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To grow and develop EU and UK demand for FLEGT-licensed furniture requires promotion in these markets of what a FLEGT Licence stands for and the business benefits in terms of assured legality and exemption from EUTR due diligence.  It also demands that more FLEGT VPA partner countries join Indonesia and get to FLEGT licensing stage to boost the EU’s choice of FLEGT-licensed products and supplier.

In 2020, IMM commissioned a follow-up study of FLEGT impact on forest sector investment in Indonesia and Viet Nam. The study identified correlation between a rise in forest sector investment and a shift in investment from the pulp and paper towards the wood processing and furniture manufacturing sector in Indonesia during the last decade.

Analysis of trade data shows in the latest IMM Annual Report demonstrates that the goal of closing world markets to illegal wood products is already well advanced – even if recent steps towards regulation in China are discounted for now. In 2019, 66.5% (US$27.6 billion) of the total value (US$41.5 billion) of recorded tropical wood product exports worldwide were destined for countries with regulatory measures to eliminate illegal trade (Figure 1). This compares to 62.2% of tropical trade in 2018. The rise in the proportion of tropical wood products destined for regulated markets in 2019 was due primarily to the decline in imports by China, considered here an unregulated market, while US imports of wood products from tropical countries, particularly Viet Nam increased sharply during the year. 

The updated open access IMM Data Dashboard and STIX websites allow users to tailor timber trade data presentation and analysis to their requirements. To be of value to timber businesses, and other sector stakeholders, it’s vital that industry trade data is both current and accessible - available in comprehensible, user-friendly and relevant formats. The IMM’s Data Dashboard has recently been redeveloped to make it easier to navigate. New visualization tools have also been added, so users can select and present information specific to their needs.

Accurate and timely information on timber trade flows is crucial to understanding market developments, including the impact and effectiveness of FLEGT policy measures. The ability to access trade data in near real-time has taken on even greater significance during the period of unprecedented global disruption caused by COVID-19. At a webinar on 20 October, the FLEGT Independent Market Monitor (IMM) will introduce two new, innovative and freely accessible online sources of trade data - the IMM's own Data Dashboard and the Sustainable Timber Information Exchange (STIX). 

The IMM 2017 survey serves as 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 and 2019 now allows for comparison over time. Chart 1 shows a sharp and constant rise of the proportion of respondents finding the administrative process of importing FLEGT-licensed timber easily understandable and manageable over the last three years. The number of respondents highlighting challenges continued to fall in 2019, after declining sharply in 2018.

The IMM 2017-2019 EU Trade Surveys recorded no significant changes in the overall level of awareness of the FLEGT VPA process (chart 1) among respondents over the last three years. The number of companies claiming to be “fully aware” of the process dropped by 17 percentage points in 2018, with some companies stating that they only realised that they had not fully understood the process after beginning to hear more about it. At the same time, the number of companies claiming to the be “totally unaware” of the process had risen as well. However, this was believed by IMM correspondents to have mainly been expressions of frustration with the duration of the process, which resurfaced in 2018, after initial euphoria over Indonesia achieving the Licensing stage in late 2016. In 2019, the number of “fully aware” companies increased again slightly, while the number of “totally unaware” companies fell. 

The question of where FLEGT stands in relation to voluntary third-party certification is frequently raised in discussions during IMM Trade Consultations and in interviews conducted as a part of IMM surveys. Is the FLEGT VPA process “a step backwards” because it focuses on demonstrating compliance to national forest laws rather than to international “sustainable forestry” principles that are the basis for forest certification systems? Or is the FLEGT process “better” than voluntary certification, because it is mandatory, better placed to achieve a broad national stakeholder consensus on forest management standards integrated with national regulatory and fiscal frameworks, and helps to ensure equitable access for all forest operators? 

The FSC Controlled Wood System was first introduced in 2004 alongside introduction of the FSC Mix label which allows, under controlled conditions, the mixing of FSC certified material with uncertified material in FSC labelled products. The non-certified portion must comply with the FSC Controlled Wood standards which enable manufacturers and traders to avoid timber and timber products from unacceptable sources. The Controlled Wood requirements are an integral part of FSC chain of custody (CoC) certification which, at the end of 2018, applied to 40,000 operators worldwide, including nearly 20,000 in the EU. 

The IMM 2018 trade survey analysed whether there were any perceived direct impacts from the introduction of FLEGT-licensing and the EUTR on imports of timber certified by private certification and legality verification schemes. Figure 1 shows that, according to respondents, private schemes, especially FSC, have profited to some degree from the introduction of EUTR. Several respondents remarked that, since EUTR was introduced, they have tended to prefer certified timber from countries where the risk of illegal harvest is considered non-negligible and certification is used as the principle mechanism to mitigate this risk.

Overall progress of third-party certification under the FSC and PEFC frameworks in VPA partner countries was slow before efforts to develop FLEGT licensing systems began and, in most countries, progress has remained slow during the period of TLAS implementation. Total FSC and PEFC certified area in all VPA Partner countries was 17.5 million hectares in 2018, up from 11.62 million hectares in 2012 and less than 3 million hectares in 2007. While the rate of increase is impressive, in 2018 less than 4% of total forest area in VPA partner countries was certified and around 80% of the certified area was in just two of the 15 countries, Indonesia (38%) and Malaysia (42%). 

IMM’s latest Annual Report, “FLEGT VPA Partners in EU Timber Trade 2018”, shows that the combined share of the VPA partner countries in global tropical wood products trade (all products in HS 44 and wood furniture products in HS 94) was 78.8% in 2018, slightly down from 78.9% in 2017 and 79.4% in 2016. This trend is set in the context of an 8% rise in global tropical wood products trade in 2018, to US$39.8 billion.