1. CONCEPT OF NATIONAL ACTION PLAN FOR PREVENTING ILLEGAL LOGGING AND ASSOCIATED TRADE Federal Forestry Agency of RF March,2006

2. 1 Rationale and Background Materials for the Development of National Action Plan Substantiation: Instruction of the Russian Government dated 26.01.06 No. АЖ-П9-233; Saint-Petersburg Declaration of Ministerial Conference ENA-FLEG, November 2005; Order of Rosleskhoz dated 14.12.2005 No.333 «On Development of National Action Program of the Russian Federation to Improve Forest Law Enforcement and Governance» Substantiation: Instruction of the Russian Government dated 26.01.06 No. АЖ-П9-233; Saint-Petersburg Declaration of Ministerial Conference ENA-FLEG, November 2005; Order of Rosleskhoz dated 14.12.2005 No.333 «On Development of National Action Program of the Russian Federation to Improve Forest Law Enforcement and Governance» Background Materials: Interagency Action Plan for Combating Illegal Logging and Associated Trade (2002); Decisions of a Joint Meeting involving the Federal Forestry Agency, Ministry of the Interior (MVD), Federal Tax Service (FTS), Ministry of Economic Development and Trade (MEDT) (Khabarovsk, 6 September 2005); Materials of ENA-FLEG Ministerial Process (November, 2005); Materials of international conferences on illegal logging and associated trade (Geneva, 16-17 September and 5 October 2004). Background Materials: Interagency Action Plan for Combating Illegal Logging and Associated Trade (2002); Decisions of a Joint Meeting involving the Federal Forestry Agency, Ministry of the Interior (MVD), Federal Tax Service (FTS), Ministry of Economic Development and Trade (MEDT) (Khabarovsk, 6 September 2005); Materials of ENA-FLEG Ministerial Process (November, 2005); Materials of international conferences on illegal logging and associated trade (Geneva, 16-17 September and 5 October 2004).

3. 2 Definition of “Illegal logging” Lack of permitting documents “Illegal logging” Failure to comply with logging licenses (beyond logging site, logging trees that are banned for cutting, etc.)

4. 3 Socio-economicSocio-economic LegalLegal Intersectoral and sectoral Sustainable internal and external demandSustainable internal and external demand High profits generated by illegal loggingHigh profits generated by illegal logging Jobless population in forested areasJobless population in forested areas Low incomes of populationLow incomes of population Inadequate forest, penal, administrative, and customs legislationInadequate forest, penal, administrative, and customs legislation Lack of effective enforcement practiceLack of effective enforcement practice Inadequate assessment of forest resourcesInadequate assessment of forest resources Poor control over the use of forest resourcesPoor control over the use of forest resources Poor tracking of wood movement from the logging site to the consumerPoor tracking of wood movement from the logging site to the consumer Lack of interagency cooperation to prevent illegal logging and associated tradeLack of interagency cooperation to prevent illegal logging and associated trade Major Causes of Illegal Logging

5. 4 * % of total logging Source: World Resource Institute ( WRI), 2004 Brazil Canada Russia* Japan Europe Central and Western Africa <1% >20% 30-70% <3% 10-15% 3-5% USA According to International Experts Russia’s Illegal Logging Amounts to 10-15 %

6. 5 Final cutting Intermediate cut Exports Domestic consumption Logging volumes 132 53 114 90 Consumption Estimates +19 185 204 mil.m 3 Illegal Logging Estimates Based on the “Harvesting- Consumption” Balance Source: Rosleskhoz, NIPIEIlesprom, 2006

7. 6 1.16 mil.m 3 (additional identification) Identified Volume of Illegal Logging Amounts to Some 10 % of Estimates Source: Rosleskhoz, 2005 Identified Volume 2 mil.m 3 Remote sensing (7 subjects) Estimates 19 mil. m 3 + 0.89 mil.m 3 State Statistical Reporting 66% - beyond logging site 34% - lack of permitting documents

8. 7 Logging licensing Logging Transportation of wood Wood processing Trade Subjects of RF MNR Ministry of Interior Ministry of Industry & Energy Rosstat Federal Security Service MEDT General Prosecutor’s Office Assessment of forest resources, management and compliance monitoring Enforcement control, supervision over law enforcement agencies Economic security Managing development of forestry Industries Economic regulation in the forest sector Statistical observation in the forest sector Regional forest governance Major Zones of Responsibility of Federal and Regional Authorities in the Russian Federation: Macro Level

9. 8 Logging licensing LoggingTransportation Wood processing Trade Rosleskhoz Subjects of RF Ministry of Interior Federal Security Service Federal Customs Service Ministry of Interior Federal Tax Service Rosprirodnadzor Rosleskhoz Subjects of RF Ministry of interior Subjects of RF Rostransnadzor Rosprirodnadzor Major Zones of Responsibility of Federal and Regional Authorities in the Russian Federation: Local Level

10. 9 Improving legislation of the Russian Federation Improving the state governance system International cooperation Developing socio-economic mechanisms Improving forest management Block 1 Building Blocks of National Action Plan for Preventing Illegal Logging and Associated Trade Block 2 Block 3 Block 4 Block 5

11. 10 Improving the current forest-related legislation of the Russian Federation and harmonizing it with national and international requirements Improving regulatory technical and methodological framework in forestry and forest management IMPROVING LEGISLATION OF THE RUSSIAN FEDERATION Forest legislation; Customs legislation; Tax legislation; Penal legislation; Administrative legislation. Block 1

12. 11 Establishing a single interagency information system concerning record keeping, use of and trade in forest resources and products, price and tax monitoring, statistics of illegal activities Establishing a mechanism of interagency cooperation and coordination between governmental bodies Federal level Organizing conservation of forest resources and state control over their use (Rosprirodnadzor) Improving the State Governance System Block 2 Regional level Monitoring the use of forest resources (Rosleskhoz) Improving the system of control and economic security compliance when logging, transporting, selling and processing forest products (MVD, FTS, FNS, FSB, Rostransnadzor) Strengthening control and supervision over law enforcement agencies (General Prosecutor’s Office of RF) Organizing and coordinating activities for combating illegal logging and associated trade (Subjects of RF)

13. 12 Improving the system of forest resources inventory and logging licensing Developing the federal system of remote sensing monitoring in forestry Facilitating the national system of forest certification Improving the system of long-term forest area lease Intensifying advocacy of forest conservancy IMPROVING FOREST MANAGEMENT Block 3

14. 13 Developing Socio-economic Mechanisms Building the image of good business practices in forestry and establishing supporting mechanisms Involving civil society in forest management, enhancing environmental awareness of public at large Increasing access to forest resources by expanding road infrastructure Establishing processing capacities in the regions that are exposed to a substantial amount of illegal logging Preparing the Federal Targeted Program “Developing Value-Added Wood Processing Capacities and Bringing New Forested Areas into Exploitation up to 2015” Building up the market share of legal forest products Establishing vertically integrated structures in the forestry sector Developing new market segments in the area of alternative energy sources and wood- based house-building Block 4 Tool Overall Objectives 1.1. 2.2. 3.3.

15. 14 Developing cooperation within the UN Convention against Transnational Organized Crime and other multilateral initiatives Establishing a uniform system of forest materials record-keeping and measuring Establishing the information exchange system concerning advanced technologies of accounting of and control over forest trade Developing and implementing agreements on the exchange of electronic information concerning the movement and customs clearance of forest products Cooperating within the International Working Group to develop a general understanding of the concepts, definitions and terms associated with the FLEG process International Cooperation Developing cooperation with countries in the implementation of national strategies within ENA-FLEG process Participating in the Ministerial Meetings within the ENA-FLEG process Block 5

16. 15 Assigning responsibility for the implementation of the Saint-Petersburg Declaration and National Plan to a federal authority Developing regional and agency plans Establishing the NAP National Supervisory Council Developing criteria and indicators for an independent assessment of the National Plan performance Institutional Support to the Implementation of the National Action Plan (NAP)

17. 16 Expected Results Covering 100% of the area of commercially exploited forests with the system of remote sensing Increasing the share of the identified illegal logging from 10% to 50% of the estimates Ensuring a 2-fold improvement in the accuracy of the cutting area assessment Reducing illegal logging by 20-30% within the first two years Increasing payments to the budget by up to RUR 2 billion a year Improving the environment and state of the forests in the regions Enhancing the international credibility of the Russian Federation in the area of forest management and governance