FLEGT VPA Independent Market Monitoring (IMM) 1

Presentation structure IMM background, role, progress and outputs Draft baseline data – Indonesia in international trade – Indonesia in EU trade Concluding comments 2

IMM Background IMM is a condition of some FLEGT VPAs (including Indonesia) Builds on IMM proposal by EFECA in EFI- commissioned report issued 2012 Funded by European Commission through through DG International Cooperation and Development Budget: €4.4 million over 5 years ( ) Hosted by International Tropical Timber Organisation (ITTO) – Promotes expansion & diversification of trade in tropical timber from sustainably managed and legally harvested forests – Membership = most producer & consumer countries. – Record of statistical capacity building, data collection & market information 3

FLEGT VPA Partners 4

IMM Objectives Generate information that demonstrates changes in trade of legally verified timber and timber products in the EU market Improve knowledge and understanding of the impacts of VPAs on timber prices, trade and market trends globally Ensure VPA countries & EU provide reliable stats and info on FLEGT timber trade and acceptance in their reporting Inform decisions by VPA Joint Implementation Committees (JICs) by providing timely & accurate info on market impact Contribute to monitoring the impacts of the FLEGT Action Plan and to inform its implementation Develop a long-term strategy for sustaining the IMM in consultation with the EU and VPA partner countries 5

IMM Oversight & Guidance Project Steering Committee (PSC) – Monitors IMM progress, review work plan and reports – ITTO & EC representatives – Observers e.g. EFI, Eurostat, interested government agencies Advisory Committee – Advises on technical aspects, promotes coordination, facilitates participation by stakeholders and communication of IMM activities. – ITTO, FAO, UN-ECE, Eurostat, EFI, government agencies from EU & VPA Partner countries, trade associations, other organisations interested in timber market monitoring. Timber Market Monitoring Committee (TMMC) – Facilitates info exchange, avoids duplication, improves market monitoring practices & stats, common data protocols – AC sub-group of organisations directly engaged in market monitoring – ITTO, EFI, Eurostat, Indufor, ATIBT/IFIA, STTC, FAO, UNECE, Global Timber Forum, Chatham House, WRI, & Forest Trends. 6

IMM Methodology Framework (currently in draft) of 52 indicators for quantitative assessment of market impacts 7

33 EU-wide indicators Overall EU market for all FLEGT VPA timber Examples: – market impact of EUTR implementation; – scope and content of public sector procurement policies; – timber procurement requirements established by EUTR MOs, TTF’s & major retailers – handling of VPA licenses in FSC and PEFC CoC standards – perceptions of VPA licensed timber in design and architectural community – recognition of FLEGT VPAs in guidelines for assessment of forest sector risk in the financial sector 8

19 VPA partner-specific indicators Changing market for each VPA partner country Examples: – monitoring of volume and value of trade flows between the VPA partner country, the EU and other markets; – prices for specific indicator products from the partner country; – time to clear customs – size and quality of investment in the VPA partner country – changing perceptions of timber from the partner country resulting from VPA licensing. 9

Key operational issues Phased approach - progressively widen monitoring against indicators as more licensed timber becomes available & with rising awareness Close working relationship with JICs in VPA countries Network of IMM correspondents in VPA Partner Countries & priority EU Member States reporting regularly Additional surveys undertaken directly by IMM or by other members of TMMC Linkage to trade associations in both producer and consumer countries to encourage input from private sector 10

IMM Progress Baseline report – 1 st review draft end November 2014, final report available Jan/February 2015 – VPA Partner Countries in international & EU trade 2004 to 2014 – Identify & preliminary review of factors driving change Liaison with VPA Partners – participation at Liberia JIC & Ghana JMRM in May/June 2014, workshops Indonesian Ministry of Forestry in November 2014, Cameroon/Congo Republic 1 st Qtr of 2015 First Advisory Committee meeting planned 1 st Qtr 2015 (likely Brussels) Preliminary negotiations with potential members of IMM Correspondents Network 11

Improved access to statistics Strengthen ITTO’s existing capacity Responding to regular requests from policy makers and private sector Supporting redevelopment of EFI Forest Products Trade Flow Database – Based on global COMTRADE & EU COMEXT data – HS Chapters 44 (Wood), 47 (Pulp), 48 (Paper), 49 (Printed papers), 94 (Furniture) – Validated - comparing unit values & mirror export/import data – Publicly available on ITTO and EFI websites – Data visualisation 12

Key IMM outputs Annual reports (First before end 2015) – Current status of licensing in VPA Partner countries – Annual update of production and trade data – Overview major trade trends & issues arising – Systematic review against indicators Website – – Quarterly e-news – Production and trade database – Data visualisation 13

Draft baseline data: Overview of tropical timber trade 14

15 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

16 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

17 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

Draft baseline data: Indonesia in International trade 18

19 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

20 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

21 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

22 Source: IMM analysis of Global Trade Atlas & UN COMTRADE

Draft baseline data: Indonesia in EU trade 23

24 Source: IMM analysis of Eurostat COMEXT

25 Source: IMM analysis of Eurostat COMEXT

Eurostat construction production index 2010=100 26

27 Source: IMM analysis of Eurostat COMEXT

A Perfect Storm: drivers of tropical hardwood market decline in Europe 28

29 Source: IMM analysis of Eurostat COMEXT

30 Source: IMM analysis of Eurostat COMEXT

31 Source: IMM analysis of Eurostat COMEXT

EU Member State import of Indonesian wood products Monthly value (moving average) – March 2004 to June 2014 €1 million (constant 2013 prices) Red line = date of EUTR enforcement 32

33 Source: IMM analysis of Eurostat COMEXT

Concluding comments Trade data yet to reveal direct EUTR impact – Other commercial factors more in evidence – Different interpretations – EUTR not yet effective? Tropical forest regulation and/or trade due diligence already effective? Data inadequate? Significant gaps in information – Limited availability & poor quality of production and trade data – Systematic assessments illegality risks for countries/regions/products – Data on flows of certified/verified legal timber – Regular input from private sector - role for IMM Correspondents network Decline in relative role of EU in tropical trade (short term?) reinforces: – Importance of collective action on consumer side – Need for more effective market development strategy in EU Central role for VPA process - wide international coverage - critical mechanism for EU engagement in tropical countries – solid foundation for tropical wood market development 34

Thank you! IMM brochure available Rupert Oliver 35