US, Peru Assess Efforts to Tackle Illegal Logging Under Trade Accord

4 October 2018

In late September, an interagency US committee issued a report via the Office of the United States Trade Representative (USTR) that deemed that while Peru has made valuable headway in its forest management efforts, more work remains in ensuring the legality of its timber supply chain can be properly ensured and verified. 

The statement was released on behalf of the US Timber Committee, which was set up as part of the US-Peru Trade Promotion Agreement, and its assessment built on an earlier review by Lima that found similar results. The reviews focused specifically on efforts to verify the legality of three timber shipments from Peru to the United States in early 2017.

Timber from a particular Peruvian exporter, Inversiones La Oroza, has been banned in the US since late 2017 due to concerns over the ability to verify the integrity of the supply chain, in a move deemed “unprecedented” at the time. (See Bridges Weekly, 26 October 2017)

The document released last month says that while two shipments were in line with Peru’s domestic laws, there were challenges in the verification of the third. The US Timber Committee report also outlines a series of suggestions for future work by the Andean country’s government. US Trade Representative Robert Lighthizer welcomed efforts made to date while noting that “there is more work to do,” and that he is “committed to using the tools available under our trade agreement” to tackle the issue.

Forest annex implementation

Nearly a decade has passed since the enactment of a trade deal between the United States and Peru, which has a forest annex that set aside specific provisions for combating illegal logging in the Latin American country and is subject to the agreement’s dispute settlement provisions. The forest annex of the accord has been in effect since 2010, and aims at supporting efforts to ensure the legality of the timber supply chain, with the possibility of blocking imports from producers deemed to be non-compliant.

The current situation began a few years ago, when Washington flagged a particular shipments from January 2015 by Inversiones La Oroza for examination in early 2016, with a review ultimately finding that the shipment included illegally sourced timber. Subsequent reviews have been held, and the Peruvian government has indicated that it is working to improve traceability, inspections, and other aspects of the supply chain.

However, due to repeat questions over verifying compliance, timber from the producer involved has been banned since late 2017 for a period of three years, though this timeframe can be shortened if and when the issue is fully addressed.

The US Timber Committee report issued in late September came after the US filed a request earlier this year to review progress to date in implementing the steps that Peru had announced in late 2016. The domestic investigation in Peru involved an interagency review, in conjunction with the regional governments of the locations where the timber was harvested.

Peruvian authorities were able to establish that two shipments from early 2017 were compliant with domestic laws and regulations regarding the harvest and trade of timber products. However, the report found challenges with the verification of the third, according to the Timber Committee’s summary of the findings of the Peruvian government investigation.

“For the remaining shipment, based on the procedures followed and information obtained, Peru could not establish that it was compliant with Peru’s laws, regulations, and other measures on the harvest and trade of timber products. Specifically, OSINFOR found through its post-harvest inspection of the one land title associated with the shipment that the trees were not harvested from the authorised site and that there were inaccuracies in the forest land title holder’s management plan,” the report said.

The acronym OSINFOR refers to Peru’s Supervisory Agency for Forest and Wildlife Resources, an independent body tasked with such matters.

Peruvian authorities at the country’s trade ministry noted their continued work at improving forest sector governance, as well as the value of doing so for the country’s sustainable development objectives. For example, it highlighted efforts to improve the capacity of regional forest authorities, the establishment of an online platform for reporting infractions of forest-related laws, and legal actions against actors who are not implementing forest laws.

“The forest sector contributes, through using resources sustainably, to forest conservation, job creation, and the development of the Peruvian Amazon, with a positive impact on local economies,” said Peru’s Ministry of Foreign Trade and Tourism (MINCETUR).

Trade tools and timber

The Peruvian government has implemented various regulatory measures in the ten years since the trade promotion agreement was signed to make sure none of its timber is being harvested or produced illegally, and taking legal action in cases of violations. Illegal logging has long been a challenge in the Andean nation, as the Washington-based Environmental Investigation Agency (EIA) documented in its landmark 2012 report “The Laundering Machine.” An earlier report from the World Bank in 2006 suggested that the level of Peruvian timber exports with illegal origins could amount to 80 percent, a figure that has been cited in subsequent reports as recent as 2012.

Experts note that illegal logging in the Amazon has severely damaging environmental implications, particularly via deforestation. It is also blamed for supporting organised crime networks, hurting local livelihoods, devastating the biodiversity-rich corridor’s resources, creating economic disadvantages for indigenous communities, and harming a key “carbon sink.”

Furthermore, US officials say that tackling illegal logging in Peru is important not only because of the environmental, social, and economic costs for the Andean country, but also given that having illegal timber arrive and be sold on the US market at a lower cost would hurt American producers.

The US is one of various countries or country groups that have been experimenting with the use of trade tools to tackle illegal logging and ensure that illegally sourced timber from abroad does not end up on their domestic markets. Aside from trade tools such as the forest annex in the Peru deal, Washington also has a domestic law in place known as the Lacey Act, which institutes a prohibition in illegal wildlife trafficking, including timber.

As another example of international efforts, the EU has in place a system known as the Forest Law Enforcement, Governance and Trade (FLEGT) Regulation, aimed at tackling illegal logging and improving the controls along the timber supply chain. More specifically, the regulation aims at ensuring that illegal timber does not find its way onto European markets, with the EU pursuing “voluntary partnership agreements” or VPAs with various timber-exporting countries on the subject.

The bloc has VPAs in place with some select countries in the African continent and southeast Asia, and is looking to ink several more with other countries in those regions and in Central America.

At the wider international level, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the landmark treaty designed to regulate wildlife trade, also includes tackling illegal logging among its aims. It has various types of timber listed on its annexes as requiring protection to avoid being exploited extensively, with the organisation’s secretariat reporting that approximately 900 varieties of timber are now on its lists.

ICTSD reporting.

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