Position Paper: FLEGT License Implementation Must be Accompanied by Governance Improvement Sustainability in the Forestry Sector and Its Trade

On 21 April 2016, the President of Indonesia Joko Widodo, European Commission President Jean-Claude Juncker, and President of the European Council Donald Tusk issued a joint statement that the European Union and Indonesia have agreed to immediately undertake steps toward implementation of the first FLEGT licensing scheme, which is an effort from both parties to reduce illegal logging and promote the trade of legal timber.

The FLEGT licensing scheme implementation is one of the main achievements of the Voluntary Partnership Agreement (VPA) between Indonesia and the European Union on Forest Law Enforcement, Governance, and Trade (FLEGT) that was signed in 2013 and ratified in 2014. The latest development in Indonesia was the issuance of Decree of Minister of Commerce No. 25 of 2016 which ensured that all timber products from Indonesia must comply with timber legality assurance system (TLAS) indicated by the issuance of the V-Legal Document for exported timber products. This timber legality assurance is known in Indonesia as the Sistem Verifikasi Legalitas Kayu (SVLK) and is implemented throughout the entire timber trade framework between Indonesia and the European Union. The enforcement of the FLEGT License is expected not only to strengthen the economic value of timber trade between Indonesia and the European Union, but also as a sustainable improvement for better governance, especially in the forestry sector and its trade.

This development must be appreciated and regarded as a show of earnestness by all parties in Indonesia and the European Union as a joint effort to face illegal timber trade and forest degradation. However, it must be noted that trade incentives will not be achieved if stakeholders do not work together to build and maintain credibility and prepare mitigation safeguards for the spill-over negative impacts that may occur due to this FLEGT licensing implementation (such as in the event of certain divergences), especially toward indigenous and local communities whose livelihoods come from and also depend on the presence and protection of the forests.

There are still challenges in forestry governance and law enforcement that must be resolved for continuous improvement and enhancement. Issues pertaining information transparency, boundaries in forest tenure/utilization and management, conflicts, environment degradation through forest conversion, corruption and forms of maladministration are still taking place. In addition, this timber legality assurance system itself must be further challenged to achieve sustainable forest protection.

TLAS’ credibility as a timber legality assurance system will greatly depend on how the system achieves its own accountability. In this sense the Government’s role is crucial, especially in ensuring that monitoring and law enforcement is effective in the event of divergences. It must be known that this homework of building accountability – and therefore credibility – is imperative as one of the main focus for real improvements, especially regarding the government’s efforts in responding to reports of violations submitted by independent monitoring agencies within the TLAS scheme. If accountability and law enforcement is not implemented in an effective manner, this will not only erode credibility, but also becomes a mistaken incentive and thus developing a rent-seeking behaviour in the certified timber market. Within the same context, monitoring is not only to be borne by the Indonesian side, but the European Union must also take the same measures to ensure this legal timber trade, through timber product trade transparency between Indonesia and the European Union, and the concrete, effective and stringent implementation of the EU Timber Regulation (EUTR) in all European Union member countries (originating from any countries).

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Position Paper CSO_FLEGT Licence_Final