1. Trade impact of the EUTR
April 17
Trade impact of the EUTR
BD Holz
Rupert Oliver,
Forest Industries Intelligence Ltd

2. Status of EUTR Enforcement
Client Earth Survey March 2014
Legislation introduced:
Austria, Denmark, Croatia, Germany, Cyprus, Czech Republic, Portugal, Luxembourg, Slovenia, UK.
Interim system operational
Netherlands
Legislation in draft
Belgium, Bulgaria, Finland, France, Ireland, Poland, Romania and Sweden.
No legislation
Estonia, Lithuania, Greece, Malta, Hungary, Slovakia, Spain, Italy
No information
Latvia
Approved monitoring organisation
NEPCon (EU wide)
Conlegno (Italy)
April 17
BD Holz

3. EUTR economic & trade context
April 17
BD Holz

4. EUTR introduced at very bottom of the downturn
April 17
BD Holz

5. Overall decline in EU timber trade
April 17
BD Holz

6. April 17
BD Holz

7. Most extra-EU imports from countries with high corruption & low certified forest area
April 17
BD Holz

8. EU: diminishing direct role in high risk flows
Scale in U$ million
Total value of trade:
$12.8 billion
2007
Global tropical hardwood trade flows by US$ value.
All import flows over $100k into 34 of the world’s largest importing countries. From Global Trade Atlas
Includes logs, sawn, veneer and plywood.
Share of imports:

9. EU: diminishing direct role in high risk flows
Scale in U$ million
Total value of trade:
$12.6 billion
2012
Global tropical hardwood trade flows by US$ value.
All import flows over $100k into 34 of the world’s largest importing countries. From Global Trade Atlas
Includes logs, sawn, veneer and plywood.
Share of imports:

10. EUTR trade impacts
April 17
BD Holz

11. Anecdotal evidence indicates some immediate effects of EUTR
Less focus on CoC to label just a few product lines (greenwash)
More focus on negligible risk of illegal wood entering supply chains of all product lines
Merchants/retailers more rapidly extending minimum documentation requirements to all product lines
In complex supply chains or chains where risks are high, increased pressure to move to FSC/PEFC certification
Greater scrutiny of formal CoC and forest certification systems to ensure genuinely deliver negligible risk of illegality
Suppliers of low risk products spending a lot of time correcting misinterpretation of EUTR obligations
April 17
BD Holz

12. Speculative trade flow responses
Concentration of DD functions in a few specialised importers
more reliance on cross-trading within the EU
More reliance on wood harvested in the EU
EUTR DDS applied at EU harvest sites so no need to deal with supply chain
More reliance on wood products manufactured in the EU
Strengthen existing trend towards “reshoring” of European manufacturing
Switch in external EU trade:
Away from EUTR regulated to non-regulated materials & products
Away from countries & timber suppliers with high perceived risk to low perceived risk
Away from tropical timber to non-tropical countries (offset by VPAs?)
Away from certified to uncertified
Away from MS with tough regimes to MS with weak regimes
April 17
BD Holz

13. Will EUTR contribute to declining EU imports from tropical countries?
April 17
BD Holz

14. EU28 long-term tropical hardwood import trend
April 17
BD Holz

15. A Perfect Storm: drivers of tropical hardwood market decline
April 17
BD Holz

16. Status of FLEGT VPA
April 17
BD Holz
Timber-producing country develops systems to verify timber exports are legal
VPA licensed timber not subject to EUTR due diligence
Indonesia legality system operating on a pilot basis since January 2013
Ghana expecting first licensed deliveries during 2014
Malaysia could quickly deliver licensed timber if political issues were resolved

17. EUTR could contribute to long-term stability in EU tropical trade
EUTR, FLEGT & forest certification as platform to rebuild tropical wood’s reputation
Rising % of EU tropical imports now 3rd party certified or legally verified
e.g. 40% Cameroon forest legally verified; MTCS in West Malaysia, SVLK in Indonesia
EU Sustainable Tropical Timber Coalition (STTC) launched on 6 November 2013
FII appointed Lead Consultant to ITTO “Independent Market Monitoring” project
Monitor FLEGT VPA & EUTR impact
Essential background information for improved tropical hardwood marketing
21/04/2017
AHEC Convention Budapest 2013

18. Will EUTR contribute to declining EU imports from China?
April 17
BD Holz

19. EU28 long-term trend in timber imports from China
April 17
BD Holz

20. EUTR short-term trend in timber imports from China
EU28 monthly imports of product from China
Complex opaque supply chains for plywood, flooring & furniture sector may lead to loss of share
Use of tropical wood already much reduced in Chinese products – e.g. eucalyptus, birch & poplar dominate EU plywood imports
Search for replacements to PNG bintangor & Russian hardwoods
More plywood with dyed “fineline” (reconstituted) poplar
Further encourage shift from Russian oak to US oak in furniture & flooring
Some manufacturers cutting out traders & buying direct – but overall trend in China is towards GREATER reliance on traders
Narrower range of suppliers, mills offering FSC-certified oversold
21/04/2017
AHEC Convention Budapest 2013

21. EU manufacturing competitiveness rising relative to China?
April 17
BD Holz

22. Will EUTR lead to diversion of trade to EU Member States with weak sanctions?
April 17
BD Holz

23. EU Member State imports from “very high risk” countries
No clear evidence yet of switching of high risk imports to other EU Member States…..
21/04/2017
….unless Belgium is seen as a soft touch
AHEC Convention Budapest 2013
“Very high risk” (VHR) countries have Corruption Perceptions Index of less than 30% & certified/ legally verified forest area of less than 10%. The EU imported €242 million of timber from these countries in 2013.

24. Will EUTR lead to substitution of wood for non-wood products?
April 17
BD Holz

25. EU28 annual imports of furniture by material type 2005-2013
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26. Conclusions
Trade data yet to reveal significant direct trade impact of EUTR
Trends indicative of other factors – economic & construction downturn, reduced supply, diversion of trade to emerging markets, rising labour and other costs in China, subsidies for biomass, changes to Russian export taxes
EUTR reinforcing existing trends rather than leading to step change in EU trade
Full impact only apparent if and when:
EU economy stabilises and begins to recover
EUTR fully implemented & communicated across the EU
Capacity for enforcement in place
FLEGT VPA licensed timber arrives on the market
April 17
BD Holz

27. Thank you! Rupert Oliver
April 17
Thank you!
BD Holz
Rupert Oliver or