International Trade Requirements
International Trade Requirements
International Trade Requirements
Championing Fair & Sustainable Timber Trade
International Trade Requirements: Navigating Timber Legality in Global Markets
The sustainability and legality of the timber trade are major global concerns, with illegal practices costing timber-producing countries up to US$25 billion each year.
Malaysia plays an active role in international forums such as:
- FAO (Food and Agriculture Organization)
- ITTO (International Tropical Timber Organization)
- UNFF (United Nations Forum on Forests)
- CITES (Convention on International Trade in Endangered Species
Championing Fair & Sustainable Trade
Malaysia believes that trade rules should not unfairly restrict tropical timber products, especially those from developing countries. Instead, such rules should promote fair market access, respect national development goals, and encourage the sustainable and responsible use of natural resources.
How it Works
Businesses placing timber on the EU market for the first time must follow a “due diligence” process to minimise the risk of illegal timber entering their supply chain. This includes:
Tracking suppliers
Tracking suppliers
Knowing the tree species and country of harvest
Knowing the tree species and country of harvest
Performing risk assessments and taking steps to manage or avoid high-risk sources
Performing risk assessments and taking steps to manage or avoid high-risk sources
Tracking suppliers
Knowing the tree species and country of harvest
Performing risk assessments and taking steps to manage or avoid high-risk sources
Tracking suppliers
Knowing the Tree Species & Country of Harvest
Performing Risk Assessments & Taking Steps to Manage or Avoid High-Risk Sources
The regulation applies to both imported timber and timber harvested within the EU. Enforcement and Support
Each EU country appoints a competent authority to enforce the regulation and set penalties for non-compliance.
Additionally, the EU recognises Monitoring Organisations — private entities that provide ready-to-use due diligence systems for companies, helping them meet EUTR requirements.
EU Deforestation-free Regulation (EUDR)
The EU Deforestation-free Regulation (EUDR), adopted in November 2021, replaces the EU Timber Regulation (EUTR) and aims to ensure that products entering or leaving the EU do not contribute to deforestation or forest degradation.
Starting 30 December 2024 (or 30 May 2025 for small businesses), companies must ensure that commodities like timber, furniture, palm oil, rubber, cocoa, coffee, soya, and cattle are sourced legally and are fully traceable to deforestation-free areas.
Malaysia is actively working to align with EUDR requirements to maintain access to the EU market and uphold its commitment to sustainable forestry.
EUDR Key Requirements
EUDR Compliance & Enforcement
Under the EU Deforestation-free Regulation (EUDR), companies must ensure full traceability of products to their exact point of origin and prove they are deforestation-free and legally produced according to the laws of the source country.
Businesses must implement a due diligence system that includes:
- Risk analysis to identify deforestation risks in the supply chain
- Mitigation measures to address those risks
- Annual public reporting on due diligence outcomes
Failure to comply may lead to serious consequences, including:
- Bans on distribution
- Withdrawal or recall of products from the market
- Fines of up to 4% of annual turnover
Malaysia’s Initiatives on EUDR Compliance
As a major commodity producer, Malaysia is proactively addressing the impact of the EU Deforestation-free Regulation (EUDR) to ensure continued access to the EU market.
International Engagement
Malaysia, alongside Indonesia, is part of an Ad-Hoc Joint Task Force (JTF) with the European Commission to resolve EUDR compliance challenges. The JTF has met in Jakarta, Kuala Lumpur, and Brussels (2022–2024), focusing on five key workstreams:
- Smallholder inclusivity
- Certification schemes
- Traceability
- Scientific data on deforestation & forest degradation
- Data privacy protection
National-Level Coordination
Malaysia formed a dedicated task force Jawatankuasa Kecil Mitigasi ke atas Pematuhan Perundangan Perdagangan Antarabangsa (JKM3PA) led by the Ministry of Plantation and Commodities, working with:
- Ministry of Natural Resources and Environmental Sustainability
- Sabah Forestry Department
- Forest Department Sarawak
They meet twice yearly to align Malaysia’s forestry systems with EUDR requirements.
Upgrades in Traceability Systems
Each region in Malaysia is moving forward at its own pace to upgrade timber traceability systems — paving the way for full EUDR readiness.
- Peninsular Malaysia: Digitalisation of forest inventory and operations, targeted for completion in Q3 2025.
- Sabah: Collaborating with a European firm to enhance Sabah TLAS with EUDR-aligned sustainability features.
- Sarawak: Upgrading REVLOG 2.0 with mapping, e-removal pass, and QR code tracking by May 2025.
Industry Initiatives
The timber industry is actively tackling EUDR challenges through strategic global engagement, knowledge sharing, and advocacy. Major initiatives include:
- Position Paper by the Malaysian Timber Industry on EUDR – May 2022
- Coalition on Sustainable Timber Position Paper – February 2024
- Joint Global Letter – Calling for legal clarity and fair transition under EUDR – April 2024
- Stakeholder Engagements in Brussels – Dialogue visits in Sept 2022, May 2023, and May 2024
The European Union Forest Law Enforcement, Governance & Trade (EU-FLEGT)
The European Union (EU) is one of Malaysia’s top export markets for timber products. To support legal and sustainable timber trade, Malaysia was among the first countries to begin negotiating a Voluntary Partnership Agreement (VPA) with the EU under the Forest Law Enforcement, Governance and Trade (FLEGT) initiative. This agreement aims to ensure that only legally sourced timber enters the EU market.
While the FLEGT-VPA is still being finalised, Malaysia has already implemented several interim measures to help its timber industry comply with the EU Timber Regulation (EUTR), which took effect in March 2013. These include:
MYTLAS
(Peninsular Malaysia Timber Legality Assurance Scheme)
Sabah TLAS
(Sabah Timber Legality Assurance System)
STLVS
(Sarawak Timber Legality Verification System)
These systems verify the legality of timber products, giving European buyers confidence in Malaysia’s responsible forestry practices.
EU Timber Regulation (EUTR)
What is the EU Timber Regulation (EUTR)?
The EU Timber Regulation (EUTR) is part of the European Union’s effort to stop illegal logging and trade, introduced under the FLEGT Action Plan in 2003 and enforced since 3 March 2013.
What Does it Do?
The EUTR prohibits the sale of illegally harvested timber and products made from such timber in the EU market. This includes a wide range of items such as:
How it Works
How it Works
Businesses placing timber on the EU market for the first time must follow a “due diligence” process to minimise the risk of illegal timber entering their supply chain. This includes:
Tracking suppliers
Knowing the Tree Species & Country of Harvest
Performing Risk Assessments & Taking Steps to Manage or Avoid High-Risk Sources
The regulation applies to both imported timber and timber harvested within the EU. Enforcement and Support
Each EU country appoints a competent authority to enforce the regulation and set penalties for non-compliance.
Additionally, the EU recognises Monitoring Organisations — private entities that provide ready-to-use due diligence systems for companies, helping them meet EUTR requirements.
Peninsular Malaysia Timber
Legality Assurance System (MyTLAS)
Malaysia supports global efforts to stop illegal logging and timber trade. In line with the EU Timber Regulation (EUTR) and while waiting for the finalisation of the EU-FLEGT VPA, Malaysia introduced the MyTLAS for Peninsular Malaysia.
MyTLAS is designed to verify the legality of timber and timber products exported to the EU. It ensures that all timber comes from legal sources and is traceable throughout the supply chain. MyTLAS includes clear control procedures, institutional checks and strict implementation across Peninsular Malaysia
Malaysia is confident that MyTLAS meets the EU’s due diligence requirements, helping local exporters maintain access to high-value international markets. Similar systems—Sabah TLAS and Sarawak STLVS—are in place for other regions, strengthening nationwide timber traceability and compliance.
Peninsular Malaysia Timber Legality Assurance System (MyTLAS)
Malaysia supports global efforts to stop illegal logging and timber trade. In line with the EU Timber Regulation (EUTR) and while waiting for the finalisation of the EU-FLEGT VPA, Malaysia introduced the MyTLAS for Peninsular Malaysia.
MyTLAS is designed to verify the legality of timber and timber products exported to the EU. It ensures that all timber comes from legal sources and is traceable throughout the supply chain. MyTLAS includes:
Clear control procedures
Institutional checks
Strict implementation across Peninsular Malaysia
Malaysia is confident that MyTLAS meets the EU’s due diligence requirements, helping local exporters maintain access to high-value international markets. Similar systems—Sabah TLAS and Sarawak STLVS—are in place for other regions, strengthening nationwide timber traceability and compliance.
U.S. Lacey Act: Combating Illegal Timber Trade
The U.S. Lacey Act, originally enacted in 1900, was amended in 2008 to become the first law in the world to ban trade in illegally sourced wood products.
Under this law, it is illegal to import, export, sell, or transport any plant or plant product—including timber and wood-based goods—that has been harvested or traded in violation of local, state, tribal, or international laws.
What Does it Cover?
The Lacey Act applies to the entire supply chain, meaning:
- All parties involved are equally responsible
- It includes raw logs, sawntimber, plywood, furniture, pulp, paper, musical instruments, and more
- It does not apply to food crops or certain scientific specimens
Why it Matters
If illegal activity is found at any stage in the supply chain, the product cannot be legally sold in the U.S. market. This ensures greater transparency, legality, and environmental accountability in global timber trade.
The law is enforced by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS), which provides updated product schedules and guidance.
Australian Illegal Logging Prohibition Act 2012 (AILPA)
Australia’s AILPA aims to stop the import of illegally harvested timber and support global efforts in promoting legal timber trade. The law applies equally to Australian-grown and imported timber, including products like sawntimber, plywood, and furniture.
What the Law Says
Under AILPA:
Illegal timber is defined as timber harvested in violation of laws in the country of origin.
The law targets Australian businesses, requiring due diligence to ensure timber is legally sourced.
It aligns with World Trade Organization (WTO) standards and treats all suppliers equally.
Malaysia is confident that MyTLAS meets the EU’s due diligence requirements, helping local exporters maintain access to high-value international markets. Similar systems—Sabah TLAS and Sarawak STLVS—are in place for other regions, strengthening nationwide timber traceability and compliance.
Under AILPA:
- Illegal timber is defined as timber harvested in violation of laws in the country of origin.
- The law targets Australian businesses, requiring due diligence to ensure timber is legally sourced.
- It aligns with World Trade Organization (WTO) standards and treats all suppliers equally.
Malaysia is confident that MyTLAS meets the EU’s due diligence requirements, helping local exporters maintain access to high-value international markets. Similar systems—Sabah TLAS and Sarawak STLVS—are in place for other regions, strengthening nationwide timber traceability and compliance.
Leading the Way in Traceability and Sustainability
Malaysia actively participates in global efforts to ensure the sustainability and legality of the timber trade. With US$17–25 billion lost annually due to illegal logging worldwide, Malaysia collaborates with international organizations such as the FAO, ITTO, UN Forum on Forests, and CITES to protect its forestry sector and support other tropical timber-producing nations.
Malaysia advocates that trade regulations should not act as barriers for developing countries but should promote fair access to global markets while ensuring the responsible use of natural resources.
Adhering to Global Timber Standards
Malaysia ensures its timber trade aligns with stringent international regulations:
- Verifying that timber is legally harvested and sustainably sourced
- Prohibiting trade in illegally sourced wood products
- Australian Illegal Logging Prohibition Act 2012
Compliance is maintained through certification systems like the Malaysian Timber Certification Scheme (MTCS) and traceability initiatives, ensuring Malaysian timber meets legal and sustainability criteria in global markets.
Jump to
International Trade Requirements
The European Union Forest Law Enforcement, Governance and Trade (EU-FLEGY)
EU Timber Regulation (EUTR)
Malaysian Timber Legality Assurance Scheme
U.S. Lacey Act
Australian Illegal Logging Prohibition Act 2012
International Trade Requirements
Sustainability and legality of the timber trade are issues of international concern, and are estimated to cost timber producing countries as much as US$17-25 billion per annum in lost revenue. Malaysia is actively involved in numerous international forums, such as the FAO, the ITTO, the UN Forum on Forests and Convention on International Trade on Endangered Species (CITES) to promote not just Malaysian interests but also those of other tropical timber producing countries. Malaysia’s stand has always been that legislative efforts must never be used as a non-tariff barrier to restrict the imports of tropical timber products into environmentally-sensitive markets, and that implementation of such efforts must take into account developing countries’ level of development and the right to optimise the use of its natural resources.
The European Union Forest Law Enforcement, Governance and Trade (EU-FLEGY)
The EU market is one of Malaysia’s high-value export markets for timber products. Malaysia was one of the first countries to start negotiating a Voluntary Partnership Agreement (VPA) with the EU and negotiations are currently ongoing.
The EU-FLEGT VPA is a mechanism to combat illegal logging and facilitate trade in legal timber. The VPA under the FLEGT is an action plan signed between wood producing countries and the EU. It aims to ensure that wood being sold in the EU is legal. Malaysia is supportive of this EU initiative and is in the final stages of negotiation to conclude a FLEGT VPA.
Whilst the EU-FLEGT VPA is being finalised, Malaysia has come up with an interim measure called the Malaysian Timber Legality Assurance Scheme (MYTLAS) in order to help Malaysian companies comply with the importing criteria stipulated by the EU Timber Regulation (EUTR), which came into force on 3 March 2013.
EU Timber Regulation (EUTR)
The EU Timber Regulation (EUTR) is part of the European Union’s policy to fight illegal logging and associated trade which was defined in 2003 under the
Enforcement and Products Covered
Since 3 March 2013, the EU Timber Regulation prohibits the first placing of illegally harvested timber and products produced from such timber on the EU market. The Regulation obliges operators on the EU market to have systems in place that assure the timber is from legal origin. The definition of legal timber is based on the law of the country of harvest. The Regulation covers a large range of timber products including furniture, pulp and paper, logs and sawntimber.
How It Works
Operators who are placing timber or timber products on the EU market for the first time must exercise “due diligence”; the Regulation applies to timber harvested within the EU or imported, and to imported timber products. The “due diligence” places the onus on operators to undertake a risk assessment and risk management exercise so as to minimise the risk of placing illegally harvested timber, or products containing illegally harvested timber on the EU market. This means that they need to have access to information on, among others, their suppliers, the tree species and the timber’s country of harvest. All these are steps to ensure that their supply contains only legally harvested timber.
Each country is to have an EU-designated competent authority that will be responsible for the enforcement of the Regulation. Countries in the EU will also determine the type and range of penalties that will apply in case of non-compliance with the Regulation.
The Regulation provides for Monitoring Organisations to be recognised by the European Commission. These organisations are private entities, and will provide EU operators with due diligence systems that are ready to use. Operators can thus develop their own system or use one developed by a monitoring organisation.
Malaysian Timber Legality Assurance Scheme
Malaysia is supportive of the global initiatives in combatting illegal logging and trade of illegal timber. In support of the EU Timber Regulation (EUTR) and pending the conclusion of the EU FLEGT VPA negotiation, Malaysia commenced implementation of the Peninsular Malaysia Timber Legality Assurance Scheme [MYTLAS (Peninsular Malaysia)] and Sabah TLAS to assure the legality of its timber and timber products exported to the EU. Similarly, Sarawak has also implemented its Sarawak Timber Legality Verification System (STLVS) to strengthen the traceability of its legal timber production supply chain.
This PDF booklet contains information on the scope of MYTLAS, its control procedures, institutional arrangements and its implementation in Peninsular Malaysia. Malaysia is confident that MYTLAS meets the requirements of the due diligence procedure under the EU Timber Regulation (EUTR).
U.S. Lacey Act
The Lacey Act is a U.S. law originally passed in 1900 to protect wildlife from trafficking. In 2008 it was amended to include plant products, making it the world’s first ban on the trade of illegally sourced wood products. Under the amended Act, it is unlawful to import, export, transport, sell, receive, acquire or purchase, in interstate or foreign commerce, any plant taken or traded in violation of the laws of the United States, a U.S. state, tribal territories, or foreign countries.
The Lacey Act covers the entire supply chain for timber and timber products. Illegal activity at any point means that the product may not be legally traded in the United States. All parties are equally liable under the law, not just the first placed into the U.S. market.
The ban on trade in illegally sourced wood products applies to all products, except for certain scientific specimens and food crops, and has been in effect since the law was amended in 2008. It includes common products such as raw logs, sawntimber, plywood, composite materials, furniture, pulp, paper and musical instruments. The updated schedule is available from the Animal and Plant Health Inspection Service (APHIS), the U.S. agency that implements the Lacey Act.
What is considered ‘illegal’ under the Lacey Act?
There are two parts to a Lacey Act violation:
First, an underlying law must be violated. There are only six specific types of laws which, if violated, mean that the resulting product is illegally sourced. They concern forestry, taxes, and export. Other activities which may be illegal in the country of origin (e.g. labour violations) are not covered by the Lacey Act. The six categories are:
Second, the resulting product must be traded to or within the United States. This second transaction may trigger a Lacey Act Violation.
Although the law is complex, it boils down to four basic requirements:
The Lacey Act is violated when someone trades illegally-sourced wood or products in U.S. interstate or foreign commerce.
How do Malaysian companies comply with the Lacey Act?
Malaysia is a manufacturing hub of raw wood materials, whether locally-sourced or imported from other countries. Malaysian companies whose main export market is the US usually source for certified timber (whether PEFC- or FSC-certified) or legally-extracted timber raw materials, to feed into their production line.
With Malaysia’s own Malaysian Timber Certification Scheme (MTCS), which is PEFC-endorsed, it is easy enough to source for certified timber from sustainably managed forest. For further information on the MTCS, please click here.
Australian Illegal Logging Prohibition Act 2012
Australia’s Illegal Logging Prohibition Act 2012 (AILPA), is designed to promote the trade in legally harvested timber and timber products in Australia. The legislation restricts the movement of illegally logged timber into Australia and comes in two parts – primary legislation, followed by detailed regulations.
The legislation promotes trade in legally harvested timber by restricting the importation of illegally logged timber and forms part of international efforts to do so.
The Act defines illegally logged as: “in relation to timber, means harvested in contravention of laws in force in the place (whether or not in Australia) where the timber was harvested.”
Timber that has been harvested in accordance with the legislative regime of the relevant country would be considered to be legally logged.
This legislation:
The Act asserts a high-level prohibition on importing or processing illegally logged timber. In order to prosecute someone against this prohibition, it will need to be proven that an Australian importer or processor knowingly, intentionally or recklessly imported or processes illegally logged timber.
Within two years of the commencement of the legislation, the regulations will outline the due diligence process for importers and processors of domestic timber regarding certain timber products. Regulated timber may include raw and sawntimber, paper, pulp and furniture. Due diligence requirements will vary according to the product.
So far, Malaysian companies have had no problems complying with the AILPA.
