China's New Approach in Updated Forest Law Could Support Pandemic-Fighting Needs

Washington D.C. — The world is now focused on fighting a common enemy: COVID-19. For most of us, this is an unprecedented moment of global struggle. The first hit nation, China, has seemingly emerged from the most difficult stage and is forging ahead with some measures to address drivers of pandemic risks. Notably, following indications that the outbreak could have been related to wild animal markets, the Chinese government passed a new regulation banning breeding of and trade in most terrestrial wild animals for consumption as food and has committed to cracking down on the illegal wildlife trade. Although this ban did not go far enough, failing to address wildlife trade elements with inherent risks to biodiversity and human health, this policy change might indicate a newly precautionary approach to commercial exploitation of wildlife.

While these new restrictions arose from concerns around one root cause of pandemics, they do not tackle another key contributing factor—deforestation and forest degradation. There has been a growing body of scientific literature that clearly demonstrates that when deforestation rises, so do lethal outbreaks of disease in humans. The recent adoption of Article 65 of the revised Chinese Forest Law though is a major opportunity for China to support the protection of global forests, the global climate and global health.

Article 65 proclaims a nationwide ban on buying, transporting, and/or processing illegally sourced timber. It marks the first time that “illegally sourced timber” is highlighted since the Forest Law’s inception in 1984. The law came into force on July 1, 2020 and China’s National Forest and Grassland Administration (NFGA) is looking into amending the outdated Implementing Rules of the Forest Law that will detail the enforcement plan.

To better understand the origin of this major shift and what could be the next punch to a deadly pandemic like COVID-19, let’s take a closer look at the exact wording of Article 65 and examine how this version evolved from previous versions of the Law and through different drafts of this latest round of amendment.

The final text of Article 65 reads (unofficial translation): “Timber operating and processing enterprises shall establish the input and output ledger for raw materials and products. No entity or individual may purchase, process, or transport timber that is knowingly sourced illegally.”

Legality: a core element of sustainable forest governance

According to the official explanation, the main purpose for this revision is to establish a modern forest governance system with an aim to promote sustainable development. Article 65 is located in section VI “Forest Management and Administration,” which lays the foundation of a sustainable forest governance system. By including an Article to ensure that timber is sourced legally, the revised Forest Law acknowledges that timber legality is a crucial component of sustainable forest governance.

A new supply chain approach with responsibilities at each level

Looking back at the previous three versions of the Forest Law the (1984 original, and two revisions in 1998 and 2009), the 2019 revision significantly expands the scope of coverage. While all previous versions almost exclusively focused on forest protection and timber harvesting, the 2019 revision aims to cover components of the full timber supply chain. In addition to illegal activities related to timber logging, permitting, and transportation, Article 65 highlights “timber operational and processing enterprises” which for the first time covers downstream actors in the – usually complex – industrial timber chains. For instance, plywood and furniture manufacturers now must ensure their timber be sourced legally. Accordingly, Article 65 also mandates extended liability of relevant stakeholders and mandates that they perform their own due diligence checks on timber source legality. In addition to logging entities, the revised Forest Law covers all relevant players in the industrial chain, including those in the timber transporting and processing businesses.

Due diligence requirement

Article 65 already highlights one important measure that should be a core element of a future due diligence package. As mandated by the Article, all timber operating and processing enterprises are required to establish and maintain an updated input and output ledger for raw materials and products. If these ledgers are well kept at every point of transaction, they will serve as key tools for tracing the sources of certain timber products. If combined with other key due diligence aspects, like methodical legality risk assessment and mitigation that includes knowledge of the origin and traceability, the new Chinese Forest Law has what it needs to tackle the illegal drivers of deforestation and forest degradation around the globe.

Promoting inclusive liability

The specific wording of Article 65 has changed over the course of a few revised drafts. Earlier versions of the text were phrased as one continuous sentence in Chinese, which meant that the only liable entities were timber operating and processing entities. However, by separating the Article into two sentences and adding the phrase “no entity or individual may” at the beginning of the second sentence, the final version of Article 65 indicates that the responsibility of checking source legality expands beyond timber operators and processors. By default, timber-trading entities that import from the international market now should be covered. Prohibiting the trade of illegally sourced timber is an essential step to support sustainable governance of forests around the world and help prevent future pandemic threats. To fully seize this rare opportunity, we recommend Chinese authorities to take specific steps to support, enforce, and safeguard Article 65:

• First, in order to facilitate an effective cross-administration implementation it is important for Chinese authorities to make perfectly clear that Article 65 also applies to imported timber;
  
• Release an official implementation plan for the new Forest Law, which lays out the mechanism to enforce Article 65;
  
• Charge the relevant administrative agencies, including the NFGA, the Ministry of Commerce (MOFCOM), and the General Administration of Customs (GAC), with forming a cross-agency task force to actively enforce Article 65 and its implementation plan;
  
• Enact an administrative measure exclusively focusing on the management of timber imports, detailing due diligence requirements for relevant stakeholders.