A Major Liability

In 2016, PNG provided 29% of China’s tropical log imports, making it the country’s single largest supplier. But our investigation reveals how a large number of logging operations in Papua New Guinea (PNG) violate the law despite holding government-issued permits.

China is the world’s largest consumer and manufacturer of wood and wood products. Yet it has no regulation to keep illegal timber from entering its borders.

The risk of illegal timber from countries like PNG flooding China’s markets has the potential to damage its reputation and major trade relationships as buyers in the U.S. and EU, which ban illegal timber imports, take action to protect themselves.

This trade has profound implications for PNG as well. 70% of the country is covered by forest ecosystems that are home to some of the world’s rarest plants and animals. The forest is also central to the cultural traditions and livelihoods of PNG’s eight million people. By continuing to import tropical timber from PNG on such a scale, China is driving the destruction of a vulnerable and ancient forest.

In A Major Liability,  we draw on satellite imagery to show hundreds of apparent violations of the country’s Forestry Act in major logging operations – all of which hold government permits and all of which continue to export timber. 

On paper, the legal system in PNG guarantees that indigenous Papua New Guineans have control over their forests. In reality, however, the government is responsible for a catastrophic failure to uphold these laws, and the forest sector has been plagued for decades by allegations of corruption and lawbreaking. 

This forest and the lives it supports are under threat, with deforestation rate in PNG unusually high in recent years – in the past 5 years alone, 640,000 hectares of forest were lost.  And as the largest importer of timber from PNG, China’s failure to introduce regulations to screen timber entering the country raises concerns that it is fuelling illegality in PNG’s forestry sector and facilitating the entrance of illegal wood into its market.

Recommendations

• The Chinese government should put in place mandatory measures requiring all timber importers to carry out due diligence to ensure they do not import timber produced in violation of source country laws. The measures should require importers to go beyond official documents as proof of legality and require importers to investigate and verify the conditions under which the timber was produced. At present, such due diligence would mean not buying timber from any of the operations named in this report. The measures should also require companies to publish their due diligence policy and procedures.
  
• The Chinese government should expand its national Green Supply Chain policies to include requirement on the sourcing of timber and other raw materials abroad, by establishing mandatory requirement for these materials to be sourced legally.
  

The PNG government should immediately place a moratorium on issuing all new logging and forest clearance permits.

• The PNG government should place a moratorium on all existing logging operations and review the issuance of their permits and the operations themselves for legal violations. Permits found to have been issued illegally should be cancelled.
  
• The PNG Forest Authority should thoroughly and regularly oversee the operations of all logging and clearance operations and ensure that companies operate according to the law. 
  
• In conjunction with the PNG Forest Authority, the PNG judiciary should hold those responsible for breaking the law to account, by investigating, prosecuting, and fining companies, and/or fining or jailing company directors, officers, and government officials involved.
  
• The PNG government should also attempt to reclaim the proceeds of any timber deemed to have been cut illegally and establish a mechanism to return these funds to affected landowners.
  
• The PNG Forest Authority should create a publicly accessible electronic system of documents related to the issuance and oversight of logging and clearance permits and operations, including verification of landowner consent and findings from the agency’s checks on operations. This will allow landowners to monitor how their own land is being used and challenge any unauthorized uses, and also facilitate thorough due diligence by timber buyers.
  
• PNG’s new Timber Legality Standard should include clear verifiers for the free, prior, and informed consent of landowners for any logging or forest conversion projects taking place on their land.