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becoming more similar to the traditional birch ply product supplied from Russia. Chinese exports of birch ply to the UK, a major consumer of the product, grew in 2023 but then substantially dropped in 2024. However, corresponding figures for the EU showed an increase in 2024. This was a “very worrying signal for the industry,” said Mr Lacis.
Other countries are also sending higher volumes of birch plywood into Europe, including Georgia, which claims it now has higher production rates. In the cases of Egypt and Uzbekistan there are no explanations. The share of illicit plywood in the EU
market is currently 16%, down from 19% in 2023 (worth €175m in turnover) and compared to 6% in 2022.
The claims from some exporting countries that they are sourcing birch raw material originating from the EU (Baltics / Latvia), has “no solid ground”, said Mr Lacis. Unfortunately, he added, documentary claims were being falsified, including one case where a Latvian forest owner found its documents were being falsely used in the supply chain.
False product and sourcing claims, he said, also related to product in Turkey and Kazakhstan.
“Due to the EC investigation, there is quite a stock of unsaleable Turkish and Kazakhstan origin plywood. Now we feel in some cases it has started to be marketed under EU producers’ trademarks. These are worrying signals for consumers in the market.” Mr Lacis said the lower prices of illicit plywood gave an unfair advantage versus its competition. He also reported a further 5% drop of birch plywood production recorded in Q1 2024, with Europe pushing down capacity utilisation close to 80% – leading to a risk of job losses.
European birch producers are also forced to spend their resources to defend fair trade instead of investing in the future. Yuriy Rudyuk, partner of Van Bael & Bellis, addressed the webinar to summarise enforcement action against sanctioned plywood.
Mr Rudyuk said the first sanctions after the outbreak of war were announced in April 2022, before a complete ban was brought in during July 2022.
The action had very strong support from the leading EU birch ply producers. The EU’s Anti-Circumvention investigation expanded the original AD duty for Russia (15.8% ad valorem) onto all imports from Kazakhstan and Turkey, irrespective of producer and origin. Imports registered during the investigation (August 2023 to May 2024) were also subjected to retroactive collection of 15.8% duty from European importers, estimated as a total of almost €10m.
Imports from both countries significantly reduced following the investigation and Commission’s findings. In Poland alone (the largest importer in the EU), it is 47% lower in January-August 2024 vs same period in 2023. The new European regulation (EU) 2024/1745 of June 24, 2024 brought a new circumvention clause, strictly prohibiting EU operators from importing products once they are aware that the wood products may have Russian origin.
In terms of liabilities for sanctions, the situation varies among EU member states and can be administrative, criminal or both. Administrative liabilities include fines up to
€10m. Possible confiscation of the object of the breach also exists.
In the criminal arena, prison sentences vary and can reach six years and, in addition, a criminal fine up to €900,000. Mr Rudyuk shared an example from Rotterdam District Court in April 2024 where Dutch trader Rowood was found to fail to comply with the information obligation incumbent on it regarding the origin of the wood and the deliveries of birch plywood manufactured. Rowood has disagreed with the court decision and filed an appeal, currently pending before the Court of Appeals in The Hague.
Another case was Latvia’s National Forest Service’s (VMD) first public enforcement of EUTR in May 2024 where VMD imposed a €10,000 fine and a trade ban for one year against an undisclosed company due to its non-compliance with EUTR for supply of birch plywood from Turkey.
The penalty has been imposed for due diligence checks that do not comply with the EUTR requirements, allowing for the risk of placing timber originating in Russia or Belarus on the market.
Another case shared at the webinar was a Gdansk District Prosecutor’s Office and other authorities raid of one of the largest traders in Poland of birch plywood from Kazakhstan (July 2024). During the raid, the authorities seized plywood, computers, servers and vehicles belonging to the trader and samples of plywood were taken for further testing. The investigation is currently pending. Under the harmonised liabilities under the EU Directive (EU) 2024/1226 of 24, the EC is now requesting all member states to introduce criminal liabilities for sanctions violations, with prison sentences of up to five years in some cases.
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The result of all the work, Mr Rudyuk says, is that EU member states are more vigilant and active in their enforcement work under the EUTR.
VERIFICATION OF TIMBER ORIGIN Dr Victor Deklerck, director of science at World Forest ID presented an innovative
model for identifying birch plywood from Russia or Belarus to webinar attendees. Species reference data had already been available, but evidence of harvest/origin was less known. World Forest ID, a US non-profit organisation that acts as a central data hub and facilitator to a growing global consortium of public scientific institutes, is using data to make geo-spatial models so it can answer questions of where products came from and if product claims are valid.
It is effectively creating unique non- proprietary reference material for enforcement of environmental laws, working with enforcement agencies and government scientists to establish protocols and norms for use of science in enforcement.
Its most high-profile project is in eastern European conflict timber – with an ambition to create the most comprehensive dataset possible to identify stolen Ukrainian timber and/or Russian and Belarusian conflict timber in trade.
The UK government tasked it to build a major reference data set of eastern European timber, mainly focused on birch and specifically plywood. World Forest ID collected over 4,500 samples in six months to build the database, with samples sent to labs for the following tests – stable isotope ratio analysis (SIRA) and trace element analysis (TEA).
All organic material has a signature of isotopic values that we can measure. The isotopic value changes depending on where the tree grows, so a tree growing in Latvia will have a completely different signal from a tree growing in Russia.
SIRA AND TEA TESTS
SIRA measures isotopes, which occur in all organic material and are affected by environmental factors such as humidity, rainfall, temperature, and soil composition. The quantity of these elements in a given species and location then creates a unique “fingerprint”.
TEA enables scientists to measure small quantities of chemical elements in a sample. Trace elements are ubiquitous in the environment and different plant species absorb different amounts of these elements from the soil. The quantity of these elements in a given species and location then creates a unique “fingerprint” World Forest ID used its model to test a birch plywood claimed to be from south Estonia. It measured the sample and compared it to reference data. It then was able to say the claim was false.
“These are the models we have used in Belgium to identify Russian timber and used in enforcement actions,” said Dr Deklerck. ■
www.ttjonline.com | November/December 2024 | TTJ
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