I attended the seminar on Illegal Logging and Promotion of Legal Timber Trade organized by the Netherlands Embassy at Diet Members' Office Building when the Minister of Economy visited Japan. It interested parliamentarians from two major political parties; Liberal Democratic Party and Democratic Party of Japan, who consider developing legislation of illegal logging.

(Background)

It has been 10 years at February next year since Japan introduced the Guideline for verification on legality and sustainability of wood and wood products to meet the legal requirement specified by the Government Procurement Policy in 2005 to respond the discussion of the illegal logging at Gleneagles G8 Summit.

At the same time, European Union has negotiated FLEGT VPA with developing countries, and to strengthen the FLEGT action plan, the European Timber Regulation (EUTR) was enacted.

EUTR includes three key obligations: 1) it prohibits the placing on the EU market for the first time of illegally harvested timber and products derived from such timber (4.2); 2) it requires EU traders who place timber products on the EU market for the first time to exercise Due Diligence (4.2); 3) and keep records of their suppliers and customers (Article 5).

The United States amended Lacy Act in 2003 and Australia just has enacted the new act to prohibit illegal logging. In such international context, they claimed that the increasing risks of illegal timber into Japanese market (as a free zone)

Andre de Boer, European Timber Trade Federation, showed the figure on the left. Based on the Corruption Perception Index made by Transparency International, it implies that market share of exported timber is gradually increasing from the countries with corruption score 50 above.

(Comparison of illegal logging policy in Japan and EU)

The major difference of two systems is that Japan requires the verification of all supply chains, and giving incentive by green procurement policy, meanwhile, EU places a due care of a prudent manager to some extent, and penalizes in the case of incompliance. I have frequent opportunities to talk with Japanese Importer of Chinese timber. They often say "If I can pass the EUs due diligence, I cannot pass the Japanese guideline which requires management of every supply chain of the timber.' Of course it is not surprising that the scenario of with penalty set a lower hurdle than those with benefits.
On the other hand, it is a big point whether it is subject to punishment or not like EUTR, from perspective of system reliance. In the case of companies just described above, who think Japanese system set a higher bar, they consider to clarify the social responsibility of own company. If it is out of such reckoning, Japanese system credibility assurance would hugely depend on "associations social responsibility' That could be a huge problem.
I can imagine that if one mentions of "penalty for Japanese operators based on illegal activities overseas' the policy making experts would laugh away as it is impossible. But recently, it seems that the discussion has organized including the experts from legislative bureau (MP Kojima mentioned in the seminar). I look forward to the new step added to Japan's goho-wood system at its 10th anniversary.

(Meaning of guarantee by associations for EU)

I made a comment in the seminar- "Please look into the Japanese verification method under the authorization of associations. It is not the perfect solution, but will be an important step to develop such a system in the areas where many supply chains involves SMEs, and especially to address risks of illegal logging within EU, not only imported illegal timber.' This is what I always say when I meet with counter parts from EU and China. I expect that we can discuss further with them on prospective of Japan "goho-wood model' on how we exert the trade association on its social responsibility and what kind of limitations it has.