Environmental Legislation, Multilateral Relations and Funding Opportunities [600223]

Environmental Legislation, Multilateral Relations and Funding Opportunities
THE IMPLICATIONS OF THE DUE DILIGENCE SYSTEM IN THE
ROMANIAN WOOD MARKET

Assoc. Prof. Dr. Eugenia Grecu1
Assoc. Prof. Dr. Cristian Clipa2
1 Politehnica University of Timisoara, Romania
2 West University of Timisoara, Romania

ABSTRACT
EU member states make efforts in an attempt to combat illegal forest exploitation and
wood trade. Romania supports these efforts and must therefore adopt specific measures
regarding the conduct of economic agents on the wood market. Such measures involve
that the insertion of illegally obtained wood or wood -based products is prohibited on the
internal market. The creation of a due diligence system is meant to ensure the access to
information regarding the wood suppliers inserted in the internal market and the
applicable leg islation, as well as regarding risk evaluation and risk reduction. The
purpose of monitoring authorities is to maintain and evaluate the due diligence system,
to grant use permissions to the operators, and to verify the appropriate use of the
system. Accor ding to EU regulations, the quality of a monitoring authorit y can be
obtained by any organiz ation with legal personality which is legally formed in the EU
and which requests appro priate recognition. Such organiz ations must have the required
level of expert ise and the capacity to execute the specific duties, and must not be in a
conflict of interest situation.
Keywords: wood, regulations, risk, organiz ations

INTRODUCTION
Illegal forest exploitation has negative consequences for the environment and of socio –
economic nature. On the one hand, the consequences of these activities are related to
deforestation and climate change. On the other hand, it affects the work and even the
existence of honest operators who correctly exploit and commercialize the wood and
derived products [10].
Worldwide, a number of countries (such as USA, Australia) have developed regulations
that are designed to stop illegal exploitation of timber. Over 90% of round wood and
lumber used in the EU comes from European countries, in t erms of round wood and
lumber sawmills, only 2% comes from outside Europe, and in terms of hard wood, only
9% of round wood and 40% of timber from outside Europe [3]. The rest is represented
by certain imports from certified forests in Africa and South Ame rica.
However, there are many sources (such as those in South Asia – East) with a source
which creates more suspicion [11]. Therefore, EU has recently adopted new regulations
aimed at preventing illegal exploitation of timber.

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FEATURES OF THE WOOD MARKET IN ROMANIA
For Romania, Wood is the traditional manufacturing sector. Romania has a remarkable
forest fund.
Table 1. Romanian Forest Fund
National forest 6.519 mil lion hectares
Public property 4,313 million hectares Private property 2,206 million hectar es
State ownership Property of
territorial
administrative
units Property of
individuals and legal
entities Property of
territorial
administrative
units
3.284 mil lion
hectares 1.029 million
hectares 2.129 million
hectares 0.077 million
hectares

The proc essing of wood from Romania shows some particularities.
SWOT analysis of the wood market in Romania outlines some strength in terms of
natural resources and environmental targets [9]. There are many natural resources
available for wood processing (90% of the main varieties of regenerative wood). Other
factors relevant to competitiveness are: Economy adapted to EU rules for competition
transparency, a cordial business environment and national infrastructure being
upgraded. The existing upstream industries, capable of providing and adapting the offer
in the national value chain to vertical integration of wooden furniture products, a long
tradition in wood processing, favorable geographical conditions that allow easy
connections with foreign markets with favor able transport possibilities, both road and
rail, sea and Danube.
There are also several weaknesses, such as: lack of synchronization, communication and
cooperation between companies, between utility and natural resources and processors,
between banks and companies, research institutions and public sector., a low level of
knowledge about foreign markets and the effects of globalization; It is recorded a
significant gap between the real needs of the community undertakings operating on the
market of wood, w ood producers and processors, and what they perceive as needs; This
is manifested by the lack of understanding of the need for quality control and
certification, of creation and protection of brands and industrial property. The same
trend manifested by lac k of interest in knowing the requirements, benefits and priorities
for sustainable development, rural development and environmental protection; Many
agents’ activity in the wood industry business suffers from lack of managerial skills,
marketing strategies and brand building, and distribution networks on foreign markets;
also there is a weak institutional capacity of business associations, as well as a lack of
coagulation and their representation nationwide.
In terms of natural resources and environment, t he targets in Romania identify a high
level of deforestation and the use of wood resources in primary industries with low
added value (such as the export of unprocessed timber and timber) and also the
protection and biodiversity low promotion.
In Romania, it is registered a technological gap and low technology modernization

Environmental Legislation, Multilateral Relations and Funding Opportunities
(furniture and other processing sectors), low labor productivity and often non –
compliance with advanced quality and environmental standards; however, on the wood
market in Romania there are also manifested some opportunities such as increasingly
interest for environmental protection and biodiversity, and not least, a new type of
consumer interested in these issues;
The timber market in Romania faces a number of risks and constraints rel ated to: loss of
biodiversity caused by chaotic economic activities, unbalan ced territorial development .
Authorities still have much work with illegal forest cutters, despite improved legislation
in recent years recorded in many cases with huge damage.

PROSPECTS OF WOOD MARKET DEVELOPMENT IN ROMANIA
Timber market development in Romania requires a better use of wood resources in the
national value chain [5]. Such a perspective requires modification and amendment of
existing legislation aiming to improve the monitoring of the licensing process and the
development of the cuts. Measuring the impact of this initiative will be on: making
profits from woody material over the chain of custody (cutting, processing semi –
finished and finished products, etc.), more flu id use of timber, as well as on increasing
the production and quality of manufactured products.
Another initiative requires expansion of the sale of timber on quality standards and aims
to use the whole amount of timber cut annually approved by Government Decision [6].

ADMINISTRATIVE OBSTACLES
The detachment of Water and Forests in the area of competence of the Ministry of
Environment and Climate Change, forming a separate ministry is a decision at odds
with the principles of environmental protection. The re is concern that these critical areas
for environmental health to be affected by the philosophy of resource exploitation at the
expense of preservation. Ministerial responsibilities assigned in this way are in
disagreement with the institutional architec ture of Europe.
Romania has re -negotiated with the European Commission an environmental chapter
which includes water component and consequently this solution does not reflect the fact
that the government powers Directorate General for Environment.
In add ition, most of the Natura 2000 are protected areas are areas of water and forest
and their protection should be a priority according to the European Birds and Habitats
Directives. The conditions of forest degradation, and the unprecedented assault on the
mountain rivers by the construction of several small hydropower plants requires a
protectionist approach and special attention to the country's natural resources.

NEW REGULATIONS ON THE WOOD MARKET
The Action Plan for Forest Law Enforcement, Governance and Trade (FLEGT) sets out
a range of measures available to the EU and its Member States to tackle the problem of
illegal logging in the forests of the world [1].
To fight against deforestation and climate change a new European law will prohibit,

13th International Multidisciplinary Scientific GeoConference SGEM 20 13
starting in March 2013, entering the EU market of illegally harvested timber [8]. This
law aims the operators who introduce for the first time in the market, wood and derived
products such as furniture or wood for heating or paper. By coercive measures, such
operator s are required to ensure the legality of their products. To ensure product
tracking option, those who buy or sell wood already on the market must identify their
suppliers and customers in a register.
The EU has decided that each Member State to determine how specific they will punish
those who contravene the regulations established in this regard. So, in relation to the
extent of damages to the environment, sanctions can range from fines, confiscation of
timber and derived products and even suspension of a uthorization to engage in
economic activities.
According to a report by the Court of Accounts of Romania from 1990 to 2011 in
Romania were illegally felled 80 million cubic meters of wood, which means that illegal
logging generated a loss of over five bil lion EUR [12]. To prevent and combat illegal
logging of trees, Ministry of Waters, Forests and Fisheries has initiated some legislative
changes. Among them, stands out Law 46/2008 – Forest Code in that that the illegal
cutting of trees, regardless of size, would constitute a criminal offense [5]. The new
Forest Code would prohibit the current practice of selling the wood "foot" in the
auction, and the introduction of severe penalties for those who illegally cut trees in the
forest. It is also aimed the chan ging of Law 171/2010 on the establishment of forest
offenses and their punishment. E.g.: forest offenses may be also found by personnel of
the Romanian Gendarmerie [6].
Other changes will be made on Government Decision no. 996/2008 approving the
Norms con cerning the origin, movement and sale of timber, the system of timber
storage facilities and processing plants logs [4] in order to harmonize with EU
legislation concerned with Regulation (EU) No. 995/2010 of the European Parliament
and of the Council of 2 0 October 2010 laying down the obligations of operators who
place timber and timber products [8].
Changes will also be made on Ministerial Order no. 504 of 20.07.2006 on amendment
of forestry technical rules for forest land approved by Ministry of Waters, Forests and
Environmental Protection no 1672/ 07.11.2000 [7]. The new regulations will seek to
regulate new procedures for obtaining exemptions from the provisions of forest
management but also the capitalization of accidental products.

CONDITIONS OF ACC REDITATION AS AN ORGANIZATION
An organization monitoring the timber market will load the appropriate verification by
the operator using his system of "due diligence" which includes three essential elements
of risk management: access to information, risk as sessment and mitigation of the risk
identified [8]. This system should provide access to information sources and suppliers
of timber and timber products placed on the market for the first time, including relevant
information such as compliance with applica ble law, the country of harvest, species and
quantity and, if applicable, the sub -national region and concession of harvest [2]. Using
this information, operators should carry out a risk assessment. If such a risk is
identified, operators should mitigate i t by its scope in order to prevent the introduction
on the internal market of illegally harvested timber and timber products derived from it.

Environmental Legislation, Multilateral Relations and Funding Opportunities
Such an organization will be required to take appropriate measures when they recorded
misuse of the system or "du e diligence". Also, in case of existence of significant or
repeated violations of this system by an operator, such organization shall be obliged to
inform the competent authorities. Such an organization would also ensure that the
FLEGT licensing scheme onl y timber harvested in accordance with applicable national
legislation and timber products derived from it are exported to the EU [1].
For recognition as a monitoring organization can apply any legal entity which is
established in the EU, has legal persona lity and has the necessary expertise and the
ability to exercise the functions. Also, in the exercise of its functions is required that
there shall be no conflict of interest [8].
It is necessary for recognition and withdrawal of recognition of monitoring
organizations to be done in a fair and transparent manner. Also, to allow operators to
use them requires that a list of such recognized organizations should be made public.
The competent authorities should carry out regular checks (and whenever there is a
suspicion of irregularity) monitoring organizations to verify if they actually meet
European requirements [8].
The international character of illegal logging and related trade requires close
cooperation between administrative authorities and third count ries.
Such an organization must actively contribute to the fight against exploitation and
illegal trade in timber. Also, this would have synergistic contributions on forest
protection policies and to combat climate change and biodiversity destruction.
Framework conditions are not only the efficiency of the public sector through
legislation and institutions for implementation. This implies an efficient organization of
mesoeconomics level, represented by business associations and employers. The clotting
ability and combination of these associations depend on a number of services they offer
members in access to information and access to foreign markets [8].
Such an organization should aim to improve the framework conditions of the market by
promoting friendl y legislation to regulate the sector. His actions should aim the
optimization of legislation in furniture industry / wood processing, preventing and
combating unfair competition on the wood market, customs fraud; efficiency in customs
clearance and better communication and dialogue between customs authorities and field
associations.

CONCLUSIONS
The future of wood processing activities in Romania depends on the ability to exploit
their strengths, especially in the natural resources.
In order to exploit the opportunities, overcome weaknesses and threats it requires a high
level of coordination between companies, business associations, private organizations
and the public sector.
Any entity that satisfies the requirements imposed by European regulations in t he field
will be recognized as an organization to monitor the wood market.
It is also required the development of a framework policy to maximize the management
and use the natural resources in a sustainable manner.

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It is necessary to ensure facilitation and encourage the alignment of the economic agents
in the wood industry to the environmental protection standards and biodiversity at both
regional and national and European level.

REFERENCES
[1] Annexes II and III to Regulation (EC) no. 2173/2005 of 20 D ecember 2005 on the
establishment of a FLEGT licensing scheme for imports of timber into the European
Community , Official Journal of the European Union, Brussels, Belgium, L 347, pp.1 -5,
2005 ;
[2] Directive 97/7/EC of the European Parliament and of the Cou ncil of 20 May 1997
on the protection of consumers in respect of distance contracts , Official Journal of the
European Union, Brussels, Belgium, L 144, pp.19 -27, 1997;
[3] Directive 2003/4/EC of the European Parliament and of the Council of 28 January
2003 on public access to environmental information , Official Journal of the European
Union , Brussels, Belgium, L 41, pp.26 -31, 2003 ;
[4] Government Decision 996/2008 approving the Norms concerning the o rigin,
circulation and sale of timber , the system of tim ber storage facilities and processing
plants round wood , Official Gazette, Part I no. 643/ September 09, 2008 ;
[5] Law 46/2008 – Romanian Forest Code , Official Gazette, Part I no. 238/March 27,
2008 ;
[6] Law 171/2010 establishing and sanctioning violations forest , Official Gazette, Part I
no. 513 din 23.7. 2010 ;
[7] Ministerial Order 504 of 20.07.2006 amending and supplementing the forestry
technical rules for forest land approved by Ministry of Waters, Forests and
Environmental Protection no 1672/ 07.11.20 00;
[8] Regulation (EU) No. 995/2010 of the European Parliament and of the Council of 20
October 2010 laying down the obligations of operators who place timber and timber
products , Official Journal of the Europea n Union, Stra sbourg, France, L 295, pp. 23-39,
2010;
[9] Ungur A. Forests of Romania – Past, present and future – policies and strategies (in
Romanian) , Publisher Devadata, Romania, pp.159 -273, 2008 ;
[10]*** http://www.afacerilemn.ro/rom/start.p hp, Accesed on 2013 -04-02
[11]*** http://www.eos -oes.eu , Accesed on 2013 -03-25
[12]***http:// www.mmediu.ro / National Forest Strategy 2013 -2022 , Accesed on 2013 –
04-11