“Verifying origin of wooden products”

Global Forestry Services Inc (GFS) provides assessment and monitoring of manufacturers and traders under the Wood Tracking Program (WTP) based on a formal Chain of Custody (COC) system to track the material used in wood products to a verified legal forest or plantation area. The objective of GFS Wood Tracking Program is to provide due care for the Lacey Act and due diligence to meet EU timber trade regulations.

The Wood Tracking Program :

• Provides verification of a structured chain of custody system to tracks raw material from forest origin through processing and trade.
• Provides evaluation of forest or plantation areas for legal compliance.
• Ensure that wood products are derived from raw material that is legally harvested from forest or plantation areas based on both risk assessment and field verification.

“GFS Wood Tracking Program ensures that the products come from verified legal sources to provide due diligence under the EU Timber Trade regulations or due care under the Lacey Act.”

EU Timber Trade Regulations :

The EU has recently established regulations in December 2010 on the import and trade of timber and wood products that will be fully operational by March 3, 2012. The regulation prohibits the placing on the EU market of illegally harvested timber and wood products derived from such timber.

In absence of FLEGT Licensed Timber under VPA, the regulations require due diligence evaluation for legality of timber and wood products. Due diligence is based on 3 elements inherent to risk management: access to information; risk assessment and mitigation of the risk identified. The EU definition of legality is based on national regulations associated with harvesting timber, processing, trade and export of timber and wood products. Thus, the EU Timber Trade Regulations is based on compliance to regulations in both the forest and through the manufacture and supply chain.

Lacey Act (USA) :

On May 22, 2008, the U.S. Congress passed an amendment to the Lacey Act banning commerce in illegally sourced plants and their products – including timber and wood products. Violation of the Lacey Act occurs when a plant is taken, harvested, possessed, transported, sol or exported in violation of an underlying law in any foreign country or the USA then subsequently traded in USA interstate or foreign commerce – thus, one must “import, export, transport, sell, receive, acquire or purchase.

Under the amended Lacey Act, importers are required to submit a declaration for certain plants and plant products. The declaration must contain, among other things, the scientific name of the plant, value of the importation, quantity of the plant and name of the country from which the plant was harvested. Violations of the Lacey Act provisions may be prosecuted in three basic ways :  (1) Civil-monetary penalties;  (2) Criminal-fines,penalties and potential incarceration; or (3) Forfeiture-dispossession of the plant, fish or wildlife in question.

Basic elements of illegality of forest products include :

• theft of plants.
• taking plants from an officially protected area such as park or reserve.
• taking plants from other types of “officially designated areas” that are recognized by a country’s laws and regulations.
• taking plants without, or contrary to, the required authorization.
• failure to pay appropriate royalties taxes or fees associated with the plant’s harvest, transport or commerce.
• failure to comply with laws governing export or trans-shipment such as export log bans.

How to comply with the Lacey Act?

Importers of timber and wood products must demonstrate due care which is basically exercising the requirements discovered under due diligence to protect or mitigate exposure from identified risks. The most practical way to undertake due care is to utilize independent systems for verification of legality and full certification.

The GFS Wood Tracking Program is designed to ensure that wood products can be verified to a legal forest or plantation area based on risk assessment and/or field verification of origin of raw material.   Companies participating in the GFS WTP must have a formal Chain of Custody system to track material from purchasing through production and sale of wood products.

Structure of the Wood Tracking Program Chain of Custody Requirements: The Chain of  Custody standard used by GFS WTP has been derived from the FSC standard that requires companies to have formal procedures track raw material purchased through production and sales within a given company along a clearly defined supply chain. The GFS WTP requirements for Chain of Custody are listed in WTP-005 that forms the standard used to evaluate a company’s ability to purchase and trace raw material through production and sales of finished goods based on environmental status.  All material traded under the GFS WTP must be 100% legal origin (VLO) or full legal compliance (VLC).

Responsible Purchasing & Legal Verification:

Companies that want to participate in the GFS WTP must have a formal risk assessment of all suppliers to evaluate legal origin of raw material. All suppliers that are NOT considered low risk must be verified legal based on field visits to the site. Legality based on clearly defined rights to harvest and payments of associated fees, royalries, taxes, etc. is referred to as Legal Origin (VLO), while verification of full Legal Compliance (VLC) includes evaluation of compliance to national and local regulations of activities associated with harvesting, transport and sale of raw material.

GFS requirements for Legality are defined in document LVS-005. GFS will evaluate the traceability of forest products from forest management organizations that can demonstrate traceability of material to the forest area with legal license to harvest, payment of all applicable fees, royalties and taxes, compliance with national and local regulations (forestry, environmental & social). GFS will issue an Audit Statement to the client as part of the Wood Tracking Program in respect to field verification of legal harvesting operations to be used in demonstrating traceability for manufacturing and trading.

Sabah Malaysia FLEGT / TLAS – Legality Verification Project :

GFS (Malaysia) has been operating the FLEGT Timber Legality Assurance System (TLAS) for Sabah, Malaysia since May 2009 supported by the Sabah Forestry Department and sponsored by GIZ of Germany & Netherlands government. GFS has facilitated the development of the field verification standard for legal compliance based on Sabah Forestry regulations and the Sustainable Forest Management License Agreement (SFMLA) that has undergone several stakeholder reviews and revisions.   GFS evaluates legal compliance of 23 active forest licensed areas in Sabah, Malaysia.. The project is currently beginning the 4th phase that will be completed in 2011 but will continue as part of the integrated verification system that includes Legality and implementation of Reduced Impact Logging.  The key objective of the project is to develop and implement a field verification system for legal compliance as part of the FLEGT VPA (Voluntary Partnership Agreement) process.  The VPAs are binding agreements that include a Timber Legality Assurance System (TLAS) to ensure that only timber harvested and processed in accordance with the legislation in force is exported to the EU market. The TLAS has five key elements as described below:

• Definition for legality: A standard to set out the legal requirements to be met in forest management and timber transportation, processing and trading
• Definition for controlling the supply chain: Timber tracking and/or Chain of Custody systems to demonstrate that the timber originates from legal sources
• Verification: To ensure that timber is produced in compliance with the legality definition and the timber supply chain is properly controlled
• Issuance of FLEGT licenses on the basis of verification results
• Independent monitoring by a third-party: To check that the whole TLAS works as intended

The current standard for evaluation of legal compliance of forest management includes assessment of 28 criteria, where 11 criteria are deemed critical and 17 criteria that are performance based (non-critical).  All applicable critical criteria must be in full compliance to be considered as legally operating. Forest operators must also demonstrate that the overall compliance level when combined with performance criteria is a minimum of 70%.

Evaluation & Monitoring Compliance :

Companies that want to participate in the GFS Wood Tracking Program shall be able to demonstrate compliance to the requirements (WTP 005) to be eligible for a Statement of Participation. Companies must address any and all major non-compliance prior to being granted a GFS WTP, Statement of Participation. GFS evaluates and reports the company’s compliance to the standard every 6 months. Summaries of all monitoring reports will be posted on the GFS WTP Client Database for transparency in compliance to the requirement to the market.

Companies under GFS Wood Tracking Program will be monitored 2 times annually (or as deemed necessary) to verify continual compliance to the CoC system. Companies that receive a Major GAP during surveillance to either the CoC requirements or legality verification must address it within 1 month or be liable for suspension of trading activities under the GFS WTP.

Trading of Wood Products : Only timber products that are classified as Verified Legal can be traded using the GFS Wood Tracking registered number under the Statement of Participation. The GFS Wood Tracking Program offers clients a means to demonstrate Due Diligence to meet requirements of EU Timber Trade Regulations for buyers in the EU, UK or due care under the Lacey Act for USA. Companies participating in the GFS Wood Tracking Program have a formal Chain of Custody system to identify and trace timber products traded. Each shipment traded under the GFS WTP, Statement of Participation will be identified using a GFS approved Standard Product Declaration that summarizes the timber products through the supply chain. All manufacturing and trading companies that desire to trade timber and wooden products under a GFS Wood Tracking Program must continually demonstrate compliance to the requirements for CoC (WTP 005) and the Conditions of Participation (WTP 029). The GFS Wood Tracking Program, Statement of Participation for manufacturing and trading are valid for 5 years.