In the recent Forest forum meeting we shared Complicit in Corruption - a recent report written by non-profit Earthsight, highlighting the widespread corruption in Ukraine's forests, and revealing how illegality permeates the timber supply chain in Ukraine from harvest to export.

Earthsight spent two years running field and undercover investigations in Ukraine. Approximately 70% of Ukraine's timber exports enter the EU and Earthsight's investigations indicate that 40% of this timber is being illegally harvest or traded. The report also claims that a significant volume of illegally harvested timber has received the FSC stamp - the former chief of one of the largest timber producing state-forest enterprises admitted to Earthsight he had found it easy to circumvent FSC checks.

Earlier this year Vietnam initialled a timber trade agreement with the EU that will see Vietnam implement legislation to address imports of illegally harvested and traded timber in return for timber exports to the EU. According to a recent EIA investigation, Vietnam continues its role as a serial offender in the illegal timber trade, with large volumes of illegal timber still flowing across the Cambodian border unhindered. EIA have identified three main areas within Cambodia where substantial illegal logging operations continue. EIA tracked timber from these sites is being smuggled out of Cambodia and into Vietnam across informal crossings.

China, which logs about 49.94 million cubic meters of natural forest each year, initiated a landmark pilot program to ban all commercial logging of natural forests in key forest zones in Northeast China's Heilongjiang Province in April 2014. Now the country will implement a ban on commercial logging of State-owned natural forests by end 2016.

The article points out that over 50% of the timber China consumes and processes comes from imports much of it thought to be from illegally harvested sources. There is a concern that this domestic logging ban may lead to an increase in those illegally harvested sources.

The largest hardwood flooring retailer in the United States, Lumber Liquidators, agreed to plead guilty to several violations of the Lacey Act. The company will have to pay a combined $13.2 million for importing illegally harvested timber from areas including forests in far eastern Russia and other compliance issues. The raids that led to the charges followed investigations and reports by the Environmental Investigation Agency (EIA) and WWF. Lumber Liquidators faces separate allegations that it imported laminated wood products with illegal levels of formaldehyde.

A study by FSC has found that approximately 300 million cubic metres of FSC certified wood are harvested every year, making up 16.6% of the total global industrial roundwood market.

Despite government plans to eradicate illegal logging that have been in place over the past five years, encroachment on the country’s forests remains rampant, a recent report says. The report, released by a number of NGOs grouped under the Coalition against Forestry Mafia and the Washington-based Forest Trends, said that more than 30 percent of the timber used by the country’s industrial forest sector could be considered illegal. According to the report, while the source of this illegal wood was unclear, it was likely from trees harvested during the clear-cutting of natural forests from new oil, palm and pulp plantations. In order to meet the demands from the industrial forestry industry, the government had pledged to boost the number of industrial forestry plantations as the primary source of legal wood in Indonesia. The plantations produce fast-growing species of trees like acacia. However, the report found that the plantation sector was dramatically underperforming. In 2007, the forestry ministry predicted that by 2014, plantations would be producing at almost twice the rate reportedly achieved.

Russia’s Federal Security Service (FSB) is working with environmentalists to combat illegal logging in the country’s Far East. Activists from WWF described long term collaboration with officials from Russia’s former KGB service in the effort to combat corruption and illegal timber exports as “unusual” but also unavoidable. WWF has been providing training for local customs officials on how to spot illegal species. A 2013 report by the Environmental Investigation Agency estimated that 96% of the valuable hardwoods harvested in the Russian Far East end up in China, while at least 80% of all felled trees have been logged illegally.

Kenya has recently seized a shipment of $13 million worth of rosewood illegally harvested in Madagascar and bound for Hong Kong. The writer highlights the trend of illegal shipments through Hong Kong and notes that as neither Hong Kong nor China has laws banning illegal timber, border authorities cannot intercept it unless it is CITES-listed. According to estimates only 16 per cent of China’s processed timber is then exported, so there is a huge domestic market that is not subject to regulations preventing the use of illegally-harvested timber.

The Indonesian Government is considering the viability of creating a voluntary partnership agreement (VPA) on timber trade with Australia to boost exports of forestry products. The VPA with Australia would be similar to the VPA between Indonesia and Europe: Under the EU-Indonesia VPA, all timber and timber products certified by the domestic timber legality verification system (SVLK) are considered legally harvested and in compliance with the EU’s timber regulation.

A new paper by Chatham House and the Center for International Forestry Research (CIFOR) has found that timber harvested illegally in Africa, Asia and Latin America continues to be sold on world markets, despite international efforts to curb the trade. Experts say that the EUTR and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) are complementary. However, there is a lack of coordination between the agencies involved in enforcing the rules of the two systems. One of the biggest loopholes identified is that both CITES- and FLEGT-licenced timber is exempt from the due diligence requirements under the EUTR, so fraudulent paperwork could escape scrutiny.

Indonesia’s VPA was backed by the European parliament on 27th February. This Voluntary Partnership Agreement acknowledges that Indonesian timber and wood products are being certified through the domestic timber legality verification system (SVLK) as legally harvested and processed, thereby complying with the EUTR. Analysts have suggested that this access to the European market will increase exports from Indonesia to the EU by 5 – 10% this year.

Lumber Liquidators, the top-selling flooring retailer in the US, is currently under investigation over whether it has been importing illegally logged wood products from the Russian Far East in violation of the US Lacey Act. The company is now facing class action lawsuits from investors following criticism from a noted hedge fund adviser who has argued that the recent increases in the company’s profit margins have come, in part, by increasing imports of illegally harvested wood from China and the Russian Far East.

A report from the UK- and US-based Environmental Investigation Agency (EIA) has said that up to 80% of the hardwood harvested in the Russian far east is logged illegally. The EIA say the demand for this material comes from Chinese sawmills and subsequently their western customers. The material that is of most concern is illegally logged Russian oak. US wood flooring retailer, Lumber Liquidators, was named in the report as being heavily reliant on Chinese suppliers who allegedly mainly sell illegally logged material. The EIA say the US and EU regulations on illegal logging are important pressure points where they now have the ability to intervene – before now, and without this pressure, illegal logging in Siberia has seen rapid expansion. Despite industry incentives from the Russian government, incredible demand from China has led to Chinese sawmills establishing just over the China-Russia border. EIA’s investigations suggest that most of these mills rely on a supply of illegally logged timber.

Kimberly-Clark is investigating the use of plants which make more efficient use of land and resources without displacing food crops in its efforts to meet its ambitious goal of cutting the amount of wood fibre it uses by 50% by 2025. It is currently test marketing tissue products containing bamboo and is also exploring ways to use waste fibres that remain after agricultural crops such as wheat have been harvested.

Lord Mandelson said his work with APP related to the new EUTR VPA requirement for Indonesian companies to supply only legally harvested timber. He said he would be advising APP on how to make the new regime a success and how to communicate it with customers and stakeholders.

Press release for a report published by the Union of Concerned Scientists called ‘Logging and the Law: How the U.S. Lacey Act Helps Reduce Illegal Logging in the Tropics’. The report draws attention to how illegally harvested wood distorts prices of legal wood and has a negative impact on the US wood industry.