The Environmental Crime Crisis

Wood and wood products from tropical countries* to Europe and United States

E UROPEAN U NION

86%

U NITED S TATES

Plywood

Paper Pulp Chip particles Newsprint

Particle board Industrial roundwood

Sawnwood

62%

0

5 000

10 000

15 000

20 000

Thousands cubic metres of roundwood equivalent, 2010

* Selected tropical countries: Brazil, Chile, China, Indonesia, Philippines, South Africa, and Uruguay

Source: FAOSTAT; EUROSTAT

Figure 11: Wood and wood products from tropical countries to Europe and United States.

For pulp and paper production, networks of shell companies and plantations are actively used to by-pass logging mora- toriums under the pretext of agricultural or palm-oil invest- ments. Holding companies in tax havens and shell compa- nies are actively used to deliberately and systematically bypass logging moratoriums for alleged plantation devel- opment and hide the real ownership of plantations to avoid prosecution. Often these plantations or agricultural develop- ment are never established, or they are declared bankrupt following clearing. This results in significant loss of revenue to governments. Perpetrators use legal loopholes to conduct tax avoidance, or simply commit straightforward illegal tax evasion. Plantations are also used as cover for larger networks of forest logging roads. The road networks are used to funnel illegal timber through plantations, or to ship wood and pulp via legal plantations in order to re-classify pulp or wood as legal production. 122 China is now the world’s largest consumer of tropical timber (ITTO 2011), and increasing. Significant efforts are made in China to establish plantations, however China’s wood industry depends on imports for almost 50% of its timber supply. Sourcing of materials for this large and growing market is crucial to the long-term sustainability of the industry in China and of forest resources and wood indus- tries around the globe. 124

The scope of illegal logging can be deduced from assessing the amount of tropical wood out of all the wood products imported to the EU and US. About 33.5 million m 3 round wood equivalent (RWE), or 9–25%, originates in tropical countries, where illegal logging is widespread. According to data from EUROSTAT, FAO and ITTO for 2010, EU imports 133–385 million m 3 RWE of wood products including paper and pulp. The US imports about 72 million m 3 . About 59 per cent of the imports to the EU and the US are paper and pulp. From tropical countries the relative amount of paper and pulp is higher, at 62% for US and 86% of imports to the EU. About 60 million tons of paper and pulp (RWE of 186 million m 3 ) was imported to the US and the EU combined in 2010. EU imports 2/3 of the paper, and US and EU import the same amount of pulp. 15% of this is sourced in tropical countries. Paper and pulp are interesting products from a transnational organized crime perspective because once it has been processed it takes scientific analysis of fibre samples to determine its origins, in contrast to roundwood where species and origins can more easily be identified. This makes laundering of parts of the supply chain effective, and retracing of the product imprac- tical and expensive. The wood used to produce paper and pulp is often mostly or partly declared falsely as plantation wood. 125

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