New U.S. and European Union efforts to clamp down on the illegal timber trade are expected to take a multi-billion dollar annual toll on Indonesian exports because the southeast Asian nation has failed to enact standards for wood-based products in spite of years of debate.

European parliament officials estimate up to 19 percent of all wood and paper products entering the EU are of illegal or suspect provenance. Britain estimates illegal logging costs timber producing countries $10 billion (€7.4 billion / £6.8 billion) a year in lost taxes and fees.

According to government statistics, Indonesia exported $6.9 billion of wood-based products in 2007, the latest year for which complete data is available. The figure is equivalent to about 5 per cent of its total exports. About $1.41 billion of the products went to the EU and $400 million to the U.S.

Indonesia is one of the world’s biggest centers of illegal logging. It and other exporters are facing pressure because the U.S. has added forest-based products to legislation requiring importers be able to verify the legality of their imports’ origin. The EU is also moving to enact a law to ban the sale of products that are not from certifiably legal sources.

U.S. and EU officials believe the value of Indonesian wood-based products arriving in their markets is much higher than the official figures, which do not include stock transported, often surreptitiously, through third countries.

Hadi Daryanto, the official in charge of drafting the legality standards at the forestry ministry, said new rules should be ready within weeks, but officials have made similar claims for the past two years.

European officials, however, say the rules may not be acceptable because the current draft has not received broad civil society endorsement, a key EU prerequisite. Civil society concerns include that the standards do not define legality in sufficient detail and do not require that concession holders obtain the prior, informed consent from communities with customary rights in forest areas.

“It’s all about political will,” said Mardi Minangsari of the local environmental group Telepak. “This wouldn’t even be an issue if the government showed sufficient political will to get it right. But we’re just not seeing it.”

Under the U.S. Lacey Act, importers of wood-based products have to, if challenged, demonstrate that their goods come from legally felled sources. Increasing numbers of products will be added over the next year.

The European Parliament is scheduled to vote on April 23 on legislation to ban all non-legally certified wood-based products.

Exporting countries are likely to be given a few additional months to enact standards because the EU member states’ governments have been unable to reach consensus on the subject. This is in spite of an escalating campaign by environmental groups and nations such as Britain which are leading a campaign for the legislation.

Hillary Benn, Britain’s environment secretary, said in March: “Illegal logging causes untold environmental damage, it harms communities and it threatens wildlife. If we import timber without ensuring that it is legally sourced, then we are contributing to these problems.”

(Source: Financial Times)