3. Have the products been legally produced?
There is no universally accepted definition of illegal logging and trade. Strictly speaking, illegality is anything that occurs in violation of the legal framework of a country. It is generally acknowledged that legality is not a synonym for Sustainable Forest Management, and that what is sustainable may not always be legal (World Bank, 2006; Contreras-Hermosilla et al., 2007). Some examples of what have been considered illegal forestry activities are given in Box 4.
Illegal logging is a fundamental problem in certain nations suffering from corruption or weak governance. International trade is one of the few sources of influence sufficient to create the political will to make improvements. Several international processes4 have taken up this issue, and national efforts have started to appear as a result. During the last five to 10 years, illegal logging and illegal trade have risen to the top of the international forestry agenda.
Illegal logging of wood and paper-based products entails a complex set of legal, political, social, and economic issues. Poverty, lack of education, financial issues, population growth, and weak governance are all enabling factors for illegal activity. Illegal activity has many drivers that make it challenging to address this issue. These drivers are often associated with a range of items from short-term economic gain to local and national actors including communities and governments:
- Local (and often national) governments may receive higher revenues as a result of illegal land conversion and increased timber production.
- Because illegally logged wood can be sold at lower prices, it depresses the profitability of legally harvested wood while improving the competitiveness of industries that use illegal wood.
- Many people may derive an income from illegal forest activities.
Illegal logging and illegal trade can create serious problems:
- Government revenue losses – the World Bank estimates that governments lose revenue equivalent to about US$ 5 billion per year (World Bank, 2002A).
- Unfair competition – market distortion and reduction of profitability for legal goods; the World Bank puts this cost at more than US$ 10 billion per year (World Bank, 2002A).
- Increased poverty – occurs indirectly when governments lose revenues.
- Support and funding of national and regional conflicts.
- Unplanned, uncontrolled and unsustainable forest management.
- Destruction – areas important for biological conservation, ecosystem services, and local livelihoods.
Between 8-10% of global wood production is estimated to be illegally produced, although the great uncertainty of these estimates is also acknowledged; most of this illegally produced wood is used domestically, although a significant portion enters the international trade either as finished products or raw materials (Seneca Creek and World Resources International, 2004). Estimates of illegal logging in specific countries and regions vary depending on the nature of the activity and the variability of laws and regulations (Figure 4).
Factors to consider regarding legality
- Legality is not an issue in every country. A pragmatic approach may be to begin by identifying regions/countries at higher risk, and then focusing efforts on aspects of concern within those areas (e.g., corruption, lack of law enforcement, social conflict, etc). A number of resources are available to assist in this process (below).
- Legality is not always better than illegality in terms of SFM.
- Lack of compliance with minor administrative regulations may not have a significant impact on sustainability. It is desirable, but difficult, to focus on significant infractions.
- There are also cases when the law is not seen by everyone as equitable or fair (e.g., people with traditional claims to the land), or where laws protecting customary rights are not enforced or ignored.
- Verification of compliance with all national laws can be challenging. A pragmatic way to address this is to establish whether violations are merely oversights or form a pattern of major violations with serious impacts on sustainability.
- It is difficult to prove legality beyond good title because legal systems document non-compliance (i.e., citations, fines), not compliance. Transfer of title, however, is commonly documented through bills of lading and other negotiable instruments. Even for title, however, the risk of forged documents can be significant in some places. At a minimum, documents should carry all appropriate stamps and seals from the relevant governmental agencies.
- Consider actively supporting government action to address illegal logging and international trade in illegally-produced wood-based products.
Box 4. Examples of illegal forestry activities
Illegal activities can generally fall into two broad categories: illegal origin (ownership, title or origin), and lack of compliance in harvesting, processing, and trade. The following are examples of activities that have been identified and/or included in some definitions of illegal logging (Contreras-Hermosilla, 2002; Miller et al., 2006; GFTN, 2005).
Illegal origin (ownership, title, or origin)
- Harvesting of wood in protected areas without proper permission (e.g., in national parks and preserves). This may include instances where authorities allocate harvesting rights without properly compensating local people.
- Logging protected species.
- Logging in prohibited areas such as steep slopes, riverbanks and water catchments.
- Harvesting wood volumes below or above the limits of the concession permit as well as before or after the logging period stated in the harvesting license.
- Harvesting wood of a size or species not covered by the concession permit.
- Trespass or theft, i.e., logging in forests without the legal right to do so.
- Violations, bribes and deception in the bidding process to acquire rights to a forest concession.
- Illegal documentation (including trade documents).
Lack of compliance throughout the supply chain (harvesting, manufacturing, and trade)
- Violations of workers’ rights (e.g., illegal labor, underpaying workers, etc.), labor laws and international standards, and violation of traditional rights of local populations and indigenous groups.
- Violation of international human rights treaties.
- Wood transported or processed in defiance of local and national laws.
- Violations of international trade agreements (e.g., CITES species – Box 5).
- Failure to pay legally prescribed taxes, fees and royalties.
- Illegal transfer pricing (e.g., when it is to avoid duties and taxes), timber theft, smuggling.
- Money laundering.
- Failure to fully report volumes harvested or reporting different species for tax evasion purposes.
Different definitions of illegal logging can lead to different estimates, which makes addressing the problem more difficult (Contreras-Hermosilla et al., 2007; Rosembaum, 2004). Defining illegal logging is not only a technical issue, but one with potentially far-reaching political implications (Contreras-Hermosilla et al., 2007).
Box 5. The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)
The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) was established to limit and regulate the trade of endangered species.
CITES is an international, legally binding agreement to ensure that international trade of certain animals and plants (including wood from certain tree species) does not threaten their survival.
CITES establishes controls for the international trade of selected species. All import, export, and introduction of species covered by the convention must be authorized through a licensing system established by member countries. Each country designates one or more Management Authorities that administers the licensing system advised by one or more Scientific Authorities.
Based on the degree of protection needed, species covered by CITES are listed in three appendices:
- Appendix I – species threatened with extinction; trade is permitted but under very restricted circumstances
- Appendix II – trade of these species is controlled and regulated to ensure their survival
- Appendix III – species subject to special management within a country.
Sources: CITES website, and UNEP/WCMC’s Tree Conservation Information Service website.