Who needs to develop a due diligence system under Australia’s new Illegal Logging Prohibition laws?

Generally speaking, the law applies to individuals or companies that

-import paper or products incorporating paper;

-import logs, timber or products incorporating wood; or

-process  Australian harvested logs

and it comes into force on 30 November 2014.

The Illegal Logging Prohibition law covers a large number of wood-based products which are all listed in the regulations.  Individual importers should check their products carefully against the list of regulated products, but it is pretty safe to say that it covers most things that contain any wood whether they be raw logs, wood processed to paper, toilet paper, writing paper,  cardboard, … processed wood and wood chips such as particle board, moulded wood, laminated timber, furniture, window frames,  flooring…. and the list goes on. (Recycled timber is exempt.)

The upshot of the law is that Australian importers must not knowingly, intentionally or recklessly import timber or products of timber unless they know that the trees were logged legally under the laws of the country they were logged in.  Australian timber processors must not process Australian timber that was illegally logged.

What are the penalties for non compliance?

The purpose of the Act and Regulations is to stop the importation of timber that has been illegally logged (according to the laws where it is grown) and to this end, it requires importers of these regulated timber products and local processors of Australian grown timber to know where the wood that goes into the product being imported, was sourced from and be able to prove why they reasonably believe this.

The penalties and fines for importing illegal products and for failing to have a compliant due diligence system are serious and include up to 5 years imprisonment and up to $85,000 in fines for a person or up to and $425,000 for a company as well as the forfeiture of the timber products or raw logs.

How can  importers and local processors avoid being penalised?

Importers and Australian processors of Australian logs can be penalised if they:

-know timber or timber products have been sourced from illegal logging activities; or
-believe timber or timber products have been sourced from illegal logging activities; or
-know that there is a substantial risk timber or timber products have been are sourced from illegal logging activities.

This does not mean that they can avoid penalties for not making relevant enquiries and finding  the information. Far from it. Importers need to know the provenance of the timber products and their supply chain, keep written records and have enough information to satisfy themselves that the timber was logged legally.   If they can’t satisfy this requirement they need to mitigate the risk that the timber is illegally harvested, either by obtaining more information to show it was legally harvested or not importing the products.

It’s important to remember that this process needs to be developed, implemented and documented before products are imported, or before  locally harvested logs are processed after 30 November 2014.

What is a Due Diligence System?

A due diligence system is the  process of  making  enquiries and recording the facts.  The regulations set out what needs to be included in the due diligence process, which must be in writing.

Generally speaking importers will need to keep records of:

-details about themselves;

-details about the products and the trees the wood came from,  including the scientific name and where they were grown ( forest and region as well as country);

-details of the manufacturer of wood-based products and where they were manufactured;

-details of the supplier and the shipment; and

          -evidence that the timber was not illegally harvested, including copies of relevant licences.

 Risk assessment and risk mitigation

The importer also has to make an assessment on the risks that the product come from illegally logged timber. The regulations list a few considerations such as the prevalence of illegal logging or conflict in the area the wood was sourced, and consider any other information that the importer knows or should know that the products are made from illegally logged timber.

If the importer is importing timber that complies with various certified timber legality schemes, such as the FSC or PEFC schemes they still need to assess that accuracy of the supplier’s evidence that the products comply with these certifications.

The law requires importers to have a good knowledge and understanding of the products they are importing and all the steps in the supply chain leading to its shipment.  In developing their own due diligence process, importers should consider what their suppliers will need to do as far as their own due diligence is required. Good communication with, and support of, the supplier, manufacturer and logger will help the importer to meet the fast looming deadline for putting due diligence systems in place.

Turning a blind eye to the risk that timber or timber based products that they are importing come from illegally logged forests, or failing to develop a satisfactory process  could find importers in hot water come 30 November.

This information is of a general nature not intended to be used as legal advice. If you want help with knowing what your company’s specific risks are and with developing a compliant due diligence process please contact us to see how we can help you.