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It's very nice to be here.
As Neil said, I live in Jakarta, and we don't see sky
like this in Jakarta.
It's glorious.
Canberra's a lovely city-- you're very
lucky if you live here.
So I'm going to talk about market based measures.
But before I do that, let me tell you a
little bit about myself.
Oh no.
What I'm going to tell you is what I'm going to tell you,
which is it's all about the market, stupid.
That's the message that I want you to take home from today.
This rather longer and more polite position is responsible
markets can help save the planet.
I was really hoping that Alan Oxley would be here today.
Does anybody know of his whereabouts?
He's not here.
I can't see him.
Anyway, here's the presentation.
I'll talk about responsibilities,
culpabilities in some cases.
I'll talk about this acronym FLEGT and the story so far,
and then some examples, some real live examples, from the
country I live in in the moment.
And then since this is Outlook conference, all about the
future and what might happen next.
But before all that--
me, I'm a forester.
I've been working in tropical forestry for 30 years in
Africa, Latin America, and Asia and it's the last five
years I've been in Indonesia, which is where I've been
developing this timber auditing
scheme called the SVLK.
That's actually a Malaysian tree, by the way.
The Indonesians are very upset about that.
What I'm trying to do is stop illegal timber from getting
into the supply chain, going to Europe, primarily.
And that means helping negotiate a trade agreement
between the European Union and Indonesia.
That means I'm based in Manggala Wanabakti, the
Ministry of Forestry in Jakarta.
And as I say, my sentence so far has been five years and I
think I've got another two to go before remission.
Before doing all that, I did look after trees and here's a
plantation that I'm at least partly responsible for in
Cameroon with some Indonesian colleagues.
This guy is still around.
This guy, unfortunately, is imprisoned for taking a bribe
at some point.
Some of you might know Neil Scotland who now works with
DFID, formerly in the employment of AusAID.
And that's me in the middle.
Anyway.
The thing about this photo, though, is to say those trees
are growing phenomenally well, but I'm pretty sure they've
all been cut down now because the people who used to live in
that forest basically wanted their land back.
This was an old forest reserve that the Colonial French
authority had taken from the local people and they regarded
it as theirs.
And I think at the root of all of this work we've got to
consider who in Australia you should know, I guess, who
fundamentally owns the land.
Where that's unclear, then there's
confusion and conflict.
So back to the presentation.
Who is responsible for all of this?
Well, in my last 10 years I've been working in the trade, the
UK Timber Trade Federation and here I was representing
importers, buyers of timber, from all over the world.
What was the amount that we used to bring in every year?
It was millions-- it was about 10 million cubic metres, an
awful lot of timber.
And these were the sort of campaigns that I was
having to deal with.
NGO campaigns--
that's Travis Perkins, that's one of the big merchants in
the UK building merchants--
DLH, one of the big international hardwood
traders, and then this one, the last one, is in the States
so I didn't actually represent them.
The point was that this was the reputations of those
companies that was on the line, and they were starting
to take responsibility for this.
And I organised a meeting--
I think it was in June 2003 of the trade-- invited over some
Indonesians to speak about Indonesian illegal logging.
And that very day Greenpeace decided to unfurl this banner
on a government building site in the middle of London.
Now some of you may know there was a government procurement
policy in the UK at the time that said that the UK
government would not purchase illegal timber.
In fact, it would prefer sustainable timber.
And so the point of this campaign was to basically
identify some plywood that had come from Indonesia from a
national park where it was obviously illegal.
That campaign was called Partners in Crime and it had
several phases, and I was the brunt of those attacks.
I've had to defend the trade, the UK trade, and their buying
practises, which was a very difficult time.
I mean, I'm a forester primarily and I've got to say
I had to agree with many of the things that
Greenpeace had said.
They went on after Indonesia to attack Chinese plywood that
originated in Papua, in the Western
provinces of Indonesia.
This species is bintangor, after the first attacks on the
Indonesian stuff.
This was a load of plywood dumped outside the UK
government to say your policy is not working, so the
government got it in the neck that time.
And even Tony Blair was hauled up.
This is Admiralty Arch, which if you know London, that's the
Mall and going to the right is the Queen's Buckingham Palace,
the palace.
Nelson's Column, the House of Commons.
So it was a pretty active time for me, and it led me to
several trips to Indonesia, a country that's had its fair
share of illegal logging.
I think it probably last year slipped from being the most
highly deforested country in the world in terms of the
rates, but these are some fairly recent figures, I
think, based on satellite imagery.
Is the worst over?
Is all the forest gone is a good question now, and I think
that's one of the reasons why the rates of deforestation
have declined so much.
So who is responsible?
Well, government, of course--
governance in the broadest sense of the word, as well.
It takes two to corrupt, of course.
Then there are the buyers in the supply chain.
Do they really care?
Does it matter that you're bringing in timber that's come
from a protected area where orangutans used to live?
So the importers in the Europe and the US have said yes, we
are responsible.
In that sense, I think the Australian importers have said
the same in the sense that they're supporting the
legislation in Australia.
And end consumers have often expressed concern, although
rarely paying extra for the certified product that the
trade would offer.
And the drivers for those are, indeed, things like
transparency media and the IT.
And in end, of course,
accountability is what matters.
The NGOs have helped us in this.
They've brought some clarity to what's going and
connected the dots.
And then there's the due diligence of buyers.
And then finally, at the end of all of this, I think the
companies that I worked with in the UK, groups like Travis
Perkins, were saying, it's our reputations.
Are people going to trust us to do business with this if we
don't know where the timber's coming from?
It did help there were a few pension funds that wrote in in
very stern terms that they were unhappy with the
performance of their investors and their investments.
And then as I think Joe Ludwig said this morning, the social
contract between business and society.
FLEGT, my second theme.
What on earth does that mean?
Who dreamt of that?
Well, it was a conference, of course.
Forest Law Enforcement Governance was how it started,
and in fact, in Bali in Indonesia in 2001.
And then the European Union added the T, and that was a
really important addition as far as I'm concerned.
The trade is what has make this work in practise.
So it's actually an action plan that the European
Commission orchestrated with the member states, and it's
now 10 years old.
And I want to tell you a bit about it, because it's a very
unusual partnership between those three sectors--
civil society, business, and government.
And it's multipronged, and here are some of the prongs
that influence the market base.
There are more, which I won't bore you with.
Procurement policies--
we started with those, and then private sector policies
took over the momentum, really.
And now we're developing these trade agreements, at the end,
regulation.
And I think that's a pattern that we will see in more and
more markets with more and more products as the years
stretch ahead.
For us, in the forestry world, forest governance is the aim
of this work.
Better forest governments--
that means better forest management, that means
hopefully less wanton deforestation.
It doesn't necessarily mean less land
clearance, of course.
Countries need to do that, still.
So after 10 years, what have we done?
We've got procurement policies in the eight
major markets in Europe.
We've got six of these trade agreements agreed and seven
more in negotiations, so there's Indonesia plus a whole
slew in Africa.
We've got the timber regulations and the purchasing
policies which have now morphed into this due
diligence mechanism that Paul talked about.
And here are the real things that matter.
This report that Chatham House did a couple of years ago said
that there was, there has been a drop in illegal logging in
Cameroon, Brazil, and Indonesia.
And yet, the volumes of imported illegal timber are
down 30%, 17 million hectares of forest protected from
degradation, an awful lot of carbon.
And that much revenue-- $6.5 billion revenue
saved from this work.
Now this is where I want to tackle Alan Oxley about this,
because he came up with a figure of 270 million euros, I
think, that we'd spent on this work.
And actually, I think, that's a pretty good return even if
all that money has just gone on those areas.
Indirectly, it's affected what's gone on in Japan.
They've got a timber procurement policy there.
And now, at last, they're considering some further
action of a regulatory nature.
China is developing a certification scheme.
Why?
Because although it imports a lot of logs and consumes a lot
of logs, it exports to Europe and the US,
and of course, Australia.
Then there's that legislation that we think we've helped
encourage our Australian colleagues.
And of course, the US were first to the starting line
with the Lacey Act and led the way on that.
Independent forest monitoring has exposed the degree of
illegal logging going on.
And of course, enforcement work.
In fact, the Indonesian government has been quite
successful in clamping down on illegal logging, particularly
across the border between Kalimantan and Sarawak.
And we know that because Sarawak ran out of timber
about three years ago, which is interesting.
They deny there's any illegal logging going on and they're
not responsible for this, but I'm afraid it's not true.
So I wanted to give you a couple of meaty things to go
home with, and two examples from industry, both, of
course, Indonesian.
And this was another campaign not related to timber, but
related to oil palm.
Give me a break.
Is anybody familiar with this?
Yeah, the Kit Kat story.
And I'm really sorry.
I had a YouTube link but there's no internet here.
But basically this Kit Kat film, if you remember it, is
about a bored office worker sitting there shredding paper
and he decides to open the Kit Kat.
And instead of opening some delicious chocolates, it's
four orangutan fingers.
And he bites in and the blood spews from his mouth.
And it was actually devastatingly--
the impact of it was devastating.
And they aimed that at Nestle, which, of course, is the Kit
Kat producer.
But at the end of it, it was Golden Agri Resources, which
is part of the big Sinar Mas conglomerate in Indonesia.
The result of it was others stopped buying from GAR, so
they pulled out of supply contracts and they said, we
can't afford this.
Our reputations are too important.
GAR, you'll remember, of those of you following it, they got
in auditors.
They tried to defend themselves against this, but
they gave up in the end because the evidence was
irrefutable.
They were responsible for destroying orangutan habitats
and training deep peat.
As a result of this, this forest conservation policy was
developed, which in a nutshell, through the good
offices of The Forest Trust, was pretty far reaching--
no deforestation below 35 tonnes of carbon per hectare.
That's actually pretty degraded forest.
So anything less than 35 tonnes per hectare, you can
deforest and convert to oil palm.
But this was really important-- no conversion of
high conservation value forest or peatland.
That was really important, and I tell you why, because that
HCVF and peatland is where people don't live and it's
easy to deforest, and you get a whole load of income from
the timber.
So this was a really big decision.
Anyway.
Social conflict issues have to be resolved, and then there's
the certification scheme, the RSPO.
My second example is even more recent.
It involves, funnily enough, another company within the
Sinar Mas group, Asia Pulp and Paper.
That's, I think, the biggest pulp mill in the world, Indah
Kiat, in Sumatra.
This company has, by its own admission, now being
responsible, for mismanaging forests.
The company itself has admitted that it doesn't know
where its timber's coming from, where the fibre that
it's been using for this mill.
And it was making commitments it couldn't keep--
promises to NGOs, to governments, to its customers,
that it could not keep, and it was being found
out again and again.
The level of trust, that social
contract, had been broken.
It was losing markets.
And in my mind, because I was following it very closely, it
was when Disney, Walt Disney, had a letter from Greenpeace
that, I think, it was the beginning of the
end for this company.
This was the sort of thing that Greenpeace were
demonstrating, that Disney was responsible for importing,
effectively, ramin into the products that it
wraps its toys with.
And the ramin, of course, is an endangered species.
It's illegal to trade in ramin, and so
Disney stopped buying.
In fact, they stopped buying from Indonesia altogether,
which upset the trade minister--
Minister Gita, some of you may know.
And he phoned up the head of Disney and Disney said to him,
look, I'm sorry.
I just can't risk it.
It's too risky.
I can get my wrapping from other sources.
So they stopped buying and APP, I think, realised that it
was the end.
I'll cut a long story short, because there's much more to
be said on it, but this is what they came up with.
And you might say, well, why are we going to
believe this now?
What's the difference?
This was last month.
And the real difference is this fellow here, the
chairman, Teguh Widjaja, who's the shadowy head of this
conglomerate now that his father is in his dotage,
basically was there at the press conference promising
that he would do this.
Now if you know Indonesia and the way Indonesia works,
actually your word is important.
It's your face--
you've got to deliver on this.
Of course, they'd worked out where they could get the fibre
from and they had help from The Forest Trust to do that.
So they had a manageable solution to this.
They no longer had to chop down natural forest.
They no longer had to cut down peat.
But they took a big decision in delaying investment in a
big new mill that they were going to put in Sumatra.
Greenpeace were there at the same press release, so there's
your credibility.
You've got credibility by working with the NGOs.
And I think the real point from this story is if APP can
do it with its state of mismanagement, actually
anybody can.
And that's a really important message for the Indonesian
government.
Thirdly, I want to talk about this SVLK, very, very quickly.
This scheme is, if you like, the national response to all
of this stuff.
This is what Indonesian government has developed, but
at the behest of its industry.
In the end, industry was saying we need something to
cover ourselves.
We need to be sure, we need to be maintaining access to these
shrinking markets--
Europe and US.
This scheme was developed through multi-stakeholder
consultation.
Right back in 2003, I got involved in the right at the
beginning asking what is legal in Indonesia as a trader?
We needed to know that.
And then the negotiations started and then they stopped
and then they restarted.
It was classic trade negotiations.
But the tipping point was the Lacey Act, the US Lacey Act.
That's what brought Indonesian government to realise that the
markets were what mattered.
And then at the end of that year, in 2008, the European
Union announced its intention to legislate.
And has been mentioned already, that legislation is
now in force as of Sunday.
So there we are with the scheme.
How are they doing in rolling it out?
Well, it's now compulsory on all exports for
26 different products.
That's most of the timber that you would recognise when you
walk into a builder's merchant here in Canberra.
And already they've issued some 10,000 licences.
That covers about 10 million hectares of forest at the
moment, and so it's only partial.
There's about 30 million in total, so 20 more to go.
They're going to add more product codes, so that's going
to be furniture added in those 14.
And then this timber trade agreement that we've been
negotiating, we are hoping this will come into force in
September this year.
That's a trade agreement with the European Union, which says
that the European Union will recognise this scheme.
I'll talk a little bit more about that.
If you're really interested in more, there's a website there,
SILK, that you can Google.
You can obviously get this presentation afterwards.
But I wanted to talk about how the EUTR and the VPAs work
together, because this is important.
It's really important for Indonesia.
And the reason they came to negotiate this timber trade
agreement, which I think will have far reaching effects--
it's already having far reaching
effects on the industry--
is because it means that when it's working, that Indonesian
timber will be considered zero risk in Europe.
You buy it with impunity.
Mark, his company, if he had one in the UK, would be able
to buy that timber knowing he could not be prosecuted under
the timber regulation.
So these are basically bilateral trade agreements.
That's why they escape problems with
the WTO, by the way.
It operates through a licencing scheme, which is
basically governed by the border control-- so, the
customs at both ends.
Customs in Indonesia check the licences that are issued and
customs in Europe check that the same licences apply.
Any unlicensed timber from Indonesia will be excluded.
It will be left on the docks.
It will be sent back, actually.
So the EU timber regulation requires the due diligence.
That's the difference.
It's not a border control measure, and I think there's a
slight difference with the scheme that Australia is
proposing because yours doesn't imply, I
think, border control.
But we can talk about later.
So there it is at the bottom.
VPAs give importers 100% certainty that the timber is
zero risk, so the buyers love this scheme as well.
When they're buying from Indonesia, they
don't have to worry.
They can't get prosecuted under the timber regulation.
Just at the very end here, I've been in quite a fight
with APP over the years and I just came across this blog in
the Financial Times written by their head of sustainability
in Europe, a guy that I've sparred with
on quite a few occasions.
And I couldn't believe I read this.
I thought, is this really true?
The EU, through this approach, is helping to drive change.
Indonesia's largest business realises that to become global
leaders they need to step beyond compliance--
wow, and here we go--
my company, blah blah blah.
I find it interesting that globalised trade, which has
certainly contributed to illegal logging, it may well,
paradoxically, also bring a solution.
So basically I think I'm here to congratulate Australia on
its illegal logging prohibition bill.
I'm to encourage you and to say that there's
lots more to be done.
We're in the European Union very keen to continue
cooperation.
I've got some ideas as to what should happen.
Wherever there are voluntary measures, I think the
regulation is the ultimate goal.
They are important in terms of innovation.
The responsible purchasing policies that I worked on with
the Timber Trade Federation is what morphed into the due
diligence legislation.
There will always be free riders.
There will always be the guys that think they can get away
with it, so that's why you need legislation.
The monitoring that we see now all over the place-- mobile
phones connected to the internet-- you cannot escape,
you cannot hit, but this is really important.
This is going to be our next challenge, social conflict.
Who really owns that timber?
Those guys that I used to work with in Cameroon would say
this is our forest.
That was taken from us, that's stolen property.
Those trees belong to me and I want the land grow my peanuts.
Fair enough-- you can't really deny the person's right to an
existence of subsistence.
This sort of thing is, I'm afraid, going to be a big
problem for us in the rest of the tropics.
So, changing behaviour--
that has been driven by markets, of course.
I think the consumers with NGOs were the start of this,
but it's now governments that are taking this up with the
support of companies seeking regulation.
Those companies that want to be around for the long term,
and I know a trading company in the UK that's now 250 years
old, they're in the 14th generation--
they want sustainable timber because they want to be able
to continue trading in timber forever and ever.
And this cut and run business, which I think was where
Indonesia came from in the '70s and '80s, I think that's
over, partly because the forest is gone but not only
because of that, it's because the customers
weren't accepted anymore.
And those elites that I see that my kids have grown up
with up with it in the school, they're now moving into the
companies, into positions of authority.
And in fact, it's the third generation of Widjajas in
Sinar Mas that have said enough's enough.
We're not going to carry on this practise of basically
ripping out the heart of our country.
Kayu Lapis Indonesia is one company that is
a paragon of this.
They're third generation Indonesian.
This is what they said recently in some business
dialogues in London.
We do what the customer wants.
I know that sounds obvious, right, but believe you me, the
Indonesian plywood industry, they used to set prices.
They were the price setters around the world.
They could dictate what happened, and they would tell
you what your sizes and dimensions and when you were
going to get delivery, and that was because it was cheap,
illegal timber.
They flooded the market.
So for you guys, yeah, it's very welcome.
I'm really glad to hear that you guys are going out to
explain it and we'll be there side by side if you want to
join the market dialogues we have planned to Jakarta.
You're very welcome.
I think Australia is a regional champion.
I mean, Japan is sort of doing stuff but it's still very
focused on is on its own borders and you've got to look
at your footprint as a consuming country.
The relationship between Australia and Indonesia--
you've mentioned it already, Paul-- that trading
relationship, political relationship, is very
important, the Asian sentry.
But I think, finally, I wanted to leave you with this one
message from my colleagues in the Ministry of Forestry.
They do, of course, want the SVLK to be recognised by you.
I think they really ought to write to you and suggest that.
Not, I mean, formally.
Like, please come and assess the SVLK.
And I think that's a logical next step.
It's effectively what the European Union did when we
started negotiating the VPAs, the timber trade agreements.
We said to Indonesia, do you have anything to offer us, and
they offered us, eventually, the SVLK.
So I think this is a good next step.
And then in your other international relations, of
course, in the region with Japan--
Vietnam.
If they're important suppliers of yours, we can
team up with you there.
Obviously, China.
South Korea--
I know you don't do much with them, but again, we want to
start talking to them.
These are the guys on the left.
These are the first illegal loggers I met in Indonesian in
Kalimantan in 2003.
And they're not doing particularly
well, as you can see.
It's a really hard job.
They were just sawing up timber in the middle of a
concession.
These actually are victims of this business.
They're basically working for the police for a
[? peppercorn ?] rent with awful conditions.
This lady here, who's actually raising fish, basically was
another one of the victims because, of course, they lose
out when the watersheds get choked up.
So that's the human angle.
But I've got to leave you with this, of course.
Thank you very much.