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Chinese response to market demand for legal timber

Chinese response to market demand for legal timber. Update on SmartWood Approach to Verification of Legality Illegal Logging Update and Stakeholder Consultation January 24-25, 2007. China’s surging timber consumption. Staggering economic growth, surging capacity, dramatic levels of consumption

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Chinese response to market demand for legal timber

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  1. Chinese response to market demand for legal timber Update on SmartWood Approach to Verification of Legality Illegal Logging Update and Stakeholder Consultation January 24-25, 2007

  2. China’s surging timber consumption • Staggering economic growth, surging capacity, dramatic levels of consumption • 2005, China world’s second largest importer of timber • Exports went from $2.7 to $17 billion from 1997 to 2005 • 30% of global furniture manufacturing • Largest exporter of plywood • 1999 – a handful of FSC COC certificates • 2007 – close to 250 COC and increasing

  3. New demands on Chinese factories • 80% of exports to NA, Japan, EU • Private sector sourcing initiatives, driven by large European companies • Placing external pressure to know more about sources • Seeking accurate information on supply chains that are long, complex, and non-transparent • Historically, a company’s relationship with contract manufacturers based on product, not sources • Time in factory dedicated to design, materials, pricing, production, logistics, etc. • Oversight in factory on quality control

  4. Pressure from NA, EU, and Japan • NA, EU, and Japanese private sector are driving some initial interest in verifying the chain of custody and tracing timber to its source. • SW has reached agreements, or in discussion, for verification of legal origin and/or compliance with: • Major EU furniture retailer • Major EU home products retailer • EU timber trader • These companies voluntarily seek validation and view 3rd party auditing as critical

  5. SW Verification Program • Developing an auditing program for legality verification • Voluntary in nature • Borrowed on experience in FSC COC auditing • Verifies company’s timber tracking from all forest sources and all points within a defined scope • COC is required for any entity and audited: • at the forest • contractors • sawmills • Manufacturers

  6. SW Verification Program • Research on existing legality definitions, standards, approaches • Framework of principles, criteria, and indicators for legality • Two generic standards (in draft, for consult) • Will incorporate national ‘legality definitions or standards’ (as developed) • Will be adapted for each country (China, Malaysia)

  7. Legal Right to Harvest • Authorization to harvest in the forest management unit has been granted from the resource owner(s) • Planning approvals are in place • There is a valid permit, license or similar instrument • Such rights are issued pursuant to the laws and regulations governing the jurisdiction of the operation(s)

  8. Legally Harvested • Raw material harvested from a source with a legal right to harvest. • In compliance with ALL national and sub-national laws governing the management and harvesting of forest resources.

  9. Harvesting Regulations Planning Approvals Environmental Regulations Legal Right to Harvest Social & Labor Regulations Control of Unauthorized Activities Trade Regulations Fees & Taxes COC VLO

  10. Harvesting Regulations Planning Approvals Environmental Regulations Legal Right to Harvest Social & Labor Regulations Control of Unauthorized Activities Trade Regulations Fees & Taxes COC V L C

  11. TODAY and LEGAL + SUSTAINABLE FSC VLC TOMORROW? NEXT WEEK? NEXT YEAR? TODAY?

  12. UNK. Timber Production POTENTIAL L & S FSC L--Complexity of compliance--H CW VLC VLO S------------------- Time required to comply ---------------------------L

  13. SmartStep UNK. Timber Production POTENTIAL L & S FSC L--Complexity of compliance--H CW VLC VLO S------------------- Time required to comply ---------------------------L

  14. SW Verification claims • VLO/VLC verified companies may communicate the message • Evidence of status demonstrated by “Verification Statement” issued by Rainforest Alliance. • Can use the Rainforest Alliance and SmartWood names and logos onlyoff-product. • Can not label a product. • Can put a verification code number (e.g. SW-VLO-####) on invoices and on products. • SW requires review and approval of all VLO related advertising, brochures, catalogues, or other promotional materials.

  15. Stepwise approach to certification • VLO is the minimum acceptable starting point for timber tracking • VLO will be linked closely to other SW programs promoting responsible forestry • After VLO, progress is expected towards: • VLC - Full legal compliance • CW – Controlled Wood certification • SmartStep / Phased program • FSC certification • “A milestone, not a destination” • Want feedback and input on standards

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