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The Lie Behind the Ply

European Consumers of Tropical Plywood have been the Unwitting Drivers of Threatened Forest Degradation

Washington, D.C.— In an unprecedented investigation that connects threatened forests of Solomon Islands, China’s timber manufacturing hubs, and European importers, the Environmental Investigation Agency (EIA-US) reveals today that several European companies appear to have imported thousands of tons of tropical-faced plywood, at high risk of containing illegal wood and in apparent violation of European law, between 2016 and 2018. The findings expose the role of Jiangsu High Hope Arser (“Arser”), the largest Chinese plywood exporter, and what appears to be a fraud of over 100,000 tons of Forest Stewardship Council (FSC)-certified products. EIA found that systemic lack of transparency in the global supply chain for tropical-faced plywood lies at the heart of the problem.

Driven by recovering construction activity worldwide, the global market for plywood is booming. It is projected to reach 223.4 million cubic meters annually by 2022. European countries play an important role in the global plywood market. In 2018 alone, European Union (EU) countries imported US$4.7 billion worth of plywood, of which the largest share came from China. For the past decade, plywood has been China’s second largest wood product export.

Arser, the plywood manufacturer at the heart of the investigation and a state-owned foreign trade enterprise, claimed for years to its European clients that all the pencil cedar (Palaquium spp.) on its plywood came exclusively from the only FSC-certified concession in Solomon Islands, managed by Kolombangara Forest Products Limited (KFPL).

After multiple years of investigation, EIA-US concluded that the volume of FSC-certified pencil cedar-faced plywood sold by Arser to its European customers was an estimated 20 times higher than the quantity of plywood that can be manufactured from the limited volume of pencil cedar logs produced and exported out of KFPL’s concession. According to EIA’s estimate, over 95 percent of the volume imported by Arser’s European customers between 2016 and 2018 likely did not come from the Kolombangara concession as claimed, but from other areas, most likely Papua New Guinea and Solomon Islands where illegal logging is rampant, and possibly including the buffer zone of the threatened United Nations Educational, Scientific and Cultural Organization (UNESCO) natural World Heritage site, Rennell Island. When contacted for comment, Arser stated that during the years 2016-2018, it “exported some volume of pencil cedar faced plywood, but far less than 1000 containers/year.” Arser did not dispute EIA’s statement that it had inflated pencil cedar volumes.

Several European importers told EIA-US investigators that they were aware of the mass balance gap, falsification of documents, and FSC fraud widespread in China. Under the European Union Timber Regulation (and now under United Kingdom Timber Regulation), if identified risks of illegality remain greater than negligible, the importers should not place the timber products on the EU (and now UK) market.

Lisa Handy, Director of Forests Campaign at EIA-US, said: “Our investigation shows that the plywood sector urgently needs radical supply chain transparency, if we don’t want to lose the positive results of a decade of demand-side laws against illegal timber trade.”

Since 2019, EIA-US has filed multiple complaints with EUTR competent authorities in Belgium, the Netherlands, and the UK. In September 2020, Dutch authorities carried out an initial investigation and ordered Sakol Nederland B.V. to comply with EUTR. To-date, results from none of the final investigations have been made public. Sakol did not respond to an opportunity to comment.

In February 2020, an Arser representative stated in writing to EIA-US that the company had ceased importing tropical logs as of February 2020 and that “all the faces on plywood exported to Europe by Arser were made of legally traceable FSC 100% certified logs.”

In January 2021, FSC suspended and terminated several certificates associated with Arser, after a multi-year investigation found the company had inflated volumes of certified wood and were selling it as FSC-certified into European market.

Lisa Handy said: “Specific investigations by authorities in Europe and FSC’s targeted sanctions against Arser are positive steps. They still don’t address the structural issue, however, which is that despite mitigating measures put in place by importers, importing tropical-faced plywood from China is unlikely to be EUTR compliant. European consumers remain key drivers of the destruction of vulnerable tropical forests.”

Contact: Lindsay Moran, Head of Communications, EIA-US, lmoran@eia-global.org

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