ANNEX VISupplementary provisions
ANNEX VI CRITERIA FOR EVALUATION OF THE LEGALITY ASSURANCE SYSTEM This Agreement provides for implementation of a legality assurance system (LAS) intended to guarantee that all timber and derived products specified in this Agreement and exported from Liberia to the Union are produced entirely legally. The LAS should include: — a definition of legally produced timber that lists the laws that must be complied with in order for a license to be issued, — control of the supply chain to track timber from the forest to the point of export, — verification of compliance with all elements of the definition of legality and control of the supply chain, — the procedures for issuing FLEGT licenses, and — the independent audit to ensure that the system is working as intended. The LAS will be subject to an independent technical evaluation before the FLEGT licensing scheme becomes operational; the terms of reference will be jointly agreed between the Parties, via the Joint Implementation Committee (JIC) for this Agreement. These evaluation criteria describe what the LAS is expected to produce and will provide the basis for the terms of reference for the evaluation. The evaluation will: — review any revisions made to the system after this Agreement was signed, and — examine the functioning of the system in practice and whether it delivers the intended result. 1. DEFINITION OF LEGALITY Legally produced timber needs to be defined on the basis of the laws applicable in Liberia. The definition used must be unambiguous, objectively verifiable and operationally workable and, as a minimum, include those laws which cover: (a) harvesting rights: granting of legal rights to harvest timber within legally gazetted boundaries; (b) forestry operations: compliance with legal requirements regarding forest management, including compliance with relevant environmental and labour legislation; (c) fees and taxes: compliance with legal requirements concerning taxes and fees directly related to timber harvesting and harvesting rights; (d) 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; (e) trade and customs: compliance with legal requirements for trade and customs procedures. Is it clear which 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 of legal compliance assess the 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 drawing up the definition, did the parties concerned consider all the main areas of applicable law? Does the legality assurance system incorporate the main legal provisions identified by prior discussion between the various parties involved? Does the legality definition account for all possible sources of timber that enter the supply chain intended for the Union and are appropriate indicators developed for different sources/rights allocation procedures? Have the definition of legality and the legality assurance matrix been amended since this Agreement was concluded? Have indicators and criteria been defined to ensure verification of these changes? Were all relevant stakeholders consulted about these changes in a process that took adequate account of their viewpoints? 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 the 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 possible mixing (e.g. a timber terminal or a processing facility). 2.1. Logging rights 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 logging rights for the forest areas concerned? Have the procedures for issuing logging rights and information on logging rights issued and their holders been published as required by Liberian legislation? 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 use of labels for individual items to reliance on documentation accompanying a load or batch. The method selected must reflect the type and value of the 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 subsequent stages of the supply chain, i.e.: — timber in the forest, — transport, — interim storage, — arrival at the primary processing facility, — processing facilities, — interim storage, — transport, — arrival at the 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? Is there a protocol for verifying the results of the control procedures set up and applied? Are the application procedures clearly defined and communicated to all interested parties? 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 on inputs and outputs at the following stages of the supply chain: — standing timber, — logs in the forest, — transported and stored timber, — arrival at the primary processing facility, — control within the processing facilities, — arrival at the point of export? Which organisations are responsible for feeding the quantitative data into the control system? How are these organisations linked? Are the staff of these organisations given standard training in data management? Do the organisations have adequate resources in terms of personnel and equipment? What is the quality of the data control? If different organisations are responsible, how is it ensured that control performance and data management are conducted in the same way and with the same standard by each organisation? 2.4. Data gathering All data are recorded in a way which makes it possible to reconcile them with the prior and subsequent links in the chain in a timely manner. Reliable reconciliation is carried out for the entire supply chain. Are all quantitative data recorded in a way which makes it possible to reconcile quantities quickly with the prior and subsequent stages in the supply chain? Are there methods for assessing correspondence between standing timber, harvested logs 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 reconciliation by individual item or by batch of timber products possible throughout the supply chain? Which information systems and technologies are applied for storing, reconciling and recording data? Are robust systems in place for securing the data? How is unauthorised access to the system avoided (system security)? How is the viability of the security systems guaranteed? Which organisation is responsible for data reconciliation? Does it have adequate human and other resources for carrying out the data management activities? What information on the supply chain control is made publicly available? How can the interested parties access this information? 2.5. Imported timber products There are adequate controls to ensure that imported timber and derived products have been imported in line with legal requirements and procedures established to ensure imports have been legally harvested following the legal requirements of the country of harvest. How is the legality of imported timber products demonstrated? What evidence is required to demonstrate that imported products originate from trees harvested legally in a third country? Does the LAS identify imported timber products throughout the supply chain? Where imported timber is used, can the country of origin be identified on the FLEGT license, including that of components in composite products? Does the use of bar codes on imported timber guarantee that only forestry products that have been legally logged and processed will be exported with a FLEGT license? 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 (including associated responsibilities) clear and in the public domain? Are the responsibilities clearly allocated and are the required competences associated with the responsibilities clearly defined? How are they implemented? How do the departments responsible for verifying legality guarantee the highest possible level of rationalised collaboration and data management between the administrations involved in forestry sector control? 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 adequate competence/experience amongst the personnel of the verification body, — applies internal control/supervision, — includes mechanisms to control conflicts of interest, — ensures the transparency of the system, — defines and applies a verification method, — uses a publicly accessible complaints management system? 3.2. Verification against the definition of legality There is a clear definition setting out what has to be verified. The verification method is documented and ensures that the process is systematic, transparent and evidence-based, is carried out at regular intervals and covers everything included within the definition. Does the verification method cover all elements of the legality definition and include tests of compliance with all the indicators specified? Does verification require: — checks of documentation, operating records and field operations (and spot checks), — collection of information from external interested parties, — recording of verification activities that allows checking by internal auditors and the independent auditor? 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 method 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. Does the verification method fully cover checks on supply chain controls? Is this clearly spelt out in the verification method? What evidence is there to demonstrate application of verification of supply chain controls? Are institutional roles and responsibilities clearly defined and applied? Are the verification results on supply chain control made publicly available? How can the interested parties access this information? 3.4. Non-compliance The non-compliance mechanism makes it possible to deal with any cases of non-compliance with the requirement of legality verification. There is an effective and functioning mechanism for enforcing appropriate corrective action where offences 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 offences identified and corrective action taken? Is the effectiveness of corrective action evaluated? What information on identified breaches goes into the public domain? 3.5. Complaints A complaints mechanism makes it possible to deal with any complaint relating to legality verification. Is there a complaints mechanism available to all interested parties? Do the verification bodies have mechanisms in place to receive and respond to objections from stakeholders or independent observation? Do the verification bodies have mechanisms in place to receive and respond to infringements/breaches detected by Government officials? Is it clear how complaints are received, documented, escalated (where necessary) and responded to? 4. LICENSING Liberia has assigned a licensing authority overall responsibility for issuing FLEGT licenses. FLEGT licenses are issued on the basis of individual shipments. 4.1. Organisation Which body is assigned responsibility for issuing FLEGT licenses? Are the roles of the licensing authority and its personnel with regard to issuing FLEGT licenses 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 FLEGT licenses Does the licensing authority have documented procedures for issuing licenses? Are these publicly available, including any fees payable? What evidence is there that these procedures are properly applied in practice? Are adequate records available on licenses issued and refused? Do the records clearly show the evidence on which the issuing of licenses is based? Are the requirements for licenses clearly specified and available to the exporter? Do exporters fully understand the criteria for issuing FLEGT licenses? Which information on licenses issued goes into the public domain? 4.3. Procedures to handle queries on licenses issued Can the competent authorities of Union Member States obtain clarification on FLEGT licenses issued? Have clear procedures been established for communication between the licensing authority and competent authorities in the Union? Are there channels for other national or international stakeholders to inquire about the FLEGT licenses issued? 4.4. Mechanism for handling complaints There is a mechanism for handling complaints and disputes that arise from licensing. This mechanism makes it possible to deal with any complaint relating to operation of the licensing scheme. Is there a documented complaints mechanism available to all interested parties? Is it clear how complaints are received, documented, escalated (where necessary) and responded to? 5. INSTRUCTIONS ON THE INDEPENDENT SYSTEM AUDIT The independent audit (IA) is a function that is independent from Liberia’s regulatory bodies for the forestry sector. It aims to provide credibility to the FLEGT licensing scheme by checking that all aspects of the LAS are operating as intended. 5.1. Institutional arrangements 5.1.1. Designation of authority Liberia has formally authorised the IA function and allows it to operate effectively and transparently. 5.1.2. Independence from other elements of the LAS There is a clear separation between organisations and individuals that are involved in management or regulation of forest resources and those involved in the IA. Does the Government have documented requirements for the independence of the independent auditor? Do provisions state that organisations or individuals from both Parties with a commercial interest or an institutional role in the forestry sector are not eligible to perform the independent auditor function? 5.1.3. Designation of the independent auditor The independent auditor was appointed by a transparent mechanism and there are clear and publicly available rules regarding its activities. 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. Mechanism for handling complaints There is a mechanism for handling complaints and disputes that arise from the IA. This mechanism makes it possible to deal with any complaint relating to operation of the licensing scheme. Is there a documented mechanism for handling complaints 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 from 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 Guide 17021 or similar standards? 5.2.2. Audit method The method of the IA is evidence-based and verifications are carried out at specific and frequent intervals. Does the method specify that all findings must be based on objective evidence concerning the functioning of the LAS? Does the method of the IA specify the maximum intervals at which each element of the LAS will be verified? Does the Government provide assurance that the IA can access information and resources which enable it to perform its function effectively? 5.2.3. Scope of the audit The independent auditor operates in accordance with terms of reference that clearly specify what has to be audited and that cover all agreed requirements for issuing FLEGT licenses. Does the method of the IA cover all elements of the LAS and specify the main tests of effectiveness? 5.2.4. Reporting requirements The IA shall submit a preliminary report to the Joint Implementation Committee (JIC). The reports of the independent auditor and any corrective action required will be discussed in the JIC. Do the independent auditor’s terms of reference specify the reporting requirements and reporting intervals? Do the terms of reference of the auditor and the procedures of the JIC describe the procedure for publishing audit results? 6. EVALUATION CRITERIA OF THE SYSTEM ESTABLISHED IN THE UNION TO ACCEPT FLEGT LICENSES The FLEGT Regulation and the associated implementing measures lay down procedures for establishing the FLEGT licensing scheme, including procedures to verify that Liberian timber products intended for release for free circulation within the Union are properly covered by a FLEGT license. These procedures also require the Member States of the Union to designate a competent authority to take on this responsibility. Since these are new measures introduced specifically to implement the FLEGT scheme, the evaluation will examine the degree of preparedness of the Union for verification of the FLEGT licenses. Have the competent authorities been identified in each Member State of the Union? Has this information been made public? Have the procedures for processing the FLEGT licenses been established in every Member State of the Union? Have these procedures been made public? Have appropriate laws and regulations been established where deemed necessary by the Member States of the Union? Have the means of communication between the competent authorities and the customs authorities been determined? Have procedures been established to enable the Union, or any person or body designated by the Union, to gain access to relevant documents and data and to avoid any problems arising that could hamper the proper functioning of the FLEGT licensing scheme? Have procedures been established to enable the independent auditor to gain access to all relevant documents and data? Have reporting methods been negotiated between the Member States of the Union and the European Commission? Have procedures for publication of these reports been adopted? Do procedures cover cases where goods accompanied by a FLEGT license are not accepted? Have procedures been established to report any contradictions in the licenses and to deal with offences? Has the information relating to fines for various offences been published?