New legislation coming into force making it a criminal offence to market illegally harvested timber.

New legislation will come into force in March 2013, making it a criminal offence to market illegally harvested timber.

EU Regulation no995/20120 takes effect from March 3rd next year and is currently in the process of being enshrined into UK law; there will be no transition period.

The wide ranging provisions which carry criminal sanctions prohibit the "first placing of illegally harvested timber and timber products" onto the EU market. According to the regulations, "illegal" is deemed to mean timber that his been "harvested in contravention of the applicable legislation of the country of harvest." The sale of illegal timber covers not just solid wood products, but also fuel wood, fibreboard, particle boards, pulp and paper. Products that are not included are books, magazines and recyclables, plus any wood products that are deemed to have come to the end of their useful life.

The success of the new Regulations will rely on the operators and traders in the timber industry to try and curtail the selling of illegal timber; organisations will need to ensure they are aware of which area of sales they fall into.

Minimising the risk of selling illegally harvested timber will be the responsibility of Operators, those merchants placing timber on the market for the first time. Operators will need to ensure that their timber is legally harvested as illegal timber will be prohibited from the EU market. They will also need to ensure that they operate a due diligence system to track and monitor all sales and purchases of timber: the diligence system must provide information about the source of supply, species, quantity and details of the operator including evidence of compliance with the country of origins law.

Traders are deemed to be those who engage in the buying and selling of timber on the EU market, and are required to keep records of all their sales and purchases for a period of five years to ensure that any timber can be traced.

The use of the due diligence system will effectively evaluate the risk of illegality and take steps to mitigate the risk of misconduct. Operators may set up their own diligence systems or engage a Monitoring Organisation approved by the Competent Authority; in the UK, this is DEFRA. Although timber and timber products which are covered by CITES or FLEGT will be deemed "legal," FSC and PFC certification is to be considered only part of the "diligence system."

The Regulations will be enforced by the Competent Authority and penalties (yet to be finalised in the UK) are to be dissuasive and effective and are likely to include seizure of illegal timber, fines equivalent to the environmental damages caused and tax revenues lost, and even the suspension of authority to trade. Operators and traders should use the upcoming year to determine how they need to implement systems and contractual arrangements and to improve the quality of recorded information regarding transactions, and to action now to ensure that they are capable of dealing with the challenges that come with the new regulations.

This note is based on the EU Regulations, and we await confirmation of how the rules will be implemented into UK. DEFRA and the EU Commission are also in the process of preparing formal guidance notes. Accordingly, this is a statement of the legal position as we currently understand it, but please note that it is not a definitive position. The rules may change once the guidance notes and the UK legislation are published and we will provide further updates in due course.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.