ANNEX I

ANNEX II

LEGALITY DEFINITION FOR ISSUANCE OF FLEGT EXPORT LICENCE AND LEGAL REFORM PROCESS

1.   Preamble

As a requirement of the Voluntary Partnership Agreement, Ghana has, through stakeholder consultation, developed a legal standard to underpin the implementation of this agreement. The legal standard is linked to the Legality Assurance System through the legality matrix. This document presents the legal definition, the legality matrix, a summary of relevant laws and regulations governing the forest sector, as well as describing the processes through which Ghana will reform and consolidate laws in the forestry sector.

2.   Annotated Legal Definition

A product containing wood sourced from Ghana can be licensed for sale within Ghana or for export from Ghana:

(a)

in cases where the source and ownership is a felling permit: (i) timber originated from prescribed sources (1) and the individual, group and owners concerned gave their consent to the logging of the resource (2); (ii) the logger, at the time of felling, held a valid Timber Utilisation Contract (TUC), issued by the Minister for Lands Forests and Mines ratified by Parliament following the prescribed competitive process (3); (iii) the logger at the time of felling, held a valid Salvaging Permit (SP) issued by the Forestry Commission (4); or (iv) the logger complied with forest operation procedures and standards prescribed by statute (5); (v) The logger at the time of felling has been granted replacement (6) for timber rights;

(b)	in cases where the source and ownership is a Certificate of Purchase-COP: (i) The COP was issued pursuant to a court order confiscating the timber (7); (ii) the wood was abandoned and sold by the Forestry Commission in accordance with statutory procedures (8);

(c)	the wood was at all times transported in accordance with standards prescribed by statute (9);

(d)	the wood was processed in accordance with standards prescribed by statute (10); and

(e)	all vendors/exporters have valid licence or permits to market timber (11);

(f)	at the time of sale or export no accrued fees, rents or taxes, prescribed by statute were owing to the State (12); and

(g)	at the time of sale or export, the logger had complied fully with obligations under Social Responsibility Agreements (13).

3.   Legality Matrix

In determining whether wood sourced from Ghana meets the standard set out in the definition of ‘Legal Timber’ as stated above, the principles and criteria as set out in table 1 below shall apply.

Table 1:   Principles and Criteria for Legal Standard

PRINCIPLE 1	Source of Timber: Timber originated from prescribed sources and concerned individual, group and owners gave their written consent to the land being subjected to the grant of timber rights.
CRITERION 1.1	For Timber Utilisation Contracts (TUC) in on-reserves, forest management plan preparation covers strategic plan; Delineation of TUCs; Conduction of an inventory before harvesting (on-reserve, off-reserve and plantation); Written consent of concerned individual, group or owners.
Guidance notes on relevant Legislation/Regulations	LI. 1649 PART1: Procedure for grant of timber rights; Subpart1-identification of lands suitable for the grant of timber rights; MOP Section A – Strategic planning (forest reserves); MOP Section B – operational planning (forest reserves); Instruction sheet B2 operational planning methodology (on-reserve delineation); MoP Section C – Timber Production in Forest Reserve; MOP Section F – Controlled timber production off-reserve 2.1 (ii) Identification of TUC areas and 3.7 (C) (off-reserve delineation); F3.2 Consultation process (written consent); Manual of Procedures (MoP) (14) – Sustainable timber production on-reserve (section C); Stock survey and yield allocation (section D) and Controlled timber production off-reserve (section F).
PRINCIPLE 1	Source of Timber: Timber originated from prescribed sources and concerned, individual, group and owners gave their written consent to the land being subjected to the grant of timber rights.
CRITERION 1.2	Land owner, individual or group written consent.
Guidance notes for relevant Legislation/Regulations	Act 547: Timber Resources Management Act section 4, subsection 2 (d); LI1649: Part 1 procedure for grant of Timber Rights, subpart 1: field inspection 2 (d); Subpart II Procedure in relation to lands other than public land and existing forest reserves; MoP Section F (Controlled Timber Production Off-Reserve) – F3.2 – consultation process; MoP Section F, F5.0: Finalisation (endorsements).
PRINCIPLE 2	Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a Salvage Permit issued by the Forestry Commission.
CRITERION 2.1	Natural Forest and Plantation TUCs; Qualification of loggers for grant of TUC by TREC.
Guidance notes for relevant Legislation/other references	LI 1721:Part II: Procedure for Competitive bidding for grant of timber right Q; LI 1649: Terms and conditions of TUC (section 14 Act 547: Ratification by parliament (Section 9).
PRINCIPLE 2	Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a Salvage Permit issued by the Forestry Commission.
CRITERION 2.2	Salvage permit (15) Issuance of Salvage Permit.
Guidance for relevant Legislation/Regulations	Regulation on procedure for salvage timber (Act 547 section 18g); salvage of timber products LI1649 Section 38.
PRINCIPLE 2	Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a Salvage Permit issued by the Forestry Commission.
CRITERION 2.3	Confiscated Timber Permit for duly auctioned confiscated timber issued.
Guidance for relevant Legislation/Regulations	Offences – Act 547 Section 17 (3); and Salvage and disposal of abandoned timber product (LI 1649 Section 37).
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.1	Stock surveys (including pre-felling inspections for off-reserve areas) were conducted in accordance with the logging manual. Harvesting plan.
Guidance notes for relevant Legislation/Regulations	Logging Manual (Section 10 of Act 547). Logging Manual means a set of rules intended to guide the activities of persons who harvest timber in the forest as interpreted in Act 547 (Section 20). MoP Section D (Stock Survey and Yield section).
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute (LI 1649).
CRITERION 3.2	Logging was carried out in accordance with harvesting requirement in areas designated for timber production.
Guidance notes for relevant Legislation/Regulations	Procedure relating to timber operations (i.e. Harvesting plan) – LI 1649 Section 17; MoP Section E – Preparation of timber harvesting schedules for forest reserve; MoP Section F – Controlled Timber Production Off-reserve (Instruction Sheet F4.3 – The annual logging plan); Other sources of timber production (e.g. Plantation, underwater harvesting) as specified by the contract terms, Logging Manual Section 3 (timber harvesting standards and specification).
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.3	Logs were accurately measured and recorded.
Guidance notes for relevant Legislation/Regulations	MoP section C, Records, Reporting and Auditing procedures C5.0. MoP Section F, Records and Reporting procedures F5.0.
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.4	Timber harvested corresponded to the species and volumes or numbers authorised in the TUC or Salvage permit.
Guidance for relevant Legislation/Regulations	LI 1649 Section 23 – Measurement of timber; Marking Logging Manual appendix 5: Logging Control Forms (TIF and LIF).
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.5	Stumps and logs were marked and numbered in accordance with the logging manual.
Guidance for relevant Legislation/Regulations	LI 1649 Section 20; Marking and numbering of trees, logs and timber products; Logging Manual Section 3: Timber harvesting standard and specifications (log markings).
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.6	The logger executed and complied with the relevant Social Responsibility Agreement.
Guidance notes on relevant Legislation/Regulations	Section 14 of LI 1721; Logging Manual Sections 3 – code of conduct (on-reserve) that recognises the rights of other users and show respect for cultural norms such as taboo days etc.; and code of conduct – (off-reserve) that recognises the rights of other users and show respect for farming operation etc. Section 4.1 – Monitoring of timber harvesting operation (Social responsibility assessment); 4.2-Penalties.
PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.7	Compensation was paid to affected farmers in respect of crop damage if any.
Guidance for relevant Legislation Regulations	Logging Manual Section 4.2 (Penalties).
PRINCIPLE 4	Transportation Timber was at all times transported in accordance with standards prescribed by statute.
CRITERION 4.1	Timber was transported with official documentation detailing its origin and corresponding with physical identification of the timber.
Guidance for relevant Legislation Regulations	Logging Manual Section 3: Timber harvesting standards and logging control appendix 5.
PRINCIPLE 4	Transportation Timber was at all times transported in accordance with standards prescribed by statute.
CRITERION 4.2	Timber was transported within the time periods permitted by law.
Guidance for relevant Legislation Regulations	Procedure relating to timber operations (Approved periods of timber operations and transport of forest produce): LI1649 Section 18.
PRINCIPLE 5	Processing
CRITERION 5.1	Timber processing facilities have valid licences and registration with FC and complied with all legal requirements.
Guidance on relevant Legislation Regulations	Act 571 Section 2.
PRINCIPLE 5	Processing
CRITERION 5.2	Industrial relation practices conform to legal standards.
Guidance for relevant Legislation Regulations	Occupational Health, Safety and Environment: Act 651 Labour Act Section 118-124; LI 1833: Health and employment (Section 18-20) and Office and Factories Act.
PRINCIPLE 6	Trade All vendors/exporters have valid licence or permits to market timber.
CRITERION 6.1	Exporters have acquired FC permit.
VERIFICATION	Valid export licence.
Guidance for relevant Legislation Regulations	Act 571 Section 2 (i) vetting and the registration of contracts to market timber products and such forest and wildlife products as the commission may determine.
PRINCIPLE 6	Trade All vendors/exporters have valid licence or permits to market timber.
CRITERION 6.2	Domestic Vendors have FC registration.
Guidance on relevant Legislation Regulations	Act 571 Section 2 (ii) the establishment of procedures to track the movement of timber, wood and wildlife products. TVD audit reports on supply of wood products to the domestic market.
PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.1	Logger was not in default of stumpage fees or any other fees payable by loggers in Ghana.
Guidance notes on relevant Legislation/Regulations	Procedure relating to timber operation (payment of stumpage) LI 1649 Section 25. TVD audit reports on financial flows reconciliation.
PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.2	Logger was not in default of ground rents.
Guidance on relevant Legislation Regulations	Timber stumpage fees and contract area rent – LI1649 PART V Section 27.
PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.3	Exporter was not in default of export levies.
Guidance on relevant Legislation/Regulations	Export levies: Trees and timber Amendment Act 493 Section 4.
PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.4	Neither Logger nor exporter was in default of corporate income tax.
Guidance on relevant Legislation/Regulations	Imposition of Income Tax (Income from a Business): Act 592 Section 7.

4.   Laws and Regulations in force in Ghana

The definition of ‘Legal Timber’ represents a subset of the laws contained within the legal framework for timber harvesting, processing and export in Ghana. Through multi-stakeholder consultation, it has been agreed that verification of compliance with these laws will be required in order to issue a FLEGT licence. The laws and regulations in force in Ghana, from which this definition was extracted, include:

CONSTITUTIONAL PROVISIONS, 1992

1.

Article 258 Establishes a Lands Commission and prescribes the functions of the Commission.

2.

Article 267(1) Vests stool lands in the appropriate stools in trust for their subjects in accordance with customary law and usage.

3.

Article 266 Imposes restrictions on the rights and interest in land that could be granted to a non-citizen of Ghana.

4.

Article 267(2) Establish the Office of Administrator of Stool Lands and prescribes its functions.

5.

Article 267(6) Provides for the disbursement formula for stool land revenue.

6.

Article 268 Requirement of Parliamentary ratification of agreements relation to the grant of a right or concession for the exploitation of any natural resources.

7.

Article 269 Establish natural resources commissions [Forestry Commission] which ‘shall be responsible for the regulation and management of the utilisation of the natural resources concerned and the coordination of policies in relation to them’.

8.

Article 295 Provides for the definition of Stool lands.

PRIMARY LEGISLATION

9.

Forest Protection Decree, 1974 (N.R.C.D. 234) – This Act defined forest offences and prescribed sanctions and or penalties for such offences.

10.

Forest Protection (Amendment) Law, 1986 (P.N.D.C.L. 142) – This law reviewed upwards the penalties/fines for forest offences.

11.

FORESTS Ordinance (Cap 157) – This Act provided guidelines for constitution of forest reserves and the protection of forests and other related matters.

12.

Trees and Timber Decree 1974 (N.R.C.D. 273) – This law prescribed guidelines for participation in the logging/timber industry and provided for the payment of fees as well as sanctions for non-compliance with the guidelines for participation and also export of unprocessed timber.

13.

Trees and Timber (Amendment) Act 1994 (Act 493) – This Act reviewed the fees and fines upwards and also introduced export levy for air-dried lumber and logs.

14.

Timber Resources Management Act 1997 (Act 547) – This repealed the Concessions Act, 1962 (Act 124) and provided for the grant of timber rights in a manner that secures the sustainable management and utilisation of timber resources.

15.

Forestry Commission Act, 1999 (Act, 571) – This Act repealed ACT 453 and re-establish the Forestry Commission as a semi-autonomous corporate body and also brought under the Commission, the forestry sector agencies implementing the functions of protection, development, management and regulation of forest and wildlife resources.

16.

Forest Plantation Development Fund Act, 2000 (Act 583) – This Act consolidate to it the Forest Improvement Fund and provide for the establishment of a Fund to provide financial assistance and the management of such funds for the development of private commercial forest plantations in the country.

17.

The Forest Protection (Amendment) Act 2002 (Act 624) – This Act repealed the Forest Protection (Amendment) Law, 1986 (PNDCL. 142), reviewed forest offences fines upwards and introduced joint liability in the commitment and prosecution of forest offences.

18.

The Forest Plantation Development Fund (Amendment) Act 2002 (Act 623) – This Act amended ACT 583 to enable plantation growers, both in the public and private sectors to participate in forest plantation development.

19.

Timber Resources Management (Amendment) Act 2002 (Act 617) – This Act amended ACT 547 to exclude from its application, land with private forest plantation, to provide for maximum duration, and maximum limit area for timber rights and to provide for incentives and benefits for investors in the forestry and wildlife sector.

20.

Factories, Offices and Shops Act, 1970 (Act 238) – This Act provides for the registration of factories, welfare and safety of employees in factories and other places of work.

21.

Social Security Law, 1991 (PNDCL. 247) – This Law establishes a trust fund to provide social protection to the working population.

22.

Internal Revenue Act, 2000 (Act 592) – Provides for taxation of individuals and other entities and for related matters.

23.

Value Added Tax Act, 1998 (Act 546) – Provides for the imposition of a VAT on specified transactions and activities.

24.

Economic Plants Protection Decree, 1979 (AFRCD. 47) – Prohibits the grant of timber felling rights in cocoa farms.

SUBSIDIARY LEGISLATION

25.

LI 1649 timber Resources Management Regulations, 1988 – This Regulation provided guidelines for the allocation and management of timber resources.

26.

LI 1721 – timber Resources Management (Amendment) Regulations, 2003. This Regulations established basis for competitive bidding in timber resource allocation.

5.   Forest Policy and Legislative Reform Aspiration

Ghana recognises that the provisions in the existing law which provides grounds for the forgoing legality definition framework needs to undergo significant reforms to be able to address existing inadequacies as well respond to emerging issues in the sector that bothers on the principles of good governance. Ghana wishes therefore to indicate its intension to carry out legal and policy reforms in the spirit of good forest governance. It is expected that such legal reforms could be completed in the next five years.

Areas that require policy and legal reforms include:

—	Initiation of process to amend the Savings and Transitional provisions of Act 547 in respect of conversion of extant leases/concession to Timber Utilisation Contracts and the related matter of Timber Rights Fee payment,

—	Plantation development and harvesting,

—	Timber processing and standard setting for the timber industry,

—	Import of raw material (wood),

—	Domestic market development: (a) (small to medium size enterprises); (b) resource allocation; (c) Standardisation of wood components in building and constructional industry; (d) Introduction of public procurement policies,

—	Institutional arrangements and Forest control processes: (a) Timber Validation Entity; (b) Governing council; (c) Independent Monitoring; (d) Bar codes,

—	Submerged Timber Resource allocation (Volta lake),

—	Workers health and safety requirements for forest operation,

—

A clear statement of resource governance objectives – public interest in biodiversity sustenance, rural livelihoods, sustainable industrialisation and cultural development Identification and correction of inconsistencies in existing forest laws that relate to definition of legal timber (e.g. issuance of salvage permits in respects of lands under Timber Utilisation Contract),

—

Affirmation of local forest tenure and of different stakeholder rights, particularly farmers in different types of forests and clarification of the respective scope of local (including customary) and national institutions in forest management to: (a) sustain forests; (b) develop and exploit forests (both timber and non-timber),

—

Investment Regulation: (a) Incentives, regulation, fiscal and benefits sharing for Non-Timber Forest Products (including tourism and environmental services); (b) Incentives, regulation, fiscal and benefits sharing arrangements for extractive investments; (c) Incentives, regulation, fiscal and benefits sharing arrangements for reforestation; (d) Incentives, regulation, fiscal and benefits sharing arrangements for plantations; and (e) Incentives, regulation, fiscal and benefits sharing arrangements for processing.

6.   Implementation

To move from the existing towards the future legal standards, the Ghana anticipates a two tier reform approach to deal with obsolete, disjointed and inconsistent laws and also introduce new laws to give effect to evolving policies:

—	Changes to areas that do not require extensive legal reform process will be realised through subsidiary legislation one year of agreeing a Voluntary Partnership Agreement,

—	Changes that will require extensive consultations, involvement of experts and considerable political reflections, pertaining to e.g. good governance issues, stakeholder participation, benefit sharing, etc. is expected to take about 3-5 years.

---

(1)  Act 547 Section 4, and LI 1649 Regulations 1 and 2.

(2)  LI 1649 Regulations 2 – 8.

(3)  Act 547 Section 1, 7, 8, 9 and LI 1721 Regulations 9 – 13.

(4)  LI 1649 S 38.

(5)  Act 547 Section 18(d) and LI 1649 Regulations 16 – 20.

(6)  Act 547 Section 15(1) c, d, e.

(7)  Section 17(3), Act 547 and Section 37, LI 1649.

(8)  S37 of LI 1649.

(9)  LI 1649 Regulation 18.

(10)  Factory Offices and Shops Act (Act 328) and Labour Act (Act 651).

(11)  Act 571 Section 2(i) and (ii).

(12)  Act 547 S8 (e) and (f), and LI 1649 S 21, 27.

(13)  Section 14 LI 1721.

(14)  Legal status of MoPs: MoPs are output of requirements in Section 18 of the Timber Resource Management Act 547 and accompanying Timber Resource Management Regulation LI 1649 Section 14 repealed by Timber Resource Management (Amendment) Regulation LI 1721, Section 14 which provides for the terms and conditions of TUC.

(15)  The Forestry Commission issues a permit subjected to such terms and conditions as shall be specified therein for the salvage of trees from an area of land undergoing development such as road construction, expansion of human settlement or cultivation of farms.

ANNEX III

CONDITIONS GOVERNING THE RELEASE FOR FREE CIRCULATION INTO THE COMMUNITY OF TIMBER PRODUCTS EXPORTED FROM A PARTNER COUNTRY AND COVERED BY A FLEGT LICENCE

ANNEX IV

CONDITIONS GOVERNING THE ISSUANCE AND SPECIFICATIONS OF FLEGT LICENCES

Requirements relating to FLEGT licences

Requirements relating to paper-based FLEGT licences

FLEGT licence lost, stolen, destroyed

Treatment of doubts regarding the validity of the licence

Technical specifications with regard to a Computerised FLEGT licence

ANNEX V

LEGALITY ASSURANCE SYSTEM (LAS)

1.   Introduction

Under the agreement, Ghana will implement a legality assurance system (LAS) which will be based on adherence to the legal definition (Annex II to the Agreement). The legal definition outlines conditions under which a product containing wood sourced and/or processed in Ghana can be licensed for sale within Ghana or for export from Ghana. For the purposes of the Agreement, the licences will cover all products exported to the EU. The products included are described in Annex I to the Agreement. A wood tracking system (WTS) will enable the establishment of a chain of custody system as well as the monitoring and reporting of compliance against the legal definition. The wood tracking system is described in Appendix 1 to 10. For the purpose of assessing compliance to the legal standard, a table that sets the legality definition against implementation of the principles and criteria is provided under the verification procedures.

Under the LAS a verification entity is to be established. This entity is called the Timber Validation Department (TVD). The TVD will perform the functions of verification. This will involve the reconciliation of data generated along the entire process chain of wood products destined for both export and the domestic market. The TVD will also measure compliance of wood consignments to the legal standard. The purpose of the verification and compliance monitoring is to enable the TVD check if procedures provided for in the legal standard have been complied with. For the purpose of performing the verification function, the TVD will work with data based on submissions and approvals from the responsible regulatory Division/Unit within the FC. The TVD to a large extent will perform the role of verification and validation of processes at the critical control point (harvesting, transportation, processing and export). The TVD will further verify and validate procedures and outputs in the Divisions. The TVD is described in the document. The figure below is a schematic presentation of the relationship of the actors in the LAS.

Under the new set-up the Forest Service Division will continue to regulate and manage the control interventions of the supply chain from the point of stock survey and harvest to the point of commencement of log transport. The Timber Industry Development Division (TIDD) of the Forestry Commission is the designated licensing authority under the LAS. The TIDD will issue the FLEGT licences together with export permits after it has reconciled export permit applications submitted by exporters with TVD datasets. FLEGT licences will be issued for the EU market and export permits for non-EU markets. Both will however be delivered through the LAS and therefore will be, by definition, legal timber.

The detailed procedures and management systems will be developed during the design and piloting of the LAS. The new LAS will build from existing structures and systems and seeks to address identified weaknesses in the paper-based system. This document describes the objectives and principles that will guide the development of new structures and systems. (1)

Independent Monitoring and Reporting under LAS

The entire LAS will be open to external monitoring by an independent monitor (IM). The purpose of the intervention of the IM will be to identify weaknesses and recommend systemic reforms in the LAS (Terms of Reference of IM are attached as Annex VI to the Agreement).

2.   The Wood Tracking System

Traceability of wood products from export to forest will be maintained under the agreement. In the case of products derived from wood harvested from a foreign country, the system will be able to maintain traceability from the point of entry to processing after which it will follow the same protocols as wood harvested in Ghana.

The monitoring of wood flows requires the identification of critical control points at different locations within the supply chain as well as the monitoring of stages and processes that affect the state of the asset as it moves through the chain. The first control point will be that of pre-harvest inventory data gathering. Essentially, this will involve mapping standing trees using GPS technology and gathering specific metrics data such as species and carrying out laser measuring of standing trees selected for harvest in order to accurately determine standing tree volumes. Information gathered as part of the Forest Inventory should have the option to be made available online and can be used to trigger the issuing of cutting annual permits for the harvesting of timber. This information forms the first control point within the chain of custody from which wood flows will be monitored.

The next control point (i.e. where an event occurs that affects the status of the asset) would be the felling of the tree. At this point, data would be again recorded. This process would follow throughout the forest and processing operations, monitoring timber as it transforms and flows through the supply chain and reconciling data gathered at each of the individual control points. The WTS will gather information at all the supply chain control points, process the data gathered and automatically reconcile it with data gathered at previous control points, identifying any errors or anomalies that are found in the data.

Critical Control Points

For the purpose of tracking and controlling timber flows, the following critical control points are identified and described in the supply chain:

(i)	Source of Timber;

(ii)	Timber Rights Allocation;

(iii)

Stock Enumeration;

(iv)	Tree Felling and Log Production;

(v)	Post Harvest Audit;

(vi)	Log Transport and Inspections;

(vii)

Confiscated Timber;

(viii)

Wood Imports;

(ix)	Log Arrival at Processing Plant;

(x)	Log Processing;

(xi)	Processed Wood;

(xii)

Export of Processed Wood.

1.   Source of Timber and Allocation of Rights

Wood products coming from Ghana will be derived from legally designated areas and will be allocated according to legal prescription. Such products will come from designated areas within forest reserves, plantations, off-reserves areas or sub-merged forests. Timber rights will accordingly be obtained in the form of Timber Utilisation Contracts (TUCs), Salvage Permits and Plantation Felling Permits according to the provisions in the legal standard, specifically to principles 1 and 2. The controls will therefore start from the enumerated tree in these designated areas. The allocation of use rights (TUCs) are governed by procedures and the bidding sessions are conducted publicly. The record of bid winners is public. The procedures for allocating TUCs are available on the website of the FC. Additionally, public summary reports of all other use right holders (Salvage Permits, and Underwater use rights) will be indicated as an output of the verification process to increase transparency.

The timber flow control interventions are managed by the Timber Industry Development Division (TIDD) and Forest Service Division (FSD) with some level of quality control in the area of yield endorsement and post harvest audit from the Resource Management Support Centre (RMSC) of the Forestry Commission. Data along each of the control points will be reconciled by the TVD with the preceding set of data to enable traceability to be established.

The critical control points relate to the provisions in the legal definition set out in Annex II to the Agreement. They are therefore linked to the principles and criteria (as indicated in parentheses). In the operation of the electronic system, a paper based system will be used as a back-up in instances where the electronic system becomes unavailable.

2.   Stock Enumeration (Relates to Principle 3 Criteria 3,1)

The Stock Enumeration is primarily managed by the Forest Service Division. The endorsement of the yield is done by the Resource Management Support Centre. The output of the process of stock enumeration is, in the first instance, a stock map. The yield list/map is a derivative of the stock map. The endorsed/approved yield is the final output that is used to conduct harvesting in the forest. All documentary outputs of this process are forwarded to Timber Validation Department (TVD) for the purposes of verification. Hand held data devices will be used to collect data in the field. The data will be downloaded at the end of the day onto FSD District office computers. From the District office, the data are then sent to the central database. The TVD central database will keep records of approved yields which will be reconciled with tree information (felled tree data) and log information (cross-cut tree data). The detailed process map for enumeration is attached in the Appendix 1.

Permission to harvest shall be enforced through the issuance of harvesting permits in the form of an administrative directive from the Forestry Commission (FSD) which will accompany an endorsed yield. The endorsed yield gives the list and location of all trees to be harvested. Record of permits for harvesting will therefore comprise of the endorsed yield and the accompanying administrative directive from the FSD.

3.   Tree Felling and Log Production (Relates to Principle 3 Criteria 3,3)

The Forest Service Division (FSD) implements most of the control interventions at the point of felling and log production. Based on the inventory and the endorsed yield database, the tags to be applied on the trees stumps and logs are allocated by the FSD to the producer. These tags are applied by the producer on the stump of the felled tree as well as the logs produced. The FSD collect data on the felled tree on to the tree information form (TIF). Hand held devices will be used to enhance this function. The permission to transport the logs from the landing site is given after the FSD has issued a log measurement and conveyance certificate (LMCC) for each truck load. The LMCC is based on comparison and clearance of the log information (LIF) recorded by the producer. Copies of the tree data, log data and conveyance information are transmitted to the TVD for purposes of reconciliation. A detailed process description is given in the chart in the attached Appendix 2.

Plantation log measurement conveyance certificates (PLMCC) are issued by the FSD. For the submerged forest scenario, logs are to be marked with barcode labels of a distinctive colour in addition to paint marking to show the contractor’s sequential log number. Log information forms will be filled by FSD staff at the landing showing location of origin or block number, stool, district and property mark.

4.   Post Harvest Audit (Relates to Principle 3, Criteria 3,2)

Post harvest audit will be conducted by the RMSC in accordance with the harvesting plan that harvesting in the compartment is complete. The official date of opening and closure of the compartment will be held in the central database for the purposes of reconciliation. The purpose of the post harvest audit is to ensure that the operator has adhered to the harvesting plan and left the compartment in good working condition. This also provides the opportunity to check on the quality of the stock survey. Specifically, the following checks will be conducted:

—	the enumeration was complete and tree diameters were correctly measured,

—	the producer has only taken those trees that were in the yield list,

—	the numbers, species and sizes of the logs declared correspond to the trees that were felled,

—	no excessive logging damage occurred.

The report generated from the post harvest audit will be available to the FSD district office, regional office, FSD/HQ as well as the FC/HQ. The TVD will be copied for the purpose of reconciliation. The TVD will perform a sample of post harvest inspections. Appendix III shows the process map for post harvest inspections.

5.   Log Transport and Inspection (Relates to Principle 4 Criteria 4.1)

The Timber Industry Development Division (TIDD) will perform unannounced checks on truckloads along the road. The unannounced checks will be done in addition to the fixed check point interventions. The log transport and inspection will check the LMCCs against truck loads. The specific checks will also ensure that all logs have tags, there is no re-use of forms, log origin corresponds to the route of the truck, the truck ID and the destination of consignment/truck. The reports of the TIDD routine checks will be captured on hand helds and transmitted to the TVD database for purposes of reconciliation. Appendix IV is the process map for log transport and inspection.

6.   Confiscated Timber (Relates to Principle 2, Criteria 2.3)

Timber confiscated by the FC will only be sold by Court Order through public auctioning. After the auction the winning bidder will receive a Certificate of Purchase from the FSD. The certificate will be registered in the central database. All auctioned forest produce will be tagged. The entire auction result will be documented in a FC Sale Report and the payments due as well and entered in the central database. Process map is shown in Appendix V.

7.   Imported Wood (Relates to Principle 4, Criteria 4.1)

Logs and other wood imported for processing must be declared by CEPS through GCNet platform to TIDD. Any incoming shipment will be reported to TIDD accordingly, as well as to the TVD. Export documentation will be used to verify logs sourced from outside the country. The TIDD measures the logs and puts a log tag on each one in the harbour. Other products such as lumber meant for reprocessing will similarly be tagged. The TIDD also issues the Import LMCCs (ILMCC) for the logs if these are destined for local processing plants. The logs are next loaded onto trucks and accompanied with ILMCCs to the local processing plants. Data declared is similar to that declared for logs cut in the forest and transmitted to TVD. For each imported log or wood product, records are taken of tag number, species, length and two diameters at each end. For each truckload the LMCC, importer ID, country of origin, destination, processing company ID, truck ID, driver and truck owner are recorded. The wood then follows a similar supply chain management process as wood harvested in Ghana. Process map is shown in Appendix VI.

8.   Log Arrival at Processing Plant (Relates to Principle 5)

Daily declaration will be required of the producer on arrival of the logs at the processing plant. These declarations will include the location, date/time, LMCC form number and truck ID of all arriving consignments. The LSEs with considerable size log yard will be required to indicate the location of each log in the yard after loading. This record will be amended each time the log changes location. TIDD checks will ensure that all logs bear tags and that the information on the tag matches the declared records. Records of remanufactured logs must also be kept and declared. Data captured at log arrivals at the processing plant will be made available to the TVD. This data on log arrivals will be reconciled with the LIFs and the LMCCs. Appendix VII is the process map for log arrival at processing plant.

9.   Log Processing – Shift Records – (Relates to Principle 5)

At the end of shift the sawmill/processing company will make a declaration of the list of logs and log pieces which were processed during the shift. The following records will be provided: date, processing plant ID, log tag numbers, quantities of processed wood and respective processing contract ID. The system must be able to tally the pieces of wood that come from each log or log piece, so that for a particular bundle of processed wood the constituent logs can be identified. Conversion factors will be dependent on the diameter, species, and quality etc. of the input logs and this critical element of the WTS that will enable effective reconciliation will be further developed in the pilot phase. TIDD inspectors will oversee the data collection process to ensure that records are being kept correctly and accurately. Random inspections and the days/shifts of inspection will be recorded so that results can be checked against days when no inspectors are present. Records of the shift production as submitted by the producer will be made available to the central database for the purpose of reconciliation. This will include monthly stocks of processed logs and processed wood products. Appendix VIII shows the business processes for log processing.

10.   Processed Wood (Relates to Principle 5)

Processed wood bundles when completed will be marked with a processed wood tag. TIDD inspectors will perform checks before the consignments are loaded into containers/trucks. Every truck will have a numbered way bill. Data for each processed wood bundle includes tag number, type, species, volume, no. of pieces, contract number, destination and waybill number and list of logs used to make the bundle. The checks performed by TIDD will ensure that the data provided matches the physical consignments on the truck. Records will be made available to the TVD to enable reconciliation between processed wood inspections and declarations. This will determine whether producers are declaring their production correctly. Monthly reports will be available to the FC and TIDD HQs. Appendix IX is the business process map for processed wood.

11.   Export of Processed Wood Bundles (Relates to Principle 5)

To enable the export of processed wood bundles, the exporters will submit a request (using a web form) for the export of a contract ID of processed wood, with details of purchaser ID, destination ID, shipping date, ship name. There will be the provision of manual submission of records as a back up to the electronic system. This will consist of a list of processed wood bundle tag numbers, showing type of product, volume, species, grade, etc., along with information on the sales contract, buyer, etc. The central database will receive the list of bundle tag numbers and produce a report indicating the history of the wood in those bundles, showing when and where processing was done, the ID numbers of the logs and the IDs and locations of the source trees involved, when and where the source trees were cut (a digital map of source trees should be available on the web), and the results of FC/TVD sampled inspections (volume and species disparities). The random inspections refer to the TVD post harvest audit sampled inspections. If no discrepancies over an agreed threshold are found, the ‘go-ahead’ is given to the TIDD for the issuance of the FLEGT licences.

Details of product export certificates issued are stored in the database (authoriser’s name, certificate number, volume, species, type of product, date of issue, exporter, purchaser, etc.). At the time of contract approval the TIDD will enter into the system the relevant details: contract number, buyer ID (overseas), processing company ID, volumes/dimensions to be supplied (by species and product ID). Details of transactions under export of wood bundles are shown in Appendix X.

Table 1 overleaf is a summary description of the procedures for tracking wood from stock enumeration through felling, cross-cutting of logs, conversion into primary and secondary products and export.

Table 1:   Data Reconciliation along the Process Chain

Activity	Output	Data source	Reconciliation	Key data
Enumeration	Stock List/Map	FC/Private		Stock no, Species, Locality Mark, Property Mark.
↓
Yield selection	Yield List/Map	FC		Stock no, Species, Locality Mark, Property Mark.
↓
Yield endorsement	Yield List/Map	RMSC	Stock List, Yield List	Stock no, Species, Locality Mark, Property Mark.
↓
Post-felling insp.	Felled tree list (TIF)	RMSC/TVD	Yield List, TIFs	Stock no, tree tag no.
Log produced and transported	Log (LIF) data (declaration), LMCC	FSD/Log Producer	TIF, LIF, LMCC	Log tag no, LMCCs.
↓
Roadside Log Inspection	Log data (inspection)	TIDD (HHC)	LMCCs and Truck Loads	Log tag no, LMCC no., Truck ID.
↓
Log yard	Log arrival	Primary Processor TIDD	Against log declaration, LMCC, Truck ID.	Log tag no, LMCC, Truck ID.
↓
Log converted	Log conversion	Primary Processor	Processed Logs, Output Vol./Species,	Log tag no, Contract no.
↓
Primary PW transported	PW data (declaration)	Primary Processor	Against logs converted	Log tag no. Primary PW tag no., Contract no.
↓
Primary PW inspected	PW data (inspection)	TIDD (HHC)	Against primary PW declaration	Primary PW tag no.
↓
Primary PW exported	PW arrival (at port)	Exporter	Against declared waybill no.	Primary PW tag no. Export dossier no.
Or … arrival at secondary mill	Processed wood Arrival	Secondary Processor	Against Primary PW declaration	Primary PW tag no. Contract no.
↓
Secondary PW transported	PW data (declaration)	Secondary Processor	Against primary PW converted	Secondary PW tag no.
↓
Secondary PW inspected	PW data (inspection)	TIDD (HHC)	Against secondary PW declaration	Secondary PW tag no.
↓
Secondary PW exported	PW arrival (at port)	Exporter TIDD/TVD	Complete history	Secondary PW tag no Export dossier no.

3.   Verification Procedure

This section sets out the legality definition against implementation of the principles and criteria. The procedures as will be implemented by the concerned agencies are outlined. Table 2 therefore indicates the control procedures by responsible FC divisions. The outputs of the control procedures will be verified under the protocols to be developed under the LAS pilot phase. Mechanisms for handling non-compliance identified over the course of verification activities will be developed in detail in the pilot phase based on existing law enforcement procedures and regulation.

Verification methodology which will specify the periodicity, sampling methods, field procedures and collection of objective evidence will be addressed in the TVD manual of procedures. This table takes its source from the definition of legal timber in Annex II to the Agreement.

Table 2:   Control Procedures against Principles and Criteria

PRINCIPLE 1	Source of Timber: Timber originated from prescribed sources and the concerned individual, group and owners gave their written consent to the land being subjected to the grant of timber rights.
CRITERION 1.1	For TUCs in on-reserves, forest management plan preparation covers strategic plan; Delineation of TUC; Conduct of an inventory by FSD before harvesting (on-reserve, off-reserve and plantation); Written consent of concerned individual, group or owners.
RESPONSIBILITY	— FSD responsible for strategic and operational planning of on-reserve TUCs. RMSC – Quality Control of Enumeration; Endorsement of Yield; — TIDD to verify import documentation for imported wood products and produce reports.
PROCEDURE	On-reserve Strategic management plans — formation of planning team; — review of current situation based on existing information; — provisional zonation; — field investigations; — provisional management planning for each zone; — compilation of a first draft management plan; — formal review of working draft by resource owners; — revision of the working draft; — local endorsement of the draft plan; — forward the draft plan for national review and approval; — publish and circulate copies of the final plan; — prepare summary pamphlet of the plan. Delineation of TUC — Fixing of boundary pillar by FSD; — Cleaning of boundaries by FSD. Written consent Post of notices at (a) the offices of the District Assembly, Traditional Council and Unit area in whose area of authority the land identified is situated for 21 days. Concerned individual, group or owner notifies his interest and consents in writing to FC of the land being subjected to grant of timber rights.
	Inventory — Stock enumeration by FC for SMEs. LSEs to conduct enumeration in their TUC areas; — Verification of the quality of enumeration and clearance is the responsibility of FC(RMSC); — Digitise Yield List and Yield Map produced; a shared responsibility by FC/Enterprise; — Vetting and endorsement of the proposed yield thoroughly carried out by FC- (RMSC); — RMSC lodges copies of approved yield with FSD, TIDD and TVD. In the case of enterprise copy of yield is routed through FSD under a cover letter that states salient FC logging rules; — RMSC endorses and enters yield (key element of the WTS) into central database; — FSD approves and enters yield into database.
	off-reserve Operational plan and inventory — Endorsement and modification, if necessary, of the draft TUC operational plan (FC-FSD); — Initial selection of trees by contractor (enterprise); — Conduct Pre-felling Inspection by taking GPS bearings of all trees to be harvested in the OFRs (FC-FSD); — Recording of parameters (FC-FSD); — Yield selection and approval (FC-FSD); — Preparation of annual logging plan; — FSD release copy of approved yield to Enterprise and TVD; — FSD enters approved yield into central database. Delineation — field checks of unallocated land by FSD; — Boundaries if possible follow undisputed land ownership boundaries and distinct natural features (rivers, roads, etc.); — identify areas that need to be excluded and fixing of boundaries by FSD; — Demarcation on a map and supported with a description of the boundaries by FSD. Written consent — Consultation with communities, District Chief Executive (DCE) or their accredited representative; — Field inspection of the potential harvesting area with the land owners consent.
	Plantation — Enumeration of all harvestable trees (FC-FSD); — Estimate standing tree volume (FC-FSD); — Upfront payment by contract (ENTERPRISE); — Issuance of entry permit (FC-FSD); — FSD release copy of entry permit to Enterprise and TVD; — FSD enters details of entry permit stating the estimated standing volume into its central database. Delineation All plantations within forests reserves have their compartment boundaries mapped by the FC FSD District plantation unit marks boundaries (e.g. by cleaning, by oil paints), Underwater Pre-defined block number underwater (FC-FSD/ENTERPRISE). Imported wood — Enterprise ensure that wood imported are declared through CEPS GCNet platform to TIDD; — Any incoming shipment must be reported to TIDD; — FC-TIDD ensures that all imported wood are legally sourced from the country of origin and have appropriate documentation. This will be done through checks on import documentation.
OUTPUT	On-reserve — Forest Management documents; — Forest maps; — Forest Survey Reports, stock enumeration and yield data; — Maps of Forest types (habitats critical areas, genetic hot spots, Globally Significant Biodiversity Areas, Coarse grained protection areas); — Reserve Management Plan. Off-reserve — Operational plan; — TUC Map; — Off-reserve Inventory Report; — felling Inspection Form CO2; — Felling Permit Form CO3/Letter of approval. Plantation — Plantation Map; — Enumeration report; — Payment receipt; — Entry permit. Underwater — Blocking report. Imported wood Declaration to Customs of Imported Timber (GCNet report); importer ID, Country of origin, etc.

PRINCIPLE 1	Source of Timber: Timber originated from prescribed sources and concerned individual, group and owners gave their written consent to the land being subjected to the grant of timber rights.
CRITERION 1.2	Land owners/individual/group consent.
RESPONSIBILITY	— FC-FSD checks on Public notification through districts quarterly reports.
PROCEDURE	On-reserve — Consent embodied in the reserve management plan (FC-FSD). Off-reserve — Land owner and affected farmer(s) identified through District Assembly, Traditional Council, Unit area, District Forest Office as part of the consultation process; — Constitute field inspection team as stated by law (FC-FSD); — Any tenure disputes resolved through arbitration (FC-FSD); — Local stakeholders (e.g. land owners, affected farmers) consented in writing to harvesting of the resource.
OUTPUT	— District Notices; — Written consent; — Consultation Minutes; — Records Arbitration of Proceedings.

PRINCIPLE 2	Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a SP issued by the Forestry Commission.
CRITERION 2.1	Natural Forest and Plantation TUCs Qualification of loggers by TREC.
RESPONSIBILITY	MLFM,TREC and FC.
PROCEDURE	— Logger participates in competitive bidding process; — The Forestry Commission recommends to MLFM to award a TUC to Logger; — Logger complies with all conditions specified in Minister’s notice of award under the Act. This includes a secured consent from concerned individual, group or landowner; — The Minister executes the TUC in the prescribed format; — Parliament ratifies TUCs (with the exception of plantation TUCs).
OUTPUT	— TREC pre-qualification report; — Letter of Consent; — TREC bidding report; — FC report to MLFM on compliance; — TUC; — TUC and Parliamentary Hansard (Except plantation TUC).

PRINCIPLE 2	Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a SP issued by the Forestry Commission.
CRITERION 2.2	Salvage permit (2) Issuance of Salvage Permit.
RESPONSIBILITY	FC-HQ.
PROCEDURE	— Enterprise applies to FC; — FSD conducts inspection and submits a report to CEO of FC about the justification for commercial trees in a defined location to be salvaged; — FC issues salvage permit; — FSD enters details of salvage permit into the central database.
OUTPUT	— Applicant’s application; — FSD’s inspection report; — Salvage permit.

PRINCIPLE 2	Timber Rights Allocation The logger held a TUC issued by the Minister and ratified by Parliament following the specified competitive process or Logger held a SP issued by the Forestry Commission.
CRITERION 2.3	Confiscated Timber.
RESPONSIBILITY	FC-FSD.
PROCEDURE	— FC determines the offence and court authorises the sale of confiscated timber product; — COP issued to the buyer according to statute; due process for auctioning confiscated timber are followed.
OUTPUT	— Court Order; — Certificate of Purchase; — FC sale report.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.1	Stock surveys (including pre-felling inspections for off-reserve areas) were conducted in accordance with the logging manual. Harvesting plan preparation.
RESPONSIBILITY	— FC-FSD (validates harvesting plan submitted by industry); — RMSC (checks that allocated yield conforms to MoP requirements).
PROCEDURE	Stock Survey Refer to procedure under criterion 1.1. Harvesting plan (forest reserve) Complete the approved compartment logging plan format which includes: — general description of compartment; — propose start and finish date of harvesting; — road/track construction; — total length of skidding tracks needed; — scaled map (≥ 1:10,000) showing the following: — protected areas to be excluded from timber production, — all water courses, — position of existing and new tracks to be constructed, — log dumps,
	Harvesting plan (off- reserve) — detailed description of the harvest area including delineated boundaries of the area; — summary of number of trees agreed for felling as per pre-felling inspection form-CO2; — road/track construction; — total length of skidding tracks needed; — scaled map (≥ 1:25,000) showing the following: — protected areas to be excluded from timber production, — all water courses, — position of existing and new tracks to be constructed, — Agreement plans with affected farmers/communities in course of track construction.
	Harvesting — In forest reserves, range supervisor records tree parameter; — The operator record tree parameter in off-reserves; — Records tree data onto TIF; — Scans tag (barcode) number; — Marks tree stump/tag stump; — Cross-cut tree into logs.
OUTPUT	— Harvesting schedule; — Stock survey report; — Pre-felling inspection report; — Stocking maps; — Yield Lists; — Yield maps.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute (LI 1649).
CRITERION 3.2	Logging was carried out in accordance with harvesting requirements in areas designated for timber production.
RESPONSIBILITY	— FC-FSD (Checks logging by Enterprises; check numbering and tagging of stumps; checks environmental impacts in accordance with logging manual (i.e. buffer strips, etc.)); — RMSC (conducts stock survey checks).
PROCEDURE	Logger notifies the District Office of completion of harvesting in a compartment. FSD carry out a detailed 100 % post-felling inspection in the compartment harvested. FSD checks Enterprise for adherence to harvesting standards/specifications as spelled out in the logging manual. In cases where enterprise conducted stock survey, RMSC check on the accuracy of stock survey. The logger (Enterprise) checks that all stumps trees have a numbered tree tag on them. Both FSD and Enterprise ensure that all trees listed as approved in the yield have been extracted and all fees, royalties and compensation paid: — Enterprise ensures that Log yards have been ripped to break up compacted soil; — Enterprise ensures that all rubbish/debris removed from site; — All streams and water courses clear of debris; — Ensures that all access and skidding tracks follow the agreed alignment and adequate drainage is provided; — Good felling practice is observed; — FSD ensures that all relevant data is captured using hand-held computers for onward transmission to TVD.
	Environmental standards Enterprise ensures the following: — Siltation of water courses is avoided to prevent water pollution; — No logging operation is permitted within a buffer strip, 25 metres either side of any stream or 50 metres either side of a river; — No smoking is permitted during high fire hazard periods except on a road way cleared of inflammable material; — No logging operation, including felling, skidding, road and log yard construction is permitted in a protected area; — Any tree classified as Black Star (species of important international interest and conservation value) cannot be felled under any circumstance; for special permit species an authorisation is required from RMSC.
OUTPUT	— RMSC Post harvest audit report; — Compartment Closure Certificate.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.3	Logs were accurately measured and recorded.
RESPONSIBILITY	— FC-FSD (verifies LIF recordings and verifies tagging on logs and stumps); — TIDD (randomly measures logs at check points).
PROCEDURE	— FSD Range supervisor take full measurement of felled tress; — Records tree parameter on Tree Information Form (TIF); — The logger (Enterprise) records log parameters including log tag number on Log Information Form (LIF); — FC-TVD issue tags to FC-FSD and Enterprise according to permitted yield; — FSD cross-check TIF data with LIF from Enterprise; — FSD verify log data and Tag number.
OUTPUT	Completed TIF and LIF.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.4	Timber harvested corresponded to the species and volumes or numbers authorised in the TUC or Salvage permit.
RESPONSIBILITY	— FC-FSD (checks species and volume declaration on TIF and LIF; checks harvests against Yield).
PROCEDURE	— The producer records the log data, including log tag number, number of log(s) from the tree, dimensions (length plus two diameters at each end), species, tree (stump) tag number, tree stock number, onto the LIF form; — FC and Enterprise check that all tree stumps tagging and numbering are conducted; appropriate tag colour on them; — FSD cross-check TIF data with LIF from Enterprise; — FSD verify log data and Tag number.
OUTPUT	— Yield; — Completed TIF and LIF.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.5	Stumps and logs were marked and numbered in accordance with the logging manual.
RESPONSIBILITY	— FC-FSD (checks markings and tagging); — TIDD (checks marking on logs at check points).
PROCEDURE	FC and Enterprise ensures that: — All tree stumps are marked and numbered; — Every log must be marked with: — the species code, locality mark, contractor’s tree number, which is sequential numbering beginning with 1 (i.e. number of tress felled since registration of enterprise’s property mark, — Log number which is the number of the log cut from the tree; log number 1 is the butt log, — The enterprise’s property mark, — Logs from within forest reserves must be marked with: — Reserve code, compartment and stock survey number, — Logs from off-reserve must be marked with the code ‘OFR’; — Tree stumps/logs have appropriate tag colour on them.
OUTPUT	Marked and Tagged stumps, marked and tagged logs.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.6	The logger executed and complied with the relevant Social Responsibility Agreement.
RESPONSIBILITY	FC-FSD checks compliance on SRA.
PROCEDURE	— FC-FSD ensures that logger enters into an SRA with land owning communities and it forms an integral part of the TUC and terms and conditions becomes binding on both parties; — Enterprise deposits SRA document with FC; — FC-FSD report on compliance of the SRA; — Land owning communities respect the right of the logger to be able to operate in the TUC area.
OUTPUT	SRA document; FSD reports on compliance.

PRINCIPLE 3	Timber Harvesting Operations The logger complied with forest operation procedures and standards specified by statute.
CRITERION 3.7	Compensation was paid to affected farmers in respect of crop damage if any.
RESPONSIBILITY	FC-FSD checks compensation level and payment.
PROCEDURE	— FSD conducts damage assessment as specified in the Logging Manual; — FSD ensures that logger (Enterprise) pay the appropriate compensation payment in respect of crops damaged.
OUTPUT	Damage assessment and compensation report and payment receipt.

PRINCIPLE 4	Transportation Timber was at all times transported in accordance with standards prescribed by statute.
CRITERION 4.1	Timber was transported with official documentation detailing its origin and corresponding with physical identification of the timber.
RESPONSIBILITY	TIDD (checks on LMCCs/PLMCC/ILMCC and submits data to TVD).
PROCEDURE	— Enterprise applies for LMCC/PLMCC from FC-FSD; — FC-FSD checks TIF details against log declarations (LIF and Log tag No.); — FC-FSD issues LMCC/PLMCC for truck movement to destination (mills); — FC-TIDD conducts road side checks at designated check points and TIDD inspectors perform unannounced checks on sampled truck load; i.e. LMCC/PLMCC checked against logs on truck (details of check include property mark, locality mark, stock survey number, truck ID, destination, etc.); — FC-TIDD checks and capture LMCC/PLMCC data at designated check points using Hand-held computers and transmit data to TVD central data base; — Upon arrival at mills, details of logs are entered in Mill Log Book. Transportation (Imported timber) — TIDD measures the wood and puts a tag on each of the logs/bundles at the harbour; — Logs destined for local processing plants are loaded unto trucks and TIDD issues ILMCC; — Data declared is similar to that declared for logs cut in the forest and transmitted to TVD. This includes tag number, species, length and two diameters at each end. For each truckload the LIF number, importer ID, country of origin, destination, processing company ID, truck ID, driver and truck owner are recorded.
OUTPUT	LMCC/PLMCC, ILMCC, Waybill, Details of logs recorded in Mill Log Book.

PRINCIPLE 4	Transportation Timber was at all times transported in accordance with standards prescribed by statute.
CRITERION 4.2	Timber was transported within the periods permitted by law.
RESPONSIBILITY	FC-TIDD (checks on truck movements).
PROCEDURE	FC-TIDD and FC-FSD ensures that timber is transported between 6:00 am and 6:00 pm on a working day unless otherwise permitted by the Chief Executive on an application to him for the purpose.
OUTPUT	LMCC/PLMCC/ILMCC.

PRINCIPLE 5	Processing
CRITERION 5.1	Timber processing facilities have valid licences and registration with FC and complied with all legal requirements.
RESPONSIBILITY	FC-TIDD (check documents submitted by Enterprise; checks source of raw material of Enterprise).
PROCEDURE	New enterprises: — Enterprise submits application to FC of its intent to start a Timber Enterprise; — FC-TIDD check the required documents (Business plan and feasibility report, including source of raw material); — FC-TIDD register the enterprise and issue certificate if all requirements are met. Existing enterprises — Enterprise submits application to FC for renewal of their licence annually; — FC-TIDD check the required documents (Company’s code and certificate to commence business obtainable from Registrar General’s Office; Tax clearance from Internal Revenue Service; Property Mark renewal from FC-FSD); — FC-TIDD renews certificate if all requirements are met.
OUTPUT	Valid certificate/licence.

PRINCIPLE 5	Processing
CRITERION 5.2	Industrial relation practices conform to legal standards.
RESPONSIBILITY	— TIDD (checks labour, health and safety requirements); — Factory Inspectorate Unit (Labour Department).
PROCEDURE	Enterprise ensures that: — every worker employed works under satisfactory safe and healthy conditions; — workers are provided with the necessary information, instructions and training about health and safety at their place of work; — adequate precautionary measures are in place to provide worker safety in the event of fire; — there is prevention of accidents and injury to health arising out of, connected with, or occurring in the course of, work by minimising the causes of hazards inherent in the working environment; — Workmen compensation insurance exists for all workers; — Labour department conducts inspection and or direct employer to put in place the necessary corrective measures to ensure health and safety at work place.
OUTPUT	Work instructions, training, insurance and accident records.

PRINCIPLE 6	Trade All vendors/exporters have valid licence or permits to market timber.
CRITERION 6.1	Exporters have acquired FC permit.
RESPONSIBILITY	FC-TIDD.
PROCEDURE	— Buyer applies for inspection; — Exporter submit tax clearance certificate; — TIDD issue inspection report; — Reconciliation of data by TIDD; — FC-TIDD conducts Input and output reconciliation — Export is preceded by an exporter submitting a request in a web form or manually for the export of a contract ID of processed wood. The contract approval process then follows: — At the time of export, TIDD will enter into the TVD data base system details such as processing company ID, Contract number, buyer ID, volumes and dimensions to be supplied by species and product ID etc.; — TIDD will issue reports on monthly exports of processed timber products for each producer or exporter; — The central database at TVD will receive the list of bundle tag numbers and produce a report indicating the history of the wood in some sampled bundles; showing when and where processing was done, the ID numbers of the logs and the IDs and locations of the source trees involved, when and where the source trees were cut etc.; — After a successful reconciliation of acceptable data sets, TVD will issue the record of verification to TIDD. TIDD issues Export/FLEGT licence; — TIDD transmits data to CEPS for release of cargo for loading on the vessel. — CEPS release for export.
OUTPUT	— Buyers Registration Certificate; — FC Certificates/Licence to operate; — FC-TIDD approved sales contract; — CLC; — Tax clearance certificate, Product inspection report, CLC and Custom clearance.

PRINCIPLE 6	Trade All vendors/exporters have valid licence or permits to market timber.
CRITERION 6.2	Domestic Vendors have FC registration.
RESPONSIBILITY	FC-TIDD (checks on applications for registration by domestic vendors; checks on Vendor sites; checks Vendor purchases from Saw Mills).
PROCEDURE	— Vendor applies for inspection; — Vendor submits tax clearance certificate; — Issuance of inspection report by FC-TIDD; — Reconciliation of data by FC-TIDD; — FC-TIDD Input and output reconciliation; — TIDD will in future issue reports on monthly supply to domestic market of processed timber products for each producer.
OUTPUT	— Vendor’s valid FC registration licence; — FC Certificates/Licence to operate; — Product inspection report; — VAT registration certificate; — Income tax clearance certificate.

PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.1	Logger was not in default of stumpage fees or any other fees payable by loggers in Ghana.
RESPONSIBILITY	— TIDD (checks payment of stumpage and other fees prior to issuance of FLEGT licence); — FC-FSD (checks on payment of stumpage prior to renewal of Property Mark); — TREC (checks payments of stumpage prior to pre-qualification of bidders for competitive bidding);
PROCEDURE	Range supervisors generates weekly billing reports based on TIF. Forest District Accountant prepares contractor’s bill. Weekly contract bill/statement of account submitted. FC-FSD will issue reports on analysis of royalty invoices based on timber production for each producer. TIDD conducts reconciliation of financial flows. For exporters this will include: — Stumpage fees; — Approved Bank of Ghana Exchange control form A2; — Evidence of payments of letters of credit.
OUTPUT	Contractor’s bill, payment receipts Exchange control Form A2, Letters of Credit.

PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.2	Logger was not in default of ground rents.
RESPONSIBILITY	FC-FSD (checks on ground rent payment).
PROCEDURE	FC-FSD sends contractors monthly statements.
OUTPUT	FSD ‘contractors’ monthly statement, payment receipts.

PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.3	Exporter was not in default of export levies.
RESPONSIBILITY	TIDD (checks on payment of export levies prior to registration and issuance of FLEGT licences).
PROCEDURE	— Exporter presents export documentation; — TIDD determines which species attracts levy; — Exporter pays; — FC-TIDD issues permit; — FC-TIDD provides quarterly reports to MLFM, MFEP, Accountant General.
OUTPUT	Payment receipts and FC-TIDD monthly quarterly reports.

PRINCIPLE 7	Fiscal Obligations Neither the logger nor the Vendor was at the time of sale or export in default of fees, rents or taxes, prescribed by statute.
CRITERION 7.4	Neither Logger nor exporter was in default of corporate income tax.
RESPONSIBILITY	— FSD (checks income tax payments prior to property mark registration and allocation of resources); — TIDD (checks income tax prior to registration of exporters/domestic vendors of wood products).
PROCEDURE	Exporter or vendors submits income tax clearance certificates during property mark registration or renewal and registration with TIDD or renewal of certificate.
OUTPUT	Tax clearance certificate, Payment receipts.

4.   Licensing Procedure

As the designated licensing authority, TIDD will be responsible for issuing licences for all consignments. TIDD will rely on information from TVD confirming legal compliance of the shipment in question. The detailed management and licence issuance procedures will be developed during the pilot phase and will build on the existing TIDD procedures for permit issuance. The system will thus enable TIDD to issue consignment based licences to be issued for wood products exported against the legality definition. Data to be reconciled along the process chain is laid out in Table 1 as well as verification of procedures in Table 2.

At operational level, TIDD will reconcile the following: verification of documentation including production declarations and permits; field inspections to ensure compliance with the documented record; log and timber product tracking from source to point of export; verification of royalty and other payments; and random checks on logging areas, truck loads and processing plants. These checks will be supported by the TVD clearance to allow for issuance of the FLEGT licence. This will further be developed at the piloting stage.

The FLEGT licensing authority will have access to reconciled data at the various control points to enable it issue the licences. Licences issued by the authority will be randomly checked by the TVD to ensure that only export parcels that have complied with the legal requirements for sourcing harvest, transport, processing, trade and meeting its financial/tax obligations.

5.   The Timber Validation Department (TVD)

1.   Introduction

In the implementation of the LAS it is important that the principles of independence, transparency and credibility are respected. In this regard, a Timber Validation Department (TVD) will be created to perform the following functions:

(i)

Auditor in the operations of actors in the forestry sector. In this respect it will check on the status of implementation of regulatory function as prescribed the law and contained in the definition of legality framework. The TVD will use the verification procedures as outlined in Table 2 as the audit framework to guide the discharge of its verification functions;

(ii)	Reconciliation of datasets generated through field operations within the sector for the purpose of enabling the issuance system based licences.

Technical assistance will be sought to establish the management systems and verification protocols of the TVD as well as to provide a basis for establishing credibility of the LAS. This will also serve as a basis for building capacity.

2.   Institutional arrangement and staffing

The TVD will be established as a department within the FC and based at the HQ. The Secretariat of the VPA will form the nucleus of the new TVD and will be headed by a Director who shall be appointed through a competitive recruitment process. To encourage the introduction of new working culture, the TVD will to a large extent recruit personnel to fill vacancies during the pilot phase. A similar approach will be used beyond the pilot phase when the system is fully functional. Key personnel for the TVD will have to be graduates with strong background in ICT, Forestry, Wood Technology and Supply Chain Management. Key functions of the TVD shall include – reporting on infractions and make recommendations for improvement on the LAS and the regulatory framework to the Ministry of Lands, Forestry and Mines through the Chief Executive. To ensure empowerment of the TVD, the MLFM will introduce an LI as part of the first phase of reforms under the legislative review.

To ensure maintenance of high-calibre staff, the Director will be taxed to develop a program for training of the TVD staff. This will ensure that the skills of the TVD staff are continuously upgraded to keep in sync with the demands of the system.

To ensure independence and credibility, a Timber Validation Council (TVC) will be established to have oversight for the functioning of the TVD. The Council will ensure that the TVD functions in a transparent and independent manner. The Council will be made up of different stakeholders as indicated, but not limited, to the following:

(i)	Judiciary;

(ii)	Ministry of Lands, Forestry and Mines;

(iii)

Customs;

(iv)

Police;

(v)	Civil Society;

(vi)	Chief Executive of the FC;

(vii)

Industry;

(viii)

Director of TVD as ex-officio member.

The Council shall be chaired by the Chief Executive of FC. Heads of FC agencies may be invited for meetings where a subject matter resides in their area.

3.   Relationship with existing institutions

The detailed interaction of the TVD as an auditor with the existing Divisions/Units within the FC is depicted in the cross-functional process maps in appendix 1-10. The existing Divisions and Units will continue to perform their mandated functions while the TVD remain at an arm’s length as verifier. The TVD and TVC will report to the MLFM through the Forestry Commission.

4.   Financing

GOG will seek external assistance in the establishment of the TVD to assist in technical design and to help meet investment costs of establishing the TVD and its core functions. In the long term the GOG expects that fees/rents levied on the timber sector will cover the costs of operating the TVD and the regulatory controls governing timber extraction.

The overall implementation budget of the TVD will cover the following areas:

—	cost of procuring the tracking system,

—	cost of sourcing technical assistance through the accredited verifier,

—	logistics and ‘tooling up’ for TVD set as well as requirements of other Divisions for implementing the LAS,

—	cost of training of staff of the TVD as well as staff of the FC whose services are crucial to the implementation of the system,

—	Initial cost of assistance to industry to enable basic technological readiness (IT) for the operation of the system.

5.   Complaints procedure

Complaints on the operation of the TVD in the issuance of verification datasets (i.e. the confirmation of the end of the reconciliation and verification process allowing for issuance of FLEGT licences) will be received by the TVC. The purpose of the complaints procedure will be to provide an avenue for aggrieved parties to seek redress as well as to promote public confidence in the operation of the verification system. TVC will therefore appoint a team of adjudicators headed by a legal practitioner qualified to be a high court judge.

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(1)  An independent review was undertaken to assess this proposal in August 2008. It identified some areas of concern that both Parties agreed would be more appropriately considered in assessing the system once it is operational. These concerns will be considered also during the design and piloting of the LAS.

(2)  Forestry Commission issue a permit subjected to such terms and conditions as shall be specified therein for the salvage of trees from an area of land undergoing development such as road construction, expansion of human settlement or cultivation of farms.