Assessment of Georgian Legislation within the Context of      Verification of the Origin of Wood Harvested and            ...
Michael GarforthConsultant in Natural Resources ManagementGeorgia Office: +995 32 913 193Georgia Mobile: +995 99 504 833UK...
Assessment of timber origin verification legislation. Final report                                                        ...
Assessment of timber origin verification legislation. Final report    4.2     As a basis for verification of legal source ...
Assessment of timber origin verification legislation. Final report                                 Acronyms and Abbreviati...
Assessment of timber origin verification legislation. Final reportPrefaceThis report has been prepared by Michael Garforth...
Assessment of timber origin verification legislation. Final report1             Introduction1.1           Purpose and scop...
Assessment of timber origin verification legislation. Final report1.3.1             Legal sourceThe production of wood and...
Assessment of timber origin verification legislation. Final reportcertification programmes, which verify that forest manag...
Assessment of timber origin verification legislation. Final reportIn June 2010 EU member states voted and agreed to make i...
Assessment of timber origin verification legislation. Final report2              Verification of source2.1            Purp...
Assessment of timber origin verification legislation. Final reportauthority if that permit conflicts with the land-use pla...
Assessment of timber origin verification legislation. Final report          − Labour and welfare;          − Health & safe...
Assessment of timber origin verification legislation. Final report2.1 The definition must be consistent with a widely acce...
Assessment of timber origin verification legislation. Final report                                                        ...
Assessment of timber origin verification legislation. Final report3                 System of controls in Georgia3.1      ...
Assessment of timber origin verification legislation. Final report          − licences may be granted to physical or legal...
Assessment of timber origin verification legislation. Final report3.3           Present legal framework for authorising an...
Assessment of timber origin verification legislation. Final report        − Order No. 806 of the Minister of Environmental...
Assessment of timber origin verification legislation. Final report      − Process 5. The licence holder prepares a forest ...
Assessment of timber origin verification legislation. Final report                     Figure 1 – Control system for timbe...
Assessment of timber origin verification legislation. Final reportAfter the consignment has reached the destination record...
Assessment of timber origin verification legislation. Final report                  Figure 2 – Control system for firewood...
Assessment of timber origin verification legislation. Final report3.6          Impending changes to the system3.6.1       ...
Assessment of timber origin verification legislation. Final report4             Assessment of the system4.1           As a...
Assessment of timber origin verification legislation. Final report        − that the licence holder has paid the resources...
Assessment of timber origin verification legislation. Final report4.1.4.2       Quality of the legislationThe arrangement ...
Assessment of timber origin verification legislation. Final reportbefore the certificate expires: villagers often do not h...
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
4.02.02.report on wood_verification_legislation_wwf_georgia
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4.02.02.report on wood_verification_legislation_wwf_georgia

  1. 1. Assessment of Georgian Legislation within the Context of Verification of the Origin of Wood Harvested and Processed by Logging and Timber Processing Companies Final reportAnalysis of legislation and recommendations for improving the current controls Prepared for WWF Caucasus Programme Office by Michael Garforth Tbilisi, June 2010
  2. 2. Michael GarforthConsultant in Natural Resources ManagementGeorgia Office: +995 32 913 193Georgia Mobile: +995 99 504 833UK Office: +44 1287 660 709UK Mobile: +44 7714 758 943Email: mikegarforth@yahoo.co.uk
  3. 3. Assessment of timber origin verification legislation. Final report Table of ContentsAcronyms and Abbreviations ................................................................................................. iiiPreface ............................................................................................................................... iv1 Introduction .............................................................................................................1 1.1 Purpose and scope of this report .............................................................................................. 1 1.2 Why should governments want to verify origin? ....................................................................... 1 1.3 Origin, legal origin, sustainable origin ....................................................................................... 1 1.3.1 Legal source .................................................................................................................................... 2 1.3.2 Sustainable source ........................................................................................................................... 2 1.4 EU Policy on Combating Illegal Logging ................................................................................... 32 Verification of source ...............................................................................................5 2.1 Purpose of verification and how verification is organised ......................................................... 5 2.2 Criteria for verifying that a source is legal ................................................................................. 6 2.3 Criteria for verifying that a source is sustainably managed ...................................................... 7 2.4 Verifying compliance and chain of custody ............................................................................... 73 System of controls in Georgia................................................................................10 3.1 Forests, forest management and forest use ........................................................................... 10 3.1.1 Wood and wood products .............................................................................................................. 10 3.1.2 Owners and users .......................................................................................................................... 10 3.2 Purpose of verification of source in Georgia ........................................................................... 11 3.3 Present legal framework for authorising and controlling harvesting ....................................... 12 3.3.1 Key legislation .............................................................................................................................. 12 3.3.2 Powers and responsibilities ........................................................................................................... 13 3.4 Harvesting of wood under a licence for forest use .................................................................. 13 3.5 Harvesting of wood to provide firewood or construction timber to households ...................... 16 3.6 Impending changes to the system .......................................................................................... 17 3.6.1 Changes to the arrangements for issuing timber origin and timber legality certificates................ 17 3.6.2 Changes to the status and functions of the Forestry Department .................................................. 184 Assessment of the system.....................................................................................19 4.1 As an instrument for Georgian authorities to tackle illegal logging ......................................... 19 4.1.1 Purpose of the system.................................................................................................................... 19 4.1.2 Control points and information ..................................................................................................... 19 4.1.3 Checks made at the control points ................................................................................................. 19 4.1.4 Efficiency of design ...................................................................................................................... 20 4.1.5 Abuses of the system ..................................................................................................................... 22 4.1.6 Effectiveness of implementation ................................................................................................... 22 4.1.7 Other issues not directly related to controlling illegal logging ...................................................... 23 Page i
  4. 4. Assessment of timber origin verification legislation. Final report 4.2 As a basis for verification of legal source by buyers or their agents ....................................... 23 4.3 As a basis for verification of sustainably managed source by buyers or their agents ............ 245 Conclusions and recommendations .......................................................................25 5.1 Design of the system established by legislation ..................................................................... 25 5.2 Quality of the legislation .......................................................................................................... 25 5.3 Effectiveness of implementation ............................................................................................. 25 5.4 Verification of legal source by buyers or their agents ............................................................. 26 5.5 Verification of sustainably managed source by buyers or their agents .................................. 26References ...........................................................................................................................27AnnexesAnnex 1. Findings from interviews with regulatory bodies and licence holders .................................... 28Annex 2. Example of the information about the resources in a proposed licence territory submitted by the Forestry Department to the MED .............................................................. 30Annex 3. Example of timber origin certificate used for timber harvested under a licence or for personal consumption .......................................................................................................... 31Annex 4. Example of a timber legality certificate................................................................................... 32Annex 5. Example of a document verifying the legality of firewood for household use ........................ 33BoxesBox 1 Pan-European Criteria for Sustainable Forest Management ........................................................3Box 2 Pan-European Operational Level Guidelines ................................................................................3Box 3 EU Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) ..........................4Box 4 Challenges in deciding criteria for verifying legal sources ............................................................5Box 5 UK government’s criteria for legal source .....................................................................................6Box 6 UK government’s criteria for sustainably managed source ..........................................................7Box 7 Principles and criteria for verification activities in the framework of VPAs....................................9FiguresFigure 1 Control system for timber harvested under a licence.............................................................15Figure 2 Control system for timber harvested for household use ........................................................17 Page ii
  5. 5. Assessment of timber origin verification legislation. Final report Acronyms and Abbreviations ENA FLEG Europe and North Asia Forest Law Enforcement and Governance initiative EU European Union FD Forestry Department of the MEPNR of Georgia FLEG Forest Law Enforcement and Governance Initiative FLEGT European Commission Forest Law Enforcement, Governance and Trade Initiative GFTN Gobal Forest and Trade Network of WWF MED Ministry of Economic Development MEPNR Ministry of Environment Protection and Natural Resources of Georgia NGO Non-governmental organization SFM Sustainable forest management WWF World Wide Fund for Nature Page iii
  6. 6. Assessment of timber origin verification legislation. Final reportPrefaceThis report has been prepared by Michael Garforth (the Consultant) contracted by WWF CaucasusProgramme Office in the framework of the regional programme “Improving Forest Law Enforcement andGovernance in the European Neighbourhood Policy East Countries and Russia”. The programme,supported by the European Union and other donors, is aimed at putting in place improved forestgovernance arrangements through the effective implementation of the main priorities set out in the St.Petersburg Ministerial Declaration and Indicative Plan of Actions on the Europe and North Asia ForestLaw Enforcement and Governance (ENA-FLEG) initiative. The programme covers seven countriesincluding Georgia.The objectives of the Consultant’s assignment were to assess relevant Georgian legislation andregulations applicable to the verification of the origin of wood harvested in Georgian forests and preparerecommendations for their improvement, in cooperation with relevant stakeholders. The assignmentwas carried out in two stages: • Discussions with representatives of government authorities and of timber harvesting and processing companies in order to become familiar with the legal framework and to identify problems with the regulations and their implementation. • Detailed analysis of the regulations and preparation of recommendations for improving the regulations and the arrangements for their implementation.This report is structured as follows: • Chapter 1 – Introduction - describes the purpose of the report, reviews the reasons why governments might be interested in a verification system, discusses the concept of “origin”, and describes the EU’s policy on combating illegal logging. • Chapter 2 - Verification of Source – discusses the purpose of verification, criteria used to verify origin, and the principles which should be followed when designing and implementing a verification system. • Chapter 3 – System of Controls in Georgia – provides an overview of forests, forest management and use, and the wood and wood products sector in Georgia, discusses the purpose of verifying the source of timber originating in Georgia and describes the present system of authorising and controlling timber harvesting in Georgia. The chapter describes the legislation which establishes the system of authorisation and control of harvesting, the powers and responsibilities of the regulatory bodies concerned, and describes the authorisation and control system. • Chapter 4 – Assessment of the System – presents the Consultant’s analysis of the system established by legislation as a mechanism for the Georgian authorities to combat illegal logging, as a mechanism for verifying legal source and as a mechanism for verifying sustainably managed sources. • Chapter 5 – presents the Consultant’s Conclusions and Recommendations -When the Consultant was carrying out his research for the study the MEPNR announced plans toreplace the Forestry Department with a Forestry Agency, established as a legal entity of public law. Thenew Agency was to have broadly the same functions as the Forestry Department but with powers tocharge fees for services and to retain and reinvest income.The Consultant expresses his thanks to the following: Ilia Osepashvili – WWF Caucasus ProgrammeOffice - for his advice and support during the assignment and the preparation of this report; SergoPareishvili – Legal Advisor to the Minister of Environment Protections and Natural Resources – for hishelp with understanding the intention and meaning of the legislation; the representatives of theregulatory bodies and licence holders who gave their time and their ideas freely; and the interpreterswho made the exchange of information and ideas possible. Page iv
  7. 7. Assessment of timber origin verification legislation. Final report1 Introduction1.1 Purpose and scope of this reportThis report is about the system of checks, authorizations and documents and other records whichenables verification of the origin of timber produced in Georgia. The report aims to answer thequestions: - is the system appropriate to the purpose for which it is intended and other verification purposes for which it might be used; i.e., does the system include the elements needed to achieve the purpose and only those elements; and - is the system working as intended; i.e. are the provisions made in legislation being implemented in practice?1.2 Why should governments want to verify origin?There are three reasons why a government might wish to establish controls to enable the verification ofthe origin of timber and timber products: - to detect and deter illegal logging with the purpose of conserving the country’s forests and ensuring that resource use fees are paid; - to provide assurance to persons who buy wood and wood products originating in the country that the wood and wood products come from a legal source (and perhaps also a sustainable source); - to detect and deter imports into the country of wood and wood products from illegal logging in other countries.There is an important distinction between controls introduced by legislation (addressed by this report)and controls implemented voluntarily by companies and individuals. As an example, the legislation ofthe United Kingdom does not establish any controls on the origin of timber circulating in the country(except in a small number of specific instances related to preventing the import and spread of pests anddiseases); however, the demand for assurance of legal (and often sustainable) origin is such that thevast majority of forest management enterprises, including state and private enterprises, have chosen tohave their operations certified by independent forest certification schemes; 85% of timber and timberproducts sold in the UK are from certified sources. Furthermore, many of the companies in the supplychain between the forest and final consumer have opted for chain of custody certification – amechanism that provides independent verification of the origin of wood and wood products.It is also important to distinguish between controls on the circulation of timber (the subject of this report)and controls on the procurement of timber. Denmark, the Netherlands and the United Kingdom (andmost other EU Member States) do not control the import of timber and wood products into theircountries or the circulation of domestically produced and imported timber and wood products in theircountries; however, the governments of all three countries are implementing procurement policieswhich require that timber and wood products supplied to government bodies come from legal sources(and in some cases sustainably managed sources).1.3 Origin, legal origin, sustainable originThe word “origin” means simply the place from which the wood or wood products originate (for examplecountry of origin, forest of origin, the place in the forest where the trees were cut). For the purposes ofdetecting and deterring illegal logging and providing assurance to buyers, verifying the place of origin isnot sufficient: the system of controls needs to enable verification that the wood or wood products havebeen produced legally, that is they come from a “legal source”. The scope of the system could beextended to enable verification that wood and wood products originate from a “sustainable source”. Page 1
  8. 8. Assessment of timber origin verification legislation. Final report1.3.1 Legal sourceThe production of wood and wood products is governed by many provisions of legislation. Typicalprovisions (though not necessarily in force in all countries) include: - felling may not be carried out without a forest management plan or equivalent document which has been approved by the relevant authorities; - the process of preparing the forest management plan must include consultation with stakeholders and must take account of stakeholders comments; - forest managers and their contractors, and timber harvesting companies must comply with various provisions regulating working conditions of employees (for example hours of work, health and safety, minimum wage); - forest managers and their contractors, and timber harvesting companies must comply with certain environmental norms; - forest managers and their contractors, and timber harvesting companies must pay tax on their profits.The concept of legality of the source of wood and wood products may also extend to aspects of civillaw; for example: legal right to use the forest for the purpose of harvesting timber (property right,leasehold right, rights held under licence); payment of the contracted price of the trees (in cases wherethe person harvesting the trees has purchased the trees from the person who owns the trees).Beyond harvesting, illegal practices may also extend to transport infringement, illegal processing and 1export, and false declarations to customs .Thus the concept of “legal source” can include a large number of provisions in administrative and civillaw. People and organizations who want to verify that wood and wood products come from a legalsource, and government authorities who want to enable verification, need to decide which provisionsshould be included in the definition and which provisions should be excluded.1.3.2 Sustainable sourceMost governments, Georgia among them, are parties to international agreements that include 2sustainable forest management as a goal . An increasing number of companies that trade in wood andwood products, and organizations (including government bodies) that purchase wood and woodproducts, require their suppliers to provide evidence that forests from which the material originates aresustainably managed. Various definitions of sustainable forest management have been developed. Themost relevant definition for Georgia is the one adopted by the Ministerial Conference on the Protection 3of Forests in Europe (now Forests Europe) : ‘“sustainable [forest] management” means the stewardship and use of forests and forest lands in a way, and at a rate, that maintains their biodiversity, productivity, regeneration capacity, vitality and their potential to fulfil, now and in the future, relevant ecological, economic and social functions, at local, national, and global levels, and that does not cause damage to other ecosystems.’It is impossible for governments to demonstrate their progress towards sustainable forest managementat a national level or for forest managers to demonstrate their compliance at a forest level using onlysuch a definition. Therefore governments have developed criteria and indicators of sustainable forestmanagement (for example the criteria and indicators and the operational level guidelines adopted bythe Ministerial Conference on the Protection of Forests in Europe – see Boxes 1 and 2). Forest1 FLEGT Briefing Notes 2007 Series. Briefing Note #2. What is legal timber?2 In particular “Agenda 21” and the “Forest Principles” adopted by the 1992 United Nations Conference on Environment and Development.3 www.foresteurope.org Page 2
  9. 9. Assessment of timber origin verification legislation. Final reportcertification programmes, which verify that forest management complies with certain standards, havedeveloped their own criteria and indicators, in some cases based on the criteria and indicatorsdeveloped by governments. 4 Box 1 – Pan-European Criteria for Sustainable Forest ManagementThe pan-European national level criteria for sustainable forest management were adopted within the follow-upprocess of the 1994 Helsinki Ministerial Conference. They are a policy instrument for evaluating and reportingprogress towards sustainable forest management in individual European countries and in Europe as a whole.The six pan-European criteria for sustainable forest management are: 1. Maintenance and appropriate enhancement of forest resources and their contribution to global carbon cycles; 2. Maintenance of forest ecosystem health and vitality; 3. Maintenance and encouragement of productive functions of forests (wood and nonwood); 4. Maintenance, conservation and appropriate enhancement of biological diversity in forest ecosystems; 5. Maintenance and appropriate enhancement of protective functions in forest management (notably soil and water); and 6. Maintenance of other socio-economic functions and conditions.Each criterion is described by descriptive and quantitative indicators which provide the basis for assessing andreporting progress towards achieving sustainable forest management. 5 Box 2 – Pan-European Operational Level GuidelinesThe Pan-European Operational Level Guidelines were elaborated to promote sustainable forest management inEurope by translating international commitments to sustainable forest management down to the level of forestmanagement planning and practices. They represent a common framework of recommendations for reference atthe field level that can be used on a voluntary basis. The Guidelines follow the structure of the six pan-Europeancriteria that were identified as the core elements of sustainable forest management (see Box 1). They are dividedinto ‘Guidelines for Forest Management Planning’ and ‘Guidelines for Forest Management Practices’, focusing onbasic ecological, economical and social requirements for sustainable forest management within each criterion.The Guidelines are designed to be applied in the context of, and in full respect to, national and/or regionalinstruments and actions. They cannot be used in isolation to determine sustainability in forest management. Theirpurpose is to identify complementary actions at the operational level which will further contribute to sustainabilityof forest management. This should reflect national, economic, ecological, social and cultural conditions, researchand traditional knowledge, and must respect forest and environmental legislation, decisions on protected areas,other general principles, as well as codes for forest practice such as standards used for forest management inany given country.1.4 EU Policy on Combating Illegal LoggingIn May 2003 the European Commission adopted the EU Action Plan for Forest Law Enforcement, 6Governance and Trade (FLEGT) . The Action Plan sets out a range of measures that aim to combat theproblem of illegal logging (Box 3). The Action Plan is relevant to an analysis of the Georgian system ofcontrols to combat illegal logging because it aims to prevent any timber from illegal sources fromentering and circulating in the EU and establishes a framework for defining legality.4 Resolution 1 of the Second Ministerial Conference on the Protection of Forests in Europe 16-17 June 1993, Helsinki.5 Annex 2 to Resolution 2 of the Third Ministerial Conference on the Protection of Forests in Europe 2-4 June 1998, Lisbon.6 FLEGT Proposal for an EU Action Plan, 21 May 2003. Communication from the Commission to the Council and the European Parliament. Page 3
  10. 10. Assessment of timber origin verification legislation. Final reportIn June 2010 EU member states voted and agreed to make it illegal to trade illegally harvested timber inthe EU. The EU Parliament will approve the legislation in July. The legislation will oblige companiesplacing timber and timber products on the EU market to adopt systems of due diligence to ensure thatthey exclude illegal products.The long term aim of the FLEGT Action Plan is sustainable forest management, therefore companieswhich supply timber to EU countries can expect to have to demonstrate that the timber originates inforests managed in accordance with certain criteria of sustainable forest management. 7 Box 3 - EU Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) Support to timber-producing countries. Financial and technical support and advice to timber-producing countries to achieve improved governance structures; policy reform; improved transparency and information exchange between producing and consuming countries; capacity building and training; support for the development of community-based forest management and the empowerment of local people to help prevent illegal logging. Activities to promote trade in legal timber. Voluntary Partnership Agreements (VPAs) - voluntary, bilateral agreements between producing countries and the EU, and dialogue with other major importers. The intended outcomes of VPAs are improved forest governance, improved access to markets in the EU for timber from partner countries, increased revenues collected by partner country governments, increase access to support and development for partner country governments, implementation of more effective enforcement tools in partner countries, and improved foundations for sustainable forest management. VPAs offer an approach by which legally-produced timber exported to the EU can be identified using licenses issued by Partner Countries. These will be underpinned by timber legality assurance systems developed under each VPA. FLEGT licenses covering timber shipments will enable EU customs agencies to distinguish verified legal timber from Partner Countries and to allow it entry to the EU, while excluding unlicensed timber from those countries. The assurance system will address controls on timber production, processing, internal verification, licensing and independent monitoring. Promoting public procurement policies. The Action Plan encourages EU Member States to implement policies that favour sustainable and verified legal timber in their procurement contracts. Such policies require suppliers to demonstrate adequate evidence of legality and/or sustainability of timber sources. Support for private sector initiatives. The Action Plan encourages private sector involvement, including support to build private sector capacity in producer countries. Such support may be aimed, for example, at higher standards of forest management and legal compliance, improved supply chain management, and adoption of corporate social responsibility standards. Safeguards for financing and investment. The Action Plan aims to encourage banks and financial institutions to take long-term legal supply, as well as environmental and social factors, into account when conducting due diligence assessments for such investments. Use of existing legislative instruments or adoption of new legislation to support the Action Plan. The EU is investigating whether existing Community or Member State legislation can be used to combat forest sector illegality; for example legislation against money laundering; implementation of the Convention on International Trade in Endangered Species; measures set out in the OECD convention on bribery; national legislation related to stolen goods. Addressing the problem of conflict timber. The Action Plan commits the EU to develop a more robust definition of conflict timber and to better recognize in development cooperation programmes links between forests and conflicts.7 FLEGT Briefing Notes 2007 Series. Briefing Note #1. What is FLEGT? Page 4
  11. 11. Assessment of timber origin verification legislation. Final report2 Verification of source2.1 Purpose of verification and how verification is organisedVerification means carrying out checks to confirm that wood and wood products originate from a sourcethat complies with criteria decided upon by the person or organization concerned.Verification is organized in different ways to serve different purposes; for example: − Checks carried out by the environment ministry’s environmental inspectorate on the origin of material being transported on the public highway are a form of verification. Inspectorate staff may check that the material is accompanied by any documents recording the origin of the material or providing evidence that the relevant resources use fees have been paid and that the material and the information in the documents correspond with each other. − Organisations which buy wood and wood products may carry out their own checks in fulfilment of their corporate responsibility policies. Such organizations include government bodies as well as private companies. Organisations may carry out the checks using their own staff or subcontractors; or they may ask their suppliers to provide evidence that the source of the materials has been verified by an independent organization, for example a certification body accredited by credible certification scheme.When verification is carried out by a government authority for the purpose of detecting and deterringillegal logging inside the country, as in the case of the first example above, the criteria used during thechecks are generally easy to define and understand: are the timber or timber products accompanied bythe required documents? do the timber or timber products conform to the description in the documents?If it is necessary that the checks extend to activities in the forest from which the material originates, thecriteria are also straightforward: does forest management comply with the requirements laid down inlegislation? did the felling of the trees from which the material is derived comply with the requirementsof legislation or a licence or permit issued by the government?When verification is carried out for the purpose of implementing a corporate responsibility policy, it ismore difficult to decide the criteria for verifying whether the source is legal (and even more challengingto decide criteria for verifying whether the source is sustainably managed). First, the organization whichrequires verification needs to decide which elements of legality it is concerned about: only that thetimber has been felled by a person with the legal right to do so? that provisions relevant to the conductof the felling have been complied with (for example, workers rights, environmental norms)? that anyresource use fees specified in law have been paid? Secondly the organization needs to decide whetherit will be appropriate to follow a strict interpretation of the law, knowing that the law may be bad orunfair. (See Box 4). 8 Box 4 – Challenges in deciding criteria for verifying legal sourcesThere are a number of challenges related to deciding criteria for verifying that timber comes from alegal source. The following are some of the most common examples:Unclear line between a significant offence and a minor transgression. For example, how manyinstances of improper road construction are permitted before a concession holder strays beyond poorharvesting practices into the realm of illegal logging?Overly prescriptive regulations. For example, should a forest manager be penalized for adaptingpractices to fit the local ecosystem of a given forest, while technically breaching a poorly conceivedregulation?Conflicts with laws from other sectors and levels of government or with administrative procedures. Forexample, is it illegal to harvest timber according to a timber permit issued by the central forestry8 Adapted from “Keep it Legal: Best Practices for Keeping Illegally Harvested Timber Out of Your Supply Chain”. WWF GlobalForests and Trade Network. http://assets.panda.org/downloads/keep_it_legal_final_no_fsc.pdf Page 5
  12. 12. Assessment of timber origin verification legislation. Final reportauthority if that permit conflicts with the land-use planning policy of the local government?Conflicts between unwritten customary law and formal laws. For example, is it illegal for a communitywith usufruct rights that derive from traditional law to harvest timber in a logging concession that failsto recognize these rights?The law is bad for the forest. For example, outdated silvicultural prescriptions required by regulationmay do more harm than good to the forest resource.The application of the concession allocation system is corrupt. For example, legal permits are handedout to cronies and bribe payers. This could mean that those holding “legal” rights to harvest havegained their permits through corrupt administration of the law.The law is unfair when compared with international norms or the organization’s own values. Forexample: the law extinguishes traditional rights as a result of creating logging concessions orprotected areas without recognition of traditional rights over the forest resource; punishment isdisproportionate to the offence and poor villagers who cut firewood illegally because they cannotafford to buy from legal sources may face a prison sentence; the law prescribes no minimumstandards or unfair standards for working conditions and workers are poorly paid and at risk of injury.2.2 Criteria for verifying that a source is legalVarious definitions of legal source have been developed for the purpose of verification, some with anarrow scope (for example including only that the person who felled the trees had the legal right to doso), others with a wide scope (for example including laws on the rights of workers, laws dealing withconservation of biodiversity). The EU’s approach in the framework of its FLEGT Action Plan is that eachtimber producing country should decide for itself which laws should comprise a legality definition. 9However the EU emphasizes that legality should be defined in a multi-stakeholder process .The EU notes that checking compliance with and enforcing a definition of legally-produced timberrequires that the definition is clear, operationally workable and objectively verifiable. It must be easilyunderstood by staff of both forest operators and enforcement agencies. This means that: − It must be clear which laws and regulations are included in the definition and which are not; − There must be clear tests of evidence (i.e. criteria and indicators) to determine compliance with each law or regulation; − There should be practical ways to carry out such tests in the field.The governments of some importing countries have developed their own criteria to define legality inorder to be able specify that timber and timber products must come from legal sources when arrangingsupply contracts. The United Kingdom, Denmark and the Netherlands use similar criteria. The UnitedKingdom’s criteria are in Box 5. 10 Box 5 – UK government’s criteria for legal sourceFor UK Government procurement, legal timber and wood derived products are those which originate from a forestwhere the following requirements are met:Content of the definition1.1 The forest owner/manager holds legal use rights to the forest.1.2 There is compliance by both the forest management organisation and any contractors with local and nationallegal requirements including those relevant to: − Forest management; − Environment;9 FLEGT Briefing Notes 2007 Series. Briefing Note #2. What is legal timber?10 Source: www.proforest.net/cpet/documents Page 6
  13. 13. Assessment of timber origin verification legislation. Final report − Labour and welfare; − Health & safety. − Other parties’ tenure and use rights1.3 All relevant royalties and taxes are paid.1.4 There is compliance with the requirements of CITES.2.3 Criteria for verifying that a source is sustainably managedAn increasing number of companies are implementing corporate responsibility policies which requirethat any timber or timber products that they purchase come from sustainably managed sources. It isalso the EU’s ultimate aim that timber and timber products imported into and circulating in the EU arefrom sustainably managed sources. Companies which require timber and timber products to come fromsustainable managed sources generally rely on independent verification in the framework of national orinternational certification programmes which have developed their own criteria for sustainable forestmanagement (e.g. Forest Stewardship Council) or apply criteria that have been adopted inintergovernmental processes (e.g. the Programme for the Endorsement of Forest Certification uses thePan-European Operational Level Guidelines and the various guidelines developed by the InternationalTropical Timber Organisation).Criteria for sustainable forest management include requirements which national laws often do notspecify and they may set higher environmental and social standards than those established by producercountries’ legislation. However, the criteria adopted by forest certification schemes are generally in linewith the obligations or aspirations of international agreements related to forest management such as theConvention on Biological Diversity, conventions adopted by the International Labour Organisation, thePan-European Criteria and Indicators for Sustainable Forest Management and Operational LevelGuidelines.The EU so far has not developed a definition of sustainably managed source but a number of EUmember states have developed their own criteria for application in their government procurementpolicies. The criteria specified by the UK government in its procurement policy are in Box 6. The criteriashown are in addition to the criteria for legal source shown in Box 5.2.4 Verifying compliance and chain of custodyVerification of compliance with criteria for legal source and sustainable managed source involves auditsof the forest management unit from where the timber originates and implementation of supply chaincontrols at each point where a product is transported, received or transformed, such as sawmills, tocheck that no material that is unaccounted for has entered the process. Verification must provideadequate control to ensure that the forest of origin is managed and the timber produced in accordancewith the criteria. Verification must be sufficiently robust and effective to ensure that any non-compliancewith requirements, either in the forest or within the supply chain, are identified and action is taken in atimely manner to resolve the problem. The intensity of verification should be proportional to the specificcircumstances in the country in which the forest lies. The EU has established a number of principles forverification for the purposes of licensing schemes developed in the framework of VPAs with producercountries (see Box 7). 11 Box 6 – UK government’s criteria for sustainably managed sourceFor the purpose of the UK Government timber procurement policy, sustainable timber and wood products mustmeet the legality requirements listed above and come from a forest which is managed in accordance with adefinition of sustainable that meets the requirements set out below:Content of the definition11 Source: www.proforest.net/cpet/documents Page 7
  14. 14. Assessment of timber origin verification legislation. Final report2.1 The definition must be consistent with a widely accepted set of international principles and criteria definingsustainable or responsible forest management at the forest management unit level.2.2 The definition must be performance-based, meaning that measurable outputs must be included.2.3 Management of the forest must ensure that harm to ecosystems is minimised. In order to do this the definitionof sustainable must include requirements for: − Appropriate assessment of impacts and planning to minimise impacts; − Protection of soil, water and biodiversity; − Controlled and appropriate use of chemicals and use of Integrated Pest Management wherever possible. − Proper disposal of wastes to minimise any negative impacts.2.4 Management of the forest must ensure that productivity of the forest is maintained. In order to achieve this,the definition of sustainable must include requirements for: − Management planning and implementation of management activities to avoid significant negative impacts on forest productivity. − Monitoring which is adequate to check compliance with all requirements, together with review and feedback into planning. − Operations and operational procedures which minimize impacts on the range of forest resources and services. − Adequate training of all personnel, both employees and contractors. − Harvest levels that do not exceed the long-term production capacity of the forest, based on adequate inventory and growth and yield data.2.5 Management of the forest must ensure that forest ecosystem health and vitality is maintained. In order toachieve this, the definition of sustainable must include requirements for: − Management planning which aims to maintain or increase the health and vitality of forest ecosystems − Management of natural processes, fires, pests and diseases. − Adequate protection of the forest from unauthorised activities such as illegal logging, mining and encroachment.2.6 Management of the forest must ensure that biodiversity is maintained. In order to achieve this, the definition ofsustainable must include requirements for: − Implementation of safeguards to protect rare, threatened and endangered species. − The conservation/set-aside of key ecosystems or habitats in their natural state. − The protection of features and species of outstanding or exceptional value.Process for developing the definition2.7 The process of defining sustainable must seek to ensure balanced representation and input from theeconomic, environmental and social interest categories.2.8 The process of defining sustainable must seek to ensure: − No single interest can dominate the process; − No decision can be made in the absence of agreement from the majority of an interest category.Social criteria:From April 2010, application of the timber procurement policy includes certain social criteria. The social criteriamust not be included in technical specifications for procurement of timber and wood-derived products, but only inrecommended contract conditions. The social criteria that are included in model contract conditions are notedbelow for information purposes, as contractors may be required by contract conditions to provide evidence ofcompliance, for example through certification schemes.Management of the forest must have full regard for: − Identification, documentation and respect of legal, customary and traditional tenure and use rights related to the forest; − Mechanisms for resolving grievances and disputes including those relating to tenure and use rights, to forest management practices and to work conditions; and − Safeguarding the basic labour rights and health and safety of forest workers. Page 8
  15. 15. Assessment of timber origin verification legislation. Final report 12 Box 7 – Principles and criteria for verification activities in the framework of VPAs1. Organisation.Verification is carried out by a government, market participant or third-party organisation, or some combination ofthese, which has adequate resources, management systems and skilled and trained personnel, as well as robustand effective mechanisms to control conflicts of interest.1.1: Verification is undertaken by one or more organizations which are clearly identified and which are competentand adequately resourced.1.2: All verification personnel have the skills and experience necessary to perform their jobs and are adequatelysupervised.1.3: Verification activities are carried out under an adequate documented management system and providemeans to ensure transparency of the system.1.4: There is a robust system in place to ensure that all potential conflicts of interest at both the individual and theorganisational level have been identified and documented and are being effectively managed and controlled.1.5: Where verification activities are carried out by field-based monitoring personnel who are routinely involvedwith forest operations (e.g. forest guards), there must also be a component of the verification process carried outby other personnel who are not routinely involved with either the forest operations or line management of the field-based monitoring personnel.2. Verification of legality in the forest.There is a clear scope setting out what has to be verified. The verification methodology is documented andensures that the process is systematic, transparent1, evidence-based, carried out at regular intervals and coverseverything included within the scope.2.1: There is a clear, detailed, documented scope setting out what must be verified which, as a minimum, meetsall the requirements contained within the definition of legality.2.2: There is a documented verification methodology which is appropriate, transparent, justified and effective andincludes adequate checks of documentation, operating records and operations as well as collection of relevantinformation from external interested parties.2.3: Verification is carried out at regular intervals and there is provision for unannounced verification visits. Thefrequency and intensity of verification should be proportional to the robustness of the system being implemented.Records of verification activities are maintained in a form which allows monitoring by internal auditors and theindependent monitor.3. Verification of systems to control the supply chain.There is a clear scope setting out what has to be verified which covers the entire supply chain from harvesting toexport. The verification methodology is documented and ensures that the process is systematic, transparent,evidence-based, carried out at regular intervals, covers everything included within the scope, and includes regularand timely reconciliation of data between each stage in the chain.3.1: There is a clear, detailed, documented scope setting out what must be verified which is fully consistent withthe principles for control of the supply chain set out in Section 2.3.2: There is a documented system in place which defines how compliance with the supply chain requirementswill be verified.3.3: There are routine checks that the required controls are being implemented throughout the supply chain. Theintensity of verification should be proportional to the robustness of the system being implemented to ensurecompliance. Records of verification activities are maintained in a form which allows monitoring by internal auditorsand the independent monitor.3.4: There is reconciliation of data between each stage in the supply chain. The methodology for reconciliation,including who is responsible, how the reconciliation will be managed and the timing, is clearly documented andjustified.4. Non-compliances.There is an effective and functioning mechanism for requiring and enforcing appropriate corrective action wherenoncompliances are identified.4.1: There is a system in place for requiring corrective and preventive actions where non-compliances aredetected, and for enforcing implementation of the action.12 FLEGT Briefing Notes 2007 series. Briefing Note #5. Legality assurance systems: Requirements for verification. Page 9
  16. 16. Assessment of timber origin verification legislation. Final report3 System of controls in Georgia3.1 Forests, forest management and forest useThere are 2.81 million hectares of forests and other wooded land in Georgia (FAO, Global ForestResources Assessment 2005). Approximately 35% (0.98 million hectares) are available for woodproduction; the rest are in protected areas, allocated to protective functions, or on slopes that are toosteep for harvesting.3.1.1 Wood and wood productsFor several decades before Georgia’s independence in 1991 Georgia’s forests were managed for theirprotective functions and to provide firewood and minor wood products such as bean poles for ruralhouseholds. Industrial wood was imported from Russia. After independence unsustainable and illegalharvesting became rife: demand for firewood increased after gas supplies were cut; imported industrialwood was no longer available in the quantities demanded and at an affordable price. As the economicsituation of the country has improved and control of forest use strengthened, unsustainable and illegallogging has declined but continues at a lower level. 13In 2009 wood production from authorised cutting amounted to about 700,000 cubic metres . The full 14extent of unauthorised logging is not known. About 8,200 cubic metres of wood from unauthorisedfelling were detected by the Georgian authorities in 2009 but the total amount of unauthorised logging ishigher. The extent of authorised but illegal logging – i.e. logging which is not in accordance with theconditions of the licence or is in breach of laws and regulations governing the conduct of forestoperations – is not known.3.1.2 Owners and usersGeorgian legislation distinguishes between forest owned by the State (State Forest Fund), forest ownedby the Patriarchy of Georgia and forest owned by physical and legal persons (Forest Code Article 9(1)).That part of the State Forest Fund which does not form part of a protected area is termed the UseableForest Fund. The Forest Code makes provision for a Local Forest Fund: ‘a part of the Usable StateForest Fund legally regulated by local governing and self governing bodies in accordance with thisCode and Georgian legislation’ (Forest Code, Article 5 f).Georgian legislation establishes the following arrangements over the management and use of forests: − the Useable Forest Fund excluding the Local Forest Fund is managed by the Forestry 15 Department (Forest Code, Article 16(1)); − the Local Forest Fund is managed by local self-governing bodies (Forest Code, Article 16 16(3)) ; − state forests that form part of a protected area are managed by the Agency for Protected Areas (Forest Code, Article 14); − forests owned by the Patriarchy of Georgia and physical and legal persons are managed by their owners in accordance with the Forest Code and other relevant legislation (Forest Code, Article 10); − forests that form part of the State Forest Fund may be transferred for management and use to 17 other persons (Forest Code, Article 9(3)) ;13 Source: Forestry Department of the MEPNR of Georgia14 Source: Forestry Department of the MEPNR of Georgia15 The Forestry Department is to be superseded by a new entity – the Forestry Agency – in July 2010.16 Although the Forest Code provides for the Local Forest Fund to be managed by local self-governing bodies, in practice a local forest fund has not been registered or demarcated and no forest land in Georgia is the formal responsibility of local self- governing bodies. Page 10
  17. 17. Assessment of timber origin verification legislation. Final report − licences may be granted to physical or legal persons for using forests for harvesting wood and 18 as hunting ranges (Law on Licences and Permissions, Article 7) . − forests may be used without a licence under arrangements established by the MEPNR (in Adjara the Department of Environment Protection and Natural Resources) to supply wood to the local population for meeting their needs in firewood and timber and for special purposes. Special purposes include such purposes as construction and reconstruction of water supply facilities, pipelines and electricity lines, to extract minerals. (Regulation On the Procedure and Terms of Forest Use Licensing adopted by Resolution of the GoG #132 dated 11 August 2005 as amended, Article 2(3).The arrangements are not clear in some important respects. The Forest Code provides for state foreststo be managed by local self-governing bodies. The Law on Licences and Permissions establishes thatlicences for using state forest land will be sold by auction by the MED. The Law on Licences andPermissions does not distinguish between state forest managed by local-self governing bodies and theForestry Department.The area of forest owned by the Patriachy of Georgia and physical and legal persons and the area ofstate forest under the ownership or devolved responsibility of local self-governing bodies forms a verysmall part of the total area of forests in Georgia. Therefore the lack of clarity in the governancearrangements provided for by current legislation are not significant in relation to verifying the origin ofwood and wood products. However, the weaknesses in legislation should be addressed in order toensure that the legislation reflects its purpose and can be implemented effectively.3.2 Purpose of verification of source in GeorgiaThe timber harvesting and processing company representatives interviewed during this assignmentstated that there was no demand at the moment from customers in Georgia or in their foreign marketsfor verification of source. This picture is unlikely to change in the near future except for exports to EUcountries. EU legislation prohibiting the importation of illegal timber will cause companies who areimporting wood and wood products into the EU to implement due diligence procedures which willinclude verification of origin. Supply chain actors located in Georgia should prepare for this: governmentauthorities who have responsibilities for managing forests, allocating use rights over forests, exercisingcontrol over the harvesting of trees and the production and transport of timber and timber products;companies which harvest trees and produce timber and timber products for export to the EU. In thelonger term, Georgia may have to make the same provisions in its own legislation in line with itscooperation agreement with the European Union.The need at the present time is for the Georgian authorities to be able to detect and deter illegal loggingby conducting checks on the origin of timber after it has left the forest (and perhaps also checks ontimber products if that will add to the effectiveness of the system without adding unreasonable costs).In the not very distant future there will be a need for Georgian producers to provide evidence to EUbuyers that timber originating in Georgia is from a legal source; and there may be a need for Georgianproducers to provide evidence to EU buyers that timber is from a sustainably managed source. Thegovernment could address both of those needs through regulations, or could leave it to producers tomake their own arrangements, for example by applying for certification to a recognised certificationscheme. Since wood and wood products from Georgia originate almost entirely in State forests,producers depend on the government to provide some of the documents or other records which can beused to verify legal source and sustainably managed source.17 The English text of the Forest Code Article 9(3) states: “The State Forest Fund and its resources (excluding forests privatized in accordance with Georgian legislation) are allocated for ownership and use in accordance with Georgian legislation”. The Code does not use the word “ownership” to mean privatisation. The exact meaning intended by the Code is not clear.18 The Forest Code provides for nine types of forest use. The Law on Licences and Permissions is a superior law and in effect cancels the types of use which are provided for in the Forest Code but not in the Law on Licences and Permissions. Thus it is not clear whether forests can be used legally for some purposes, for instance collection of non-wood forest products. Page 11
  18. 18. Assessment of timber origin verification legislation. Final report3.3 Present legal framework for authorising and controlling harvesting3.3.1 Key legislationThe present system of authorizing and controlling the harvesting and transport of wood and woodproducts is established by the following legislation: − Law on Licences and Permissions 2005 (as amended). Establishes the legal basis for issuing licences to persons to use forests for the purpose of harvesting timber as hunting ranges. Procedures and terms of forest use licensing are laid down in the regulation adopted by Resolution of the Government of Georgia No. 132 described below. The Law establishes that no other licences or permissions and no obligations that imply the establishment of a licensing regime may be introduced other than by the Law on Licences and Permissions. − Forest Code 1999 (as amended). Establishes permissible forms of forest use and lays down conditions that must be met before forest use may take place. The Forest Code specifies nine types of forest use. However, the Law on Licences and Permissions, which is superior to the Forest Code, specifies only two types of forest use: harvesting of wood and hunting. Article 93 of the Forest Code provides for the system of the control documents specified in the regulations adopted by Order No. 380 of the Minister of Environmental Protection and Natural Resources described below. − Resolution of the Government of Georgia No. 132, 11 August 2005, On Approval of the Regulation On the Procedure and Terms Of Forest Use Licensing (as amended). Establishes the procedures and terms for issuing licences for using forests for harvesting timber and as hunting ranges. The regulations provide that the Forestry Department of the MEPNR (and the equivalent bodies in Adjara and Abkhazia) may allocate cutting areas without a licence and by a simple administrative procedure to provide firewood and timber to meet the needs of the local population and for special purposes. Regarding controls over the transport of wood the regulation lays down that: wood transported on the territory of Georgia must be accompanied by a certificate of the appropriate form as specified in the order of the Minister of Environment Protection and Natural Resources (see below); and primary timber processing, timber transportation on the territory of Georgia, and timber sales shall be prohibited without a legal harvesting certificate. The regulations also lay down obligations on licence holders regarding the preparation of forest management plans before cutting of trees can start. − Order No. 380 of the Minister of Environmental Protection and Natural Resources of Georgia of 22 September 2005, On Approval of the Procedure for Issuance of Legally Harvested Timber and Timber Origin Certificates. Lays down the procedures for issuing timber origin certificates and legal harvesting certificates, assigns responsibilities for implementing the procedures, and lays down the forms of the documents. The timber origin certificate confirms that the material to which it refers has been harvested with the authorisation of the responsible government body. The certificate is issued following inspection of the cutting areas and the material immediately before the material is transported out of the cutting area. The certificate accompanies the material to the place where it is stored for subsequent transport or processed. A legally harvested timber certificate is issued to material which has been stored, processed or sold. The certificate establishes that the material to which it refers originates from harvesting which has been authorised by the responsible government body. The regulation requires legally harvested timber certificates to be issued to imported timber upon sale or transfer of all or part of the material to another person. Order No. 380 will be cancelled on the coming into force of Order No. 806 on 1 September 2010 (see below). − Order no. 566 of the Minister of Environmental Protection and Natural Resources of Georgia of December 20 2005 ‘On the Format and Issuance Procedure for Legally Harvested Firewood Certificate’. Lays down the procedures for issuing certificates of legality for firewood, assigns responsibilities for implementing the procedures, and lays down the forms of the documents. Order No. 566 will be cancelled on the coming into force of Order No. 806 on 1 September 2010 (see below). Page 12
  19. 19. Assessment of timber origin verification legislation. Final report − Order No. 806 of the Minister of Environmental Protection and Natural Resources of Georgia, 10th of December 2008, On the Forms and Rules of Issuing the Document Verifying Legality of Timber Wood Production. Order No. 806 comes into force on 1 September 2010 and replaced Orders No. 380 and 566 (see above). The Order consolidates the regulations for issuing timber origin and legally harvested timber certificates into one act and brings in new provisions requiring enterprises involved in the primary processing of timber to maintain records linking input with output. − Order no. 672 of the Minister of Environmental Protection and Natural Resources of Georgia of September 26 2008 ‘On the Procedure for Development and Approval of Forest Use Plans’. Establishes the procedures for developing and approving the forest use plans referred to in the regulation adopted by Resolution 132 (see above) and lays down the content of forest use plans.3.3.2 Powers and responsibilitiesThe powers and responsibilities conferred by the system lie principally with: − in relation to the auctioning and issuing of licences, the MED (delegated to the Department of Licences and Permissions) and the MEPNR (delegated to the Forestry Department); − in relation to carrying out technical expertise of plans and operations, the MEPNR (delegated to the Forestry Department); − in relation to the issuing of timber origin certificates and legally harvested timber certificates, the MEPNR (delegated to the Forestry Department in the case of the Useable Forest Fund apart from the Local Forest Fund); the Department of Environment Protection and Natural Resources of the Government of Adjara (in the case of the Useable Forest Fund apart from the Local Forest Fund); local self-governing bodies in the case of the Local Forest Fund; the MEPNR (delegated to the Agency for Protected Areas) in the case of the forests which form part of protected areas. − in relation to enforcing laws and regulations governing the actions of forest users, the MEPNR (delegated to the Environmental Inspectorate); − in relation to issuing export clearance, the relevant customs authorities.The system of authorizing and controlling the harvesting of wood under a licence for forest usedistinguishes in some important ways between wood that is destined to be used as firewood and woodthat is intended to be used in construction or for other industrial purposes.3.4 Harvesting of wood under a licence for forest useThe system for authorizing and controlling the harvesting of wood on state forest land under a licencefor forest use and its removal and transport is presented diagrammatically in Figure 1. − Process 1. The decision to auction a licence for timber harvesting is taken by the MED upon a request from a physical person or legal person of private law or on its own initiative with the agreement of the MEPNR. − Process 2. The MEPNR (through the Forestry Department) prepares information about the territory to be licensed and the volume available for harvesting. The MEPNR submits the information to the MED in a formal document. An example of such a document is at Annex 2. − Process 3. The MED prepares and conducts the auction and the winning bidder is selected. − Process 4. Within one month after the auction the winning bidder decides whether to accept the licence or not. If the winning bidder accepts the licence he signs the licence document together with the MED and becomes the licence holder. The licence holder may not start to harvest timber until he has prepared a forest use plan and the plan has been positively assessed by the MEPNR (delegated to the Forestry Department). Page 13
  20. 20. Assessment of timber origin verification legislation. Final report − Process 5. The licence holder prepares a forest use plan. The MEPNR (delegated to the Forestry Department) carries out an expertise on the forest use plan. If the Ministry’s expertise is positive, the forest use plan is approved. If the Ministry’s expertise is negative the licence holder amends the plan and resubmits it to the Ministry. − Process 6. The licence holder arranges for trees to be felled and prepared for removal from the forest. The licence holder cuts any timber that is to be considered as firewood for the purpose of paying resource use tax into lengths not exceeding 0.7 metre (a requirement established by the Order No. 806 of the Minister of Environmental Protection and Natural Resources of Georgia). The licence holder pays the appropriate resource use fee to the bank account of the Ministry of Finance and obtains a receipt. − Process 7. The licence holder writes the details of the species and the volumes of industrial wood and fire wood on an individually numbered timber origin certificate provided by the Forestry Department, arranges for the material to be loaded onto a lorry and asks the regional office of the Forestry Department to inspect the consignment and sign and stamp the timber origin certificate. − Process 8. The Forestry Department inspects the area in which the trees were felled and checks the consignment to make sure that it conforms to the species and assortments declared by the licence holder and that the licence holder has paid the resource use fees due on the consignment. The legislation establishes that the Forestry Department should sign and stamp the timber origin certificate before the consignment leaves the cutting area. − Process 8a. If the Forestry Department finds evidence that trees have been felled in contradiction to the approved forest use plan or finds a discrepancy between the consignment and the information declared by the licence holder, the Forestry Department submits a protocol to the Environmental Inspectorate. The Environmental Inspectorate decides whether to take action against the licence holder. − Process 8b. If the inspection finds that everything is in order, the Forestry Department issues a timber origin certificate and the consignment may then be transported from the forest to the destination indicated on the certificate. The consignment must be delivered to its destination within 24 hours after the Forestry Department ha s signed and stamped the licence. The time limit will be reduced to 12 hours upon the coming into force of the regulations adopted by Order # 806 on 1 September 2010. An example of a timber origin certificate issued in this instance is at Annex 3. Page 14
  21. 21. Assessment of timber origin verification legislation. Final report Figure 1 – Control system for timber harvested under a license Page 15
  22. 22. Assessment of timber origin verification legislation. Final reportAfter the consignment has reached the destination recorded on the origin certificate it may follow anumber of different paths. The destination may be outside Georgia, in which case the origin certificateprovides evidence to the Georgian customs that the material is legal before the relevant customsauthorities issues export clearance. If the destination of the consignment is in Georgia, after arriving atthe destination it may be processed at the destination and the products sold to a customer in Georgia oroutside Georgia; it may be stored for some time and transported in an unprocessed form to anotherdestination inside Georgia or exported; if the destination is again in Georgia, it may be stored andtransported again or processed and the products sold. On every occasion the timber or productsderived from the timber are transported or sold the owner has to apply to the Forestry Department for atimber legality certificate. An example of a timber legality certificate is at Annex 4.In addition to processes related to harvesting and transportation of timber described above, the MEPNRcarries out inspections of territories held under licence to check compliance with the conditions of thelicence. The checks are carried out by the Forestry Department and Environmental Inspectorate. Thechecks include: − Compliance with silvicultural and environmental protection norms specified in the Forest Code, relevant environmental protection laws, and subordinate legislation; for example: that felling is in accordance with the norms specified in the Forest Code; norms for protecting water bodies and water courses have not been breached; norms for disposing of hazardous waste have been respected. − Compliance with the approved forest use plan; for example that forest protection, regeneration and tending measures specified in the forest use plan have been carried out.If the Ministry finds that the licence holder is in breach of the conditions of the licence the Ministrysubmits a protocol to the MED, who decides what sanctions to impose. Sanctions may be cancellationof the licence, suspension of the right to fell and remove timber until corrective action has been taken.Up to the time of writing this report the MEPNR has not submitted such a protocol to the MED (seeAnnex 1 for the records of the Consultant’s meetings with the Licensing Department of the MED and theEnvironmental Inspectorate of the MEPNR).3.5 Harvesting of wood to provide firewood or construction timber to householdsThe present system for authorizing and controlling the harvesting of wood to provide firewood orconstruction timber to households is presented diagrammatically in Figure 2. − Process 1. The representative of the household submits an application for a permission to cut firewood to the regional office of the Forestry Department and to cut timber to the municipality (for the latter to forward the application to the regional office of the Forestry Department). Upon the Forestry Department’s notification that authorisation will be granted, the representative of the household pays the resources use fee which is due. − Process 2. The regional office of the Forestry Department or a service company contracted by the Forestry Department identifies a cutting area and marks the trees which are authorised for felling. The regional office of the Forestry Department issues a special legality certificate for firewood (example for a legality certificate at Annex 5) − Process 3. The permission holder fells the trees (or arranges them to be felled) and prepares them for removal from the forest. The permission holder cuts any timber that is to be considered as firewood (having paid resource use tax for firewood) into lengths not exceeding 0.7 metre. Page 16
  23. 23. Assessment of timber origin verification legislation. Final report Figure 2 – Control system for firewood and timber for household use − Process 4. The permission holder arranges for the material to be transported to his residence. For timber, before transportation the representative of the household asks the regional office of the Forestry Department to issue a timber origin certificate (Annex 3). − Process 5. The representative of the regional office inspects the cutting area to check that only trees authorised for felling have been felled, measures the timber, records the amounts on a timber origin certificate, and signs and stamps the certificate. For firewood, the wood volumes actually cut are compared with those indicated in the legality certificate, after which the certificate is stamped. − Process 6. The permission holder transports wood to his home. Page 17
  24. 24. Assessment of timber origin verification legislation. Final report3.6 Impending changes to the system3.6.1 Changes to the arrangements for issuing timber origin and timber legality certificatesThe present arrangements for issuing timber origin and timber legality certificates (Orders of theMinister of Environment Protection and Natural Resources #380 of 22 September 2005 and #566 of 20December 2005) will be superseded on 1 September 2010 by new arrangements established byregulations adopted by Order #806 of the Minister of Environment Protection and Natural Resourcesdated 10 December 2008. The new regulations consolidate the arrangements introduced by theregulations adopted by Orders #380 and #566 and introduce new obligations on enterprises primaryprocessing round timber to keep records of the movement of material received, processed, stored anddispatched.According to information provided to the Consultant by the Legal Advisor to the Minister of EnvironmentProtection and Natural Resources, the Ministry is aiming to abolish the certificate of legal timber.3.6.2 Changes to the status and functions of the Forestry DepartmentDuring the study which is the subject of this report was carried out the MEPNR announced that theForestry Department is to be replaced by a legal body of public law – the Forestry Agency. The newentity will have the right to charge and receive and retain money for providing services, includingservices related to allocating forest territories to users; for example: preparing a territory for licensing,including inventory; issuing timber origin certificates. The functions of the new entity will be broader thanthose of the present Forestry Department. Persons interviewed by the Consultant expressed differentopinions as to the extent of the new entity’s powers to monitor licence holders. One opinion was that thenew entity should have the power to enter the territory of a licence holder at any time. Another opinionwas that only the Environmental Inspectorate should have such a power and that the new entity’sfunction in relation to monitoring should be limited to bi-annual inspections and reporting to theEnvironmental Inspectorate. The Consultant’s opinion is that primary responsibility for ensuring that alicence holder is complying with the law and the licence conditions should rest with the EnvironmentalInspectorate. The Ministry of Environmental Protection and Natural Resources should ensure that theInspectorate has the necessary manpower and technical knowledge for exercising those functions. TheEnvironmental Inspectorate should continue to use the services of the Forestry Department (and thefuture Forestry Agency) to carry out ad-hoc and regular inspections. Page 18
  25. 25. Assessment of timber origin verification legislation. Final report4 Assessment of the system4.1 As an instrument for Georgian authorities to tackle illegal logging4.1.1 Purpose of the systemThe Georgian authorities’ primary interest is to prevent logging that has not been authorised and toensure that resource use fees are paid on trees that are logged. Prevention of unauthorised logging canbe achieved by (i) stopping people from logging trees without authorisation before the act by preventingentry to the forest and (ii) by deterring people from logging trees. Deterrence can be achieved bydetecting unauthorised logging during or after the act and punishing the offender.Stopping people from logging trees before the act and detection during the act would require aninvestment in forest guards that Georgia cannot afford and would be likely to be disproportionate to thecost to the country of unauthorised logging. The focus should therefore be on deterrence by detectionafter the act and punishment of offenders. For the purpose of detection, the Georgian authorities need asystem which enables them to determine whether timber has been logged with authorisation or withoutauthorisation and whether resource use fees have been paid or not.4.1.2 Control points and informationA detection system consists of checks at control points from the logging area to the place where thetimber or products from the timber are used or the border crossing where they leave the country asexports. In addition checks may also be made on imported timber after it crosses the border intoGeorgia to the point where it is used. Timber circulating in Georgia after it has left the forest isindistinguishable from imported timber, therefore a detection system which includes checks outside theforest has to include checks on all timber outside the forest.Possible control points are:1. In the cutting area or at a designated place outside the cutting area after the trees have been felled (but before the trees or the timber derived from the trees are transported out of the cutting area) to check that the material is only from trees which have been authorised for felling, that conditions of the authorisation have been met, and that resources use taxes have been paid (if they have to be paid before the material is removed).2. During transport of the timber from the forest to its first destination or during transport of the timber or products derived from the timber to a subsequent destination.3. At a place where timber is stored, processed or sold.4. In the case of exports, at a customs control point.The system established by Georgian legislation provides for checks at all of these control points.Checks can be based on information prepared by a person authorised to cut trees or issued by theresponsible authorities, and on information collected by the responsible authorities during theinspection. Information may take the form of documents authorising the felling, information provided bythe licence holder about the species and assortments, labels or marks on the timber which identifies thetree from which it was derived, documents issued by the authorities after a check, the results of visualinspection and measurement performed by the responsible authority.4.1.3 Checks made at the control pointsControl point 1In the case of a licence for timber harvesting, after timber has been loaded onto the transportationvehicle and immediately before transportation out of the cutting area or forest the Forestry Departmentcarries out the following checks: − that the species and assortments correspond to the information provided by the licence holder in the timber origin certificate; Page 19
  26. 26. Assessment of timber origin verification legislation. Final report − that the licence holder has paid the resources use fees which are due by inspecting the licence holder’s receipt from the bank.If all requirements have been met the Forestry Department signs and stamps the timber origincertificate.In the case of a permit for cutting timber for use as firewood or construction timber by households, aftertimber has been loaded onto the transportation vehicle and immediately before transportation out of thecutting area the Forestry Department carries out the following checks:− that only the trees marked by the Forestry Department for felling have been felled;− that the resource use fee has been paid by inspecting the permit holder’s receipt from the bank.If all requirements have been met the Forestry Department completes and signs and stamps the timberorigin certificate.Control point 2The Environmental Inspectorate of the MEPNR have powers to stop and check any vehicle anywhere inGeorgia. The Inspectorate organises spot checks during which the Inspectorate’s officers conduct thefollowing checks: - that any timber and timber products are accompanied by a valid origin certificate or legality certificate; - that the consignment corresponds to the information in the certificate.Control point 3The Environmental Inspectorate has powers to inspect any place where timber is stored, processed orsold. The Inspectorate organises spot checks during which the Inspectorate’s officers conduct thefollowing checks: - that the owner of any timber and timber products, or person acting for the owner, is in possession of a valid origin certificate or certificates, or legality certificate or certificates; - that the type and volume of material at the place of storage, processing or sale tallies with the type and volume recorded in the certificate or certificates.Control point 4Before clearing a consignment of timber and timber products for export the relevant customs authoritieschecks that the consignment is accompanied by a valid origin certificate or legality certificate and thematerial in the consignment corresponds with the information recorded in the certificate.4.1.4 Efficiency of design4.1.4.1 Main elementsThe checks which are carried out in the forest (control point 1) and the timber origin certificate asevidence that the material originates from authorised harvesting are sound in principle. There are someproblems with implementation which are discussed later in this report.The timber legality certificate is not an efficient instrument. Application of the certificate requires theissuing authority to check that material that forms part of a consignment covered by a timber origincertificate or certificate of legality and material that has been processed is derived from materialcovered by a timber origin certificate or certificate of legality. The effort involved in carrying out suchchecks with a sufficiently high degree of assurance is not worth the cost. The obligations on enterprisesengaged in the primary processing of timber which will come into force on 1 September are intendedprimarily to provide information that allows processed material to be traced to unprocessed materialbefore the certificate of timber legality is issued. Therefore the new obligations are justified only by theobligation to be in possession of a certificate of timber legality. Page 20
  27. 27. Assessment of timber origin verification legislation. Final report4.1.4.2 Quality of the legislationThe arrangement of the provisions in the legislation and the frequency with which some of thelegislation has been amended makes the provisions difficult to understand and implement as intended.Arrangement of provisionsThe Regulations on the Procedures and Terms for of Forest Use Licensing (Resolution of theGovernment of Georgia #132) have been amended many times. It seems highly likely that the officialsof the responsible authorities responsible for implementing the regulations do not know all of theprovisions which are in force and which provisions are no longer in force. There does not appear to be aconsolidated version of the regulations with all of the amendments incorporated. 2 3Articles 3 and 3 of the same regulations concern the timber origin certificate and certificate of timberlegality. The provisions simply duplicate the obligations laid down in the regulations adopted byResolutions #566, #380 and #806 of the Minister of Environment Protection and Natural Resources andare not necessary. 1Articles 3 and 3 of the same regulations exempt harvesting for certain purposes from licensing. Article4 of the same regulations provides for decisions on issuing firewood to the local population to be madeby a simple administrative procedure. The Consultant was not able to identify any legal basis for suchprovisions to be made by a Resolution of the Government. 1 2 3Articles 4 , 4 and 4 of the same regulations establishes responsibilities for decisions on classification ofState Forestry Fund lands as lands of a special category and their allocation for special forest use andthe carrying out of cutting on land allocated for special forest use. Such provisions should be in theForest Code, not in regulations governing licensing of forest use. 4 5Articles 4 and 4 of the same regulations concern the arrangements for paying resource use fees intimber cut on land allocated to special forest use. Such provisions should be made in the Law On theFee for Natural Resource Use or regulations under that law, not in regulations governing licensing offorest use.The Law on Licences and Permissions establishes that the only types of forest use or timber harvestingand hunting. The Forest Code establishes a number of other types. The Law on Licences andPermissions is superior to the Forest Code, therefore the types of forest use which are specified in theForest Code and not in the Law on Licences and Permissions cannot be made the subject of a licensingor permission regime. Thus there does not appear a legal basis, which would make possible legally touse State Forest Fund land for those uses, which include cutting of poles and other secondary woodproducts, research, provision of recreation services.Absence of legal basisThe regulations On Approval of the Procedure for Issuance of Legally Harvested Timber and TimberOrigin Certificates (Order No. 380 of the Minister of Environmental Protection and Natural Resources ofGeorgia of 22 September 2005), On the Format and Issuance Procedure for Legally HarvestedFirewood Certificate (Order no. 566 of the Georgian Minister of Environmental Protection and NaturalResources of December 20 2005) and On the Forms and Rules of Issuing the Document VerifyingLegality of Timber Wood Production (Order No. 806 of the Minister of Environmental Protection andNatural Resources of Georgia, 10th of December 2008) establish procedures and obligations whichimply a licensing or permission regime. The Law on Licences and Permissions expressly prohibits suchregimes being established by legislation other than the Law on Licences and Permissions. It is difficulttherefore to find legal basis for these regulations.4.1.4.3 Detailed provisionsPeriod of validity of timber origin certificatesTimber origin certificates are valid for only 24 hours from the time of issue in order to prevent fraud. Thetime limit will be reduced to 12 hours when the new regulations on the procedures and terms for issuingtimber origin and timber legality certificates come into force on 1 September. The present validity periodcauses problems for villagers to transport wood cut under a permission for personal use to their houses Page 21
  28. 28. Assessment of timber origin verification legislation. Final reportbefore the certificate expires: villagers often do not have access to vehicles, or vehicles large enough tobe able to transport the material to its destination within the time limit.Measurement prior to issuing a timber origin certificateThe regulations governing the issuing of timber origin certificates to licence holders require that theForestry Department official checks the volume of the timber against the quantities stated by the timberharvesting company after the timber has been loaded onto the vehicle which will transport the timberfrom the forest to its destination. Representatives of the licence holders and the Forestry Departmentremarked that it is difficult to measure timber accurately when it is lying on the vehicle and therefore tocheck the information recorded on the timber origin certificate by the licence holder.Categorisation as firewoodThe legislation requires that timber which is categorised as firewood for the purpose of payingresources use fees must be cut into lengths of no more than 0.7 metre before a timber origin certificateis issued. Licence holders interviewed by the Consultant commented that the requirement preventedthem from getting the highest possible value from the timber: it is often possible to obtain parquetmaterial from timber categorised as firewood.4.1.5 Abuses of the systemThe use of timber origin certificates more than once is illegal: the origin certificate should be cancelledafter the timber or firewood covered by the certificate has been delivered to its destination. However,some operators may not cancel the certificate but use it again so that they can purport to show thatillegally harvested timber is legal. This is a risky action. The timber origin certificate is a controlleddocument, individually numbered and recorded in a central registry. If an official has reason to suspectthe veracity of an origin certificate he/she can check by making one phone call. Furthermore, theregulations state that the certificate is valid for only 24 hours from the time of issue; the date and time ofissue is recorded on the certificate.There may be cases when villagers who cut firewood or construction timber for personal use with apermission from the Forestry Department sell the wood to wood processing companies, for exampleparquet flooring manufacturers. This is profitable for the villagers but illegal. The villagers pay 3 GELper cu.m for firewood and can sell it for a much higher price but below the normal price paid to licenceholders. Sales by villagers compete with sales by licence holders and put a downward pressure onprices. Villagers who might do this and the enterprises which might buy from the villagers would take arisk because they would not be able to provide a valid timber origin certificate upon inspection by theauthorities when the material is being transported to the enterprise.There have been a number of high profile cases in the last 12 months in which officials have beenconvicted of bribery. At the time of writing this report a number other cases are due to be heard by thecourts. Bribery typically involves a Forestry Department or Environmental Inspectorate official takingmoney from a license holder to issue a timber origin certificate or certificate of timber legality whichincludes false information about the timber or timber products which are the subject of the certificate.4.1.6 Effectiveness of implementationThe Forestry Department does not have enough staff to implement the system effectively. The licenceholders interviewed by the Consultant complained about the time that it took to arrange for the ForestryDepartment to carry out an inspection prior to issuing a timber origin certificate. The ForestryDepartment staff interview by the Consultant agreed that they did not have enough staff and that theforest rangers were not able to cope with the large territories under their responsibility.Lack of staff also affected the issuance of legality certificates for imported timber. It can be difficult forcompanies to arrange for an official to carry out an inspection. In some cases the importer may makean illegal deal with the holder of a forest use licence to obtain a legality certificate.Lack of technical knowledge was raised by some of the people interviewed by the Consultant, inparticular that Environmental Inspectorate lack the technical knowledge needed to be able monitorlicence holders’ forest management practices effectively and fairly. Page 22

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