Introducing Global Witness
Global Witness focuses on role of natural resources in funding conflict and corruption (see www.globalwitness.org). We aim to promote improved governance and transparency in natural resource sector management and to ensure that revenues accruing from resource extraction are used to promote peaceful, equitable and sustainable development. We campaign on conflict commodities (notably diamonds), illegal logging and oil revenue misappropriation.
There is currently no international criminal law that governs illicit natural resource extraction. Such a law could with G8 support, be elaborated under the UN Organised Crime Convention. For the purposes of this submission however, our suggestions for G8 action focus more narrowly on eliminating the root causes and drivers of illegal logging, both in timber producing and consuming countries.
The effectiveness of G8-supported measures to curb illegal logging
“Such blatant disregard for the law weakens governments, encourages corruption, undermines democracy, and then, in turn, saps the faith of the people in the democratic system. It wreaks havoc on the fragile environment, destroying watersheds, devastating wildlife, and demolishing livelihoods.” Secretary Colin L. Powell, 28 July 2003
In May 1998 G8 governments, which include both major timber producing and consuming countries, agreed amongst other things: to assess “…the nature and extent of international trade in illegally harvested timber…” to identify and assess “…the effectiveness of their internal measures to control illegal logging and international trade in illegally harvested timber…” and to work with interested partner countries to develop their own capacity to assess “…the nature and extent of illegal logging and trade in illegally harvested timber…” By placing the emphasis on further research and analysis, the 1998-2002 G8 ‘Action Programme on Forests’ essentially kicked the issue of illegal logging into the long grass.
In September 2001, the landmark East Asia Forest Law Enforcement and Governance (FLEG) Ministerial Declaration set out a comprehensive list of actions that if implemented, could and should have already made a significant impact on illegal logging. However, in subsequent years the G8 focused on the creation of complementary processes, to the detriment of tangible action in East Asia: the Africa FLEG (October 2003), the EU FLEGT Action Plan (May 2003), the U.S. President’s Initiative (July 2003), the Asia Forest Partnership (May 2002), together with several memoranda of understanding, and truckloads of additional analysis. These processes could yet prove to be worthwhile, but to date have done little if anything to improve the situation on the ground.
According to the World Bank illegal logging costs developing countries between $10-15 billion annually. Illegal timber in trade is also estimated to depress world prices by between 7%-16%, with direct cost implications for G8 nations: U.S. exporters for instance, could be losing $460 million annually. These figures dwarf the $15 million set aside by the U.S. to address the problem.
It is important the G8 ensures that China is closely involved. As a fast growing consumer market for timber and a large exporter of wooden products, China will have a pivotal role to play in the years to come. Measures to combat illegal logging are entirely consistent with and supportive of, G8 development objectives (peace and security, poverty alleviation, and good governance etc), combating organised crime and promoting good business practices, transparent markets and legal trade. The critical impacts of illegal logging are well documented, and the G8 nations uniquely placed to do something about it.
Priorities for action:
1. Prohibit the importation of illegally sourced timber and timber products
“Countries attempting to tackle illegal logging can find their efforts frustrated by the fact that once illegally harvested timber is shipped abroad there is no simple means to prevent it entering the supply chain and providing profits for those involved.” Proposal for an EU Action Plan, COM (2003) 251 Final, 21 May 2003
It is currently entirely legal to import and market timber and timber products, produced in breach of the laws of the country of origin, into all countries including G8 member nations. A continued failure to rectify this anomaly could lead the public to conclude that the G8 condones breaking the law in timber producing countries, and cares little for the consequences that this entails.
By passing legislation to prohibit the import and marketing of all illegally sourced timber and timber products, G8 nations would be sending a clear message of support to developing and emerging market countries. Or as Secretary Colin L. Powell said on 28 July 2003 “…let’s call them what they are – crimes…”
Legislation would also have a massive deterrent effect. Significantly the precedent set by the U.S. Lacey Act suggests that WTO compatibility can be safeguarded, since such laws simply prohibit the sale or import of products produced illegally in the country of origin. In common with other criminal acts, not all illegal timber shipments will be detected but when they are the legislation would enable the relevant authorities to take action; irrespective of the country of origin.
Needless to say this approach would not preclude other initiatives. Indeed, legality licensing schemes, advocated by the EU as the cornerstone of the proposed Voluntary Partnership Agreements, would be one of the mechanisms by which a general prohibition could effectively be implemented.
2. Negotiate voluntary partnership agreements with timber producing countries
“The challenge is to ensure that actions to address illegal logging, particularly enhanced law enforcement, do not target weak groups, such as the rural poor, while leaving powerful players unscathed.” Proposal for an EU Action Plan, COM (2003) 251 Final, 21 May 2003
G8 technical and financial assistance to timber producing countries, either directly or through the International Financial Institutions, should be contingent upon certain provisos, namely that the recipient country:
· has demonstrated a commitment to the equitable, transparent and sustainable management of its forest estate;
· has completed, or has plans to undertake, a comprehensive Forest Value Assessment (inclusive of economic, social and ecological values);
· has in place, or is taking the necessary steps to establish, appropriate forest laws, forest law enforcement and forest management capacity, and a functioning system for revenue transparency.
These issues should be addressed prior to engagement in all timber producing countries, but particularly where governance is week or absent, as is the case in the DRC and Liberia. Alternatively they could provide and initial focus for such engagement, through Voluntary Partnership Agreements (VPA) as espoused by the EU, and other forms of more traditional donor assistance.
The main thrust of the VPAs proposed by the EU is to develop legality licensing schemes, to ensure that only legal timber is imported from participating countries. However, there is real scope to include other provisions that would target the root causes of illegal logging such as corruption and lack of transparency, and the absence of genuine consultation, leading to inequity enshrined in bad law. As the EU action plan states: “Existing forest laws and policies frequently promote large scale forest operations and may exclude local people from access to forest resources. This inequity breeds resentment and conflict.” Experience in Cambodia clearly illustrates the dangers of failing to address these fundamental issues. In this case the World Bank’s promotion of industrial logging, in the absence of checks and balances, and without considering other possible forest management regimes, arguably led to an increased incidence of illegal logging.
The EU action plan also notes that it is implicit that partner countries are committed “ to ensure that the applicable forest law is consistent, understandable and enforceable and is supportive of sustainable forest management principles.”2 This is consistent with the G8 approach which is to tackle the problem of illegal logging “from the perspective of sustainable forest management…” Only by working with partner countries, to ensure that what is legal equates to sustainable forest management, will the G8 achieve its development objectives and secure the support of civil society for its illegal logging agenda.
G8 nations should address these and other fundamental issues in the context of bilateral and multilateral VPAs with timber producing countries and regions. The UK, Japan and China already have such agreements with Indonesia. Alternatively the G8 and other donor nations could tie progress in these areas to aid conditionality, either directly or through International Financial Institutions (see the U.S. position on revenue transparency below), as has been the case in Cambodia.
3. Increase transparency
“Secrecy creates opportunities for those that possess essential information.”… “Increasing government openness to sectors of the civil society and the private sector can be a powerful tool in reducing the influence of powerful vested interests and improving law enforcement.”
Stiglitz, 1998
Corruption hits the poor disproportionately. According to World Bank figures released in December 2003, corruption costs more than US$1.5 trillion (€1.23 trillion), or 5 % of the world’s economy.
· Promote revenue transparency. Revenue transparency, as provided for in the U.S. Foreign Operations Act and the EITI, is necessary condition to promote good governance of extractive revenues and democratic debate about the management of those revenues by the state. It should therefore be a fundamental component of all G8 engagement with extractive industries, including the forestry sector.
G8 members should encourage timber producing countries, logging and timber trading companies to address issues of revenue accountability and transparency using the approach developed by the ‘Extractives Industry Transparency Initiative’ (EITI).
To this end, G8 members should ensure that any assistance they provide, either via the International Financial Institutions or bilaterally, for the extraction and or export of timber, is provided only if the government of the country in question has in place, or is taking the necessary steps to establish, functioning systems for accurately accounting for revenue and expenditure; and that the accounts are independently audited.
Given the inextricable link between financial management and operational management of the forest estate such provisions, as set out in the U.S. Foreign Appropriations Act, are likely to have far reaching benefits for timber producing countries, especially with regard to monitorable and auditable chain of custody systems.
· Promote freedom of information. Civil society involvement is essential in the fight against illegal logging. There needs to be transparency of information to enable them to fulfill this role: in order to help identify what is illegal civil society must first know what is legal. The G8 should encourage timber-producing countries to place information relating to the control and management of the forest estate in the public domain. Such information could be made available with immediate effect.
· Promote the registration of business interests. The G8 should encourage other countries to adopt a register of business interests for politicians, civil servants and officers in the military. This is particularly important for countries rich in natural resources such as timber. The concept could be integrated into the new UN ‘Convention against Corruption’ as a specific protocol and factored into governance programmes by bilateral and multilateral donors.
4. Insist on independent forest monitoring
“Independent monitoring makes verification systems more credible and less prone to corruption.” Proposal for an EU Action Plan, COM (2003) 251 Final, 21 May 2003
It is intended that the legality licensing schemes proposed by the EU will be subject to independent oversight. However, the usefulness of Independent Forest Monitoring (IFM), extends far beyond assessing the validity of legality licenses, to all areas of forest management, including the detection of forest crimes and the auditing of government performance, to policy development and implementation.
In countries where governance is poor and corruption rife, political support for the elimination of illegal logging is often correspondingly minimal. In these situations the sort of IFM as practiced by organisations such as Global Witness is most needed and arguably can achieve most. Donor involvement is key both in terms of finance and political support – to instigate the monitoring project and to keep it in place, to help preserve the independence of the monitor and ensure the safety of its staff.
Report / Feb. 23, 2005