ANNEX IISupplementary provisions
ANNEX II LEGALITY DEFINITION FOR ISSUANCE OF FLEGT EXPORT LICENCE AND LEGAL REFORM PROCESS 1. Preamble As a requirement of the Voluntary Partnership Agreement, Ghana has, through stakeholder consultation, developed a legal standard to underpin the implementation of this agreement. The legal standard is linked to the Legality Assurance System through the legality matrix. This document presents the legal definition, the legality matrix, a summary of relevant laws and regulations governing the forest sector, as well as describing the processes through which Ghana will reform and consolidate laws in the forestry sector. 2. Annotated Legal Definition A product containing wood sourced from Ghana can be licensed for sale within Ghana or for export from Ghana: (a) in cases where the source and ownership is a felling permit: (i) timber originated from prescribed sources ( 1 ) and the individual, group and owners concerned gave their consent to the logging of the resource ( 2 ) ; (ii) the logger, at the time of felling, held a valid Timber Utilisation Contract (TUC), issued by the Minister for Lands Forests and Mines ratified by Parliament following the prescribed competitive process ( 3 ) ; (iii) the logger at the time of felling, held a valid Salvaging Permit (SP) issued by the Forestry Commission ( 4 ) ; or (iv) the logger complied with forest operation procedures and standards prescribed by statute ( 5 ) ; (v) The logger at the time of felling has been granted replacement ( 6 ) for timber rights; (b) in cases where the source and ownership is a Certificate of Purchase-COP: (i) The COP was issued pursuant to a court order confiscating the timber ( 7 ) ; (ii) the wood was abandoned and sold by the Forestry Commission in accordance with statutory procedures ( 8 ) ; (c) the wood was at all times transported in accordance with standards prescribed by statute ( 9 ) ; (d) the wood was processed in accordance with standards prescribed by statute ( 10 ) ; and (e) all vendors/exporters have valid licence or permits to market timber ( 11 ) ; (f) at the time of sale or export no accrued fees, rents or taxes, prescribed by statute were owing to the State ( 12 ) ; and (g) at the time of sale or export, the logger had complied fully with obligations under Social Responsibility Agreements ( 13 ) . 3. Legality Matrix In determining whether wood sourced from Ghana meets the standard set out in the definition of ‘Legal Timber’ as stated above, the principles and criteria as set out in table 1 below shall apply. Table 1: Principles and Criteria for Legal Standard PRINCIPLE 1 Source of Timber: Timber originated from prescribed sources and concerned individual, group and owners gave their written consent to the land being subjected to the grant of timber rights. CRITERION 1.1 For Timber Utilisation Contracts (TUC) in on-reserves, forest management plan preparation covers strategic plan; Delineation of TUCs; Conduction of an inventory before harvesting (on-reserve, off-reserve and plantation); Written consent of concerned individual, group or owners. Guidance notes on relevant Legislation/Regulations LI. 1649 PART1: Procedure for grant of timber rights; Subpart1-identification of lands suitable for the grant of timber rights; MOP Section A – Strategic planning (forest reserves); MOP Section B – operational planning (forest reserves); Instruction sheet B2 operational planning methodology (on-reserve delineation); MoP Section C – Timber Production in Forest Reserve; MOP Section F – Controlled timber production off-reserve 2.1 (ii) Identification of TUC areas and 3.7 (C) (off-reserve delineation); F3.2 Consultation process (written consent); Manual of Procedures (MoP) ( 14 ) – Sustainable timber production on-reserve (section C); Stock survey and yield allocation (section D) and Controlled timber production off-reserve (section F). PRINCIPLE 1 Source of Timber: Timber originated from prescribed sources and concerned, individual, group and owners gave their written consent to the land being subjected to the grant of timber rights. CRITERION 1.2 Land owner, individual or group written consent. Guidance notes for relevant Legislation/Regulations Act 547: Timber Resources Management Act section 4, subsection 2 (d); LI1649: Part 1 procedure for grant of Timber Rights, subpart 1: field inspection 2 (d); Subpart II Procedure in relation to lands other than public land and existing forest reserves; MoP Section F (Controlled Timber Production Off-Reserve) – F3.2 – consultation process; MoP Section F, F5.0: Finalisation (endorsements). PRINCIPLE 2 Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a Salvage Permit issued by the Forestry Commission. CRITERION 2.1 Natural Forest and Plantation TUCs; Qualification of loggers for grant of TUC by TREC. Guidance notes for relevant Legislation/other references LI 1721:Part II: Procedure for Competitive bidding for grant of timber right Q; LI 1649: Terms and conditions of TUC (section 14 Act 547: Ratification by parliament (Section 9). PRINCIPLE 2 Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a Salvage Permit issued by the Forestry Commission. CRITERION 2.2 Salvage permit ( 15 ) Issuance of Salvage Permit. Guidance for relevant Legislation/Regulations Regulation on procedure for salvage timber (Act 547 section 18g); salvage of timber products LI1649 Section 38. PRINCIPLE 2 Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a Salvage Permit issued by the Forestry Commission. CRITERION 2.3 Confiscated Timber Permit for duly auctioned confiscated timber issued. Guidance for relevant Legislation/Regulations Offences – Act 547 Section 17 (3); and Salvage and disposal of abandoned timber product (LI 1649 Section 37). PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute. CRITERION 3.1 Stock surveys (including pre-felling inspections for off-reserve areas) were conducted in accordance with the logging manual. Harvesting plan. Guidance notes for relevant Legislation/Regulations Logging Manual (Section 10 of Act 547). Logging Manual means a set of rules intended to guide the activities of persons who harvest timber in the forest as interpreted in Act 547 (Section 20). MoP Section D (Stock Survey and Yield section). PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute (LI 1649). CRITERION 3.2 Logging was carried out in accordance with harvesting requirement in areas designated for timber production. Guidance notes for relevant Legislation/Regulations Procedure relating to timber operations (i.e. Harvesting plan) – LI 1649 Section 17; MoP Section E – Preparation of timber harvesting schedules for forest reserve; MoP Section F – Controlled Timber Production Off-reserve (Instruction Sheet F4.3 – The annual logging plan); Other sources of timber production (e.g. Plantation, underwater harvesting) as specified by the contract terms, Logging Manual Section 3 (timber harvesting standards and specification). PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute. CRITERION 3.3 Logs were accurately measured and recorded. Guidance notes for relevant Legislation/Regulations MoP section C, Records, Reporting and Auditing procedures C5.0. MoP Section F, Records and Reporting procedures F5.0. PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute. CRITERION 3.4 Timber harvested corresponded to the species and volumes or numbers authorised in the TUC or Salvage permit. Guidance for relevant Legislation/Regulations LI 1649 Section 23 – Measurement of timber; Marking Logging Manual appendix 5: Logging Control Forms (TIF and LIF). PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute. CRITERION 3.5 Stumps and logs were marked and numbered in accordance with the logging manual. Guidance for relevant Legislation/Regulations LI 1649 Section 20; Marking and numbering of trees, logs and timber products; Logging Manual Section 3: Timber harvesting standard and specifications (log markings). PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute. CRITERION 3.6 The logger executed and complied with the relevant Social Responsibility Agreement. Guidance notes on relevant Legislation/Regulations Section 14 of LI 1721; Logging Manual Sections 3 – code of conduct (on-reserve) that recognises the rights of other users and show respect for cultural norms such as taboo days etc.; and code of conduct – (off-reserve) that recognises the rights of other users and show respect for farming operation etc. Section 4.1 – Monitoring of timber harvesting operation (Social responsibility assessment); 4.2-Penalties. PRINCIPLE 3 Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute. CRITERION 3.7 Compensation was paid to affected farmers in respect of crop damage if any. Guidance for relevant Legislation Regulations Logging Manual Section 4.2 (Penalties). PRINCIPLE 4 Transportation Timber was at all times transported in accordance with standards prescribed by statute. CRITERION 4.1 Timber was transported with official documentation detailing its origin and corresponding with physical identification of the timber. Guidance for relevant Legislation Regulations Logging Manual Section 3: Timber harvesting standards and logging control appendix 5. PRINCIPLE 4 Transportation Timber was at all times transported in accordance with standards prescribed by statute. CRITERION 4.2 Timber was transported within the time periods permitted by law. Guidance for relevant Legislation Regulations Procedure relating to timber operations (Approved periods of timber operations and transport of forest produce): LI1649 Section 18. PRINCIPLE 5 Processing CRITERION 5.1 Timber processing facilities have valid licences and registration with FC and complied with all legal requirements. Guidance on relevant Legislation Regulations Act 571 Section 2. PRINCIPLE 5 Processing CRITERION 5.2 Industrial relation practices conform to legal standards. Guidance for relevant Legislation Regulations Occupational Health, Safety and Environment: Act 651 Labour Act Section 118-124; LI 1833: Health and employment (Section 18-20) and Office and Factories Act. PRINCIPLE 6 Trade All vendors/exporters have valid licence or permits to market timber. CRITERION 6.1 Exporters have acquired FC permit. VERIFICATION Valid export licence. Guidance for relevant Legislation Regulations Act 571 Section 2 (i) vetting and the registration of contracts to market timber products and such forest and wildlife products as the commission may determine. PRINCIPLE 6 Trade All vendors/exporters have valid licence or permits to market timber. CRITERION 6.2 Domestic Vendors have FC registration. Guidance on relevant Legislation Regulations Act 571 Section 2 (ii) the establishment of procedures to track the movement of timber, wood and wildlife products. TVD audit reports on supply of wood products to the domestic market. PRINCIPLE 7 Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute. CRITERION 7.1 Logger was not in default of stumpage fees or any other fees payable by loggers in Ghana. Guidance notes on relevant Legislation/Regulations Procedure relating to timber operation (payment of stumpage) LI 1649 Section 25. TVD audit reports on financial flows reconciliation. PRINCIPLE 7 Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute. CRITERION 7.2 Logger was not in default of ground rents. Guidance on relevant Legislation Regulations Timber stumpage fees and contract area rent – LI1649 PART V Section 27. PRINCIPLE 7 Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute. CRITERION 7.3 Exporter was not in default of export levies. Guidance on relevant Legislation/Regulations Export levies: Trees and timber Amendment Act 493 Section 4. PRINCIPLE 7 Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute. CRITERION 7.4 Neither Logger nor exporter was in default of corporate income tax. Guidance on relevant Legislation/Regulations Imposition of Income Tax (Income from a Business): Act 592 Section 7. 4. Laws and Regulations in force in Ghana The definition of ‘Legal Timber’ represents a subset of the laws contained within the legal framework for timber harvesting, processing and export in Ghana. Through multi-stakeholder consultation, it has been agreed that verification of compliance with these laws will be required in order to issue a FLEGT licence. The laws and regulations in force in Ghana, from which this definition was extracted, include: CONSTITUTIONAL PROVISIONS, 1992 1. Article 258 Establishes a Lands Commission and prescribes the functions of the Commission. 2. Article 267(1) Vests stool lands in the appropriate stools in trust for their subjects in accordance with customary law and usage. 3. Article 266 Imposes restrictions on the rights and interest in land that could be granted to a non-citizen of Ghana. 4. Article 267(2) Establish the Office of Administrator of Stool Lands and prescribes its functions. 5. Article 267(6) Provides for the disbursement formula for stool land revenue. 6. Article 268 Requirement of Parliamentary ratification of agreements relation to the grant of a right or concession for the exploitation of any natural resources. 7. Article 269 Establish natural resources commissions [Forestry Commission] which ‘shall be responsible for the regulation and management of the utilisation of the natural resources concerned and the coordination of policies in relation to them’. 8. Article 295 Provides for the definition of Stool lands. PRIMARY LEGISLATION 9. Forest Protection Decree, 1974 (N.R.C.D. 234) – This Act defined forest offences and prescribed sanctions and or penalties for such offences. 10. Forest Protection (Amendment) Law, 1986 (P.N.D.C.L. 142) – This law reviewed upwards the penalties/fines for forest offences. 11. FORESTS Ordinance (Cap 157) – This Act provided guidelines for constitution of forest reserves and the protection of forests and other related matters. 12. Trees and Timber Decree 1974 (N.R.C.D. 273) – This law prescribed guidelines for participation in the logging/timber industry and provided for the payment of fees as well as sanctions for non-compliance with the guidelines for participation and also export of unprocessed timber. 13. Trees and Timber (Amendment) Act 1994 (Act 493) – This Act reviewed the fees and fines upwards and also introduced export levy for air-dried lumber and logs. 14. Timber Resources Management Act 1997 (Act 547) – This repealed the Concessions Act, 1962 (Act 124) and provided for the grant of timber rights in a manner that secures the sustainable management and utilisation of timber resources. 15. Forestry Commission Act, 1999 (Act, 571) – This Act repealed ACT 453 and re-establish the Forestry Commission as a semi-autonomous corporate body and also brought under the Commission, the forestry sector agencies implementing the functions of protection, development, management and regulation of forest and wildlife resources. 16. Forest Plantation Development Fund Act, 2000 (Act 583) – This Act consolidate to it the Forest Improvement Fund and provide for the establishment of a Fund to provide financial assistance and the management of such funds for the development of private commercial forest plantations in the country. 17. The Forest Protection (Amendment) Act 2002 (Act 624) – This Act repealed the Forest Protection (Amendment) Law, 1986 (PNDCL. 142), reviewed forest offences fines upwards and introduced joint liability in the commitment and prosecution of forest offences. 18. The Forest Plantation Development Fund (Amendment) Act 2002 (Act 623) – This Act amended ACT 583 to enable plantation growers, both in the public and private sectors to participate in forest plantation development. 19. Timber Resources Management (Amendment) Act 2002 (Act 617) – This Act amended ACT 547 to exclude from its application, land with private forest plantation, to provide for maximum duration, and maximum limit area for timber rights and to provide for incentives and benefits for investors in the forestry and wildlife sector. 20. Factories, Offices and Shops Act, 1970 (Act 238) – This Act provides for the registration of factories, welfare and safety of employees in factories and other places of work. 21. Social Security Law, 1991 (PNDCL. 247) – This Law establishes a trust fund to provide social protection to the working population. 22. Internal Revenue Act, 2000 (Act 592) – Provides for taxation of individuals and other entities and for related matters. 23. Value Added Tax Act, 1998 (Act 546) – Provides for the imposition of a VAT on specified transactions and activities. 24. Economic Plants Protection Decree, 1979 (AFRCD. 47) – Prohibits the grant of timber felling rights in cocoa farms. SUBSIDIARY LEGISLATION 25. LI 1649 timber Resources Management Regulations, 1988 – This Regulation provided guidelines for the allocation and management of timber resources. 26. LI 1721 – timber Resources Management (Amendment) Regulations, 2003. This Regulations established basis for competitive bidding in timber resource allocation. 5. Forest Policy and Legislative Reform Aspiration Ghana recognises that the provisions in the existing law which provides grounds for the forgoing legality definition framework needs to undergo significant reforms to be able to address existing inadequacies as well respond to emerging issues in the sector that bothers on the principles of good governance. Ghana wishes therefore to indicate its intension to carry out legal and policy reforms in the spirit of good forest governance. It is expected that such legal reforms could be completed in the next five years. Areas that require policy and legal reforms include: — Initiation of process to amend the Savings and Transitional provisions of Act 547 in respect of conversion of extant leases/concession to Timber Utilisation Contracts and the related matter of Timber Rights Fee payment, — Plantation development and harvesting, — Timber processing and standard setting for the timber industry, — Import of raw material (wood), — Domestic market development: (a) (small to medium size enterprises); (b) resource allocation; (c) Standardisation of wood components in building and constructional industry; (d) Introduction of public procurement policies, — Institutional arrangements and Forest control processes: (a) Timber Validation Entity; (b) Governing council; (c) Independent Monitoring; (d) Bar codes, — Submerged Timber Resource allocation (Volta lake), — Workers health and safety requirements for forest operation, — A clear statement of resource governance objectives – public interest in biodiversity sustenance, rural livelihoods, sustainable industrialisation and cultural development Identification and correction of inconsistencies in existing forest laws that relate to definition of legal timber (e.g. issuance of salvage permits in respects of lands under Timber Utilisation Contract), — Affirmation of local forest tenure and of different stakeholder rights, particularly farmers in different types of forests and clarification of the respective scope of local (including customary) and national institutions in forest management to: (a) sustain forests; (b) develop and exploit forests (both timber and non-timber), — Investment Regulation: (a) Incentives, regulation, fiscal and benefits sharing for Non-Timber Forest Products (including tourism and environmental services); (b) Incentives, regulation, fiscal and benefits sharing arrangements for extractive investments; (c) Incentives, regulation, fiscal and benefits sharing arrangements for reforestation; (d) Incentives, regulation, fiscal and benefits sharing arrangements for plantations; and (e) Incentives, regulation, fiscal and benefits sharing arrangements for processing. 6. Implementation To move from the existing towards the future legal standards, the Ghana anticipates a two tier reform approach to deal with obsolete, disjointed and inconsistent laws and also introduce new laws to give effect to evolving policies: — Changes to areas that do not require extensive legal reform process will be realised through subsidiary legislation one year of agreeing a Voluntary Partnership Agreement, — Changes that will require extensive consultations, involvement of experts and considerable political reflections, pertaining to e.g. good governance issues, stakeholder participation, benefit sharing, etc. is expected to take about 3-5 years. ( 1 ) Act 547 Section 4, and LI 1649 Regulations 1 and 2. ( 2 ) LI 1649 Regulations 2 – 8. ( 3 ) Act 547 Section 1, 7, 8, 9 and LI 1721 Regulations 9 – 13. ( 4 ) LI 1649 S 38. ( 5 ) Act 547 Section 18(d) and LI 1649 Regulations 16 – 20. ( 6 ) Act 547 Section 15(1) c, d, e. ( 7 ) Section 17(3), Act 547 and Section 37, LI 1649. ( 8 ) S37 of LI 1649. ( 9 ) LI 1649 Regulation 18. ( 10 ) Factory Offices and Shops Act (Act 328) and Labour Act (Act 651). ( 11 ) Act 571 Section 2(i) and (ii). ( 12 ) Act 547 S8 (e) and (f), and LI 1649 S 21, 27. ( 13 ) Section 14 LI 1721. ( 14 ) Legal status of MoPs: MoPs are output of requirements in Section 18 of the Timber Resource Management Act 547 and accompanying Timber Resource Management Regulation LI 1649 Section 14 repealed by Timber Resource Management (Amendment) Regulation LI 1721, Section 14 which provides for the terms and conditions of TUC. ( 15 ) The Forestry Commission issues a permit subjected to such terms and conditions as shall be specified therein for the salvage of trees from an area of land undergoing development such as road construction, expansion of human settlement or cultivation of farms.