The global market for forest and wood products is worth more than $ 300 billion (USD) per year. However, as an industrial sector, it is very sensitive to environmental pressures.
In March 2009, the US implemented the Initiative Against Illegal Logging (IALL) which allows companies to be prosecuted for the trade in illegal wood products. There are strong tendencies to adopt similar laws in the EU. Following these EU measures, the Malaysian government and forest industry are attempting to negotiate an agreement with the European Union under which ensures that all imports of forest products from the country are derived from legally harvested timber.
The EU imported approximately USD 500 million of wood products from Malaysia in 2009, making it the second largest market in the country after Japan. Fearing US-style legislation in the EU, according to which importing companies would be held accountable for the legality of their timber supply chain, Malaysia is trying to negotiate on behalf of its entire industry. The EU legislative efforts are called FLEGT – Forest Law Enforcement and Governance and Trade.
Under Malaysia’s proposed agreement with the EU, the country’s imports would receive a fast pace for its forestry companies. The EU has already signed similar agreements with several African nations and talks are currently under way with Indonesia. However, talks with the EU’s largest importer of wood products, China, are one step away. Unsurprisingly, NGOs such as Greenpeace and WWF are of the opinion that national agreements will not eliminate the importation of illegal products due to poor enforcement in exporting countries such as Indonesia and Malaysia.
