National private-sector stakeholders
Private-sector stakeholders have a direct financial interest in a Voluntary Partnership Agreement (VPA) and a major role in implementation. Private-sector stakeholders include:
- Logging companies
- Household and other small-scale woodworkers
- Small- and medium-scale forest enterprises
- Large companies that transport, process or export timber
The diversity of private-sector stakeholders in terms of size, power and position in the value chain means that the group is complex and does not always pull in the same direction. In some contexts, private-sector stakeholders may drive a VPA process, but in others, they may oppose it, particularly in the beginning. Opposition may be because stakeholders do not understand a VPA, or because they profit from informal deals, which the increased visibility and control resulting from a VPA would put at risk.
Private-sector stakeholders can be difficult to convene and keep engaged, particularly during lengthy VPA negotiations, as participation in long meetings has direct business costs.
The private sector is a large and diverse group of stakeholders that includes big and small enterprises with varied and sometimes competing interests and relations with government.
Private-sector concerns include the complexity and costs of complying with a timber legality assurance system. For instance, while exporters may welcome the assurance that FLEGT-licensed timber will enter the EU market without hindrance, other companies and individuals operating further up the supply chain may equate compliance with VPA with higher transaction costs.
Many private-sector stakeholders are interested in the potential of VPAs to level the playing field by ensuring that all companies abide by the same laws. A level playing field would eliminate unfair competition from cheaper illegal wood. At the same time, other private sector stakeholders may oppose efforts to strengthen law enforcement because they profit from illegal logging.
Organisation and influence
A timber legality assurance system cannot be effective without the involvement of the private sector. Private-sector participation in a multistakeholder VPA process is critical, therefore, to the credibility and feasibility of a VPA. It is in the interests of all private-sector stakeholders in the timber trade to participate in a VPA process.
However, the private sector faces challenges in participating in a VPA process. Challenges include the amount of time needed to engage. Small-scale producers in particular may struggle to have a say in VPA processes because they lack resources, information and influence. Often, associations of small-scale producers are absent from the process or poorly organised. Access to information varies greatly. Many private-sector stakeholders are simply unaware of why they should engage in a VPA process.
In addition, some small-scale operators, such as chainsaw loggers or household industries, may lack legal status to operate. It may be difficult to engage these small enterprises in VPA discussions because they are numerous, poorly organised and dispersed. Yet these are important interested parties, who together have a big impact on the forest sector, and in particular on domestic markets.
The uncertain legal status of many small-scale loggers makes it difficult for them to access resources legally, deprives governments of tax revenues and threatens to undermine efforts to improve governance. See box ‘Ghana's illegal chainsaw loggers who want to be legal'.
In contrast, large-scale operators can have strong political influence. They can block the VPA process if they feel it goes against their interests, or encourage aspects of a VPA that favour their businesses.
Engaging small-scale participants
In the first VPA processes, representation of small-scale private sector participants was poor. In Ghana, for instance, the two private-sector seats on the national steering committee went to representatives of the Ghana Timber Millers Organization, whose members are large, hi-tech milling companies. The Ghana Timber Association, whose members are small-medium scale logging and milling operations, had no representative on the committee.
In VPA processes underway at present, support targets smaller private-sector groups to encourage them to engage. In Vietnam, for instance, there has been a big push to involve artisanal woodworkers and get them to meetings. In Cameroon and Indonesia, support organisations have worked with small- and medium-scale enterprises to help them understand both the requirements of a timber legality assurance system and the demands of the EU market regarding legal timber.
Representation in VPA processes
- In the VPA processes in the Central African Republic and the Republic of the Congo, large international companies and smaller national companies were each represented by individuals who fed information back to their constituencies
- In Cameroon, representatives of three trade unions performed this role
- In VPA negotiations in Thailand, the private sector has a strong voice and has created position papers to present its perspective
Indonesia's furniture makers
For many small-scale enterprises in the Indonesian furniture sector, the implications of the timber legality assurance system only became clear after VPA negotiations had ended and implementation was well advanced. Small-scale enterprises in the sector, therefore, lobbied the government for less stringent requirements and more time to comply with them. As a result, in 2014, the government revised the timber legality assurance system, introducing a procedure called the Supplier's Declaration of Conformity that makes compliance easier for smallholders operating on private land, traders dealing with timber produced by smallholders and small-scale producers.
Ghana's illegal chainsaw loggers who want to be legal
VPAs pose challenges to small-scale loggers in Ghana. Under current laws, the loggers operate illegally. Enhanced law enforcement under a VPA may disproportionately penalise these small-scale, low-income loggers. Therefore, it may be in their interests to engage with a VPA process to press for reforms that would decriminalise their activities.
In Ghana, chainsaw loggers produce more than 80% of all lumber, all of it illegally. The 100,000 chainsaw loggers support as many as a million people and make vital contributions to local economies. The loggers say their way of harvesting timber is more efficient and sustainable than the legal sawmill industry.
The Domestic Lumber Trade Association is a union that represents 25,000 domestic lumber traders, table-top machine operators, chainsaw operators and transporters. The union is urging the government to end the ban on chainsaw logging and issue official permits to control the activity instead. The government, however, wants to encourage loggers to stop using chainsaws and to switch to legal forms of low-tech milling, such as with mobile sawmills.
Ghana's VPA requires all lumber to be legal, including lumber produced for the domestic market. But with so much wood cut illegally with chainsaws, there is a risk that some could enter the export supply chain and undermine the VPA.
"We are looking to the VPA to help," said Patrick Agyei, secretary of the union's eastern region. "While we are illegal, the status of the VPA is shaky. We have been to Liberia where it is legalised, and to Guyana where the forests have been given to the communities. This is what we want."
Sources: Pearce, F. 2012. Forest Stands: How New EU Trade Laws Help Countries Protect Both Forests and Peoples. FERN, Brussels, Belgium. 24pp. [Download PDF]; Ghana News Agency. 2012. DOLTA calls on government to expedite action on VPA. 22 September 2012. [Read online]; GhanaWeb. 2014. Illegal chainsaw operators make $200m annually. 24 July 2014 [Read online]
Related sections of VPA Unpacked
Capacity4Development. 2013. Civil Society Shares Their Experience of the VPA Process at FLEGT Week 2013. [Read online]
Jeffree, M. 2014. FLEGT forest power to the people. Timber Trades Journal Online October 2014: 48–49.Pearce, F. 2012. Forest Stands: How New EU Trade Laws Help Countries Protect Both Forests and Peoples. FERN, Brussels, Belgium. 24pp. [Download PDF]