The IMM 2018 EU trade survey asked respondents whether FLEGT-licensing and the introduction of the EUTR had had any direct impact on the share of tropical timber in their overall timber imports. Chart 1 shows that the majority of respondents found that the share had not been directly affected by either.
Substitution, economic crisis and diversion of supply = main drivers of EU tropical timber market decline
Tropical timber imports to the EU have declined for over a decade now. The loss of market share was particularly pronounced in the period 2008-2012. Sales then stabilised up to 2016, before dipping again slightly.
In 2017, the IMM EU trade survey had asked respondents to rate the competitiveness of VPA-implementing and FLEGT-licensing countries using a variety of indictors such as product range, quality, lead times and price. Results can be found in section 4 of the IMM 2017 Annual Report. This exercise was not repeated in 2018, as no major changes were expected to have occurred over such a limited period of time. The rating will be repeated and extended as a part of the 2019 survey.
The IMM 2017 survey produced a baseline for EU trade perceptions of the Indonesian FLEGT-licensing system and day-to-day management of importing licensed timber. Repetition of the same questions in 2018 now allows for comparison over time.
The IMM 2017 annual report has looked into both the relative international competitiveness of all VPA partner countries based on their rating by several international competitiveness indices and in more detail into the perception of VPA implementing partners’ competitiveness by the European import trade.
The IMM's first FLEGT Trade Consultation held in London during March provided many new insights into the current and potential future market impact of the FLEGT process. As is typical at these events, some of the most revealing insights came during the less structured Q&A session and in the corridors between sessions.
“We are often sceptical of things we don’t fully understand; tangible, factual information is key for demand-side trade audiences", says UK TTF Head of Sustainability, Mike Worrell. IMM interviewed Mike following his visit to Indonesia in October 2017 to gather first-hand experience of how the Indonesian FLEGT-licensing system works.
“EC should do more to promote FLEGT-licensed timber”
In November 2016, Indonesia started issuing FLEGT licenses which are recognised proof of legality in the EU market and thereby became the first country to fully implement a Voluntary Partnership Agreement (VPA) with the EU. Dr Rufi’ie, Director of Forest Products Processing and Marketing with the Indonesian Ministry of Environment and Forestry, is responsible for daily implementation of the Indonesian Timber Legality Assurance System (Sistem Verifikasi Legalitas Kayu/SVLK) which the VPA is based on. In an interview with IMM, Dr Rufi’ie talks about Indonesia’s motivation for entering into a VPA, challenges met on the way and first experiences with FLEGT-licensed timber.
The first round of IMM surveys in Indonesia, the only VPA partner country currently issuing FLEGT licenses, covered 47 timber industry players exporting a wide range of products – including furniture and furniture parts, decking, mouldings and plywood as well as paper, fibre- and particleboard, doors, gluelam and sawn timber – to the European Union and world-wide. Companies were surveyed about their main European export markets and the overall relevance of Europe as a sales market as well as their perception of the VPA process, FLEGT licensing and the EUTR.
The majority of respondents to a recent IMM survey of the Ghanaian timber industry fully or partially agree that the FLEGT VPA process is helping to improve forest management and governance in the country. They also agree thay it is helping to control illegal chainsaw milling and having a positive effect on implementation of laws concerning the payment of fees for the use of forest resources. However there is some variation in attitudes to the VPA process between larger and smaller companies.
“FLEGT-licensed timber going from distant promise to physical reality restored faith”, one importer told IMM during the 2017 European survey. And that it is Indonesia doing the licensing also changed mind-sets. If such a large, complex country could do it, the view was that others could too.
The fact that the start of FLEGT-licensing in Indonesia has revived trade interest in FLEGT is an encouraging finding of the first round of comprehensive market surveys conducted by IMM in seven key EU consumer markets – Belgium, France, Germany, Italy, the Netherlands, Spain, and the UK – which together account for around 90% of EU imports from VPA partner countries. A previous IMM pilot survey in Germany, Spain and the UK in 2015 had found more widespread frustration and “FLEGT-fatigue”, as repeated forecasts about the start of licensing had come to nothing at that time.