Examination of Witnesses (Questions 360-379)
MR NEIL
SCOTLAND
8 NOVEMBER 2005
Q360 Mr Hurd: I think you used the
expression "substantial resources" being allocated.
Can you be more specific about what that means in terms of either
euros or people?
Mr Scotland: Yes. We set up and
funded a range of pilot projects last year, worth about 17 million
euros or so, and that are looking at a range of issues which we
see will be arising in the context of the partnership agreements,
and this is to get some activities and thoughts to draw on. In
the pilot projects we are looking at independent monitoring of
harvesting operations, facilitating trade in legal timber, building
the capacity of local civil society in the partner countries so
there is a demand for better governance. We have put three million
euros towards the regional political processes which you discussed
earlier.
Q361 Chairman: Is this all in relation
to the voluntary partnership arrangements?
Mr Scotland: Yes, it is, certainly
in the wider sense. It is not to fund the voluntary partnership
agreements, but it is to prepare the way for them and to build
the knowledge and the political will that we need to implement
them. In terms of the actual partnership agreements, in Indonesia
we have a £15 million programme of technical assistance starting
later this year. We are in the round of . . . . The partnership
agreements do not exist yet. They have to be negotiated and set
up, and at the moment we are preparing for our next budget, as
you know, and that includes a new set of country strategy papers
for development assistance. We will have to pick this up in supporting
partnership agreements specifically once the partnership agreements
exist, and there are funds in our Indonesian strategy for that,
there are funds in our Malaysian strategy for that, and we are
hopeful, once the African strategies begin to develop, we will
get funds in there too.
Q362 Mr Hurd: Can I ask you a particular
question on the financing of illegal forestry operations? There
is little evidence of any kind of due diligence being done by
investors. What is the Commission planning to do to tackle this?
Mr Scotland: That is one area
of the action plan where there has not been much progress so far.
We have found it quite a difficult issue to grasp and make some
progress on exactly what impact these investments are having and
to what extent this can be influenced by the public sector. It
really has been quite difficult for us to grasp, so we do not
have any specific ideas on this area at the moment. We draw on
the research that Chatham House conducts quite a lot. They are
very much part of our policy development team, and they have started
some research on this. There have been discussions with ourselves
and with the incoming Austrian Presidency to try and give some
life to this part of the action plan, but there is not an awful
lot of commitment, I think, on the part of financial institutions
and export credit agencies and other organisations to really engage
on this issue in a substantive way, so we are somehow slightly
stuck.
Q363 Mr Hurd: Can I bring you on
to the question of the opportunity to develop more uniform procurement
policy across the EU? We have heard a lot of evidence as to how
helpful that would be and the evidence seems to point to five
countries—Denmark, France, Germany, the Netherlands and
the UK—who are in the vanguard of action as far as this
issue is concerned, but the rest are doing nothing as far as we
can see. What more is being done or could be done at the EU level
to make Member States' timber procurement policies more uniform?
Mr Scotland: Public procurement
is a Member State responsibility, a Member State competence, and
so there is limited scope, I think. We cannot oblige Member States
to take these sorts of measures. This is not a part of the work
which I am directly responsible for, but I think there may be
grounds sometimes for maintaining the integrity of the internal
market, and so when you have a proliferation of standards and
criteria and schemes across different countries, like the UK and
Denmark and Holland, it becomes very difficult for industry to
meet these different requirements. There are some grounds, I think,
for ensuring a harmonised approach, but my personal feeling is
that it needs to be from the lessons that we have derived from
the work that we have done in the UK in particular, but also in
the Netherlands, in Denmark. The public procurement aspect is
extremely important in giving positive incentives which we are
trying to take through the FLEGT action plan and encourage good
practices, and I think there needs to be some work done to make
sure that other Member States, who have given their backing to
the action plan and committed themselves through the G8, for instance,
to taking measures to improve their public procurement, can do
so.
Q364 Mr Hurd: But your memorandum
and I think your evidence so far suggests that you believe that
market mechanisms should be allowed to develop further without
regulation; but if now only five countries are showing any signs
of being proactive, how sustainable is that argument that this
process can be managed without any further regulation?
Mr Scotland: Just last year there
was a new set of directives concluded—it was a very lengthy
process of getting agreement between the Member States and the
Parliament. There was no appetite to put any strong clauses on
timber into that, so I do not think there is much scope to direct
Member States to take these sorts of steps, but I think there
is a lot of commitment around the FLEGT action plan, and there
is commitment through other fora, particularly the G8.
Q365 Mr Hurd: Quite a lot of commitment
in rhetoric but not much in action?
Mr Scotland: Yes. I think the
countries which are taking action have shown that that can be
very influential, but there is limited scope, I think, for us
to influence them and, beyond that, there is a responsibility
that they have to act on these commitments.
Q366 Mr Hurd: Finally, is the Commission
in agreement with the UK government that social considerations
cannot be taken into account with a procurement policy, or is
Denmark getting it right?
Mr Scotland: I am sorry; I am
not an expert on procurement. I do not follow that particular
debate at all. I cannot answer that; I am sorry.
Q367 Chairman: I think the point
was that which we questioned the Minister earlier about, including
social aspects into the definitions and to relate that to procurement
policy. Is that something which other European countries would
be pursuing?
Mr Scotland: I just do not know.
I am sorry.
Q368 Colin Challen: The FLEGT action
plan and licensing agreement is being negotiated under Article
133, relating to trade, rather than 175, relating to the environment.
Does that not effectively prejudice the interests of the environment
in this process?
Mr Scotland: I do not think so.
We chose 133 because we felt that was really the only legal base
that we could use for the regulation, and the regulation is simply
a framework which allows Customs authorities to act. It is a framework
to regulate the trade in timber—it does not go beyond that—and,
because of its focus purely on the trade in timber, we felt that
133 was the only suitable legal base. A lot of the work which
is planned through the action plan is coming in these voluntary
partnership agreements, a much wider instrument, which is looking
at and addressing these questions of poor governance and corruption
which is ultimately driving illegal logging and trying to address
this question of trade in illegal timber with the EU. Therefore
these partnership agreements would not necessarily be a 133 legal
base. I think quite the contrary, in fact. But the choice of Article
133 for the regulation seemed to be the only option.
Q369 Colin Challen: Can I just get
it right. If somebody wanted to bring a case to the European Court
of Justice, a judge sitting there could give as much attention
to environmental arguments as to the legal requirements based
on Article 133, or would that judge be constrained only to look
at the legal basis of disagreement or, indeed, any agreement?
Mr Scotland: I think he would
look at the content of the regulations and on that basis take
a decision.
Q370 Colin Challen: If he failed
to concentrate on the legal argument, as opposed to the secondary
arguments about voluntary agreement or the environment or social
requirements, he could be open to an appeal or a challenge presumably
and lawyers would not see that as being legally binding; so it
is prejudiced?
Mr Scotland: If there was any
sort of appeal, I think that would be conducted on the basis of
the substance of the regulation.
Q371 Colin Challen: Of the law?
Mr Scotland: Of the law, yes.
Q372 Colin Challen: Were any arguments
made for using the other article, Article 175?
Mr Scotland: There were some arguments,
but the Council's legal service, which is the representative of
the collective Member States, was also of the view that this should
be a 133 legal base, so the Commission's legal service and the
Council's legal service were in agreement on that. There were
one or two Member States who objected but gave their agreement
in the end, and some members of the European Parliament were not
in favour of 133 either.
Q373 Colin Challen: Would it be correct
to say that if the licensing scheme had been negotiated under
Article 175 it might have made the process rather more transparent,
perhaps involving the European Union's Parliament?
Mr Scotland: I think it might
not have . . . It may have improved transparency, although I think
we have gone to quite substantial lengths to consult and to keep
our main interest groups informed. It would certainly have added
a very considerable additional amount of time to the process.
The co-decision process between Parliament and Member States does
take very much longer than the process of agreeing a regulation
under Article 133, and so that was also a factor in our decision
to propose 133.
Q374 Colin Challen: We have had very
little evidence to give us any confidence that the FLEGT action
plan voluntary partnership agreements is really anything more
than a rather faltering and uncertain step in the right direction.
Would you agree with that?
Mr Scotland: No, I would think
that is an unfair comment. It is quite a substantial initiative,
quite a substantive initiative. It has a lot of resources, finance,
quite an innovative approach behind it, and, for something which
is actually quite new and untested and unfamiliar ground, I think
it has moved fairly, I would not say rapidly, but it has made
good progress through the system that we all have to deal with.
Q375 Colin Challen: But it does not
really substantially deal with the issue of circumvention, does
it, of imports and exports through third-party countries?
Mr Scotland: No—this is
probably what we were discussing a bit earlier—the bilateral
nature is going to be prone to circumvention. We came down to
this bilateral proposal because, as we discussed earlier, as you
heard earlier, there had been a lot of problems with efforts to
get any sort of multilateral cooperation on forests, and I think
on these sensitive issues, which are related to governance and
trade, there is, I think, no prospect of multilateral cooperation
in the current climate; so this was the best way forward that
we could come up with. It came through a very long, and I think
quite detailed and open, process of consultation and analysis
which was contributed to by research bodies, NGOs, industry, and
of all the options considered this seemed to be the best way forward.
Q376 Colin Challen: There are so
few countries being terribly interested in stopping this trade
in illegal timber, with the problems that you have highlighted
about securing multilateral agreements is not all this effort
on FLEGT and the voluntary partnership agreements just really
a waste of time. In fact, bearing in mind your earlier comment,
would it not have been better to try to get the co-decision procedure
going, something which would lead to a tougher regime, even if
it took longer to achieve it? Would that not have been a better
approach?
Mr Scotland: I am not sure that
this tougher regime is actually going to solve the problem. The
problem, as we see it, is not stopping the trade, it is stopping
illegal logging, and that is primarily a problem of governance
and corruption in countries that are blighted by illegal logging.
Trade is another dimension and is an instrument which we can use
to try to stop it, but I do not think necessarily—this is
not a final position from the Commission by any means, but we
have argued very consistently that this ban we have been asked
about a lot would not be an effective or proportionate instrument
to deal with the problem. That is for several reasons. The first
is that the ban, without any means of certification, would not
give our Customs authorities anyway of telling legal from illegal.
Legal is determined by the laws of the producing country, and
for EU Customs to determine that, they need to be able to refer
back to the producing country, the exporting country, have some
sort of means of determining whether it is legal or illegal according
to their laws, and this ban would not facilitate that sort of
cooperation. It would be rather antagonistic. The other reason
we have elected for this bilateral approach based on partnerships
is that these partnerships are a way of trying to encourage some
of these difficult reforms in the producing country to increase
transparency, to address corruption, to improve equity in the
forest sector. These partnerships are a way into that and trade
is a way of using a carrot and stick as well as being able to
exclude illegal timber, and so the end is not addressing the trade
itself, it is using the trade as another way of trying to encourage
these reforms and trying to build a constructive approach around
which to push these difficult issues forward in developing countries.
Q377 Colin Challen: What would be
your measure of success in FLEGT and the VPAs? I am not quite
sure how this is going to produce the goods, because we have heard
in this Committee already how serious the problem is, how the
problem is actually growing, despite concerns that people have
had and some actions that governments have taken over the last
two or three decades. Are you confident this is going to deliver
anything and how would you measure it?
Mr Scotland: In terms of measuring
the impact, there are a lot of provisions for monitoring and reviewing
in the regulation and the directives to the partnership agreement.
That will give us information to assess the risk and the extent
of circumvention, whether it is taking place, how it is taking
place. We will be able to identify how much trade has been licensed,
there will be reviews of progress to assess the development cooperation
aspects, the governance reforms, improvements in the legal framework
in the partner countries, et cetera.
Q378 Colin Challen: Is this something
that the Commission, shall we say, will treat with a degree of
urgency given the scale of the problem?
Mr Scotland: We have always treated
this with a degree of urgency. We gave this a very high priority.
Coming out of the World Summit on Sustainable Development (WSSD),
this was one of the three key initiatives which we launched. The
other two were our water and energy initiatives. I know there
is a lot of criticism about the speed of the process, but that
is not all our fault. A large part of the process is taken up
with Member States discussing this amongst themselves, it is a
system that we all have to work with, and I think the degree of
urgency that we have given it is reflected in the fact that this
has made a good progress through the system, despite the fact
it is quite a new and fairly controversial initiative for some
countries.
Q379 Colin Challen: Once they come
into force, are the VPA agreements negotiable in any way? Could,
for example, a country unilaterally and without prejudice to itself
remove itself from the scheme?
Mr Scotland: Yes.
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