A year after the introduction of the EU Timber Regulation (EUTR), the UK has yet to see a timber trader in the dock for breaching the legislation.

In Germany, several companies are under investigation for bringing suspected illegal wenge into the market from the Democratic Republic of Congo. Greenpeace has also fingered French businesses for allegedly breaking the law.

But in the UK, while the EUTR enforcement agency, or competent authority, the National Measurement Office (NMO), has been busy visiting businesses, explaining their duties under the Regulation and getting to know the industry, there have been no prosecutions.

So does this mean the entire timber and wider forest products trading sector here is sticking to the letter of the law? Or is the NMO taking a kid glove approach? According to enforcement project manager Michael Kearney, it’s neither. While he has said the focus has been on helping companies comply, rather than cracking down on minor infringements, the NMO’s core strategy has been to establish the machinery to enforce the EUTR as effectively as possible.

"At the outset, we had a new team of officers and a gap between how the legislation was framed and applying it in the real world," he said. "We wouldn’t shy away from prosecutions, but didn’t want to be buried in them and see untested evidence-gathering procedures falling down at a critical stage of an enforcement case. So we’ve avoided the riskier, most problematic products and trade elements. Instead we identified the most high-profile players in our key target sectors, timber, paper, furniture and retail, with the most resources for due diligence."

The aim, he said, was to establish a compliance benchmark.

"If we did encounter non-compliance with these businesses, there was also unlikely to be criminal intent and we could develop our processes in a co-operative rather than an adversarial environment so they’d be more watertight. After building our profile and understanding of each of the key sectors, we could then target risk and really demonstrate the legislation has teeth."

While he couldn’t promise that these teeth would not draw first blood in the timber trade, he acknowledged that, of all sectors affected by the EUTR, it was "ahead of the game".

"It appeared that this had all just dropped out of the sky and was completely new in some sectors," he said. "But the timber industry was already familiar with the issues and had the significant advantage of the EUTR education work done by the Timber Trade Federation (TTF), and having its Responsible Purchasing Policy (RPP) due diligence system. Helping members comply has been a huge priority for them, and they’ve been a great proxy for us in getting the message out."

Effective collaboration between the NMO and TTF has produced several notable outcomes.

"The initial EUTR guidance from Brussels was not as clear as it might have been, particularly in identifying the ‘operator’ in the terms of the legislation, the company that first places timber on the market," said Mr Kearney. "TTF worked tirelessly with us and Defra to impose sense on this."

The Federation also worked with the NMO to refine the RPP and mesh it more closely with the EUTR.

"It was never incompatible, but as the RPP was established first, it has had to adapt," said Mr Kearney. "And because the legislation is dynamic and will develop, this process will have to continue and the TTF appreciates that. The key with any due diligence system is how it’s applied, and there will always be different approaches."

The timber sector and the NMO have also benefited from the TTF being combative in defence of trade interests.

"Where they think our EUTR interpretation is wrong, they’re quite capable of putting the trade view across effectively," said Mr Kearney.

High standards
The NMO has good things to say about some of the timber companies it has visited too.

"The due diligence in place at some businesses was a very high standard, which was impressive at this early implementation stage," said Mr Kearney.

There was also evidence of companies taking quite radical action to minimise their risk of breaking the EUTR.

"Operators are still buying, with great care, from some high risk sources," he said. "But to minimise exposure to illegality, many are also stopping dealing with suppliers or countries where due diligence and risk mitigation are just too problematic. This wasn’t the intention of the legislation. The idea was to carry suppliers along, not exclude them, but hopefully it sends the message that they need to improve governance."

He also stressed that not every company on the NMO’s initial calling list got a glowing review.

"We’ve dealt with some relatively serious non-compliances, albeit not headline grabbers like those on the Continent," he said. "The biggest issue is cursory or single-issue risk assessment. That undermines everything you’re doing as an operator and could lead to a judgement of negligible risk, when greater scrutiny would produce another conclusion. But some companies are doing this for the first time. Hopefully they’ll become better informed and take a broader outlook."

The NMO also found, through DNA and fibre analysis, that some products were not what companies thought.

"They’ve been quite aghast, as they think they have bona fide legality assurances," said Mr Kearney. "It’s often down to complex supply chains and material mixing, particularly in certain products, but there now appears to be an increasing appetite towards testing high-risk products to support legitimacy claims."

The NMO’s key advice to the trade is to focus due diligence on high-risk hot spots.

"Whilst it must be applied to all products, operators should correlate due diligence effort with risk level, not dissipate resources chasing endless documentation in countries which are demonstrably low risk. Evidence it’s harvested there is often enough," said Mr Kearney. "Concentrate on sources where you need to get down to concession level information."

On the thorny issue of operators’ customers going beyond their EUTR obligations and demanding their commercially sensitive supplier data, the NMO has only a modicum of comfort.

"Where corporate social responsibility is embedded in businesses, they are going to go to the ‘nth degree," said Mr Kearney. "But we don’t see a great risk of customers using this information to bypass operators. They do a difficult job, which their customers don’t have the knowledge or generally the inclination for."

There’s more solid encouragement on uniform enforcement of the EUTR across the EU, one of the issues timber companies bring up most frequently with the NMO.

"We’re now seeing a huge amount of progress on enforcement mechanisms across Europe," said Mr Kearney. "We’ve also had our first competent authority expert meeting, and are increasingly getting to know each other, which will lead to greater intelligence sharing."

The NMO has also engaged with NGOs "to gain more expertise in illegal logging and risk levels".

And now, after a year of bridge and knowledge building with the timber sector, establishing an intelligence network and getting its systems in place, the NMO is ready for the next step. It won’t say in so many words, but that’s clearly a prosecution.

"As we haven’t seen any dramatic action so far, there may be a degree of complacency building, but we’re now refocusing on high-risk areas," said Mr Kearney. "With the knowledge we’ve gathered and the NMO’s existing enforcement expertise, we’re now equipped to take on a case and ensure an outcome which will send a strong message that the EUTR is going to be robustly enforced."