Background
Illegal logging and harvesting of wood contravening local laws are closely connected to deforestation and other criminal activities in the countries of origin. Although most EU member states have tightly regulated laws covering domestic forestry operations, the legality of imported timber and wood products has largely been overlooked until the introduction of the EU Timber Regulation (EUTR) in 2013.
By introducing a system of due diligence, setting up monitoring organisations, and enforcing disciplinary sanctions for breaking the code, companies are now obliged by the EUTR to document their supply chains to prove their products are sourced from legally harvested forests.
What is the EUTR?
The EU Timber Regulation (EUTR) applies to all 27 member states of the European Union together with Iceland, Norway and Lichtenstein. The EUTR imposes three areas of responsibilities on individuals and companies trading in wood or wood products:
- Due Diligence
- When importing, also referred to as ‘placing’, wood and wood products to the EU market, a company (named the ‘Operator’ in the Regulation) must carry out due diligence on their supply chain to avoid sourcing illegal wood.
- When importing, also referred to as ‘placing’, wood and wood products to the EU market, a company (named the ‘Operator’ in the Regulation) must carry out due diligence on their supply chain to avoid sourcing illegal wood.
- Prohibition to place illegally harvested wood or wood products on the EU market
- Companies, or Operators, who want to place timber on the EU market must be confident that the timber used in their products and supply chain have been harvested in compliance with the legislation of the country of harvest and traded legally. Learn more about how to comply with the EUTR here.
- Companies, or Operators, who want to place timber on the EU market must be confident that the timber used in their products and supply chain have been harvested in compliance with the legislation of the country of harvest and traded legally. Learn more about how to comply with the EUTR here.
- Traceability
- According to the EUTR ‘Traders’ shall identify their suppliers and clients. Traders are defined as any person or company who sells or buys wood or wood products on the European Union’s internal market.
- According to the EUTR ‘Traders’ shall identify their suppliers and clients. Traders are defined as any person or company who sells or buys wood or wood products on the European Union’s internal market.
What is the purpose of the EUTR?
The EUTR is a part of the European Union's policy on fighting illegal logging and associated trade. This was first expressed in 2003 as part of the Forest Law Enforcement Governance and Trade (FLEGT) Action Plan.
The EUTR aims to reduce deforestation globally and mitigate its negative impact on the environment by developing responsible and sustainable trading practices, while preventing consumers and suppliers from purchasing illegally sourced wood and wood products.
Who is liable and for what?
The EU Timber Regulation distinguishes between companies by separating who initially places wood or wood products on the EU market (defined as ‘Operators’) and companies trading in wood or wood products already placed on the EU market (defined as ‘Traders’).
What is an ‘Operator’?
Importers and harvesters of wood or wood products based in the EU are referred to as ‘Operators’. This group must observe the following three obligations:
- The placing on the market of illegally harvested wood or wood products is prohibited.
- Operators shall have a due diligence system in place, which allows them to mitigate the risk of placing illegally harvested wood or wood products on the EU market.
- Operators shall maintain and regularly evaluate their due diligence system.
What is a ‘Trader’?
Traders are defined as any person or company who sells or buys wood or wood products on the European Union’s internal market. This group must be able to identify the Operators or Traders they have purchased wood and wood products from, and the traders to whom they have supplied wood and wood products.
The requirement for Traders is designed to help enforcement authorities trace a wood product back to the Operators where an investigation is conducted.
Operators and Traders are both required to maintain this information on record for at least five years.
Take a look at this guide for more information about Operators versus Traders or find out what definition applies to your company by taking this quick EUTR Test.
What is a Due Diligence System?
A Due Diligence System (DDS) is crucial to the EUTR and enables you to document that your wood or wood products have been harvested legally. Due diligence involves three important steps designed to help companies check their supply chains as well as mitigate any risks they identify. The three steps are:
- Step 1: Access to Information
- Operators must hold information required to document that their wood or wood product has been sourced legally. This includes information on the species, country of harvest, quantity, the name and address of the supplier to the Operator or Trader, and documents indicating compliance with legislation.
- Operators must hold information required to document that their wood or wood product has been sourced legally. This includes information on the species, country of harvest, quantity, the name and address of the supplier to the Operator or Trader, and documents indicating compliance with legislation.
- Step 2: Risk assessment
- This step requires Operators to evaluate if their products have been produced in compliance with the laws of the country in which the wood has been harvested in. The evaluation of the risks should also identify any potential risks (non-negligible and negligible risks) in the supply chain.
- This step requires Operators to evaluate if their products have been produced in compliance with the laws of the country in which the wood has been harvested in. The evaluation of the risks should also identify any potential risks (non-negligible and negligible risks) in the supply chain.
- Step 3: Risk mitigation
- If Step 2 uncovers “non-negligible risks” – including missing or non-credible documents or any indications that the wood or wood product has been obtained illegally – the Operator must take mitigation measures to minimise the risk before placing the wood or wood products on the market. Mitigation measures may range from requiring additional information or documents from suppliers to third party verification. If the outcome of Step 2 is that the timber is of negligible risk of being illegal, there is no need to set up risk mitigation procedures.
- If Step 2 uncovers “non-negligible risks” – including missing or non-credible documents or any indications that the wood or wood product has been obtained illegally – the Operator must take mitigation measures to minimise the risk before placing the wood or wood products on the market. Mitigation measures may range from requiring additional information or documents from suppliers to third party verification. If the outcome of Step 2 is that the timber is of negligible risk of being illegal, there is no need to set up risk mitigation procedures.
What information do I need for my Due Diligence System?
Due diligence is a cornerstone in the EUTR. As a company trading or importing wood or wood products into the EU, the EUTR requires that you set up a Due Diligence System (DDS). The DDS should maintain the information collected, hold a record of assessment, and the mitigation measures taken for each supply chain. You can either set up your own DDS or use the service of a recognised Monitoring Organisation (MO) who will have a DDS available for you to use. Please find an example of a DDS here.
What is a risk assessment and what should it cover?
As an importer, you should be able to demonstrate that you have sufficient access to information about the origin of the wood used in your product. Gathering and analysing all documents enables you to assess possible risks of illegal timber entering your supply chain. With this knowledge you can plan how to mitigate these risks. This could involve finding a different supplier or using a certified product instead.
For detailed evaluations of risks in timber sourcing countries, please visit the Sourcing Hub.
Timber trade portal (ATIBT and ETTF): provides country profiles on the timber industry and legislation in producer countries
Open Timber Portal (WRI): Information on producers within each producing country
FAOLEX: Country profiles covering forestry among other commodities
SPOTT: Environmental Social Governance assessments for timber and pulp producers.
What products are covered by the EUTR?
The EUTR covers a wide range of wood and wood products, but not all. Wood and wood products that have completed their lifecycle and would otherwise be disposed of as waste are excluded from the EUTR. Other exemptions include for example pencils, books and photographs.
How do you know if your products are covered? Simply check the customs code under which you import products and then see if it is listed in the annex in the Regulation or check this guide.
Are any products by definition legal?
FLEGT licensed products and CITES (Convention on the International Trade in Endangered Species) products with valid permits and licenses are by definition legal under the EUTR. This means that no due diligence exercise will have to be undertaken for these products. I.e., no additional information, risk assessment or risk mitigation is needed.
Are certified products by definition legal?
No. Even if your wood or wood products have been certified with schemes such as the FSC (Forest Stewardship Council) or PEFC (Programme for the Endorsement of Forest Certification), you will still have to carry out due diligence.
What are Monitoring Organisations?
Monitoring Organisations (MO) are companies or organisations, who can help and advise your company on how to comply with the EU Timber Regulation. Operators have a choice between setting up their own Due Diligence System (DDS) and exercise due diligence themselves or use a DDS of a Monitoring Organisation.
Monitoring Organisations are officially recognised by the European Commission, and are regulated by the Competent Authority in the EU member state they are residing in.
You can find a list of all Monitoring Organisations here.
What are Competent Authorities?
Competent Authorities (CAs) are the official bodies responsible for the application and enforcement of the EUTR. It is their responsibility to check if Operators fulfil the requirements under the EUTR, and to check if a company's Due Diligence System is sufficient to comply with the EUTR.
Find your local Competent Authority here.
What penalties will be imposed for violation of the EUTR?
In cases where companies are found to violate the EUTR, the sanction is defined by the EU member states national law and may differ from member state to member state. The EUTR states that penalties must be “effective, proportionate and dissuasive”. Penalties will be enforced by the member states. Their actions may include:
- Seizure of wood and wood products stock
- Immediate suspension of authorisation to trade
- Fines proportional to the severity of misconduct
Penalties may be imposed on:
- Operators
- If they place products containing illegally harvested wood or wood products on the EU market
- If they fail to exercise due diligence when placing wood or wood products on the EU market
- Traders
- If they are unable to identify the Operators or Traders who have supplied them with the wood or wood products being sold on the EU market
- If they are unable to identify, where applicable, the traders to whom they have supplied timber
You can also find a FAQ on the EUTR developed by the European Commission here.
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The European Commission (donor) is not responsible for any claims or views presented in this material. The European Commission's support for the production of this publication does not constitute endorsement of the contents which reflect the views only of the authors, and the Commission cannot be held responsible for any use which may be made of information contained therein.