverseas Forest Management andUtilization by Chinese Enterprises.29

The SFA Guidelines, which arevoluntary and unenforceable, stipulatethat Chinese companies operatingabroad should comply with nationallegislation and promotes self-regulationof the industry rather than directintervention by the Chinese Governmentin infractions committed by itscompanies abroad.30

Just one month on from the event, Mofidand other participating companies werecaught illegally exporting first class logs

to China as usual, precisely what theworkshop had sought to prevent.31

To its credit, in July 2013 theMozambican Government announced

that exploration licenses for 33 nationaland international forestry companieshad been cancelled for the 2013 season,

while a further 44 were issuedwarnings due to having committed avariety of irregularities, with fourcompanies being banned outright fromoperating in Mozambique.32

An MoU onsustainable forestmanagementbetweenMozambique andChina still has

not been signed,despite years ofdiscussion.


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However, for attempting to smuggle20 containers of timber in June of 2013

through the use of front companies,(Henderson International, Jian Internationaland Kam Wam,33 Mofid had its licensesuspended for merely one year. This isa minor inconvenience for a company

that has consistently committedillegalities over a 10-year period.34

Clearly, the voluntary Chineseguidelines provided little deterrence

to repeat offenders. Chinas failureto impose penalties on roguecompanies, or investigate thosesourcing illegal timber from thesuspended operators in Mozambique,contrasts with the Mozambicanauthorities laudable, albeit inadequate,attempts at enforcement.

CAPACITY, COMPLIANCE

& CORRUPTION

The Permanent Secretary of the Ministryof Agriculture, Daniel Clemente, recentlyannounced that only 500 forest officerspolice the forest management system,

way below the minimum 2,000-3,000officers required.42

Moreover, a recently published DNTFaudit of legal compliance across 37sampled forest concessions in fournorthern provinces revealed that inall 37 the supposedly mandatory

management plans were not approveduntil 12 months after the approval ofconcession contracts.43Article 25 of the2002 Forests and Wildlife Regulationclearly stipulates that managementplans must be approved prior to

concession contracts, raising theobvious question as to how concessioncontracts were issued by Governors

without approved management plans.44

A vital factor is explaining the vastscale of illegal logging in Mozambiqueis the prevalence of corruption in

the sector.

In June 2014, Mozambique's CentralOffice for the Fight Against Corruption(GCCC) finally reported the findingsof its investigation into two Chinesecompanies exposed in EIAs 2013FirstClass Connections report, namely MOFIDand Senlian. The investigation wasapparently the result of the donor callsfor such a probe.

While the GCCC investigationconfirmed that both companies hadillegally exported logs and evaded taxes,

it reportedly found no evidence thatMozambican citizens held shares in thecompanies. The investigation deemedinvolvement of officials in illegalexports beyond its scope. EIA hadreported links between Jose Pachecoand MOFID, and between Ex-Ministerof Agriculture Thomas Mandlateand Senlian.45

Other influential members of thepolitical elite are also alleged to beinvolved in the timber sector. A June2013 Africa Confidential article reported

that Chinese timber firm Casa Bonita

was found to be linked to former headof the Armed Forces, General LagosLidimo, and another powerful General -former chief of Defence in Zambezia,Bonifacio Gruveta.46

Access to information is extremelylimited in Mozambique. While a draftfreedom of information law wassubmitted to Parliament for debate andenactment in 2005,47 its progress hassince stalled, seemingly held hostage to

the whims of those with direct interestsin perpetuating opacity.

INCREASING ISOLATION

The ongoing and increasing smugglingof logs and sawn timber to China,combined with domestic consumption,generates such high rates of illegalityin Mozambiques forestry sector that

virtually all timber exports must beconsidered illegal. This is increasinglyisolating Mozambique from much-neededinvestment in industry, governancecapacity and conservation.

Such realities are directly underminingGovernment efforts to increase exportsof value added timber products, in turndiscouraging responsible companiesserving other high-value markets from

EIA

The voluntaryChinese guidelinesprovided littledeterrence torepeat offenders.


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investing in the countrys forestry andtimber sectors.

For example, the Spanish timber tradefederation, AEIM, has advised itsmembers to avoid timber fromMozambique for risk of it constitutinga legal breach of the new EuropeanUnion Timber Regulation (EUTR).48

EIA research shows that betweenthe entry into force of the EUTR inMarch 2013 and May 2014, France,Germany, Italy, Sweden, theNetherlands, Czech Republic andPoland have imported between thema total of US$10,292,224 of logs andsawn timber from Mozambique. Franceand Germany imported 50 per cent and42 per cent of total EU importsrespectively.49 Given the 93 per centrate of illegal logging for 2013, little tonone of this timber could have complied

with due diligence requirements builtinto the EUTR.

Meanwhile, international donorsdismayed by the MozambicanGovernments response to the rate ofcorruption and illegality in the forestsector in Mozambique are reconsidering

their forest governance aid provision.50

The enormous rate of illegal loggingand timber smuggling also puts intodoubt the viability of any incipientREDD+ efforts. While the World Banksapproval of the countrys ReadinessPreparation Proposal in March 2012provides the opportunity for

Mozambique to access USD$3.8 millionto establish a REDD+ strategy,51 untilwidespread crime and corruption areeliminated, it seems hard to see howany strategy could succeed.

CONCLUSIONSMozambiques forestry and timber sectors areplagued by crime.

Unprecedented levels of illegal and unsustainable exploitation arefacilitated by poor law enforcement, endemic corruption, a lack oftransparency and civil society participation, insufficient funding andincompetent leadership.

With no sign of illegal exports decreasing, China continues to freelyreceive illegal timber from Mozambique and Chinese companies inMozambique continue illegal practices.

Mozambiques forests are fast being gutted of commercial timber.

Urgent and immediate reforms are required to stem this growing tideof illegality and environmental mismanagement. Only concerted and

coordinated efforts involving all stakeholders the Chinese andMozambican Governments, international donors, forest dependentcommunities and civil society can stem the tide.

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Mozambican rural farmer

walking along a road in the

heavily forested region of

Cabo Delgado.


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The Mozambican Government should:

Immediately institute a moratorium on all timber exportsuntil a new forest inventory has been conducted and

domestic consumption is properly understood, betterregulated and brought into line with both sustainableand legal limits

Conduct a new forest inventory and redefine annualallowable cut volumes accordingly

Significantly improve monitoring and enforcement oftimber transports at strategic checkpoints, through bothfinancial incentive schemes for law enforcers and amonitoring programme by independent third parties

Institute a moratorium on new concessions and simplelicenses

Revoke all forest licences found operating withoutapproved management plans and reduce harvestvolumes in those that remain

Make forest crime a criminal rather than a civil offence

Institute a wide-ranging and independent investigationinto corruption and conflicts of interest in the forestsector

Replace the current leadership of the Ministry ofAgriculture and the DNTF

Ensure a freedom of information law is approved andinstituted in ways that significantly increase

transparency in the forest sector

Significantly increase civil society participation in forestsector governance and decision-making, includingproviding space and mandates for third party scrutinyof forest management practices.

The Chinese Government should:

Prohibit the import of illegal timber into China, andenforce that prohibition

Make compliance with Chinas Guide on SustainableOverseas Forest Management and Utilization by ChineseEnterprises mandatory, and incorporate and enforcedissuasive penalties for noncompliance

Punish Chinese companies that source timber fromcompanies illegally exporting Mozambican timberto China.

International donors should:

Ensure any forest sector aid is dependent on a completerestructuring of forestry in Mozambique

Direct all support in the next few years towards a newforest inventory and forest law enforcement.

The European Commission and the CompetentAuthorities of France, Germany, Italy andPoland should:

Investigate whether imports of timber from Mozambiquesince March 2013 complied with the due diligencerequirements of the EUTR

Ensure any future shipments into the EU fromMozambique comply with the EUTR, or are restrictedfrom the European market

Ensure any incipient negotiations on a possibleVoluntary Partnership Agreement with Mozambiquefocus primarily on bringing forestry into linewith sustainable limits, taking into accountdomestic consumption.

RECOMMENDATIONS


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1 . Environmental Investigation Agency (EIA), First ClassConnections, Log Smuggling, Illegal Logging, andCorruption in Mozambique, 01/2/2013,http://eia-international.org/wp-content/uploads/EIA-First-Class-Connections.pdf

2 . Universidade de Eduardo Mondlane, Assessment OfHarvested Volume And Illegal Logging In MozambicanNatural Forest, 31/3/2014. http://www.illegal-logging.info/content/assessment-harvested-volume-and-illegal-logging-mozambican-natural-forest

3 . Universidad de Eduardo Mondlane, Assessment OfHarvested Volume And Illegal Logging In MozambicanNatural Forest, 31/3/2014 (Actual registered harvestfigures were taken from the Annual Reports of theDireco Nacional de Terras e Florestas, Relatrios deBalano Anual de Terras, Florestas e Fauna Bravia 2007 2013. Domestic consumption figures for 2013 wereextrapolated from UEMs data by taking an averagepercentage growth rate of domestic consumption ineach year over the 2007-2012 period, and assumingthat average growth rate for 2013. The 2013 Globalimport data was extrapolated using the same method,which compared favourably with actual Chineseregistered imports for 2013.

4 . Republica de Mocambique, Ministerio da Agricultura,Balanco Annual do PES, 2013, p 31-32

5 . Environmental Investigation Agency (EIA), First ClassConnections, Log Smuggling, Illegal Logging, andCorruption in Mozambique, 01/2/2013, page 6http://eia-international.org/wp-content/uploads/

EIA-First-Class-Connections.pdf6 . Global Trade Atlas, 2013-20147. Clubofmozambique, Mozambique still has 29,000

square kilometres of virgin forest, 2013-07-30,http://www.clubofmozambique.com/solutions1/sectionnews.php?secao=business&id=29441&tipo=one

8. Comparison of statistics provided by the Universidadede Eduardo Mondlanes report on the rate of legal andillegal logging between 2007-2012 (with an additionalwood balance estimate by EIA relating to total legaland illegal logging for 2013, by using the averagegrowth rate of domestic consumption in UEMs reportfor each year between 2007-2012, and applying that to2013) compared to the Annual Allowable Cut of theForest Authoritys Forest Inventory (Direccao Nacionalde Terras e Florestas, Departamento de Inventario deRecursos Naturais, Inventario Florestal Nacional, 2007)

9 . Universidade de Eduardo Mondlane, Assessment ofHarvested Volume and Illegal Logging in MozambicanNatural Forest, 31/3/2014

10. Environmental Investigation Agency (EIA), First ClassConnections, Log Smuggling, Illegal Logging, andCorruption in Mozambique, 01/2/2013,http://eia-international.org/wp-content/uploads/EIA-First-Class-Connections.pdf

11. Global Trade Atlas, (Chinese imports of Hongmu Logsare captured in HS Code 44039930. Pau Preto is theonly species available in Mozambique included in thelist of 33 species covered by HS Code 44039930).

12. The figures were reached by comparing 85% of thetotal actual consumption figures provided for in theUEM report between 2007-2012 (plus additional EIAestimates for 2013) to the Official Mozambican ForestInventorys Annual Allowable Cut for the mentionedspecies (Direccao Nacional de Terras e Florestas,Departamento de Inventario de Recursos Naturais,Inventario Florestal Nacional, 2007)

13. 2007 Forest Inventory: Direccao Nacional de Terras eFlorestas, Avaliao Integrada de Florestas emMoambique, Inventrio Florestal Nacional, Abril 2007.Minimum girth diameters are specified in the 2002Forest Regulation, Decree 12: 2002, Annex 1.

14. Environmental Investigation Agency (EIA), First ClassConnections, Log Smuggling, Illegal Logging, andCorruption in Mozambique, 01/2/2013, page 6http://eia-international.org/wp-content/uploads/EIA-First-Class-Connections.pdf

15. Exploration tax for 2007 to 2012 was worked out usingthe tax amount mentioned in: Boletim da Republica deMocambique 6 de Junho de 2002, 1 Serie Numero 22,Decreto no 12/2002, Regulamento da Lei de Florestas eFauna Bravia, while exploration tax for 2013 wasworked out using the updated tax amount in DiplomaMinisterial no 293/2012. (In the case of the explorationtax, we multiplied the relevant tax per cubic meter bythe volume of illegally cut timber to work out theyearly rate, and converted it to USD using historicalexchange rates from Meticais to USD found inOanda.com)

16. The VAT timber export tax was worked out using theVAT tax rates in the Boletim da Republica, 1 Serie Numero 32, Lei no 7/2010: Cria a Taxa deSobrevalorizacao da Madeira, abreviadamentedesignada TSM. This tax law requires timber exporters

to pay 20 per cent on the f.o.b. price on log exports,and 15 per cent on sawn timber. For the VAT tax lossamount we multiplied the discrepancy betweenMozambiques licensed exports of logs and sawn timberand Chinese imports of Mozambican logs and sawntimber by the average of officially collected prices thatexporters are selling their sawn timber for (this being460USD per cubic meters taken from informationprovided by Sam Lawson, independent ForestConsultant), and then divided this figure by 15% foreach relevant year.

17. Environmental Investigation Agency (EIA), First ClassConnections, Log Smuggling, Illegal Logging, andCorruption in Mozambique, 01/2/2013,http://eia-international.org/wp-content/uploads/EIA-First-Class-Connections.pdf

18. Ministrio Das Finanas, Oramento Cidadao, 2014, (theSocial Program budget for 2014 amounted to2,671,000,000 Meticais, equivalent to USD 84,932,928using http://coinmill.com for exchange rates)http://www.dno.gov.mz/docs/OE2014/Orcamento_3edicao_Ultima_Versao_FINAL.pdf

19. United Nations Development Program, HumanDevelopment Report 2013,http://hdr.undp.org/sites/default/files/reports/14/hdr2013_en_complete.pdf

20. World Wildlife Fund, Chinese and MozambiqueGovernments Support Unique Training for CompaniesOperating Oversees, 31/5/2013,http://wwf.panda.org/?uNewsID=208866

21. World Wildlife Fund, Chinese and MozambiqueGovernments Support Unique Training for CompaniesOperating Oversees, 31/5/2013,http://wwf.panda.org/?uNewsID=208866

22. Mozambique, China take first steps to curb illegallogging, Thomson Reuters Foundation, October 2013,http://www.trust.org/item/20131014084115-pbqru/

23. Ministry for Foreign Affairs for Finland, Finlanddemands explanations regarding timber smuggling fromMozambique to China, 2/15/2013,http://formin.finland.fi/public/default.aspx?contentid=270185&contentlan=2&culture=en-US

24. Mocambique para todos, PGR investiga Ministro daAgricultura por contrabando de madeira, 15/02/2013,http://macua.blogs.com/moambique_para_todos/2013/02/pgr-investiga-ministro-da-agricultura-por-contrabando-de-madeira.html

REFERENCES


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25. Clubofmozambique, Agricultures minister deniesinvolvment in timber smuggling, 2013-04-22,http://www.clubofmozambique.com/solutions1/sectionnews.php?secao=mozambique&id=28382&tipo=one

26. Sapo Noticias, ONGs exigem independncia nasinvestigaes ao contrabando de madeiramoambicana, 24/4/2013, http://noticias.sapo.mz/lusa/artigo/16048587.html

27. Liga dos Direitos Humanos, A Corrupo no Sistema deJustia em Moambique, http://www.dhnet.org.br/dados/cartilhas/dh/cplp/mocambique.html

28. World Wildlife Fund Mozambique, Empresas Chinesasque operam em Moambique devero cumprir com alegislao local para gesto sustentvel de recursosflorestais, 4/6/2013, http://www.wwf.org.mz/?1240/Empresas-Chinesas-que-operam-em-Moambique-devero-cumprir-com-a-legislao-local-para-gesto-sustentvel-de-recursos-florestais

29. World Wildlife Fund Mozambique, Empresas Chinesasque operam em Moambique devero cumprir com alegislao local para gesto sustentvel de recursosflorestais, 4/6/2013, http://www.wwf.org.mz/?1240/Empresas-Chinesas-que-operam-em-Moambique-devero-cumprir-com-a-legislao-local-para-gesto-sustentvel-de-recursos-florestais

30. State Forest Administration of the Peoples Republic ofChina, A Guide on Sustainable Overseas ForestsManagement and Utilization by Chinese Enterprises,05/06/2010, http://www.forestry.gov.cn/portal/main/s/224/content-401396.html

31. Mocambique para todos, Apreendidos em Pembacontentores com madeira, 26/07/2013,http://macua.blogs.com/moambique_para_todos/2013/07/apreendidos-em-pemba-contentores-com-madeira.html

32. Moz Maniacos Noticias, Moambique dispe de 29milhes de ha de floresta intacta, 23,7,2013,http://www.noticias.mozmaniacos.com/2013/07/mocambique-dispoe-de-29-milhoes-de-ha-de-floresta-intacta.html#


34. Mocambique para todos, Madeireiros contrariados comproteccionismo de alguns, 15/01/2011,http://macua.blogs.com/moambique_para_todos/

2011/01/madeireiros-contrariados-com-proteccionismo-de-alguns.html



37. Ministerio da Agricultura, Diploma Ministerial no142/2007 de 14 de Novembro, Article 1,http://www.atneia.com/cgi-bin/pbox_wxis.exe?IsisScript =atneia/pesquisaf.xis&formato=1&contador=10&expressao1=ID=17208/%28990%29&details=1&login=IESE&tipo=4



40. Agencia de Informacao de Mocambique, Timbercompanies fined over illegal exports, January 9, 2009,

http://allafrica.com/stories/200901090867.html41. Mocambique para todos, Apreendidos em Pemba

contentores com madeira, 26/07/2013,http://macua.blogs.com/moambique_para_todos/2013/07/apreendidos-em-pemba-contentores-com-madeira.html

42. Moambique para todos, Florestas e fauna bravia:Exiguidade de recursos compromete fiscalizao,14/03/2013, http://macua.blogs.com/moambique_para_todos/2013/03/florestas-e-fauna-bravia-exiguidade-de-recursos-compromete-fiscaliza%C3%A7%C3%A3o.html

43. Direco Nacional de Terras e Florestas, Avaliao doDesempenho das Concesses Florestais emMoambique, May 2013, p 42

44. Direco Nacional de Terras e Florestas, Avaliao doDesempenho das Concesses Florestais emMoambique, May 2013, p 42

45. Mozambique: Anti-Corruption Office Confirms IllegalTimber Exports, 19 June 2014, All Africa.http://allafrica.com/stories/201406191701.html

46. Africa Confidential, Timber rackets, Gas booms, 7thJune 2013, Vol 54 no 12

47. IBIS, Lei de Direito Informao aguardada comexpectativa, 1/4/2014 http://ibismozambique.org/articles/lei-de-direito-informacao-aguardada-com-expectativa/

48. AEIM hebt Risikorating fr drei afrikanische Staaten an,02/07/2013, http://www.fordaq.com/fordaq/news/AEIM_EUTR_Holzhandelsverordnung_33305.html

49. UNCOMTRADE data from March 2013 to May 2014,http://comtrade.un.org/

50. Development Today, Finnish aid to Mozambique plaguedby corruption, 08/5/2014, http://www.development-today.com/magazine/2013/dt_12/news/finnish_aid_to_mozambique_plagued_by_corruption

51. Forest Carbon Partnership Facility (FCPF), ReadinessPreparation Proposal (RPP) for Country: Mozambique,March 2012, http://www.forestcarbonpartnership.org/sites/forestcarbonpartnership.org/files/Documents/PDF/Mar2012/Mozambique_RPP_March07_2012rev2-FINAL.pdf

52. Universidade de Eduardo Mondlane, Assessment ofHarvested Volume and Illegal Logging in MozambicanNatural Forest, March 2014, with EIA extrapolation for2013 based on average growth rates for previous years.

53. Direco Nacional de Terras e Florestas, Relatrios deBalano Anual de Terras, Florestas e Fauna Bravia 2007

201354. Ibid.55. Direco Nacional de Terras e Florestas, Relatrios de

Balano Anual de Terras, Florestas e Fauna Bravia 2007 2013

56. Global Trade Atlas, using a RWE conversion rate of80% for 4407

57. Universidade de Eduardo Mondlane, Assessment OfHarvested Volume And Illegal Logging In MozambicanNatural Forest, March 2014, with EIA extrapolation for2013 based on average growth rates for previous years.

58. Ibid (UEM 2014)59. 2007 Forest Inventory: Direccao Nacional de Terras e

Florestas, Avaliao Integrada de Florestas emMoambique, Inventrio Florestal Nacional, Abril 2007.Minimum girth diameters are specified in the 2002Forest Regulation, Decree 12: 2002, Annex 1.

60. Ibid.


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