Analyzing the Impact of EU’s Legality Requirements Policies on Sustainable Timber and Sawnwood Trade—Focusing on Tropical Wood Trade

Abstract

This study analyzes the impact of the EU′s policy to prohibit the import of illegally harvested timber on the trade of tropical timber and sawnwood. The analysis uses a difference-in-differences approach based on gravity models, with panel data from over 193 countries that trade tropical timber and sawnwood. The result of the analysis shows that the European Union Timber Regulation (EUTR) reduces the trade of illegally harvested timber. It further suggests that the EUTR caused a relatively larger reduction in tropical sawnwood (−0.21%) than that of tropical timber (0.07%). In addition, the Voluntary Partnership Agreement (VPA) appeared to cause a significant reduction in tropical sawnwood (−0.07~−0.05%), whereas tropical timber did not appear to have been significantly impacted. In particular, the reduction in timber exports in countries that have signed the VPA, which aims to encourage exports of legally produced timber, has significant implications for both the EU and timber exporters preparing for the VPA, as both parties strive to expand the VPA. The results of this study suggest that the EU needs to make additional efforts to address the decline in exports from countries that signed the VPA.