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How the UK could work with international partners to tackle deforestation

About ClientEarth

ClientEarth is an environmental law charity with offices in London, Brussels, Warsaw, Berlin, Madrid, Beijing, Luxembourg and Los Angeles. We use the law to fight climate change, tackle pollution, defend wildlife and protect people and the planet.
ClientEarth has extensive experience in domestic, international and EU environmental law. ClientEarth has been involved in the implementation of Voluntary Partnership Agreements and the European Union Timber Regulation for over ten years, and has extensive experience supporting producer countries in West Africa, the Congo Basin and South East Asia to strengthen their forest governance.
We welcome the opportunity to give written evidence to the Environment Audit Committee’s inquiry on sustainable timber and deforestation, especially the role that the UK could play to support international partners to tackle deforestation. This written evidence particularly responds to the following questions of the inquiry:

a. How effective are the measures to improve due diligence and ban imported products of illegal deforestation in the Environment Act 2021?

b. How effectively is the UK engaging with international partners to tackle deforestation?

c. What impact will the UK’s measures to tackle deforestation have on producer countries, indigenous peoples and local communities?

Introduction

Deforestation is a global problem, driven by intricate and complex trade linkages.i Countries that consume more forest-risk commodities than they produce tend to drive deforestation outside their borders. Consequently, consumer countries’ regulation of deforestation must consider the impacts outside their borders, as well. This is what the UK has committed to in Schedule 17 of its Environment Act.
In adopting a legality approach in Schedule 17 of its Environment Act, the UK has the opportunity to drive national legal reform, strengthen governance of forests and strengthen rule of law in the agricultural and forestry sectors of countries of production, as was achieved within the timber sector under the Voluntary Partnership Agreements (VPA) of the Forest Law Enforcement Governance and Trade Action Plan (FLEGT).ii However, the requirements of Schedule 17 alone will not drive these systemic changes, and more targeted cooperation and partnership with countries of production is required. This written evidence provides analysis of this approach and provides some lessons from the FLEGT-VPA experience.

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Need for international cooperation and partnership alongside UK Environment Act 2021

The legality requirement in Schedule 17 of the UK Environment Act requires operators to ensure compliance with national laws (defined within Schedule 17 as “local law (a) which relates to the ownership of the land on which the source organism was grown, raised or cultivated, (b) which relates to the use of that land, or (c) which otherwise relates to that land and is specified in regulations made by the Secretary of State”). Beyond this definition of national laws, the UK Environment Act is silent as to how operators should identify these laws – a key step before being able to demonstrate compliance. Nonetheless, “defining what is legal (and illegal) can be complicated”,iii because the laws in many countries are unclear, contradictory or incomplete. One option to overcome this potential implementation gap is for countries of production, with the support of the UK Government, to define legality within the scope set by Schedule 17.
This section will explore the implementation challenges of not defining legality and then draw on experience from the FLEGT-VPA to demonstrate what a nationally led process of defining legality could be.

Implementation challenges for UK Government officials

If a definition of legality is not elaborated, experience with the implementation of the EU Timber Regulation (EUTR) indicates that there is a risk that operators may interpret and apply a legality requirement restrictively and fail to consider whether the commodities and products in their supply chain were produced in accordance with all the rules falling within the scope of Schedule 17, claiming ignorance of complex, unclear or contradictory rules. In the framework of the EUTR, Competent Authorities have not generally challenged companies on legal issues involving environmental conservation or land tenure, because they lack the necessary capacity and resources to investigate and assess the relevant legal frameworks in third countries to the extent necessary to properly enforce the EUTR. In a Forest Trends survey of EUTR Competent Authorities, 88 percent said they had sanctioned a company for failing to meet harvesting laws, but only 13 percent said they had sanctioned companies for legal issues relating to biodiversity conservation or land tenure. In the case of customary land tenure issues, Competent Authorities report that successfully applying sanctions regarding customary land tenure issues is, in practice, very difficult based on their current levels of capacity and resources, as it requires fieldwork at the community level if those rights have not been formally registered.iv

Creation of commodity ‘tiers’ in countries of production

Schedule 17 of the Environment Act seeks to regulate commodities entering its market, with responsibility placed on operators to comply with the legality requirement. Relying on operators alone may create a patchwork of commodity production, where some production complies with national laws (and therefore the legality requirement of Schedule 17) and some production does not. In other words, two ‘tiers’ of operators emerge:

(1) those operators who comply with the UK Environment Act and continue to export to the UK; and

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(2) those operators who do not comply with the UK Environment Act, and export to countries with less stringent requirements.

Operators may make this choice for many reasons, but it can come down to operator capacity to implement the new standards set by the Environment Act. Small businesses and smallholder farmers may have particular difficulties.v
If more countries start to adopt demand-side measures, notably China and the US, the majority of forest-risk commodities that are traded internationally will be subject to similar requirements as the UK’s Environment Act and the EU’s Deforestation Regulation.vi While there are some promising discussions in these jurisdictions, any new legislation will take some time to come into effect.
More directly within the UK Government’s jurisdiction is to cooperate with producer countries to enhance governance in the agricultural and forestry sectors through national legal reforms that will apply to all operators. These reforms would also contribute to preventing the emergence of a two- tier system. Strengthening the traceability and monitoring systems, the legal framework and implementation of regulations have the potential to minimise the risk of emergence of a second tier – or at least minimises the scale of such parallel supply chains.
The UK may therefore wish to consider a formal process of cooperation with countries of production to clarify what national and sub-national laws apply to Schedule 17 and what evidence is needed for compliance. An inclusive, producer country-led definition of legality would mirror the EU and UK’s VPA approach to governance reform in the timber sector.

Lessons from the FLEGT-VPA approach

FLEGT-VPAs “were negotiated through a process that is designed to enable national stakeholders to participate in decision-making on forest law enforcement, governance and trade. The EU offers incentives in the form of trade preferences for timber products that are licensed as legal (i.e. that have been issued with a FLEGT licence). This mechanism is combined with capacity-building assistance to partner countries to set up licensing systems, reform legislation and improve law enforcement.”vii
According to a recent report by Chatham House: “Decades of work to establish legal and sustainable supply chains for timber and wood-based products provide important lessons for reform of other ‘forest risk’ commodities […] The VPAs provide a valuable model to enable the UK to expand legal and sustainable trade around the world, not just in the forest sector but beyond.”viii ClientEarth agrees, and this section sets out three fundamental principles of the FLEGT VPA approach that we believe could be replicated in the implementation of any international cooperation under Schedule 17 of the Environment Act.
The FLEGT-VPA approach was built on support for governance reforms in tropical forest countries as a key method to reduce the supply of illegal timber. Capacity building and technical assistance from the EU and the UK led to national-level reforms, which sought to ensure governance and legal compliance throughout the forest products supply chain in timber-producing countries – not just for timber being exported to the EU and the UK.
VPAs are built on a national multi-stakeholder process, bringing together government, civil society and the private sector to negotiate national laws and standards, ensuring fairness and

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legitimacy, as well as increasing credibility and accountability. Governments in certain VPA countries, such as Ghana (see below) have become more open towards non-state actors and have come to understand the valuable role they can play in shaping policy.ix

The trade element of VPAs has been important as well, in creating a clear incentive for improvements to national legal and governance frameworks. Markets can also initiate “broader discussions in which the different political, social and economic priorities of stakeholders can be addressed – which has been the case with the VPAs, for instance.”x
Currently, Schedule 17 of the Environment Act does not include any reference to cooperation or partnership with countries of production, but the possibility of establishing cooperation or partnership in secondary legislation remains. ClientEarth believes that the FLEGT-VPA is a valuable example from which to build such cooperation or partnership, based on the three principles outlined above.

Fitness Check of the VPAs and the EUTR

In 2020–21, the European Commission undertook a ‘fitness check’ of the VPAs and the EUTR.xi The findings of the fitness check were mixed, with the overarching message that it was unclear what impact there had been on illegal logging globally. The methodology and findings of the fitness check have been strongly criticised, with some civil society organisations pointing to genuine improvements in governance in many VPA countries, xii which fell outside the scope of the assessment.
The ‘fitness check’ assessment of VPAs focused on whether a FLEGT license had been put in place. However, the licence is the final piece of the VPA process and does not capture the fundamental improvement to forest governance that VPAs have been able to achieve in some producer countries, although they have not yet issued any FLEGT licenses.
Another important criticism of the VPAs was that they have taken too long and cost too much. Indeed, we know from the FLEGT-VPA that negotiating legality definitions is not straightforward, particularly when the legal framework of the producer country is weak and where a lot of reform is needed. However, the inclusive and nation-wide process of dialogue that the VPA was able to drive in producer countries has been, in itself, an enormous achievement and has led to great strides in strengthened forest governance in producer countries. These types of systemic changes to the way in which we produce and consume agricultural commodities is not a process that will happen quickly, but it is of vital importance to address the key drivers of global deforestation.

Ghana as positive example

Since embarking on implementation of a VPA in 2009, Ghana has enhanced transparency, reformed laws to address opaque timber permitting processes, boosted the benefits flowing to communities from timber concessions, and created space for multi-stakeholder

participation and independent forest monitoring by civil society.

The national processes established under the VPA to define what is legal in timber production and trade have been transformative in Ghana. A robust multi-stakeholder process prompted national legal reforms where conflicting or weak laws were identified. Law reform was, in part, driven by

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national civil society, who were central to the drafting of an important regulation (Legislative Instrument 2254 or LI 2254) that reviewed and clarified several existing regulations to solve issues of unclear rules and procedures related to timber permitting. LI 2254 has been instrumental in preparing Ghana’s timber industry for FLEGT licensing and overcoming final hurdles to legality in the timber sector. The LI 2254 garnered broad and strong support from government, private sector and civil society stakeholders, enhancing transparency and generating benefits for communities. This was an important milestone and a key achievement, as all key stakeholders were consulted during this contentious forest law reform process, and their inputs recognised.xiii The success of this participatory process is also important, as it sets an example from which to draw lessons for future national law reform processes. Specifically, it shows that national civil society has an "important role and has become more independent and powerful in the country thanks to VPA”.xiv

Nonetheless, it must be said that not all issues have been addressed by the VPA. For example, land and resource rights has received less attention: “While Ghana has seen remarkable progress in many aspects of forest governance, issues related to land and tree tenure remain unresolved.”xv This will be an important gap to consider in the implementation of the Environment Act, especially since local communities have a recognised role in preserving the lands they own and/or manage, and insecure land tenure is a major driver of deforestation and forest degradation. While a CIFOR study found that the VPA has moderately contributed to more consultation and consideration of local communities’ opinions in decision making in the timber sector and to more recognition of their property rights,xvi Ghana‘s laws are not yet sufficient to ensure that the commodities have been produced in accordance with the rights of local communities.xvii
With such systemic changes to the way in which the timber sector functions in Ghana, why does the UK need to provide more support to VPA partner countries, like Ghana? Unfortunately, our experience shows that the lessons from the VPA are not necessarily being applied to other sectors. Law reforms are taking place in other sectors, such as land and tree tenure, cocoa, wildlife and protected areas, and environmental protection. Our experience is that the improvements in transparency and inclusion that have been achieved in the timber sector remain limited to stakeholders in that sector, particularly government and private sector stakeholders. Therefore, producer countries need continued support from demand-side countries, like the UK, to expand the changes in governance that we have seen in the timber sector to other sectors linked to deforestation.

Caroline Haywood

Lead – Ecosystem Governance www.clientearth.org

Raphaelle Godts

Law & Policy Advisor – Ecosystem Governance

www.clientearth.org

February 2023

i Florence Pendrill et al. (2019). Deforestation displaced: trade in forest-risk commodities and the prospects for a global forest transition. Environ. Res. Lett. 14 055003, https://iopscience.iop.org/article/10.1088/1748-9326/ab0d41 ii Alison Hoare and Thiago H. Kanashiro Uehara (2022). Establishing fair and sustainable forest economies: Lessons learned from tackling illegal logging. Environment and Society Programme, https://www.chathamhouse.org/sites/default/files/2022-09/2022-09-28-fair-sustainable-forest-economies-hoare- kanashiro-uehara_0.pdf

iii ClientEarth (2018). Legal Toolkit on Forest Conversion, https://www.clientearth.org/media/lx5hbsv4/conversion- toolkit-full-report-ce-en1.pdf

iv Jade Saunders (2020). Ten steps towards enforceable due diligence regulations that protect forests, Forest trends, https://www.forest-trends.org/wp-content/uploads/2021/03/EUTR-DDS-FINAL.pdf

v Fern (2022). Deforestation Regulation: Ivorian Farmers’ Low income from cocoa is a human rights issue, https://www.fern.org/publications-insight/deforestation-regulation-ivorian-farmers-low-income-from-cocoa-is-a- human-rights-issue-2590/

vi Alison Hoare and Thiago H. Kanashiro Uehara (2022). Establishing fair and sustainable forest economies: Lessons learned from tackling illegal logging. Environment and Society Programme, https://www.chathamhouse.org/sites/default/files/2022-09/2022-09-28-fair-sustainable-forest-economies-hoare- kanashiro-uehara_0.pdf

vii Alison Hoare and Thiago H. Kanashiro Uehara (2022). Establishing fair and sustainable forest economies: Lessons learned from tackling illegal logging. Environment and Society Programme, https://www.chathamhouse.org/sites/default/files/2022-09/2022-09-28-fair-sustainable-forest-economies-hoare- kanashiro-uehara_0.pdf

viii Chatham House expert comment article (2017). Forest Governance Provides UK with a valuable model for expanding sustainable trade, https://www.chathamhouse.org/2017/11/forest-governance-provides-uk-valuable- model-expanding-sustainable-trade.

ix Paolo Cerutti et al. (2021), Voluntary Partnership Agreements: Assessing impacts for better policy decisions, Forest Policy and Economics, 124, https://doi.org/10.1016/j.forpol.2020.102386; Fern (ed.) (2020). How to ensure FLEGT is a success: Make sure we stay the course, FLEGT VPA update January 2020, https://loggingoff.info/wp- content/uploads/2020/01/VPA-Update-January-2020-2.pdf; FERN (undated), Do FLEGT VPAs improve governance? https://www.fern.org/fileadmin/uploads/fern/Documents/impactreport_lowres.pdf; Alison Hoare et al., (2020), Forest sector accountability in Cameroon and Ghana, Energy, Environment and Resources Programme https://www.chathamhouse.org/sites/default/files/2020-11/2020-09-30-forest-sector-accountability-in-cameroon- and-ghana-hoare-et-al.pdf; Fern (2022). EU deforestation regulation must strengthen the FLEGT process and produces countries’ own efforts to combat deforestation, https://www.fern.org/publications-insight/eu-deforestation- regulation-must-strengthen-the-flegt-process-and-producer-countries-own-efforts-to-combat-deforestation-2589/

x Alison Hoare and Thiago H. Kanashiro Uehara (2022). Establishing fair and sustainable forest economies: Lessons learned from tackling illegal logging. Environment and Society Programme, https://www.chathamhouse.org/sites/default/files/2022-09/2022-09-28-fair-sustainable-forest-economies-hoare- kanashiro-uehara_0.pdf

xi European Commission (2021). Fitness Check on Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010 laying down the obligations of operators who place timber and timber products on the market (the EU Timber Regulation) and on Regulation (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community (FLEGT Regulation), https://environment.ec.europa.eu/system/files/2021- 11/SWD_2021_328_1_EN_bilan_qualite_part1_v2.pdf

xii See, for example, Fern (2021). Raising the bar: Strengthening EU biodiversity and climate leadership through FLEGT and Forest Partnerships, https://www.fern.org/publications-insight/raising-the-bar-strengthening-eu- biodiversity-and-climate-leadership-through-flegt-and-forest-partnerships-2336/

xiii Forestry Commission, (accessed February 2023). Ghana FLEGT VPA: Definition of Legal Timber for Ghana. https://www.oldwebsite.fcghana.org/fctvd/index.php/focal-areas/definition-of-legal-timber-for-ghana

xiv N. Leszczynska et al. (2022). Collecting evidence of FLEGT-VPA impacts: Ghana country report, Bogor, Indonesia: Center for International Forestry Research, https://www.cifor-icraf.org/knowledge/publication/8443/ xv N. Leszczynska et al. (2022), Collecting evidence of FLEGT-VPA impacts: Ghana country report, Bogor, Indonesia: Center for International Forestry Research, https://www.cifor.org/knowledge/publication/8443.

xvi N. Leszczynska et al. (2022), Collecting evidence of FLEGT-VPA impacts: Ghana country report, Bogor, Indonesia: Center for International Forestry Research, https://www.cifor.org/knowledge/publication/8443. xvii ClientEarth (2022). Cocoa Research briefing 2: Major Concerns and Recommendations – Ghana,

https://www.clientearth.org/latest/documents/cocoa-research-briefing-2-major-concerns-and-recommendations- ghana/