Policy options for improved integration of domestic timber markets under the voluntary partnership agreement (VPA) regime in Cameroon

Cerutti P.O. et al., 'Policy options for improved integration of domestic timber markets under the voluntary partnership agreement (VPA) regime in Cameroon', CIFOR Infobrief no. 83, Center for International Forestry Research (CIFOR), 2014

Key PointsThe Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, launched in 2003, is the European Unions (EU) response to the global fight against illegal logging. In particular, FLEGT aims at reducing trade in illegal timber between the EU and timber producer partner countries.FLEGT operates through two major instruments: bilateral trade agreements known as voluntary partnership agreements (VPAs) that are signed with willing producer countries, and the European Union Timber Regulation (EUTR), which came into force in March 2013. The EUTR mandates EU importers to exert due diligence in their sourcing of timber from abroad to exclude illegal supplies.To date, six countries have signed VPAs. Among them, five have committed to apply VPA provisions regarding legality verification not only to timber imported to Europe, but also to timber traded on the domestic market in signatory producer countries. This means that timber harvested and traded on the domestic market will be regulated by national VPA licensing schemes (the so-called Timber Legality Assurance System, (TLAS)).Pro-Formal results indicate that Cameroon is characterized by a large, vibrant and largely informal domestic timber sector, which supports the livelihoods of thousands of local forest users including small-scale farmers, indigenous communities, chain-saw millers, traders and service providers.The domestic timber sector is characterized by the activities of smallholders, chain-saw millers and traders who rarely own a legal harvesting permit and extract and process small quantities of trees with chain or mobile saws. The resulting low-quality timber is traded in domestic markets or across the borders of neighboring countries (e.g. Chad and Nigeria), with little formal taxation.Informal taxation, conversely, is pervasive along the production chain. Results indicate that informal operators pay about 9% of their profit margins, or about EUR 6 million per annum, in bribes to representatives of ministries, local police, the military and customs officials.By signing the VPA, Cameroon has committed to undertake broad governance reforms of the entire forestry sector. Existing laws are not geared to sustaining a healthy, small-scale, domestic timber market. Pro-Formal findings indicate a need to improve and simplify access to the resource; to develop and adopt specific fiscal regimes for the domestic timber sector (such as royalty rates, processing, transport and marketing levies); to improve access to credit on favorable terms for small-scale operators; to create incentives to comply with the law; and to improve flows of information to smaller operators.In Cameroon, as in other VPA countries, local forest users and traders have been largely absent from in-country VPA negotiations. This reflects their large numbers, distribution over a vast territory, poor organizational capacity, as well as the tensions that often exist between the central governments stated willingness to formalize them, and the rent-seeking behavior of decentralized officials. Hence, before reforms are initiated, official and periodic discussions need to be set up for chain-saw millers and traders to discuss their specific needs, customary governance systems and the potential challenges and expectations of formalization.Similarly, the engagement of other ministries, in particular ministries of finance, agriculture and territorial administration, must be sustained as it is necessary for a meaningful national discussion of the implications (e.g. financial and tenurial) for operators, especially small-scale ones, of a functional VPA. Because of technically and politically induced delays, such discussion has not been systematic. This could engender implementation failures, if the advantages of the system are not evaluated against its disadvantages, from inception (e.g. it costs to operators)