27th June 2018

Wednesday, 27th June 2018

HAC

As ever a good turnout of over 30 members and guests for an update on EUTR and planning for BREXIT by Michael Kearney from Department for Business, Energy and Industrial Strategy. 

After clearing up yet another name change to the Office for Product Safety and Standards, that started in January 2018, Michael confirmed that the same people were in the same place doing the same jobs! In addition they oversee enforcement of 14 different EU directives and regulations. Michael explained that one of them ‘Conflict Minerals’ had similar regulation to timber.

Having moved from the initial phase of raising awareness following implementation of the EUTR, they have enforced sanctions and from 2017 onwards there has been a focus on returning to previously non compliant companies to follow up on Remedial Action Notices (RAN’s). Overall they are expecting  growth in the area of studying trade flows and are still working on projects that target certain species, products and countries of origin.

The current investigations focus on supply chain mapping and sharing information with the other competent authorities – this has been much better than it was in the past and there has been a lot of recent cooperation on Teak from Myanmar. They do also have to look at substantiated concerns presented to them by NGO’s who generally have good ‘in country’ knowledge. One member asked what as a trade we were supposed to do in the case of unsubstantiated allegations and mentioned the Global Witness report ‘Blood Timber’. The department always asks NGO’s to fully evidence their claims, but as with all due diligence the emphasis should be one of risk mitigation. Michael commented that NGO’s tend to shout loudly and the timber trade isn’t generally good at countering with information.

Unlike other trades like electrical products where they frequently received complaints from companies about their competitors, Michael explained that this didn’t seem to happen in the timber trade.

The starting point remains HMRC data that informs OPSS who is placing what, from where and it’s value on the market. There is to be more effort put on Traders and going up the supply chain and this has involved buying product for testing.

A new approach in a ‘Timber Expert Panel’, is being trialled, this is an open forum and intends to meet twice a year and bring together companies, trade associations and NGO’s. If members are interested they can contact Michael for more information.

In addition there are to be some regional workshops to contact companies that so far may have ‘missed the message’.

It was pointed out by a member that timber from certain producers was freely available to purchase from other European companies that wouldn’t in a million years get through a UK audit. Michael acknowledged the inconsistency between EU countries but said that things are now improving and we were seeing the benefit of experience gained by the tougher countries like UK, Denmark, Germany, Netherland and Sweden being shared with others who clearly could do better.

Michael outlined the general process of engagement as being a request to look at due diligence, followed by a visit and discussions with the potential to resubmit improved d.d. He commented that often the d.d. seemed to be being done after the event and this was clearly not the right approach.

A member questioned him on the fact that the requirements of d.d. were open to interpretation and seemed to be becoming very document intensive. Michael said that he personally felt that ultimately it was not about a specific list of documents, but whether d.d. passed the test of presenting conclusions that were reasonable. He also said that to date no one had challenged an NRA, but there was no reason why they couldn’t.

The areas currently in focus are: Ivory Coast, Tropical Timber, Teak Furniture, Oak Products from Asia, Malaysia and Paper. There had also been substantiated special concerns with respect to Peru, Brasil, Myanmar and DRC.

In 2017 the department issued numerous sanctions and owing to increasing freedom of information requests they were looking to publish these every six months on their website going forward.

Results from testing products were very interesting with around significant proportion giving a different answer to d.d. information provided by importers.

The two prosecutions were outlined, with Michael explaining that the costs of prosecution in both time and money were substantial and not taken lightly.

The first prosecution of an upmarket Teak furniture importer in London – Lombok  - was largely a result a repeated failure to improve systems and to apply an appropriate process. The fine of £5000 plus costs of around £3000, was disappointing to the department.

By contrast the second prosecution of Hardwood Dimensions, resulted from a failure to comply fully with an earlier NRA in respect of Iroko, rather than FSC Ayous from the Cameroon. The company was fully engaged throughout and significant changes were made and good practice had now been achieved. The fine in this case was £4000 with a similar amount awarded in costs.

Michael touched briefly on FLEGT and said the department had sorted out the invoicing issue.

Preparations for Brexit were underway and although it was unclear currently exactly what Brexit will look like, it was expected that the EUTR would be changed to UK law without any changes.

Michael was asked by a member whether, post Brexit, timber purchased from the EU would still count as ‘traded’ or whether those purchases would be considered as ‘first placing’. The honest answer received was that we don’t know at the moment!

Michael took questions throughout his presentation and engaged with all in his usual friendly manner. After a rather hot meeting in the middle of the UK heatwave, some cool refreshment was taken at the usual watering hole where discussions continued in a less formal atmosphere with an eye on the world cup screen!

The club would like to thank Michael for his detailed presentation to its members.

The LONDON HARDWOOD CLUB continues present interesting, relevant and engaging topics like this to its members and guests at these bi-monthly lunch meetings. We look forward to seeing you on 5th September where we expect to hear from Bentley Cars on their use of hardwoods.

Member Companies Present

Arnold Laver & Co Ltd

C Blumsom Ltd

Brooks Bros (UK) Ltd

Classic American Hardwoods

CP Timber  Ltd

D.N. Green & Co (Timber)

Danzer UK Ltd

DW Mouldings Ltd

East Brothers (Timber) Ltd

HDL t/a Pendle Hardwoods

J F Goodwillie Ltd

James Latham PLC

Malaysian Timber Council

MBM

NHG Timber Ltd

Palmer Timber Ltd

RJC Agencies Ltd

Timber Connection Ltd

Timber Dimension

Timber Link

TTF

Tradelink

Ubangi Timber Ltd

Wellwood Ltd