WASHINGTON--(BUSINESS WIRE)--Draft documents published today set the terms for a new trade agreement between the European Union (EU) and Japan (JEFTA) that, in its current form, would likely result in increased illegal logging and timber smuggling, including within Europe’s last remaining virgin forests. The documents, posted to the website trade-leaks.org by Greenpeace, indicate the JEFTA could be the EU’s biggest ever trade deal, covering a trade volume twice as large as the recent EU-Canada deal, known as CETA. An expert report commissioned by the European Commission (EC) warns about JEFTA’s adverse impacts on forests.

“New trade deals bring great risks for lowering environmental standards, unless they contain strict safeguards,” said Alexander von Bismarck, Executive Director of the Environmental Investigation Agency (EIA). “The JEFTA is extremely weak in this regard, and threatens to derail the global effort against illegal timber trade by placing Japan’s ineffective voluntary measures on par with the mandatory EU Timber Regulation.”

Illegal logging and associated trade is the world’s third largest transnational crime after counterfeiting and drug trafficking, and on par with human trafficking, generating estimated criminal proceeds of up to 157 billion dollars annually.

Japan is the world’s fourth largest importer of wood products, importing millions of cubic meters every year from countries with high rates of illegal logging, including Malaysia, Indonesia, and Russia. While the EU, the United States, and Australia have mandatory laws prohibiting the imports of illegally harvested timber and requiring importers to trace their wood back to the source of harvest, Japan has no comparable law. Japan’s new Clean Wood Act, which took effect in May 2017, comprises only a voluntary registration system for companies and lacks penalties for violations.

In a 2016 report, EIA revealed how Japan’s indiscriminate sourcing practices are already fueling illegal logging within the EU itself. Based on undercover investigations and trade analysis, EIA documented how an Austrian timber company has for over a decade incentivized illegal logging in Romania’s Carpathian Mountains, generating hundreds of millions of Euros in profits through exports of lumber, primarily to Japan for housing construction. The Forest Stewardship Council (FSC) recently disassociated from the Austrian company, Holzindustrie Schweighofer, citing “clear and convincing evidence” of illegal timber sourcing. Many of Schweighofer’s largest European buyers, including Hornbach, Leroy Merlin, SPAR and Brico Depot have committed to stop selling Schweighofer products. However, the company’s Japanese buyers continue to prefer Schweighofer’s timber to more expensive Swedish or Finnish lumber.

The EC report notes Japan’s role in undermining Europe’s efforts to establish a Voluntary Partnership Agreement (VPA) with Malaysia, due to Japan’s extensive sourcing of high-risk timber from Malaysia’s Sarawak province. According to the assessment, “Japan’s failure so far to effectively control its imports of illegal timber has arguably had an inhibiting effect on the negotiations between the EU and Malaysia on a VPA.”

The leaked draft JEFTA lacks any binding obligations for Japan to change its wood sourcing practices, since it contains only vague promises to “encourage” conservation and legal timber trade, to “contribute to illegal logging and related trade” and “exchange information.”

The EC assessment notes with concern that JEFTA would put European companies at a disadvantage vis-à-vis the Japanese counterparts in the global market place. Malaysian companies, which export large amounts of timber to Japan, “see no reason to place potential restrictions on their own trade when their major export market requires no such controls. Any expansion of Japan’s timber imports consequent upon the FTA could serve to exacerbate this situation.”

“The European Commission’s own experts concluded that JEFTA will increase trade in illegally sourced timber, with severe consequences for the world’s forests and for legitimate forest producers in the EU,” said von Bismarck. “Japan’s import laws need to be brought in line with international standards – not the other way around.”