A new legal regulation has kicked in, obliging Australian importers to meet due diligence requirements similar to those of the EU Timber Regulation (EUTR).
Australian importers are now required to have a due diligence system in place to assess the risk that the timber product they are sourcing was illegally harvested. This is the essence of an Amendment Regulation that came into force on 30 November 2014, under the Australian Illegal Logging Prohibition Act (ILPA).
The ILPA makes the import of illegally logged timber products into Australia a criminal offense, and has been in force for two years. The Regulation specifically obliges importers to assess and manage the risk that timber has been illegally logged prior to any import of regulated products.
These due diligence requirements were closely modelled on those in Europe in an effort to streamline the global legal timber market.
A positive move
“This is a crucial step in rolling out the ILPA. Due diligence is key to managing risks of sourcing illegal timber,” comments Alexandra Banks, timber legality specialist at NEPCon and a trained lawyer from Australia. She firmly believes that the new requirements will benefit the Australian timber sector:
“The exclusion of shady timber from the Australian market will help to protect the domestic trade whilst supporting legal forest operations in the export countries. Similar to the US, Europe and Japan, parts of the Australian industry have been pushing for the adoption of strict legislation to prevent illegal timber from pouring into the domestic market. Australian forest product companies may now finally begin to see the end of competition from black market timber,” she explains.
Ms Banks also sees this as an opportunity for the industry to adapt to general trends in the global marketplace. “Global consumption is on the rise, and timber resources are dwindling. Good supply chain management and stable supplies are key if you want your business to be well prepared for the coming decades. The Act pushes the industry to focus more on tracking and managing their supplies, to ensure that they come from legal sources. This requires a new level of supplier engagement which may entail some work, but ultimately it is a good thing for Australian businesses. It will help the industry to be better equipped for the timber resources scarcity that is coming down the line.”
According to figures published by the Australian government, the value of wood product imports into Australia stood at $4.6 billion in 2013–14.
Tools and guidance important
Some Australian companies are now voicing their misgivings about the burden imposed by the new obligations.
“From our experience in Europe, we know that many businesses do need to adapt when due diligence requirements are imposed. But we have also seen that it can be done. Some companies had already implemented supply chain management in line with the EUTR before the European law went into force in 2013. These businesses have proven that it is possible to follow the legislation even on complex supply chains,” says Ms Banks.
“However, the smaller companies in particular may need tools and resources to meet their obligations. This is why NEPCon has developed free tools that help businesses cope with due diligence. I commend the Australian government for its focus on providing guidance for business on the new requirements.”
On 1 December 2014, the Australian government announced a review of the impact of the new Act on Small and Medium sized Enterprises (SMEs).
“There are many SMEs and their combined trade is significant. If the smaller companies are not able to fulfil the requirements, this will threaten the effectiveness of the law,” comments Ms Banks. “The review can help to pinpoint the specific challenges involved and identify the most effective ways of helping SMEs to meet the law.”
Soft enforcement take-off
The Australian government has indicated that there will be a longer phase-in period enabling the industry to adjust to the obligations. In a related press release, the Forestry Department states: “For the first 18 months after 30 November 2014, the department's focus will be on helping affected businesses to comply with the requirements. During this period, we will not be seeking to 'catch out' people who are trying to do the right thing.”
However, businesses are still obliged by the law, cautions Ms Banks. “The requirements are in force. The Department of Agriculture has indicated a soft initial approach in terms of their inspection level, but they are unlikely to ignore flagrant or repeated breaches of the law. Only time will tell where the line will be drawn during the phase-in period.”
A lever for certified timber
The ILPA creates a further push for companies to choose certified timber. It is unique in its explicit recognition of FSC and PEFC certification as a mechanism to ‘fast-track’ a company’s due diligence arrangements.
However, similar to the EUTR, buying certified product does not exempt Australian operators from doing due diligence. They must still gather information and assess the risk that the timber was illegally logged.
Accepting certification as sole proof of legality is not allowed under the Act.
“Although it is still early days, the US Lacey Act and the EUTR have clearly made their mark on the global timber trade. At NEPCon we are pleased that Australia now also requires its importers to buy responsible timber,” comments Ms Banks.
“Australia is a large timber importing country so this move is likely to have a significant impact, too, and will further bolster the trend. As one key timber market after another closes its gates to illegal timber, black market timber becomes less profitable.”
Find more information and view the ILPA and Regulation at http://www.timberduediligence.com.au/