F1ANNEX IPRODUCT COVERAGE

The list in this Annex refers to the Harmonised Commodity Description and Coding System established by the International Convention on the Harmonised Commodity Description and Coding System of the World Customs Union.

F1ANNEX IATHE HARMONISED COMMODITY CODES FOR TIMBER AND TIMBER PRODUCTS COVERED UNDER THE FLEGT LICENSING SCHEME

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F1ANNEX IBTHE HARMONISED COMMODITY CODES FOR TIMBER PROHIBITED FROM EXPORT UNDER INDONESIAN LAW

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F1ANNEX IILEGALITY DEFINITION

F1INTRODUCTION

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F1LEGALITY STANDARD 1: THE STANDARDS FOR CONCESSIONS WITHIN PRODUCTION FOREST ZONES

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F1LEGALITY STANDARD 2: THE STANDARD FOR COMMUNITY PLANTATION FORESTS AND COMMUNITY FORESTS WITHIN PRODUCTION FOREST ZONES

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F1LEGALITY STANDARD 3: THE STANDARD FOR PRIVATELY-OWNED FORESTS

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F1LEGALITY STANDARD 4: THE STANDARD FOR TIMBER UTILISATION RIGHTS WITHIN NON-FOREST ZONES OR FROM CONVERTIBLE PRODUCTION FOREST

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F1LEGALITY STANDARD 5: THE STANDARD FOR PRIMARY AND DOWNSTREAM FOREST-BASED INDUSTRIES AND TRADERS

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F1ANNEX VINDONESIAN TIMBER LEGALITY ASSURANCE SYSTEM

F11.Introduction

Objective: To provide assurance that harvesting, transportation, processing and selling of round logs and processed timber products comply with all relevant Indonesian laws and regulations.

Known for its pioneering role in combating illegal logging and the trade in illegally harvested timber and timber products, Indonesia hosted the East Asia Ministerial Conference on Forest Law Enforcement and Governance (FLEG) in Bali, in September 2001, which resulted in the Declaration on Forest Law Enforcement and Governance (Bali Declaration). Since then, Indonesia has continued to be at the forefront of international cooperation in combating illegal logging and associated trade.

As part of international efforts to address these issues, a growing number of consumer countries have committed themselves to take measures to prevent trade in illegal timber on their markets, whilst producer countries have committed themselves to provide a mechanism assuring the legality of their timber products. It is important to establish a credible system to guarantee the legality of harvesting, transportation, processing and trade of timber and processed timber products.

The Indonesian Timber Legality Assurance System (TLAS) provides assurance that timber and timber products produced and processed in Indonesia come from legal sources and are in full compliance with relevant Indonesian laws and regulations, as verified by independent auditing and monitored by civil society.

F11.1.Indonesian laws and regulations as foundation of the TLAS

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F11.2.Development of the TLAS: a multi-stakeholder process

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F12.Scope of the TLAS

Indonesian production forest resources can broadly be divided into two types of ownership: state forests and privately owned forests/lands. State forests consist of production forests for long-term sustainable timber production under a variety of permit types and forest areas that can be converted for non-forestry purposes such as for settlement or agricultural plantations. The application of TLAS on state forests and privately owned forests/lands is set out in Annex II.

The TLAS covers timber and timber products from all permit types as well as the operations of all timber traders, downstream processors, exporters and importers.

The TLAS covers timber products destined for domestic and international markets. All Indonesian producers, processors, and traders will be verified for legality, including those supplying the domestic market.

The TLAS requires that imported timber and timber products are cleared at customs and comply with Indonesia's import regulations. These regulations require that imported timber and timber products must be accompanied by documents and other pieces of evidence providing assurance of the legality of the timber in its country of harvest. All timber and timber products imported into Indonesia must be included in a supply chain whose controls comply fully with all relevant Indonesian regulations.

Certain timber products may contain recycled materials. Specific legality requirements for recycled timber are described in the legality standards and TLAS Guidelines.

Impounded timber may be sold for use exclusively on the domestic market, with the exception of impounded timber that was harvested in conservation forest, which must be destroyed. Any industry receiving impounded timber must implement measures to segregate that timber from other supplies and duly inform a conformity assessment body (CAB), which will promptly conduct a special audit to ensure that this timber does not enter the export supply chain. No impounded timber may be covered by an export licence.

Changes in the procedures for utilization and/or administration of timber from Customary Forests, to address implementation of Constitutional Court Decision (MK) No 35/PUU-X/2012, shall be introduced after the adoption of related implementing legislation.

Timber and timber products in transit are strictly kept outside the gazetted Principal Customs Areas (PCA). Thus, such transit timber does not enter the PCA and furthermore will not be included in the timber supply chains of Indonesia. No transit timber will be issued with an export licence.

F12.1.TLAS legality standards

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F13.Control of the Timber Supply Chain

The permit holder (in the case of concessions) or landowner (in the case of private land) or company (in the case of traders, processors and exporters) shall demonstrate that every node of their supply chain is controlled and documented as set out in the Minister for Forestry Regulations P.30/Menhut-II/2012, P.41/Menhut-II/2014 and P.42/Menhut-II/2014 (hereinafter referred to as the Regulations). These Regulations require provincial and district forestry officials to undertake field verification and validate the documents which are submitted by permit holders, landowners, or processors at each node of the supply chain.

The key documents for operational controls at each point in the supply chain are summarised in Diagram 1.

All consignments in a supply chain must be accompanied by relevant transport documents indicating whether the material is covered by a valid SVLK certificate, or declared legal by use of Suppliers' Declaration of Conformity (SDoC), or originates from impounded sources. The owner or custodian of any consignment of timber or timber products at each point in a supply chain must record whether that consignment is SVLK certified, declared legal by use of Suppliers' Declaration of Conformity, or from an impounded source. If a consignment includes any impounded timber, the owner or custodian of that consignment must apply an effective system to segregate timber or timber products from verified legal sources, from impounded timber or timber products, and maintain records that distinguish between these sources.

Operators in the supply chain are required to keep complete records on received, stored, processed and delivered timber and timber products. These records must be sufficient to enable subsequent reconciliation of quantitative data between and within nodes of the supply chain. Such data shall be made available for provincial and district forestry officials to carry out reconciliation. Main activities and procedures, including reconciliation, for each stage of the supply chain and the role of the CABs in assessing the integrity of the supply chain, are further explained in the Appendix of this Annex.

F1Diagram 1Control of the supply chain which shows the required key documents at each point in the supply chain where data reconciliation takes place

F14.Institutional set-up for Legality Verification and Export Licensing

F14.1.Introduction

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F14.2.Conformity assessment bodies and Licencing Authorities

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F14.3.Accreditation body

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F14.4.Auditees

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F14.5.Independent monitor

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F14.6.The Government

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F15.Legality Verification

F15.1.Introduction

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F15.2.Legality verification process by CABs

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F15.3.Legality verification using Supplier's Declaration of Conformity (SDoC) and internal checks

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F15.4.Legality verification of imported timber and timber products

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F15.5.Government responsibility for enforcement

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F16.FLEGT Licensing

The Indonesian export licence for legal timber products is known as the “V-Legal Document”. This is an export licence that provides evidence that the timber products exported meet the requirements of the Indonesian legality standard as set out in Annex II and were sourced from a supply chain with adequate controls against the inflow of timber from sources not verified as legal. The V-Legal Document is issued by the LVs who act as Licensing Authorities (LA) and will be used as a FLEGT licence for shipments to the Union once the parties have agreed to start the FLEGT licensing scheme.

The procedures for issuing FLEGT licences/V-Legal Documents are provided in the TLAS Guidelines.

The Ministry of Forestry has established a Licence Information Unit to maintain an electronic database with copies of all V-Legal Documents/FLEGT licences and LA non-compliance reports. The Licence Information Unit will grant on-line access to its database to the competent authorities of the Union. In the event of an inquiry concerning the authenticity, completeness, and validity of a specific FLEGT licence, the competent authority in the Union will be able to verify the licence information by using the SILK on-line database. For further information, the competent authorities of the Union can contact the Licence Information Unit, which will communicate with the relevant LA if needed.

The V-Legal Document/FLEGT licence is issued at the point at which the consignment is consolidated prior to export. The procedure is as follows:

1. 6.1.

   The V-Legal Document/FLEGT licence is issued by the LA, which holds a contract with the exporter, for the consignment of timber products to be exported.

2. 6.2.

   The exporter's internal traceability system shall provide evidence on the legality of timber for export licensing. The previous stage of the supply chain shall be included in the exporter's internal traceability system.

3. 6.3.

   For a V-Legal Document/FLEGT licence to be issued, all suppliers in the exporter's supply chain that make up the consignment must have been covered by a valid legality or SFM certificate or a SDoC.

4. 6.4.

   To obtain a V-Legal Document/FLEGT licence, an operator must be a registered exporter (an ETPIK holder) who possesses a valid legality certificate. The ETPIK holder submits a letter of application to the LA and attaches the following documents to demonstrate that the timber raw materials in the product originate only from verified legal sources (SVLK certified or SDoC declared):

   1. 6.4.1.

      A summary of the transport documents for all timber/raw materials received by the factory since the last audit (up to max 12 months); and

   2. 6.4.2.

      Summaries of Timber/Raw Material Balance-Sheet Reports and Processed Timber Balance-Sheet Reports since the last audit (up to max 12 months).

5. 6.5.

   The LA then carries out the following verification steps:

   1. 6.5.1.

      Verification of the validity of the operator's legality certificate and ETPIK registration, using LA's own database as well as SILK.

   2. 6.5.2.

      Data reconciliation based on the summaries of the transport documents, Timber/Raw Material Balance-Sheet Report, and Processed Timber Balance-Sheet Report;

   3. 6.5.3.

      Control of the recovery rate(s) for each type of product (primary industry only), based on analysis of the Timber/Raw Material Balance-Sheet Report and Processed Timber Balance-Sheet Report.

   4. 6.5.4.

      Where necessary, a field visit may be conducted by the LA after data reconciliation so as to ensure consistency with the information to be specified in the V-Legal Document/FLEGT licence. This may be done through export consignments sample checking and inspecting the factory operation or timber depot, and record-keeping.

6. 6.6.

   Result of verification:

   1. 6.6.1.

      If an ETPIK holder complies with legality and supply chain requirements, the LA issues a V-Legal Document/FLEGT licence in the format presented in Annex IV;

   2. 6.6.2.

      An ETPIK holder meeting the above mentioned requirements may use conformity marking (V-Legal Label) on the products and/or packaging. National Guidelines on the use of conformity marking are described in the TLAS Guidelines.

   3. 6.6.3.

      If an ETPIK holder does not comply with the legality and supply chain requirements, LA will issue a non-compliance report instead of V-Legal Document/FLEGT licence. The non-compliance report halts the movement of the related timber and/or timber products.

   4. 6.6.4.

      In case a shipment changes configuration before leaving the port of export (e.g. change of destination, volume, species as defined in the TLAS Guidelines), the exporter must request the Licensing Authority to cancel the initial export license and issue new licence(s). The Licensing Authority must inform LIU of all cancelled export licences.

   5. 6.6.5.

      In case of misuse or falsification of legality certificates and/or export licences by an operator, a sanction shall be imposed by the Ministry of Forestry as defined in applicable regulations.

7. 6.7.

   The LA shall:

   1. 6.7.1.

      Forward a copy of a V-Legal Document/FLEGT licence or non-compliance report to the Ministry of Forestry within twenty four hours from the time the decision was taken;

   2. 6.7.2.

      Submit a comprehensive report and a public summary report outlining the number of V-Legal Documents/FLEGT licence issued as well as the number and type of non-compliances detected to the Ministry of Forestry once every three months with copies to the Ministry of Trade and Ministry of Industry.

F17.Monitoring

The Indonesian TLAS includes civil society monitoring (Independent Monitoring). To make the system even more robust for a FLEGT-VPA, a Period Evaluation (PE) component is added.

IM is carried out by civil society to assess compliance of the operators, LPs, LV, and LAs with the Indonesian TLAS requirements including accreditation standards and Guidelines. Civil society is defined in this context as Indonesian legal entities including NGOs, communities, and individual Indonesian citizens.

The objective of PE is to provide independent assurance that the Indonesian TLAS is functioning as described, thereby enhancing the credibility of the FLEGT licences issued. PE makes use of the findings and recommendations of IM. Terms of Reference for PE are set out in Annex VI.

F1AppendixControl of the Supply Chain

As described in Annex V, all along the different supply chains, operators' declarations and record keeping (e.g. transport documents and balance-sheet reports) must indicate whether timber or timber products are SVLK certified, declared legal by use of Suppliers' Declaration of Conformity (SDoC), or from an impounded source.

F11.DESCRIPTION OF THE OPERATIONAL CONTROL OF THE SUPPLY CHAIN FOR TIMBER FROM STATE-OWNED FORESTS

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F12.DESCRIPTION OF THE OPERATIONAL CONTROL OF SUPPLY CHAINS OF TIMBER FROM FOR PRIVATELY OWNED FORESTS/LANDS

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F13.DESCRIPTION OF THE OPERATIONAL CONTROL OF TIMBER SUPPLY CHAINS FOR DEPOTS AND INDUSTRY

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F14.EXPORT

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