Work Plan on Legality

Developing Minimum Standards of Legality,
Timber Tracking and Chain of Custody Systems,
Verification Systems Among Asia Forest Partnership (AFP) Partners

Overview of Voluntary Schemes

The demand for voluntary certification over the last decade has increased significantly. As a result, there have been many initiatives globally and regionally, such as the Malaysian Timber Certification Council (MTCC), the Forest Stewardship Council (FSC), the WWF Global Forest and Trade Network (GFTN), Global Forest Services (GFS), and the Tropical Forest Trust (TFT). These voluntary schemes promote sustainable forest management, timber tracking and traceability of forest products. The goal is to assure that timber and timber products have been sourced from sustainably-managed forests.

1) Malaysian Timber Certification Council (MTCC) ¹¹

The Malaysian Timber Certification Council (MTCC) was initially established as the National Timber Certification Council, Malaysia (NTCC) and later renamed as the MTCC to develop and operate a national timber certification scheme. It is an independent non-profit organization established in 1998 to operate a voluntary national timber certification scheme in Malaysia. The organization has progressed through several revisions to its standards.The current version MC&I (December 1999) will be phased out in 2005 and replaced by the new version, MC&I 2002, that uses the FSC Principles & Criteria adapted to the Malaysian indicators and verifiers for each region of the country. The standard is considered technically equivalent to the FSC standard. This FSC-compatible MC&I 2002 standard was field tested in 2004; implementation is to begin in 2005 and full compliance is expected in 2006.

The MTCC has also developed a chain-of-custody standard RAP COC 2000 that was revised in 2004. The MTCC chain of custody allows the mixing of materials, up to 30 percent, from other non-MTCC sources in the final products. The MTCC acts as a central certification body for both forest management and chain-of-custody certification through certified assessors.

2) The Forest Stewardship Council (FSC)¹²

The Forest Stewardship Council (FSC) is an international organization established in 1993. It introduced a product label system to promote responsible management of the forests. The Forest Stewardship Council has been developed as an accreditation body for an international forest certification scheme to evaluate good forest management practices. It also provides a chain-of-custody system, including the traceability of material from certified forests and the labeling of products.

The FSC system contains elements on legal compliance, with emphasis on the principles and criteria from the best practices of forest management, social and environmental issues. FSC has also a system for non-certified controlled wood that may be used for FSC-labeled certified products. The matrix examines the FSC requirements concerning non-certified material (Appendix 7). The FSC is one of the major systems recognized internationally for verifying good forest management practices.

3) WWF-Global Forest & Trade Network (GFTN)¹⁴

The World Wildlife Fund for Nature (WWF) has initiated a scheme to promote responsible purchasing of forest products and raw material from Global Forest & Trade Network (GFTN) members. The WWF developed a membership system for GFTN to support forest certification through the purchase of products manufactured using certified wood under the FSC system. The objectives of this initiative are to reduce illegal logging and to improve forest management. The GFTN has developed a guideline for responsible purchasing for its members that includes mainly four categories of material sources: Known source that complies with policy; legal source; source in progress to certification; and, credibly certified source. It adds a fifth category – recycled material.

The GFTN adopted a Modular Implementation and Verification (MIV) system as a part of responsible purchasing policies. The MIV can be considered a tool that restructures the FSC and ITTO standards into a modular framework. This system provides a credible mechanism through a step-wise approach. For instance, responsible forestry standards include legal, technical, social and environmental requirements. To verify the progress, these requirements would be divided into phases and would be addressed gradually, phase by phase. This report applied the MIV standard to evaluate the legality of forest management and timber processing industries (Appendix 8).

4) Global Forestry Services Inc (GFS)¹⁵

The Global Forestry Services (GFS) is a private company that specializes in the verification of forest management and chain-of-custody systems. The GFS has programmes to verify the legal origin of timber, compliance with forestry operations as required by governmental regulation, and progress in meeting forest certification requirements. The GFS has also programmes for assessment of chain-of-custody systems that incorporate requirements according to the GFTN guidelines for responsible purchasing, namely the four categories: Known source that complies with policy; legal source; source in progress to certification and credibly certified source, under the wood tracking programme. The programme is designed to bridge the gap between current logging practices and forest certification using a formal auditing programme based on a step-wise approach. The report applied the GFS Legal Verification Programme (Principles 1 (one) to 6 (six)) and the Wood Tracking Programme (Principle 7) in the matrix (Appendix 9).

5) Tropical Forest Trust (TFT)¹⁶

The Tropical Forest Trust (TFT) was established in March 1999. It is a membership organization that provides services along the supply chain to assure that its members have access to legal timber from well-managed sources. The membership categories are the producers (TFT supports them to move toward FSC certification); the suppliers (manufacturer and/or trader in wood products); and buyers (who sell those products to end-users). The TFT key objectives are: 1) to increase the area of FSC-certified forest in the tropics; 2) to help its members exclude illegal timber from their supply chains; and 3) to raise awareness of the FSC. The main program consists of forest management activity to ensure good forest management and supply-chain management activity to assure the use of only wood from verifiably legal and well-managed sources. The report applied the TFT Member Wood Control System Monitoring Procedures to the matrix (Appendix 10). ¹⁷

Framework for the Legality Standards

The key elements for verification of legal compliance identified in this report can be broadly divided into two categories: (1) the legality for forest management; and (2) the legality for timber processing industries. The first category refers to the basic elements needed to demonstrate legality in forest management. The second category refers to the elements needed to trace the legal route of timber from extraction to a processing industry. These include the proof of purchase of the raw material and the tracking of it through to its final product form. These key elements are supported by subsets of evidences, which are presented as simple steps to demonstrate legal compliance with government regulations and timber traceability.

(1) Legality for Forest Management

Element 1. Verification of Landownership Status and Use Rights

• Evidence that the forest management area is legally classified for commercial production, conversion and plantation.
• Evidence that the company holds a license or permit to manage or harvest trees within a defined forest area. The license should be valid for the period being managed or harvested.
• Evidence that the forest area is free of contested third party claims to the land tenure or use rights.

Element 2. Compliance with Forestry Laws and Other Related Regulations

• Evidence of compliance with relevant local and national forestry laws and regulation and codes of practice for harvesting or conditions for land clearing as applicable.
• Evidence of compliance with relevant local and national environmental, social, and labor–related regulations. These include: evidence of environmental impact assessment and measures for the protection of endangered species; recognition of the traditional rights of communities and respect of their customary laws; compliance with the workers’ safety, health and employment conditions.
• Evidence that payments of all applicable concession fees and taxes for forest operations and timber harvested are current.
• Evidence that measures to mitigate the social and environmental impacts of forestry operations are incorporated in the approved forest management/harvesting plan.

Element 3. Approval of Forestry Planning and Operations

• Evidence that the forest management or harvest plan has been approved by the appropriate government authority.
• Evidence that the harvest plan defines total and net production areas, as well as protected areas, harvesting volumes, species to be harvested, diameter limits, and other requirements as appropriate.
• Evidence that harvesting and field operations strictly follow the approved plan.

Element 4. Identification of Material and Traceability

• Evidence of a proper physical identification of logs to trace each log back to the licensed harvesting area.
• Evidence of records for the transport of logs, which quantify their volumes from harvesting areas to wood processing facilities in accordance to government regulations.

(2) Legality for Timber Processing Industries

Element 1. Operation of Timber Processing Industries

• Evidence of the required and valid permits to operate business.
• Evidence of legal license to operate based on its current capacity.
• Evidence of proper registration at the appropriate government authority, in the case of organizations engaged in trading of forest products.
• Evidence of compliance with relevant local and national environmental, and labor–related regulations. These include the compliance with environmental standards regulations and the compliance with the workers’ safety, health and employment conditions.

Element 2. Purchasing and Receiving of Raw Material

• Evidence of records of raw material received and allocated to production.
• Evidence of records that all timber purchased has adequate timber identification and records to trace the material to a licensed harvest area.
• Evidence of records that each log is checked and identified at the gate of the processing site, before the logs are unloaded.

Element 3. Processing, Planning and Controlling the Material Flow

• Evidence of records of the volume of raw material used and final products produced for each unit of production (work order).
• Evidence of records for the allocation of raw material used in a unit, and a defined unit of production.
• Evidence of records and identification of material transferred from one production unit to another unit.
• Evidence of identification of all working-in-progress, as to work order number and legal status.

Element 4. Transport of Logs and Timber Products

• Evidence of valid log transportation documents that detail the origin of the material and correspond to the physical identification of each log.
• Evidence of valid licenses for timber products transportation.

Element 5. Sales and Shipping

• Evidence of records that identify all finished goods produced under a production unit.
• Evidence of records of sales of finished goods produced under each production unit.
• Evidence of valid shipping documents, such as sales invoice and packing list.
• Evidence of export license for timber and timber products, if applicable.

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