3 Measures to discourage illegal logging
| (25872)
11656/04
COM(04) 515
| Draft Council Regulation concerning the establishment of a voluntary Forest Law Enforcement, Governance and Trade (FLEGT) licensing scheme for imports of timber into the European Community
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| + ADD1
SEC(04) 977
| Commission Staff Working Document on the establishment of a voluntary FLEGT licensing scheme
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| Legal base | Article 133 EC; consultation; QMV
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| Document originated | 20 July 2004
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| Deposited in Parliament | 13 August 2004
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 27 September 2004 and SEM of 8 February 2005
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| Previous Committee Report | None, but see footnote
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| To be discussed in Council | No date set
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
3.1 According to the Commission, there is strong evidence that
illegal logging is a substantial and growing problem, closely
associated with organised crime, which undermines the competitiveness
of legitimate forest operations, leads to significant revenue
losses, and causes enormous environmental damage and loss of biodiversity.
The Commission also believes that, although the supply side of
the problem lies in timber-producing countries, it is encouraged
by strong international demand. It therefore put forward in May
2003 a Communication setting out the measures which the Community,
as a major consumer of timber products, could take to direct demand
towards legally harvested timber.[7]
These included entering into negotiations for Forest Law Enforcement,
Governance and Trade (FLEGT) Partnerships with timber-producing
countries, and presenting a Regulation setting up a voluntary
licensing system, under which only timber with a valid certificate
of origin, indicating that it has been logged legally, would be
allowed to enter the Community.
3.2 As we noted in our Report of 2 July 2003, the
Government broadly supported the proposed Action Plan, and said
that it would support the negotiation of voluntary partnership
agreements and the setting up of a voluntary licensing scheme,
so long as these were compatible with World Trade Organisation
rules, and took into account (among other things) the need to
explore carefully ways of addressing wood and wood products coming
from countries which did not sign up to the proposed licensing
scheme; the detail and practicality of the regulation and licensing
scheme; and the legal basis for the voluntary partnership agreements.
The current proposal
3.3 The Commission has now sought in this document
to give legislative effect within the Community to the proposed
licensing scheme by defining the timber products covered (and
the process for adding or removing products); the scope of the
licence required to verify that timber has been legally harvested;
the powers to prohibit unlicensed timber products at the point
of entry into the Community; the scope for sanctions for infringements;
and the process for adding and removing partner countries (where
it has also sought a mandate to negotiate the necessary agreements).
In addition, the proposal outlines the institutional arrangements
needed to support the scheme. At the Community level, these include
a Committee to assist the Commission, formal arrangements for
reporting and review, and mechanisms for providing administrative
co-operation between the Community and its partner countries;
at the Member State level, provision is made for participating
countries to nominate the competent authorities for issuing and
verifying licences.
3.4 The proposal was accompanied by a Commission
impact assessment, which suggested that the greatest effect of
the scheme would be felt among African suppliers, such as Cameroon,
which are heavily reliant on exports to the Community market,
as opposed to those in Asia and Latin America — notably
Indonesia and Brazil — for which the Community market has
a more limited significance. In general, however, it suggests
that partner countries stand to achieve substantial additional
revenues from the scheme, and that they can also expect environmental
and social benefits, though it also points out that measures will
be needed to prevent illegal trade being directed to other markets.
Within the Community, the Commission says that the proposal could
lead to changes in the price and supply of imported timber, but
that, although this will depend on the price elasticity of timber
products and the attractiveness of substitute products, the impact
of these changes is expected to be modest, and will in any event
depend on the overall coverage achieved by the licensing scheme.
The Government's view
3.5 In his Explanatory Memorandum of 27 September
2004, the Minister of State (Environment and Agri-Environment)
at the Department for Environment, Food and Rural Affairs (Mr
Elliot Morley) said that the Government is committed to tackling
illegal logging and its associated trade, and that it welcomes
the contribution which the proposal will make. It is content
that the proposal —
which the Minister said has widespread support from both non-governmental
organisations and industry bodies —
is WTO-compatible, and that it will have no impact on domestic
forestry. However, the Minister also said that the legal base
proposed (Article 133) did not reflect the proposal's aim of addressing
environmental protection and developmental issues, and that the
Government would be preparing a Regulatory Impact Assessment of
its own to go alongside that of the Commission. In view of this,
we decided to deal with the document once we had further information
on those two issues.
Supplementary Explanatory Memorandum of 8 February
2005
3.6 We have now received a supplementary Explanatory
Memorandum of 8 February 2005 from the Minister, enclosing a Regulatory
Impact Assessment which broadly endorses that provided earlier
by the Commission. In particular, it points out that, whilst
a multilateral agreement to regulate the international trade in
timber would in principle be the best way to tackle the issue,
there is little prospect of achieving this, whilst, on the other
hand, for the Community simply to impose an import ban on illegal
timber —
though a "strong and direct" response —
would cause major trade disruptions and could well fall foul of
WTO rules. The Assessment therefore suggests that the proposed
licensing scheme represents the most effective approach currently
available in practice, and that the costs involved are expected
to be modest, representing "only a fraction" of the
export value of tropical logs and sawnwood.
3.7 As regards the choice of legal base, we have
seen the letter which the Minister sent on 30 November 2004 to
the Chairman of the House of Lords European Union Select Committee,
which had earlier raised this issue with him. In it, he comments
that some of the concerns might be alleviated by basing the Regulation
on Article 175. He adds:
"When the proposal for a draft Regulation was
made by the Commission in July 2004, it was for a Regulation with
an Article 133 (Trade) legal base. The European Court of Justice
(ECJ) has consistently held that the choice of legal base must
be based on objective factors, which are amendable to Judicial
Review, in particular the aim and content of the measure.[8]
This draft Regulation is currently being discussed, at official
level, by Council Working Group. As the dossier stands, and without
discussions in Council resulting in substantial changes to the
draft Regulation, the Government would continue to argue that
an Article 175 (environment) legal base, rather than an Article
133 (trade) legal base would be more appropriate.
"The Government feels that an Article 175 legal
base fits better with the aims of FLEGT. Article 175 is concerned
with environmental protection and allows the Council to decide
on Community action to fulfil the objectives in Article 174, including
the prudent and rational utilisation of natural resources and
promoting measures at international level to deal with regional
or world-wide environmental problems. If FLEGT had an Article
133 legal base, it would create the precedent that the Community
had exclusive external competence in Regulations where trade measures
were used to achieve environmental and development objectives
There would then be a direct read across to other MEAs with a
trade-related element, for example, CITES, Biosafety Protocol,
POPs Convention, PIC Convention, Basel Convention and the Montreal
Protocol.
"Exclusive external competence for the Community
could also have practical implications for this dossier. For example,
Commission officials would negotiate on behalf of the Community,
without Member States having the right to speak. An Article 133
legal base for the Regulation would also lead to a decreased role
for the European Parliament. The European Parliament has been
very interested in the progress of negotiations on FLEGT to date
and Government does not[9]
want to lose that support and engagement."
Conclusion
3.8 Though the licensing scheme proposed in this
document is arguably somewhat bureaucratic, and depends heavily
on the extent to which those countries supplying timber to the
Community are prepared to participate, we note the Government's
view that the approach suggested is preferable to (or more easily
achievable than) alternatives, such as a multi-lateral agreement
or an import ban on illegal timber. In view of this, and the apparently
modest cost of the measure, particularly when viewed against the
various consequences of illegal logging, we would be content to
clear the proposal, at least as regards its substance.
3.9 However, we have also noted the Minister's
comments about the legal base, which merely reinforce the concerns
which we ourselves would have felt about the use of Article 133
for a measure of this kind. We therefore feel that it would be
right to keep the document under scrutiny, pending further information
on whether the Government has been able to persuade the Commission
and the other Member States to its way of thinking on this point.
7 (24598) 9944/03; see HC 63-xxviii (2002-03), para
8 (2 July 2003). Back
8
Cases C-68/86 and C-131/86. Back
9
Corrected from 'now' in the letter. Back
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