ANNEX IISupplementary provisions
ANNEX II LEGALITY ASSURANCE SYSTEM OF LIBERIA 1. INTRODUCTION The legality assurance system (LAS) of Liberia aims to ensure the legality of the allocation of forest use rights and of harvesting, transport, processing and selling of timber. It is based on the national legislation in force and existing governmental control systems and was designed by a national multi-stakeholder process which included representatives of communities, civil society organisations (CSOs), government agencies and the private sector. These stakeholders have agreed, through a process of consultations and discussions, the elements of the LAS described below: — Legality definition, — Verification of compliance with the legality definition, — Chain of custody system, — FLEGT licensing, — Independent audit. The legality definition sets out the core requirements of legislation applicable to the forest sector. The legality definition was finalised and endorsed by national stakeholders during the Voluntary Partnership Agreement (VPA) negotiations. Legality verification systematically determines compliance with the requirements of the legality definition. This is the responsibility of government bodies designated by the legislation and by the VPA. The chain of custody system (COCS) is applied to control the timber supply chain from the forest to the point of export or sale on the domestic market. The COCS includes operational controls by companies, verification by the COCS manager and an information system where data from the operational control and verification activities are stored and analysed. A COCS that largely complies with the LAS requirements has been in operation since before the VPA negotiations started. It was built and is operated by an external service provider and will eventually be transferred to the Forestry Development Authority (FDA). Liberia issues FLEGT licenses to all shipments of timber product exports that are produced in accordance with the legality definition and duly controlled by the COCS. Independent audit adds credibility to the LAS by inspecting every component of the system to ensure that it is working as intended. The audit will be carried out by a competent body that is independent of Liberia’s forest sector regulatory bodies and private-sector operators. The audit results are reported to the Joint Implementation Committee and reports are publicly available. Legality verification, licensing and independent audit functions have been outlined by a stakeholder working group and will be further developed and put into practice during implementation of the VPA. This Annex describes how, in principle, the LAS will work in practice. 2. SCOPE 2.1. Timber sources All domestically grown timber and timber products controlled by the LAS must originate from legally designated areas for which use rights have been allocated in accordance with the legal provisions. These timber sources can encompass both natural forests and plantation forests under one of the following types of permit granted by the Forestry Development Authority (FDA): — forest management contract (FMC), — timber sale contract (TSC), — private use permit (PUP), — forest use permit (FUP), — chainsaw permit. The above-mentioned types of permit are provided for by the National Forestry Reform Law, the Community Rights Law, the Chainsaw Regulation and other related regulations. The Community Rights Regulations and Chainsaw Regulation are currently being drafted and, once they have been completed, amendments will be made to the LAS to reflect any additions. Rubberwood and other timber products harvested under agricultural concession agreements will also be covered by the LAS. Abandoned timber will be incorporated into the system once it has been auctioned and new legal ownership established. At present, timber that has been confiscated due to violation cannot be entered into the system. Regulations concerning confiscated timber and how it will be incorporated into the LAS will be developed within two years and before FLEGT licensing becomes operational. All imported timber products listed in Annex I will also be controlled by the LAS. Further details are given in Section 5.9 of this Annex. 2.2. Products The following products are controlled by the LAS: — Logs — Wood chips — Railway sleepers — Sawn timber — Veneer — Plywood — Parquet flooring — Wooden frames — Packing cases/boxes — Joinery — Furniture Annex I specifies the products covered by this Agreement and their Harmonised System (HS) codes used for classification of commodities in international trade. As implementation proceeds, Liberia will consider adding other products, including charcoal, to the scope of the LAS. 2.3. Market destinations Verification of legality is applied both to timber products sold on the domestic market and to exports, irrespective of the country of destination. Checks on products sold on the domestic market will be phased in, following a schedule that will depend on implementation of the Community Rights Law and Chainsaw Regulation and will take account of ECOWAS regional trade treaties and their integration into the LAS. 3. INSTITUTIONAL SET-UP In order to verify compliance with the legality definition (LD) and operate the COCS, the FDA will establish a new department called the Liberia Verification Department (LVD). A service provider will be contracted on a ‘build, operate and transfer’ (BOT) basis for the first five years to develop the necessary verification methodology and to build the capacity of the FDA departments and divisions involved in implementing the LAS. The LVD will collaborate with other departments and divisions of the FDA, the Environmental Protection Agency (EPA), the Ministry of Commerce and Industry, the Ministry of Finance, the Ministry of Labour and other relevant government agencies responsible for specific aspects of forest sector regulation. These government bodies will submit evidence to the LVD on operators’ compliance with the legality definition. In addition, a channel of communication will be set up for civil society organisations (CSOs) to provide the LVD and other relevant authorities with monitoring data on operators’ compliance with LAS requirements. In order to issue FLEGT licenses for timber product exports, the FDA will establish a new department called the Liberia Licensing Department (LLD). Exporters will apply to the LLD for FLEGT licenses (see Figure 1). Figure 1. Institutional set-up for verification and licensing EXPORTER LLD LVD COC / WTS VERIFICATION TO LD Submission of monitoring data CSOs FDA DEPTS EPA MOCI Informing verification bodies MOL OTHERS MOF 4. LEGALITY VERIFICATION 4.1. Legality definition and related verification procedures The legality definition consists of 11 principles , each of which is divided into a number of indicators representing the legal requirement that must be complied with. Each indicator is equipped with verifiers that are used for determining whether a private-sector operator or government agency complies with the legal requirements covered by the indicator concerned. Appendix A contains the legality definition and outlines verification procedures to guide the responsible ministry, government agency and LVD in compliance assessment. This verification framework specifies the: — objective to describe the purpose of a verification procedure, — regulatory control to provide for the normative and/or regulatory requirements and the responsibility for a particular indicator, — verification method to provide for description and means of verification, which will consist of document review, field inspection, confirmation and/or consultation, — frequency to define how often compliance with an indicator or certain aspects thereof must be assessed by the LVD. More detailed procedures, including checklists, to assess compliance with the legality definition will be developed during implementation of the VPA. 4.2. Data management Verification results will be recorded in a data management system that allows immediate checks on whether an operator complies with the legality definition. The LVD will be in charge of data management, including updating records with the frequency set in the verification procedures. The chain of custody information system (COCIS) contains certain data on legal compliance that will be collected to assess compliance with the legality definition along the product chain. These records are used as triggers to allow progress along the product chain, such as the start of harvesting operations or transfer of logs along the supply chain. It is envisaged that the COCIS will form part of the data management system necessary for verification purposes. The data management system should be developed to allow real-time exchanges of information so that any non-compliant timber detected during verification can be prevented from progressing, with later checks further down the supply chain. The architecture and technical specifications for the data management system and detailed procedures for data management will be developed during implementation of the VPA. 4.3. Legality verification of operators working under an independent forest management certification scheme Operators working under an independent certification scheme approved by the Government of Liberia can demonstrate legal compliance with the Liberian legality definition by providing the LVD and the LLD with a valid scheme certificate. Prior to acceptance of a certification scheme, the Government of Liberia will carry out a consistency assessment to make sure that all the indicators of the Liberian legality definition are included in the certification scheme, compliance with them is systematically audited and the entire certification process is reliable. Only schemes which have passed the consistency assessment can be integrated into the LAS of Liberia. In keeping with Liberian legislation, all operators, including those with their own certified chain of custody systems, will still be subject to Liberia’s national chain of custody system. 5. CHAIN OF CUSTODY SYSTEM 5.1. Standard operating procedures A set of standard operating procedures (SOP) has been developed to lay down (a) how forest companies control their supply chains and (b) how these company activities are verified with the help of the COCS: (a) general standard operating procedure 01 (GSOP 01) provides a general description of how control and verification activities for timber and wood products sourced from TSCs, FMCs and PUPs are conducted; (b) details of each activity are presented in a number of SOPs; (c) the GSOPs and SOPs will be amended to reflect any changes in the control and verification activities, including introduction of new sources of timber in the COCS. Control and verification of timber from the following sources will be developed within two years of signature of the VPA: (a) forests regulated by the Community Rights Law; (b) chainsaw logging operations; (c) imported timber; (d) timber in transit; (e) confiscated timber. The next few sections and Appendix B describe the key control points and guiding principles of the COCS. 5.2. Pre-harvest Demarcation of the contract area and of the harvesting blocks and the enumeration of trees (stock survey) are the responsibility of the contract-holder. The LVD verifies that the block map and stock survey are accurate and provides the Commercial Department of the FDA with the information it needs in order to issue an acceptance of the block map survey work and the annual harvesting certificate (AHC). FDA staff verify that the block map and stock survey have been properly undertaken and that the forms and maps have been filled in correctly by the contract-holders. This is a two-stage process, comprising first an office check to make sure that no simple administrative errors have been made and, second, if the first check is found to be satisfactory, a check conducted in the forest on a sample of at least 5 % of the stock survey area to verify tree location, diameter, species and height. The COCIS automatically checks that: (a) the contract area reference matches the contract-holder ID; (b) the four corners of the block maps fall inside the gross contract area; (c) the tree ID numbers have been allocated to the contract-holder for use in this contract area as tree labels. The block map is then manually checked by the COC field officer to confirm that: (a) the contract area reference and contract-holder ID match those on the stock survey forms submitted; (b) the dates surveyed match the dates on the stock survey forms; (c) the Universal Transverse Mercator (UTM) geographic coordinates match those on the stock survey forms; (d) the scale is correctly marked on the map, the distance between the cells is correct and the distances are correctly marked on the map; (e) the direction of the baseline has been correctly entered and the direction of the north arrow is correct in comparison with the baseline; (f) the survey line numbers and the distance numbers are correctly denoted; (g) the block border drawn on the block map corresponds to the contract area location map and fits within the overall boundaries of the contract area; (h) the tree numbers on the map are in the correct cells, as indicated by the stock survey forms; (i) the species codes are correct. The COC field officer completes a standard COCIS form, which has a series of check boxes and which will be passed to the data entry clerk or COCIS operator for entry into COCIS. If any of the checks on the stock survey forms or manual block map fail, then the COCIS operator will print the forms/maps that failed the checks. The COC data entry supervisor will send them to the contract-holder for corrections and the process is repeated with the corrected data. 5.3. Harvesting This process describes the labelling, measuring and recording procedures to be followed by the contract-holders during tree felling. Measuring and tagging logs and stumps is necessary to connect the original tree number (allocated during the stock survey) to the logs resulting from the tree harvest and to the stump left in the forest, thereby establishing traceability. Once the annual harvesting certificate has been issued, the contract-holder is allocated bar-coded log tags and is permitted to commence harvesting at the locations indicated on the block map: (a) before felling the tree, the contract-holder’s log measurer records the tree ID tag number assigned during the stock survey; (b) on felling the tree, the log measurer affixes and records a new tag to the butt end of the log and another to the stump. The resultant tree-length log is measured: the diameters of both the butt and top ends and the length of the log to the crown break (to the nearest 10 cm). The log measurer records the data on a personal digital assistant (PDA) or the appropriate form. Then the log measurer proceeds to the next tree to be felled and repeats the same procedure. The data collected are submitted to and processed by a COC data entry clerk who transfers them into COCIS. 5.4. Forest log yard/landing This process describes how the contract-holder measures and labels felled trees once they have been extracted to the log landing and been cross-cut to length. The same procedure is also followed if, at a later stage, the logs are cross-cut again into smaller logs or are simply dressed (i.e. have the first few inches removed to make the log look better for sale or export). The main principle is that an ID tag is attached to each new log so that traceability back to the original log, tree and block map is possible. COCS log scalers verify a sample to confirm that the logs have been accurately tagged and measured by the operator. The species, diameter and log length will be recorded in the COCIS, which automatically checks the log data against the information stored by the contract-holder. 5.5. Transport of logs or processed wood This process describes the procedure to be followed when logs and/or wood products are loaded onto a truck at the log landing in the forest, when logs are loaded at a holding area outside the port and when sawn timber products are loaded prior to shipping to the port and then transported. Since the COCS is designed to have real-time data on where logs or wood products are in the supply chain, the following measures are applied: (a) When the shipment is ready for loading, the operator’s staff (i.e. log measurer or sawmill tally man) complete a waybill form by: — filling out the appropriate fields (barcode, species, diameter and length), — sticking the bar-coded stickers to the waybill in the appropriate places, — listing all the bar-coded tag numbers or the bar-coded labels affixed to the wood products making up the load — these numbers need to be copied in by hand, — dating and signing the waybill. (b) Logs or wood products must be loaded in a way that enables the bar codes to be read by a PDA scanner without removing the load from the truck. Therefore either a space must be left between the end of the logs and the truck headboard (depending on the truck type) or all the logs will need to be loaded with the tags at the rear end, so they are clearly visible. This is to facilitate checking of the tag numbers by the COCS log scalers and the FDA when the truck is en route . LVD does 100 % documentary verification of the waybills/delivery notes issued and received and has mobile teams of log scalers/inspectors who check a sample of all loads transported. The species, log diameter and length are recorded. At the same time, the Liberian police will check that all loads passing checkpoints have the required waybills with them. 5.6. Processing of timber Detailed procedures describing how sawmilling and other processing of wood products are assessed will be developed in the first three years of implementation of the VPA. In principle, the operational control by the operator and verification by the COCS will cover (i) entry of wood raw materials into the mill site, (ii) storing of wood raw materials, (iii) processing, (iv) storing of processed products and (v) exit of products from the mill site. The following control and verification measures will be applied: (a) the operator keeps records of all wood raw materials entering the mill site and uploads the corresponding data into the COCIS; (b) the operator keeps records of all wood raw materials stored in the mill site and uploads the corresponding data into the COCIS. An inventory management system that records inputs and outputs of raw material from storage areas must be applied by the operator; (c) the operator’s staff record the raw material going into the processing plant and all the products coming out by entering the data in standard forms. This will give the base data for recovery assessment (for sawmilling this would be the sawn timber volume coming out of the mill expressed as a percentage of the volume of logs going in; in other instances it may be a simple conversion ratio, e.g. x m 3 of sawn wood will be equal to y units of chair legs, etc.); (d) the operator keeps records of all processed wood products stored in the mill site and uploads the corresponding data into the COCIS. An inventory management system that records inputs and outputs of raw material to and from each warehouse must be applied by the operator; (e) the operator keeps records of all wood raw materials exiting the mill site and uploads the corresponding data into the COCIS; (f) a whole-sample batch of product processing (for example, one shift at a sawmill) must be monitored by LVD staff once the mill is ready to commence production. This sample will be the basis for the ‘approved conversion rate’; (g) periodically and randomly, LVD staff will reassess the ‘approved conversion rate’. These visits to the processing plant should be unannounced; (h) the COCIS monitors the conversion rate based on the standard forms submitted by the operator against the ‘approved conversion rate’. Any significant variation will trigger further investigation and/or issue of a failure report; (i) the LVD conducts random checks on all operations and bookkeeping systems used by the operator to control the flows of wood raw material and processed products within the mill site. 5.7. Export This process describes how the products already approved for export by the LVD are shipped to the port and then loaded onto the vessel. At the point of export, the COCS checks 100 % of tag numbers and product specifications within the COCIS and physical inspections are conducted on a sample of the export consignment. The exporter has to inform the COCS when the vessel is ready for loading, so that the COCS can perform its task of sending a team to oversee the final loading of the vessel. While each log or bundle is being loaded onto the vessel, the COCS inspector will check them against the specifications to make sure they are covered by the valid FLEGT license and will record them in a PDA or on the appropriate form. The records will be uploaded into the COCIS and reconciled with the earlier product specification data stored to keep track of which product has actually been exported. 5.8. Domestic market The control and verification procedures described in Sections 5.2 to 5.7 of this Annex are applicable to the domestic market, when the timber originates from production areas covered by FMCs, TSCs and PUPs. Procedures to manage supply chains for timber from chainsaw logging operations will be developed within the period indicated in Annex VII. 5.9. Imported timber The importer must demonstrate that imported timber comes from legal sources and is customs-cleared in accordance with the Liberian legislation. The legality of timber in the country of harvest can be demonstrated by certificates issued under certification schemes or other legality verification schemes that have been assessed and approved by the Government of Liberia in consultation with the governments concerned. Imported timber controlled by the LAS of another country covered by a VPA that has an operational FLEGT licensing scheme will be considered legal in the Liberian LAS. Imported timber demonstrated to be legal is included in the COCS at the border and is thereafter controlled and verified in the same way as domestically grown timber. 5.10. Timber in transit Timber in transit has to be kept physically segregated from domestic or imported timber and transits Liberia under Liberian customs control. Timber in transit will not be integrated in the COCS and will not be subject to issue of a Liberian FLEGT license at the point of export. The country of origin and country of harvest must be clearly indicated in the bill of lading and other transport documents. Liberia will specify legal documents and related customs controls specific to timber in transit. Detailed procedures will be developed before the licensing system becomes operational. 5.11. Rubberwood The SOPs for controlling harvesting, transportation, chipping and exports of rubberwood products will be developed during implementation of the VPA. 5.12. Data reconciliation The COCIS is used for reconciling quantitative data between and within the various stages of the supply chain. The reconciliation processes aim to ensure that timber quantities by species and dimensions are consistent all along the supply chain, in particular to prove that the quantity dispatched does not exceed the quantity received and that during processing the ratio between the quantity of raw materials and the quantity of processed products is rational. Protocols will be developed for reconciliation of consolidated data over several supply chains and over time with a view to providing evidence of the legality of the whole forest sector at regional or national level. In addition to the reconciliation of quantitative data, the COCS checks with the LVD database that there is full compliance with the LD prior to each sale whether intended for export or sale in Liberia. 6. FAILURE TO COMPLY WITH THE LAS FLEGT licenses will not be issued unless all requirements of the LAS have been complied with. Any failure to comply with the LAS must be addressed. Existing legal procedures and sanctions apply for handling failures to comply with the LAS identified in the course of the verification activities. Depending on the breach, administrative fines, corrective action, suspension of activities and/or prosecution of the operator may apply. Detailed guidance on how to handle breaches and to impose sanctions for non-compliance will be developed before the FLEGT licensing system becomes operational. All failures to comply with the legality definition, COCS and corresponding sanctions will be recorded in the verification database (see Section 4.2). 7. LICENSING The Liberia Licensing Department (LLD) will be established to issue FLEGT licenses to export consignments of timber products complying with all the requirements of the LAS. The licensing process consists of the following phases: (a) The exporter applies to the LLD for a FLEGT license for each export consignment. A standard application form will be developed within two years of signature of the VPA to specify the information and documents required. The LLD will register the application and send a request for verification to the LVD. (b) The LVD verifies that the exporter and possible suppliers associated with the export consignment concerned comply with the Liberian legality definition and that the products for export originate from legal sources and are duly entered in the COCIS. The detailed procedures and checklists for the verification by the LVD will be developed within two years of signature of the VPA. (c) The LVD will then send a written communication to the LLD to confirm the outcome of the verification. The format and process for this communication will be developed within two years of signature of the VPA. — If the LVD confirms that there is full compliance with the LD, the LLD issues without delay a FLEGT license to the export consignment concerned. The detailed procedures for informing the applicant and issuing FLEGT licenses will be developed within two years of signature of the VPA. — If any non-compliance is detected at this stage, the LVD will notify the LLD that no FLEGT license can be issued, indicating the reasons for this rejection, and record the rejection in the COCIS. The LLD will notify the applicant that the application for a license has been rejected and of the reasons for this rejection. The detailed procedures for handling non-compliant consignments and informing the applicant will be developed within two years of signature of the VPA. (d) Once the FLEGT license has been issued, the exporter sends a copy of the license, including the specification, to the customs and port authority, with notification of the proposed date of loading. The customs and port authority checks that the license is consistent with the other official export documents and meets the standard formats. The LLD keeps records of all applications for FLEGT licenses received, including those that resulted in rejection. The technical specifications for FLEGT licenses, including the license format and period of validity, are presented in Annex IV. 8. INDEPENDENT AUDIT The objective of the independent audit (IA) is to assess whether the LAS is functioning effectively, appropriately and with credibility and to identify potential weaknesses and risks in the structures and implementation of the system. The terms of reference for the IA, including the tasks, qualifications required and method, are presented in Annex V.