LONDON, 1 July 2010 (IRIN) - New laws should be in place in Europe by the end of this year obliging timber importers to ensure the wood they buy has been legally produced - and Ghana will become the first exporting country to be able to offer such a guarantee.

The timber trade is a huge business. In Cameroon, where timber exports rank second only to oil in value, it is worth more than US$700 million a year. Indonesia earns nearly $3 billion a year from wood and wood products, but Greenpeace says that as much of 80 percent of the logging in Indonesia is illegal.

It is more than seven years since the European Union adopted a Forest Law Enforcement, Governance and Trade (FLEGT) action plan. Negotiations have been grinding on ever since, both in Brussels, and between the EU and supplier countries. But last week an update meeting for stakeholders in London heard that a compromise text of the new legislation had been drafted and would probably be adopted by the end of the year.

The key element is an obligation for importers to show "due diligence" – to prove that they have taken all reasonable care to ensure they are not buying illegal timber. What is or is not legal will be left to the producing countries; if the timber is produced according to local laws and regulations, the EU will accept it.

And since the importers can hardly be expected to go and poke about in tropical forests themselves to see where their wood is coming from, the EU is negotiating VPAs – Voluntary Partnership Agreements – with its traditional suppliers. Ghana was the first country to sign and ratify a VPA. By the beginning of next year it should be selling licensed timber under FLEGT. Any importer who buys it will automatically be considered to have fulfilled the due diligence obligation.

Kingsley Bekoe, a forestry specialist with Ghana's Civic Response, stressed how important the agreement is to the country: "Almost 60 percent of our timber exports are to the EU market. If you don't sign this agreement, I guess you will increasingly lose out. The market is starting to ask for legal timber. It's Europe and also the US but other markets are getting increasingly interested in this. So if you don't enter that agreement you will gradually be losing your market share."

With Ghana, Cameroon and the Republic of Congo were in the first group to sign up. Negotiations are ongoing with Malawi, Indonesia, Liberia and the Central African Republic; Gabon, the DR Congo and Vietnam have asked to start the process.

Each agreement will be different; any VPA with Vietnam, for instance, will have to take into account the fact that it imports most of its timber and makes furniture to sell to the EU and Japan. "There's no blueprint," Matthieu Bousquet of the European Commission told the meeting. "No hard and fast rules, no absolute recipe."

Illegal logging fears

However, John Palmer of the Forest Management Trust, was critical: "These agreements are now moving into states where the law is little understood," he told the meeting. "And as you demand more and more documentation, you will get any kind of documentation you are prepared to pay for. It's a simplistic assumption that everyone is basically working in the same direction. Illegal logging is hugely profitable; there's a lot of money involved."

The London-based campaign group, Global Witness, agrees. "This can curb illegal logging to a certain extent," its forestry expert, Reiner Tegtmeyer, told IRIN. "But only when the structures are in place to be sure that the certificates issued are not just paper. We have always said that independent monitoring is essential."

Illegal logging has been a source of funds for conflict and destabilization, most notoriously during Liberia's civil war. With Charles Taylor's rebels in control of the densely wooded southeast of the country and the port of Buchanan, timber was one of their main sources of income. After Taylor became president, he continued to divert timber revenues for his own purposes – Global Witness believes that by 2000 around $100 million a year was unaccounted for. Because of fears that it was being used to fund conflicts elsewhere in the region, the UN imposed sanctions on the country's timber exports.

Those sanctions have now been lifted, but Liberia is struggling to re-establish its logging industry. Victoria Cole of the country's Forest Development Authority says she is worried the FLEGT process is being pushed ahead too fast, and that her country does not have the capacity to implement it. "If I show you a piece of wood," she told IRIN, "and say this bit of wood is legal, then what makes it legal? People have to understand."

In Liberia, legality would mean that the concession had been awarded by competitive bidding, that the company treats its workers fairly and fulfils its obligation to the local community, that it only cuts mature trees and does not exceed its quota and that it has paid all its taxes. But she likes the fact that the EU will base its standard of legality on Liberia's own laws. "We are the ones to determine it," she says. "No one is going to determine it for us."

Meanwhile in Ghana, pilots for the new FLEGT assurance scheme have already started, and inspectors are out in the forest, armed with tags and handheld GPS and barcode scanners. Patrick Newton, who is developing the necessary software for a company called Helveta, described how bar-coded tags would be put on standing trees, and more would go on the logs cut from those trees. Between the saw mill and the ship, consignments would be reconciled by volume and by species, and the system would then generate a FLEGT-compliant export licence. "The buyer will be able to look all the way up the supply chain from the point of export," Newton told the meeting, "all the way back up the chain to the forest where that timber came from."