The report is the final first year report of the FLEG II project assignment “Analysis of the Legislative Framework on Timber Flow Control System in Ukraine and Development of Improved Proposals”.

The report is presented in Ukrainian and consists of four sections and two annexes of two analytical study reports.

First sections are the extractions of presented in the annexes study reports, the third section outlines the initial proposals for amendments to the legislation on improving the timber tracking system in Ukraine, and the fours – summarizes the information about published specified press releases for FLEG 2 and WWF web sites.

The Section 1 presents a summary of the report (presented in full in Annex A) “Analyze the current legislative framework for timber tracking system in Ukraine”. In particular, the regulations governing the formation and operation of timber control system in Ukraine have been reviewed. Due to this, managerial, accounting and trade subsystems for the registration and traceability of timber for all chain-of-custody have been studied. This part of the study explains that in order to strengthen the fight against illegal logging and timber trade shadow market in Ukraine, the two timber flow control systems are created, since the Ministerial Declaration in 2005 on forest law enforcement. The First one was developed through the issuance of mandatory certificate of origin on the basis of documentary evidence of the acquisition of timber prevents the export of illegal timber as round wood and sawn wood, and the second - through the piece labeling, which allows identification of locations of work place (origin) and the transmission and control of information on various characteristics of only for round wood.Basic aspects of the system for issuing certificates of origin and unified state system of electronic account of wood (USSEAW) have been considered. Analysis was supplemented with interviews of a wide range of forestry specialists, timber processors, auditors, representatives of regional departments of forestry and hunting, the company "Ukrlisconsulting" on the effectiveness and efficiency of the current system.

The Section 2 presents a summary of the report (presented in full in Annex B) “Assessment of potential impact of the EU legislation and forest certification on timber tracking systems in Ukraine”. The analysis was done in respect to the enforcement of the EU timber regulation (EUTR № 995/2010 of 20.10.2010, which prohibits placing on the EU market illegally harvested timber and products beginning in 2013) and its impact evaluation on both the forestry and woodworking industry in Ukraine. The conclusions suggest that introduction and implementation of Due Diligence System standard of controlled wood requires all importers of forest products in the EU (operators) to introduce a monitoring system for the legality of wood origin. But apart from this even more important is the task of forming a transparent and partnership relationship that provides the ability to access needed information. The assessment also covered the FSC certified supply chain products. More than a decade of experience in the certification standards for FSC scheme allowed author to estimate the efficiency of its impacts on forests and forestry in the context of sustainable development. Experience of controlled wood standard within the supply chain of products is a significant groundwork for using it to improve the timber flow control system in Ukraine. The analysis was based on a survey of forestry employees, NGOs and other stakeholders - the questionnaire that was developed for the assessment of legislation framework for timber tracking system and potential influence of EUTR and role of forest certification.

The Section 3 is dedicated to the presentation of an experts’ view on how the national timber tracking systems could comply with EU timber regulation. The consultant suggests to create a timber flow control system taking into account the requirements of the EU Regulation on timber and experience of FSC chain of custody. The combination of two spheres of control could be implemented based on public-private partnerships through the voluntary commitments to provide free estimates for a second or third parties for the wood tracking. The proposed national timber tracking system should cover the entire supply chain from forest to product manufacturer (forestry) and to the final consumer. The report presents initial proposals (just general concept), which was discussed during the round table meetings with the participation of a wide range of stakeholders, and is based on the national existing shemes and the EU requirements.