Chamber of furniture Industries of the Philippines FORUM on EU FLEGT COMPLIANCE and ALTERNATIVE SOLUTIONS INSIGHTS & UPDATES on FOREST CERTIFICATION and CHAIN-OF-CUSTODY for SUSTAINABLE FOREST MANAGEMENT For. Raul M. Briz Senior Forest Management Specialist Forest Management Bureau 26 March 2014, Lancaster Hotel, Mandaluyong City

SUSTAINABLE FOREST MANAGEMENT Also known as RESPONSIBLE FOREST MANAGEMENT Government’s main policy thrust to guarantee the long-term stability of the Philippine forests and its resources.

RATIONALE OF FOREST CERTIFICATION A process of managing forests to achieve one or more clearly specified objectives of management with regard to the production and continuous flow of desired forest products and services, without undue reduction of its inherent values and future productivity and without undue undesirable effects on the physical and social environment (International Tropical Timber Organization-ITTO)

SUSTAINABLE FOREST MANAGEMENT (SFM) Shall be in compliance with the phase-approach agreed by ASEAN Member State (AMS) wherein all forests in the ASEAN region must be sustainably managed by Eventually, forest certification will be a standard of forest management for ASEAN by 2015.

HOW IS FOREST CERTIFICATION OBTAINED? On-the ground evaluation & assessment of forest management practices in a forest management unit (FMU) conducted by an accredited third party forest certifier using tools locally developed that are anchored on internationally accepted standards, principles and criteria. If passed the assessment process, forest certification is awarded to the FMU & allowed to use the company logo of the forest certifier that it indeed practices sustainable forest management.

HOW IS FOREST CERTIFICATION BTAINED? THIRD PARTY FOREST CERTIFIER is a non- government local or international organization which is conducts assessment of a particular forest under a management regime using internationally accepted tools and forest management principles. The Philippine Criteria and Indicators (C&I) System for Sustainable Forest Management

HOW IS FOREST CERTIFICATION OBTAINED? Certification used to a voluntary, market-based tool that supports Sustainable Forest Management (SFM). SFM is also known as responsible forest management worldwide. It is done by a third party in compliance with established principles, criteria, policies & standards prepared in multi-stakeholders process that are transparent, democratic & inclusive.

HOW IS FOREST CERTIFICATION OBTAINED? Certain forest described as forest management units (FMUs) are assessed & evaluated by a third party forest certifiers using internationally accepted standards & adopt sustainable forest management (SFM) principles, criteria & indicators. E.g. Philippine Criteria & Indicators System with Audit Procedures. The FMU when finally certified is authorized to use the Company logo or the third party forest certifier certifying that the wood indeed comes from a sustainably managed forests.

CHAIN OF CUSTODY (CoC) This makes use of primary existing inventory system assuring the SEGREGATION of certified and non- certified forest products. This principle applies from the point of harvest up to the forest gate by forest management enterprises (FMEs) and between handling steps by other suppliers, manufacturers, and traders.

CHAIN-OF-CUSTODY (CoC) CERTIFICATION A chain-of-custody system allows for tracking of wood, paper products & other wood product from: 1.) the forest transport to primary processing (i.e. WPP); 2.) primary processing to downstream processing (e.g. furniture shops; 3) processing to export/ distribution point (e.g. importer & exporter,) & 4.) finally to trade and retail outlets where it reaches the final consumer (e.g. hardware, depot). Set of procedure wherein timber and timber products could be ascertain of its source as they moved along supply chain even ownership changes hands to wood processing down to retailer.

SAMPLE STEPS /PROCESSESS OF CHAIN-OF-CUSTODY Quality System Criteria for Chain of Custody 1. Company shall define CoC system responsibilities and appoint staff positions, including the following: 2. Company shall develop and maintain up-to-date documented procedures and/or work instructions to ensure implementation of all applicable CoC standard requirements. 3. Company shall develop & implement procedures for addressing non- conformances ( corrective action requests, observations ) identified by auditors. 4. Company shall develop and implement procedures for internal evaluation (audit) of its system as related to CoC requirement in this standard. 5. Company shall develop training requirements and implement training. 6.Company shall define and document Verified Legal Origin (VLO) as a claim category that will be tracked. 7. Company shall develop and maintain records to document quantities of VLO product

In-Forest Production Criteria 8. FME procedures & practices shall provide effective control of forest products from standing timber until ownership is transferred to the forest gate. 9.FME procedures & practices shall control the risk of mixing VLO forest products with non-VLO products which originate outside the scope of the verification. In-forest Production Criteria:… A system shall exist to identify FME products as VLO (e.g. through documentation or marking system) at the forest gate

Purchasing and Receiving Criteria 11. Company shall verify the validity of the supplier’s VLO claim. 12. Company shall verify that material purchased and received is consistent with the VLO claim category specified. 13. Company shall store VLO material as separate, secure units. 14.Company shall use a distinguished mark to identify VLO material. Processing Criteria 15. Company shall keep VLO material physically separate during all stages of processing. 16. Company shall use a tracking system or production records to document production of VLO material. 17. Company shall ensure that any off-site processing that takes place at a subcontracted facility follows CoC procedures and is covered by a signed outscoring agreement. 18. All material that cannot be identified as VLO shall be kept physically separate from all other material until documented evidence of the claim category is obtained.

Processing Criteria 15. Company shall keep VLO material physically separate during all stages of processing. 16. Company shall use a tracking system or production records to document production of VLO material. 17. Company shall ensure that any off-site processing that takes place at a subcontracted facility follows CoC procedures and is covered by a signed outscoring agreement. 18.All material that cannot be identified as VLO shall be kept physically separate from all other material until documented evidence of the claim category is obtained. Shipping and Sales Criteria 19. Company shall store final VLO products as separate, secure units. 20. Company shall use a distinguishing mark to identify final VLO products. 21. Company shall include claim information on sales invoices and shipping documents.

: BACKGROUND ON VARIOUS INTERNATIONAL INITIATIVES ON SUSTAINABLE FOREST MANAGEMENT

: EUROPEAN UNION TIMBER REGULATIONS (EU TR) Became effective in 03 March 2013 Operators (any natural or legal person who places timber or timber products on the EU market shall exercise due diligence when placing timber or timber products on the market). They shall use a framework of procedures and measures, referred to as a ‘DUE DILIGENCE SYSTEM, pursuant to Article 6 of EUTR. HOW? 1) Access to information ( species, origin, quantities, traders and compliance with legal requirements of harvest country) 2) Risk assessment ( certification; prevalence of illegal harvesting; sanctions; complex supply chains, etc.) 3) Risk mitigation ( additional information or documentation; certification, etc.)

: EU TR Countries enters into a bilateral arrangement with the European Union or EU called Voluntary Partnership Agreement or VPA. 1. Monitoring organisations (MO) will be legally established within the EU & recognised by the Commission 2. Maintain and evaluate a due diligence system & grant operators the right to use it 3. Ensure that operators correctly apply Due Diligence System 4. Subject to checks by competent authorities FEATURES OF HAVING A VPA: Products covered by FLEGT or CITES licenses are considered to have been legally harvested for the purposed of the EU Timber Regulation This means by importing FLEGT or CITES licensed timber, due diligence is exercised

: US Lacey Act (1900) Oldest wildlife protection law designed to combat trafficking of “illegal” wildlife, fish or some plants. Amendment to the Lacey Act was passed on May 22, 2008 & effective immediately. It was known as the Amendment to the Lacey Act Farm Bill 2008 specifically “ Section Prevention of Illegal Logging Practices.” This expands Lacey’s protection to broader range of plants, extends the statute’s reach to encompass illegally harvested plants (includes timber), and NEW DECLARATION REQUIREMENTS. Amendment to the Lacey Act addressed Illegal Logging: 1. Theft of timber, including from parks & protected areas 2. Harvesting without permission 3. Failure to comply with harvesting regulations 4. Failure to pay royalties, taxes or fees

: AUSTRALIA November 2012 – Illegal Logging Prohibition Act 2012 November 2014 – Illegal Logging Prohibition Amendment Regulation 2013 Adopts, implements and practices DUE DILIGENCE HOW? 1.Gather information 2.Mitigate Risk Assessment 3.Risk Mitigation 4.Import

: JAPAN The Government of Japan included “Goho wood” in the Environmentally Friendly Goods List which are subject to “Green Purchasing Law” Implementation Act for Promoting the Use of Wood in Public Buildings”. The Basic Principle of the Act strongly encourages to use Legality/Sustainability verified wood or Goho Wood (“go for wood”) in government subsidized projects Implementation of Wood Use Point Program

: UPDATES ON FOREST CERTIFICATIONS, CHAIN-OF-CUSTODY & TIMBER LEGALITY SYSTEMS

: FOREST CERTIFICATIONS & CHAIN-OF- CUSTODY 1.Guidelines or implementing rules and regulations to Operationalize and Implement Forest Certification nationwide Chain-of-Custody Certification - is still in progress -includes accreditation of third party forest assessors/ certifiers, governing body of forest certifications, etc. 2. Undertaking the newly-funded project by ITTO entitled Development and Testing of National Forest Stock Monitoring System (FSMS) with Improved Governance Capabilities at All Levels of the Forest Administration : PD 599/11(M) Short-term project ( Assessment of Existing Philippine Timber Tracking System & the Development of Chain-of-Custody Procedures : PP-A/ )

: TIMBER LEGALITY ASSURANCE SYSTEMS (TLAS) Setting-up a systematic timber legality assurance procedures is closest option in the absence of a VPA. TLAS is fully compliant with EU TR In this context, we will adopt the six elements or criteria of legality of timber within the ASEAN Framework. AS member of ASEAN, we are obliged to follow such criteria in developing our own timber legality assurance system or TLAS based on the ASEAN Economic Community Blue Print, which is already acceptable in ASEAN region & likewise compliant with EU TR or Due Diligence. We are in the process of developing our own TLAS for Philippines.

: ASEAN’s SIX ELEMENTS OF TIMBER LEGALITY 1. Compliance with all relevant forestry laws and regulations ( PD 705, EO 277, RA 7161, DAOs, DMCs, DMOs, etc) 2. Payment of all statutory charges (forest charges, admin. fees, production sharing agreement, local taxes, ) 3. CITES compliance (timber species banned for cutting or commercial harvesting cannot b e marketed, except when grown in plantations) 4. Implementation of a system that allows the tracking of logs to the forest of origin (DAO & DAO , DAO LCMS) 5. Timber must be harvested by parties who have legal rights to carry out logging in designated forest area & based on approved cut (licenses, agreements, special permits, etc) 6. The party which harvests the timber shall comply with the laws governing social and environmental aspects ( PD 1586 PEIS for ECC, RA 8371-IPRA law, etc)

If we would want our forest products to be marketed even more competitive in the regional (i.e. ASEAN) and global markets, forest certification is the only way and excellent option before we completely lost our forests from all forms of destructive human activities. And complimented with certified Chain-of-Custody system for the wood manufacturers/ producers, sustainable management of country’s forests can be truly possible. Finally if we can genuinely & effective implement forestry laws, rules and regulations, we could attain sustainable forest management for the sake of the next generation of Filipinos.

SALAMAT PO! DAGHAN SALAMAT MABALOS PO! THANK YOU