Legal Framework, Legality Risks and Risk Mitigation: a Reference for Buyers of Papua New Guinean Export Timber

IGES POLICY REPORT egal framework, legality risks and L risk mitigation reference for buyers of Papua New A Guinean export timber 2016 1 egal framework, legality risks and L risk mitigation reference for buyers of Papua New A Guinean export timber 2016 Institute for Global Environmental Strategies (IGES) 2108‐11 Kamiyamaguchi, Hayama, Kanagawa 240‐0115 Japan E‐mail: fc‐[email protected] Phone: +81‐46‐855‐3830 • Facsimile: +81‐46‐855‐3809 Copyright © 2016 by Institute for Global Environmental Strategies (IGES), Japan. All rights reserved. Inquiries regarding this publication copyright should be addressed to IGES in writing. No parts of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without the prior permission in writing from IGES. Although every effort is made to ensure objectivity and balance, the printing of a paper or translation does not imply IGES endorsement or acquiescence with its conclusions times on issues concerning public policy. Hence conclusions that are reached in IGES publicationsor the endorsement should beof understoodIGES financers. to be IGES those maintains of authors a positionand not attributedof neutrality to atstaff‐ all members, officers, directors, trustees, funders, or to IGES itself. The Institute for Global Environmental Strategies (IGES) is an independent think tank and strategic policy research institute that focuses on the development – environ‐ ment nexus. Through policy research, capacity building, networking and outreach, IGES globally. aims to contribute to sustainable development solutions in the Asia‐Pacific region and Authors: Henry Scheyvens, Hiromitsu Samejima, Masayuki Kawai, Taiji Fujisaki IGES Publication Code PR1601 ISBN978‐4‐88788‐194‐5 ii Foreword on Climate Change at the 21st Conference of the Parties in December 2015 recognises theThe importanceParis Agreement of sustainably adopted bymanaging Parties tothe the world’s United forests Nations to Frameworkmitigate global Convention climate change. The sustainable management of forests can only be achieved when strong legal frameworks that regulate forest resource and land use are in place and when these frameworks are enforced. However, enforcing legal frameworks for forest management the resources and competencies to fully implement their country’s forest and land laws, meaninghas been athat difficult even challengeif countries for have developing good laws countries. in place, Government forests may agencies be destroyed often lack or degraded through illegal harvesting of timber. ‐ As far back as 1998, the G8 recognised the need for a global effort to tackle illegal log throughging when international it adopted its markets Action Programmeto support legalon Forests, and sustainable which includes timber illegal harvesting logging asin developingone of its five countries. themes. SinceHere then,in Japan, various the governmentinitiatives have introduced sought to a send public positive procurement signals policy in 2006 that requires public agencies to only use legally harvested wood mate‐ rials, and national legislation to stop any trading in illegally harvested timber has been enacted. Recognising the importance of markets to sustainable forest management, this docu‐ ment provides guidance to timber buyers on the steps that they can take to responsibly purchase Papua New Guinean export timber. Log exports have been a major foreign exchange earner for PNG, but weak enforcement of forest laws means that the forest estate is mostly not managed sustainably, placing the future of this industry in doubt. guide useful, it will have served its purpose. If timber buyers and others supporting sustainable forest management in PNG find this The authors are grateful to Professor Hidefumi Imura and Dr. Mark Elder (IGES) for their guidance on improving the content of this report. They also express their appre‐ comments on a draft of the report. The authors are solely responsible for any errors or omissionsciation to Peter in this Dam document. (FORCERT), Dr. Hwan Ok Ma (ITTO) and Dong Ke (TNC) for their Hideyuki Mori IGES President March 2016 iii Contents 1. Introduction 1 2. Basic elements of the administrative and legal framework 3 in PNG 3. Assessment of legality risks 14 4.Risk mitigation 18 26 6. Conclusion 28 5. For more information Appendix 1 PNG laws, regulations and international conven‐ tions affecting forestry, wood processing and wood exports Appendix 2 Current and expired timber permits in PNG 3129 41 43 projectAppendix 3 Certified timber businesses in PNG ReferencesAppendix 4 Forest Clearance Authorities by province and 45 iv Executive Summary • Papua New Guinea (PNG) is blessed with rich forest resources, but these are being rapidly depleted through unsustainable land use and logging. While PNG has a strong legal framework for forest management, it is weakly enforced, timber. This guide aims to assist timber buyers in minimising the legality risks associatedmeaning that with there PNG are export significant timber legalityby (i) providing risks associated an understanding with PNG exportof the types and scale of the legality risks (risk assessment), and (ii) setting out op‐ tions available to mitigate these risks (risk mitigation). • Legality risks associated with PNG export timber are wide ranging, but are mostly associated with the failure of the State to gain the free prior informed consent of the customary landowners before timber rights are transferred from the landowners to the State, especially under old timber right purchase arrangements, and the failure of logging companies to comply with the reg‐ ulations governing timber harvesting. Any timber harvested under a special agriculture business lease can be considered high risk. • The administration of forest management controls has been strengthened with guidelines, and with the introduction of an independent export log monitoring system,the introduction which is ofimplemented a new Forestry by SociétéAct in 1991 Générale and supporting de Surveillance. regulations However, and buyers should note that the export log monitoring system does not guarantee that export timber is fully legal. The system only allows traceability of timber back to the harvesting block, not the stump, and was never intended to provide assurance of legality. • The administration of forestry in PNG produces a number of documents that timber buyers can request from the exporter, logging company and Govern‐ ‐ gation, this document check can be complemented by a visit to the logging site, wherement agencies the buyer as acan partial observe check operations on legality. and As holda first discussions step in legality with risk the mitiPNG project supervisors and landowners. • However, because of the complexity of the local contexts and the variety of buyer to comprehensively mitigate legality risks through a key document check andviews site that visit. different Timber stakeholders buyers should may therefore provide, target it will timber be difficult that has for been a timber cer‐ • tified under a credible certification scheme. ‐ ‐ Currently, the percentage of PNG export timber that is verified as legal or cer tified as sustainable is very low; however, a growing number of timber busi‐ nesses are making efforts to have their operations certified. In the case that buyerspreferred can timber ask suppliers suppliers of areevidence not certified of such or efforts, in the e.g. process the results of becoming of an audit cer tified, buyers should strongly encourage them to acquire certification. Timber v ‐ report from the certification body, evidence of steps taken to fill gaps that were timberidentified suppliers. in the audit, etc. If their suppliers do not take steps to acquire credi ble legality verification or sustainability certification, buyers should find other vi Abbreviations and acronyms CITES Convention on International Trade in Endangered Species of Wild CoC Chain of Custody Fauna and Flora CW Controlled Wood DEC Department of Environment and Conservation FIP Forest Industry Participant FM Forest Management FMA Forest Management Agreement FME Forest Management Enterprises FOB Free On Board IGES Institute for Global Environmental Strategies FSC Forest Stewardship Council ILG Incorporated Land Group LC Legal Compliance ITTO International Tropical Timber Organisation LFA Local Forest Area LO Legal Origin NGO Non‐Governmental Organisation PGK Papua New Guinea Kina PFMC Provincial Forest Management Committee PNG Papua New Guinea SABL Special Agriculture Business Leases PNGFA PNG Forestry Authority SGS Société Générale de Surveillance TLS Timber Legality Standard SLIMF FSC Small and Low Intensity Forest Management standard TLTV TRP Timber Rights Purchase Timber Legality and Traceability Verification UNEP United Nations Environment Programme VLC Verification of Legal Compliance vii viii Legal framework, legality risks and risk mitigation: A reference for buyers of Papua New Guinean export timber Despite their obvious values, PNG’s forests NTRODUCTION are being rapidly depleted through unsus‐ 1. tainable land use and logging (Shearman I et al., 2008). While PNG has a strong legal framework for forest management, it Papua New Guinea (PNG) is blessed is weakly enforced, meaning that there with rich forest resources. These are tremendous natural assets, not just for PNG, but also for the globe. The forests surveyare significant of expert legality perceptions

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