ANNEX VIISupplementary provisions
ANNEX VII CRITERIA FOR ASSESSING THE OPERATIONAL LEGALITY ASSURANCE SYSTEM IN CONGO The Partnership Agreement between the Union and Congo (FLEGT-VPA) provides for the development and implementation of a Legality Verification System (LVS) to ensure that all timber and derived products specified in the Agreement and exported from Congo to the Union have been legally produced. The LVS should include: a definition of legally produced timber that describes the laws that must be complied with in order for a licence to be issued; the monitoring of the supply chain to track timber from the forest to the point of export; the verification of compliance with all elements of the definition of legality and monitoring of the supply chain; the procedures for granting licences and the issuing of FLEGT licences; and finally, the independent audit to ensure that the system is working as intended. The Union’s expectations with regard to the LVS are outlined in a series of briefing notes prepared by an expert group convened by the European Commission (EC) ( 1 ) . Assessment criteria The LVS will be subject to an independent technical evaluation before the licensing scheme becomes fully operational, the Terms of Reference for which will be jointly agreed between the interested parties and the Joint Committee. These assessment criteria describe what the LVS is expected to produce and will provide the basis for the Terms of Reference for the evaluation. The evaluation will aim to: (i) review the system description with special focus on any revisions made after the FLEGT-VPA was signed; and (ii) examine the functioning of the system in practice. Section 1: Definition of legality Legally produced timber needs to be defined on the basis of the laws applicable in Congo. The definition used must be unambiguous, objectively verifiable and operationally workable and, as a minimum, include those laws which cover: — harvesting rights : granting of legal rights to harvest the timber within legally gazetted boundaries, — forest operations : compliance with legal requirements regarding forest management including compliance with relevant environmental and labour legislation, — fees and taxes : compliance with legal requirements concerning taxes, royalties and fees directly related to timber harvesting and harvesting rights, — other users : respect for other parties’ legal tenure or rights of use of land and resources that may be affected by timber harvesting rights, where such other rights exist, — trade and customs : compliance with legal requirements for trade and customs procedures. Is it clear what legal instrument underpins each element of the definition? Are criteria and indicators that can be used to test compliance with each element of the definition specified? Are the criteria/indicators clear, objective and operationally workable? Do the indicators and criteria clearly identify the roles and responsibilities of the various parties and does verification assess performance of all relevant parties? Does the definition of legality include the main areas of existing law outlined above? If not: why were certain areas of law left out of the definition? In developing the definition, did the parties concerned consider all the main areas of applicable law? Does the legality verification system incorporate the main legal provisions identified through prior discussion between the various parties involved? Has the definition of legality and the legality control matrix been amended since the FLEGT-VPA was concluded? Have indicators and criteria been defined to ensure verification of these changes? Section 2: Control of the supply chain Systems to control the supply chain must provide credible assurance that timber products can be traced throughout the supply chain from harvesting or point of import to the point of export. It will not always be necessary to maintain physical traceability for a log, log load or timber product from the point of export back to the forest of origin, but it is always needed between the forest and the first point of mixing (e.g. a timber terminal or a processing facility). 2.1. Rights of use There is clear delineation of areas where forest resource rights have been allocated and the holders of those rights have been identified. Does the control system ensure that only timber originating from a forest area with valid and permissible rights of use enters the supply chain? Does the control system ensure that enterprises carrying out harvesting operations have been issued appropriate rights of use for the forest areas concerned? Are the procedures for issuing rights of exploitation and information on issued rights of exploitation and their holders available in the public domain? 2.2. Systems for controlling the supply chain There are effective mechanisms for tracing timber throughout the supply chain from harvesting to the point of export. The approach for identifying timber may vary, ranging from the use of labels for individual items to reliance on documentation accompanying a load or batch. The selected method should reflect the type and value of timber and the risk of contamination with illegal or unverified timber. Are all the supply chain alternatives identified and described in the control system? Are all stages in the supply chain identified and described in the control system? Are methods defined and documented to (a) identify the product origin and (b) prevent mixing with timber from unknown sources in the following stages of the supply chain? — timber in the forest, — transport, — interim storage, — arrival at the primary processing facility, — processing facility, — interim storage, — transport, — arrival at point of export. Which organisations are in charge of controlling the timber flows? Do they have adequate human and other resources for carrying out the control activities? 2.3. Quantities There are robust and effective mechanisms for measuring and recording the quantities of timber or timber products at each stage of the supply chain, including reliable and accurate pre-harvest estimates of the volume of standing timber in each harvesting site. Does the control system produce quantitative data of inputs and outputs at the following stages of the supply chain? — standing timber, — logs in the forest, — transported and stored timber, — arrival at the plant, — entry into production lines/processing facilities, — exit from production lines/processing facilities, — exit from plant, — arrival at point of export. Which organisations are responsible for feeding the quantitative data into the control system? What is the quality of controlled data? Is all quantitative data recorded in a way which makes it possible to verify quantities with the prior and subsequent stages in the supply chain in good time? What information on the supply chain control is made publicly available? How can the interested parties access this information? 2.4. Mixing of legally verified timber with timber approved elsewhere If mixing of logs or timber from verified legal sources with logs or timber from other sources is allowed, there are sufficient controls in place to exclude timber from unknown sources or which was harvested without legal harvesting rights. Does the control system allow verified timber to be mixed with other approved timber (e.g. with imported timber or timber originating from a forest area with clear legal harvesting rights but that is still not covered by the full verification process)? What control measures are applied in these cases? For example, do controls ensure that verified output volumes declared do not exceed total verified input volumes at each stage? 2.5. Imported timber products There are adequate controls to ensure that imported timber and derived products have been legally imported. How is the legal import of timber and derived products demonstrated? What evidence is required to demonstrate that imported products originate from trees harvested legally in a third country? Does the LVS identify imported timber and timber products throughout the supply chain? Where imported timber is used, can the country of origin be identified on the FLEGT licence, including that of components in composite products? Section 3: Verification Verification provides adequate checks to ensure the legality of timber. It must be sufficiently robust and effective to ensure that any non-compliance with requirements, either in the forest or within the supply chain, is identified and corrective action is taken in good time. 3.1. Organisation Verification is carried out by a government, a third-party organisation or some combination of these, which has adequate resources, management systems and skilled and trained personnel, as well as robust and effective mechanisms to control conflicts of interest. Has the government appointed a body or bodies to undertake the verification tasks? Is the mandate (and associated responsibilities) clear and in the public domain? Does the verification body have adequate resources for carrying out the verification of the legality definition and the systems for controlling the timber supply chain? Does the verification body have a fully documented management system that: — ensures that its personnel has the necessary competence and experience to ensure effective verification? — applies internal control/supervision? — includes mechanisms to control conflicts of interest? — ensures transparency of the system? — defines and applies verification methodology? 3.2. Verification against the definition of legality There is a clear definition setting out what has to be verified. The verification methodology is documented and ensures that the process is systematic, transparent, evidence-based, carried out at regular intervals and covers everything included within the definition. Does the verification methodology cover all elements of the legality definition and include tests of compliance with all specified indicators? Does verification require: — checks of documentation, operating records and on-site operations (including spot checks)? — collection of information from external interested parties? — recording of verification activities that allows checking by internal auditors and the independent monitor? Are institutional roles and responsibilities clearly defined and applied? Are the verification results against the definition of legality made publicly available? How can the interested parties access this information? 3.3. Verification of systems for controlling the supply chain There is a clear scope setting out what has to be verified which covers the entire supply chain from harvesting to export. The verification methodology is documented and ensures that the process is systematic, transparent, evidence-based, carried out at regular intervals and covers everything included within the scope, and includes regular and timely reconciliation of data between each stage in the chain. Are institutional roles and responsibilities clearly defined and applied? Does the verification methodology fully cover checks on supply chain controls? Is this clearly spelt out in verification methodology? What evidence is there to demonstrate application of verification of supply chain controls? Verification of data — Which organisation is responsible for data verification? Does it have adequate human and other resources for carrying out the data management activities? — Are there methods for assessing correspondence between standing timber and timber entering the plant/point of export? — Are there methods to assess coherence between inputs of raw materials and outputs of processed products at sawmills and other plants? — Is reliable verification by individual item or by batch of timber products possible throughout the supply chain? — What information systems and technologies are applied for storing and verifying data and for recording it? Are there robust systems in place for securing the data? Are the verification results on supply chain control made publicly available? How can the interested parties access this information? 3.4. Non-compliance There is an effective and functioning mechanism for requiring and enforcing appropriate corrective action where breaches are identified. Does the verification system define the above requirement? Have mechanisms been developed for handling non-compliance? Are these applied in practice? Are there adequate records available on the breaches identified and corrective action taken? Is the effectiveness of corrective actions evaluated? What information on identified breaches goes into the public domain? Section 4: Licensing Congo has assigned a licensing authority overall responsibility for issuing FLEGT licences. FLEGT licences are issued on the basis of either individual shipments or market participants. 4.1. Organisation What body is assigned responsibility for issuing FLEGT licences? Are the roles of the licensing authority and its personnel with regard to issuing of FLEGT licences clearly defined and publicly available? Are the competence requirements defined and internal controls established for the personnel of the licensing authority? Does the licensing authority have adequate resources for carrying out its task? 4.2. Issuing of licences Does the licensing authority have documented procedures for issuing licences? Are these publicly available, including any fees payable? What evidence is there that these procedures are properly applied in practice? Are there adequate records available on licences issued and refused? Do the records clearly show the evidence on which the issuing of licences is based? 4.3. Consignment-based licences Is the licensing based on an individual consignment? Has the legality of an export consignment been demonstrated through government verification and traceability systems? Have the requirements for issuing licences been clearly defined and communicated to the exporter and to the other parties concerned? What information on issued licences goes into the public domain? Section 5: Instructions on the independent auditing of the system The System Independent Audit (SIA) is a function that is independent of Congo’s forest sector regulatory bodies. It aims to maintain the credibility of the FLEGT licensing scheme by checking that all aspects of Congo’s LVS are operating as intended. 5.1. Institutional arrangements 5.1.1. Designation of authority Congo has formally authorised the SIA function and allows it to operate in an effective and transparent way. 5.1.2. Independence from other elements of the LVS There is a clear separation between the organisations and individuals that are involved in management or regulation of forest resources and those involved in the independent audit. Does the government have documented requirements for the independence of the independent auditor? Do provisions state that organisations or individuals having a commercial interest or an institutional role in the Congolese forest sector are not eligible to perform the independent auditor function? 5.1.3. Designation of the independent auditor The independent auditor was appointed through a transparent mechanism and there are clear and publicly available rules regarding its operations. Has the government made the terms of reference for the independent auditor publicly available? Has the government documented the procedures for appointing the independent auditor and made them publicly available? 5.1.4. Establishing a mechanism for handling complaints There is a mechanism for handling complaints and disputes that arise from the independent audit. This mechanism makes it possible to deal with any complaint relating to the operation of the licensing scheme. Is there a documented for handling complaints mechanism that is available to all interested parties? Is it clear how complaints are received, documented, escalated (where necessary) and responded to? 5.2. The independent auditor 5.2.1. Organisational and technical requirements The independent auditor is independent of the other components of the legality assurance system and operates in accordance with a documented management structure, policies and procedures that meet internationally accepted best practice. Does the independent auditor operate in accordance with a documented management system that meets the requirements of ISO Guides 62 and 65 or similar standards? 5.2.2. Methodology of the audit The methodology of the independent audit is evidence-based and is carried out at specific and frequent intervals. Does the methodology specify basing all findings on objective evidence concerning the functioning of the LVS? Does the methodology of the independent audit specify the maximum intervals at which each element of the LVS will be verified? 5.2.3. Scope of the audit The independent auditor operates according to terms of reference that clearly specify what has to be audited and that cover all agreed requirements for the issuing of FLEGT licences. Does the methodology of the independent audit cover all elements of the LVS and specify the main tests of effectiveness? 5.2.4. Reporting requirements The independent auditor provides the Joint Committee with regular reports on the integrity of the legality assurance system, including any non-compliance, as well as its assessment of corrective action taken to address it. Do the independent auditor’s terms of reference specify the reporting requirements and reporting intervals? ( 1 ) http://ec.europa.eu/development/policies/9interventionareas/environment/forest/flegt_briefing_notes_en.cfm