European Union Timber Regulation: Is It Legal?

• DOI: http://doi.org/10.1111/reel.12060
• Date: 01 July 2014
• Author: Akiva Fishman,Krystof Obidzinski
• Published date: 01 July 2014

European Union Timber Regulation: Is It Legal?

Akiva Fishman and Krystof Obidzinski

The recent entry into force of the European Union (EU)

Timber Regulation completes the EU’s anti-illegal

logging policy framework – the most comprehensive

legislative effort to combat illegal logging in the world.

The Regulation prohibits the import of timber to the

European market that violates applicable laws of the

harvest country, and requires that importers conduct

due diligence to mitigate the risk that their inventories

contain illegal timber. Despite this strong stance, the

Regulation’s ability to reduce the incidence of timber

illegality depends on its ability to withstand challenges

under international trade law. No case yet decided by

the World Trade Organization’s dispute bodies has

considered the implications of trade restrictions built

on foreign definitions of legality. An analysis of the

General Agreement on Tariffs and Trade and of rel-

evant trade and environment cases reveals a possibil-

ity that the EU Timber Regulation may constitute an

illegal trade barrier.

INTRODUCTION

Deforestation has variously been proclaimed a

‘modern-day plague’1and a ‘tragedy’ of grand propor-

tions.2Its adverse consequences are significant and

widely felt, including the disruption of hydrological

cycles,3a reduction in biodiversity4and a contribution

to rising atmospheric levels of greenhouse gases.5

Forests are often perceived as private goods, but the

global benefits they provide (e.g., weather-regulating

services, habitat for biota, sinks for carbon) indicate

that they are properly regarded as public goods as well.6

This public good character has spurred a ‘high level of

global interest’ in the sustainability of forest manage-

ment practices employed in forested countries.7The

international community has pursued several strategies

to address deforestation, but to date these have gener-

ally proven unsuccessful. In the lead-up to the 1992

United Nations (UN) Conference on Environment and

Development, some countries pressed for a robust

international forest convention, but strong opposition

from actors including the Group of 77 and China to the

inclusion of any binding commitments forced negotia-

tors to settle for a set of non-legally binding Forest

Principles.8Following this conference, a series of insti-

tutions were established to keep deforestation on the

international agenda, but these have failed to make

significant headway toward a binding treaty.9Simulta-

neously, international development groups tried condi-

tioning development aid on domestic efforts to tackle

deforestation, and private schemes, such as the Forest

Stewardship Council, emerged to certify sustainably

managed forests, but these efforts have also largely

failed to slow deforestation.10 A related trend has seen

increased attention paid to the economic ‘services’ that

ecosystems provide, with numerous initiatives being

launched to pay ecosystem users to conserve these ser-

vices.11 However, the conservation impacts to date of

such payment for ecosystem services programmes have

been ‘modest’ and their methods have been heatedly

criticized.12 All the while, ‘soft’ forest law has continued

to evolve through instruments such as Chapter 11 of

Agenda 21 on ‘Combating Deforestation’, policy pro-

posals developed by the Intergovernmental Panel on

Forests and the Intergovernmental Forum on Forests,

the Non-Legally Binding Instrument on All Types of

1National Geographic, ‘Deforestation’, found at: <http://

environment.nationalgeographic.com/environment/global-warming/

deforestation-overview/>.

2B. Bowonder, ‘Deforestation in Developing Countries’, 15:2 Journal

of Environmental Systems (1985/1986), 171, at 171.

3D. Werth and R. Avissar, ‘The Local and Global Effects of Amazon

Deforestation’, 107:D20 Journal of Geophysical Research (2002),

8087, at 8087; P.M. Fearnside, ‘Deforestation in Brazilian Amazonia:

History, Rates and Consequences’, 19:3 Conservation Biology

(2005), 680, at 683.

4M.K. Pandit et al., ‘Unreported Yet Massive Deforestation Driving

Loss of Endemic Biodiversity in Indian Himalaya’, 16:1 Biodiversity

Conservation (2007), 153, at 153.

5R.F Hughes, J.B Kauffman and V.J. Jaramillo, ‘Ecosystem-Scale

Impacts of Deforestation and Land Use in a Humid Tropical Region of

Mexico’, 10:2 Ecological Applications (2000), 515, at 515.

6D. Brown et al., Legal Timber: Verif‌ication and Governance in the

Forest Sector (Overseas Development Institute, 2008), at 3.

7Ibid.

8Ibid.

9Ibid., at 4.

10 Ibid. Aid conditionality has failed in part because withholding loans

runs counter to the purposes of the World Bank and the International

Monetary Fund, and because the forest industry is often more inf‌lu-

ential than international donors within forested countries. Certif‌ication

of sustainably managed forests has been too expensive and prone to

benef‌itting forest managers who already employ sustainable prac-

tices. Ibid., at 4–5.

11 E. Gómez-Baggethun et al., ‘The History of Ecosystem Services in

Economic Theory and Practice: From Early Notions to Markets and

Payment Schemes’, 69:6 Ecological Economics (2010), 1209, at

1209.

12 S. Wunder, ‘Are Direct Payments for Environmental Services Spell-

ing Doom for Sustainable Forest Management in the Tropics?’, 11:2

Ecology and Society (2006).

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Review of European Community & International Environmental Law

RECIEL 23 (2) 2014. ISSN 2050-0386 DOI: 10.1111/reel.12060

© 2014 John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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Forests13 and a mechanism to tackle emissions from

deforestation and forest degradation adopted under the

UN Framework Convention on Climate Change.

Whatever the merits of these various strategies, the

fact is that throughout the period of their application

in the 1990s and 2000s, rapid deforestation per-

sisted.14 At the current rate of loss, tropical rainforests

could disappear within 100 years.15 In response to con-

tinued forest loss, interest grew around the turn of the

millennium in the possibility of indirectly addressing

deforestation by focusing on trade in illegal timber.16

Restricting imports to allow only timber that complies

with the relevant laws of the country in which it was

harvested should, in principle, eliminate illegal har-

vests driven by foreign demand and reduce the contri-

bution of illegal logging to deforestation. Of course,

deforestation could continue even if all logging were

done legally, but eradicating illegality from the sector

would at least enhance the ability of governments to

require sustainable practices.

The European Union (EU) has taken a leading role in

the effort to create a market for legal timber, enact-

ing the Forest Law Enforcement, Governance and

Trade (FLEGT) licensing scheme17 and the EU Timber

Regulation (EUTR),18 which respectively create volun-

tary and compulsory regimes for assuring the legality

of imported timber. Fundamentally, the EUTR bans

the import of illegal timber and requires importers

to conduct due diligence to ensure that the timber

products in which they trade have legal origins.19

FLEGT licensing provides timber-exporting countries a

means of sidestepping these burdensome due diligence

requirements,20 which could harm the competitiveness

of their timber.

The EUTR is a ‘potentially powerful tool to help the

EU exclude illegal timber from its markets, and so

contribute to its broader objectives of environmental

protection and sustainable development’.21 As the

EU accounts for about 40% of global forest product

imports,22 it has substantial potential to influence the

global timber trade through domestic legislation.

However, the Regulation’s value to the struggle against

illegal logging depends on its ability to withstand chal-

lenge in the World Trade Organization (WTO). The ban

on illegal timber potentially violates two treaties which

the WTO administers: the Agreement on Technical Bar-

riers to Trade (TBT) and the General Agreement on

Tariffs and Trade (GATT). WTO tribunals have never

confronted a regulation quite like the EUTR. Unlike

previously litigated regulations, the EUTR seeks to limit

trade on the basis of foreign definitions of legality

rather than imposing its own substantive requirements.

There is a plausible argument that such an approach

constitutes an impermissible restriction on trade,

which, if borne out, could put the EU’s illegal logging

efforts at risk.

This article analyzes the consistency of the EUTR with

WTO law, arguing that there is a case to be made that

the Regulation violates the GATT. First, it briefly

outlines the development of policy and regulatory

responses to the problem of illegal logging, culminating

in the promulgation of the EUTR. Next, it analyzes the

EUTR with a view to highlighting provisions that poten-

tially conflict with international trade law. The follow-

ing section analyzes relevant elements of this body of

law, arguing that the EUTR is not subject to the TBT,

but that although it probably does not violate the GATT,

it raises novel legal questions that could plausibly result

in a finding to the opposite effect. The concluding

section summarizes the article’s main findings.

DEVELOPMENT OF THE EU’S

ILLEGAL LOGGING REGULATORY

INFRASTRUCTURE

International attention first turned to the problem of

illegal logging in the late 1990s,23 but early initiatives

involved limited binding commitments. The Group of 8

(G8) released an Action Programme on Forests in 1998,

which did little more than oblige G8 members to

13 Non-legally Binding Instrument on All Types of Forests (UNGA

Resolution A/RES/62/98, 17 December 2007).

14 Global net deforestation between 1990 and 2000 is estimated at

8.3 million ha per year, or an annual loss of 0.2% of the remaining

forest area. The rate of loss between 2000 and 2010 declined to 5.2

million ha per year, but this still represented an annual net loss of ‘an

area slightly bigger than the size of Costa Rica’. Food and Agriculture

Organization (FAO) of the United Nations, Global Forest Resources

Assessment 2010 (FAO, 2010), at 15–17.

15 See National Geographic, n. 1 above.

16 See D. Brown et al., n. 6 above, at 5–6.

17 Regulation 2173/2005/EC of 20 December 2005 on the Establish-

ment of a FLEGT Licensing Scheme for Imports of Timber into the

European Community, [2005] OJ L347/1, Article 4.1.

18 Regulation 995/2010/EU of 20 October 2010 Laying Down the

Obligations of Operators Who Place Timber and Timber Products on

the Market, [2010] OJ L295/23.

19 Ibid., Articles 4.1 and 6.1.

20 Ibid., Article 3.

21 J. Buckrell and A. Hoare, Controlling Illegal Logging: Implementa-

tion of the EU Timber Regulation (Chatham House, 2011), found at:

<http://www.chathamhouse.org/sites/default/f‌iles/0611buckrell_hoare

.pdf>.

22 In 2008, 2009 and 2010, respectively, the EU accounted for 45%,

43% and 41% of global forest product imports. FAO, ‘Forestry Trade

Flows’, FAOSTAT database, found at: <http://faostat.fao.org/site/628/

default.aspx>. However, only 20% of timber imports come from tropi-

cal countries, and this proportion is declining rapidly because of the

economic downturn in Europe and increasing barriers to trade in

tropical timber products. See UN Economic Commission for Europe

and FAO, Forest Products Annual Market Review, 2012–2013 (UN,

2013).

23 See D. Brown et al., n. 6 above, at 6.

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