Legal framework for forest management and timber trade of Ecuador

Forest governance

As of April 2018, a new Environmental Organic Code (COA) started to be applied in Ecuador.
This policy instrument was approved in April 2017 by the National Congress. This COA replaces the former forest law, the environmental code and all the decrees declared by national authorities. The new COA addresses issues such as climate change, protected areas, wildlife, forest heritage, environmental quality, waste management, environmental incentives, coastal marine zone, mangroves, access to genetic resources, biosecurity, biocommerce, among others. The roles related to the management of forest resources are now clearer, giving total control of natural forest ecosystems to the Ministry of Environment (MAE) and that of forest plantations to the Ministry of Agriculture (Ministerio de Agricultura – MAG).

Legal rights to harvest

The responsibility for industrial plantations in the Ministry of Agriculture was assigned to a sub secretary of forest production. There is no coordinated approach to natural forest management in Ecuador; many potential management techniques have not yet been put into practice. Before 1980, several licensed logging concessions operated in defined areas with specified annual yields. Concession management was abandoned in the early 1980s. Ecuador now uses a system of short-term logging licenses which, in addition to its impact on the quality and efficiency of logging operations, has encouraged foresters to consider other ways of ensuring future long-term supplies of timber, particularly through the development of forest plantations and agroforestry. (ITTO, 2011).

Taxes and fees

There is only one forest tax in Ecuador. It is based on the harvested volume in a natural forest, at currently USD 3.00 per m3, and is paid directly to the state bank account. There is no export tax, but a tax clearance certificate is required to export (See Export certificate).

The taxation (and other payments) system is otherwise considered complex in Ecuador, having to do with official (and sometimes non-official) taxes, customs, social security, and payments to local governments for services (garbage, energy, water, etc.). There is an updated document available from the Ministry of foreign trade, which gives a general view of the tax systems but also the incentives for investors in Ecuador (Guía del inversionista, PRO ECUADOR). For example: a subsidy of up to 75% of the costs of forest plantations, plus a 15-year income tax exemption (Acuerdo-Ministerial-No-468).

Timber harvesting activities

The Ministries of Environment (MAE) in natural forests, and of Agriculture (MAG) in forest plantations, respectively, are the national forest authorities that have to authorize harvesting; in both cases through issuance of a Harvesting permit (Licencia de Aprovechamiento Forestal) and transport permits, or waybills (Guías de Circulación de Madera) that are based on an approved Cutting license (Programa de corta) – See below.

When it comes to wood from natural regrowth on deforested land and agroforestry systems, the use and transport is carried out based on a cutting plan (Programa de corta – PC) for over 12m3, or a special form.

Cutting license (Programa de corta)

Forest legislation for natural forests establishes that prior to the issuance of the Cutting license, it is necessary to prepare an Integral Management Plan (PMI) and get approval from the MAE.

Harvesting in governmental natural production forests also requires a forest inventory, the preparation of a forest management plan*, the physical demarcation of concession limits, and social payments.

* In case the extraction of wood is carried out without making use of heavy machinery, the activities fall under the Program of Simplified Forest Management (PAFSI), while extraction with heavy machinery falls under the Sustainable Forest Management Program (PAFSU).

The Agreement 125 (Acuerdo 125) is the guide through the process to be followed for obtaining a Cutting license from the MAE (for natural forests), which includes submitting the following information:

• The location of the harvesting area and a copy of the document (Certificación de propiedad) proving ownership issued by the Property registry office of each County (Cantón);
• A copy of personal identification documents for the owner and the harvesting manager;
• A document designating the Legal representative (for a company or a community);
• A sketch-map of the location of the property;
• The standing volume of timber to be harvested, per species (forest inventory);
• A document (Carta de Delegación), signed by the owner delegating, and by the harvesting manager taking, responsibility for implementation of the Cutting license, and notarized.

In the case of forest plantations, there is a simplified process to be approved by the MAG, whereby up to five documents are requested by the online system of the MAG to obtain the Cutting license, according to the "Agreement 327" (Acuerdo 327):

• Property registration
• Identity Documents
• Volume of wood
• Delegation of the seller
• If the seller is a company, power of attorney delivered by the partners.
  
  

Approval of the Cutting license and obtaining a Harvesting permit

With the information of the Cutting license, the concessionaire / forest manager has to go to the relevant ministry (MAE for natural forests, MAG for plantation forests) and request inspection for approval. The approval must be given out within 15 days after application. Once the Cutting license has been approved, the Harvesting permit can be requested from the relevant Ministry; it will be valid for one year (and can be extended once, for 9 more months). The request has to be accompanied by information about the timber volumes to be harvested, matching or fitting within the inventory on the approved Cutting License. Once the Harvesting permit is issued, the owner may start harvesting the wood.

Cutting licenses and Harvesting permits shall receive a code and be registered in the “Forest data registry" (Registro del libro forestal) and the administrative information and control system SAF (Sistema de Administración Forestal), at the Provincial Directorate of the MAE. The MAG uses another forest production information system called SPF (Sistema de Producción Forestal) for forest plantations. For thinning, other requirements apply. Pruning can be done without a Harvesting permit, but in case the pruned products are going to be sold, a Transport license is needed.

Third parties’ rights

The COA recognizes the rights of free, prior and informed consent (FPIC) with regard to plans and programs for prospecting, exploitation and marketing of non-renewable resources that are found on communal lands, for communities and indigenous peoples that may be affected environmentally or culturally; to participate in the benefits that those projects generate, and to receive compensation for any social, cultural and environmental damage caused to them.

Trade and transport

Transport permit / Waybill (Guía de circulación)

Both ministries (MAE, MAG) have local offices but the responsibility of controlling timber transport is with the MAE and the National Police, Environmental Protection Unit (UPMA).

The competent authority verifies the data entered into the system and gives way through the system for transport permits to be issued electronically. The beneficiary will be responsible for any misuse. The Transport permits are valid for the estimated time of transport (72 hours max). The origin (forest), the destination, and all trucks used for transport, small or large, must be registered in the system. The volume of each transport is automatically discounted from the Harvesting license.

Forest control and the administration of forest products have been improved thanks to the new online Forestry Administration System (SAF), launched in 2009. This is part of the SUIA (Sistema Único de Información Ambiental, or ‘Single Environmental Information System’ in English) implemented by the Government of Ecuador. It includes a computerized permit system, for which registration and login are required.

Export permit and phytosanitary certificate

The exporter must request an Export license, called DAE (Declaración Aduanera de Exportación - Customs Declaration for Exportation, in English), at the Ecuapass portal of Ecuadorian Customs and fill out the forms. After approval of the Province Director (Ecuador has Provinces and Counties) of the relevant ministry, Environment (native forest) or Agriculture (plantation forest), the user will receive a notification through the portal. Besides this Export permit, a Phytosanitary certificate has to be requested, after which an inspection is carried out by Agrocalidad. Documents such as management plan and other documents related to the production of timber or wood products must be arranged by the exporter, otherwise the products cannot be transported from the production unit. 

The above-mentioned online platform SUIA, which includes systems like SAF, makes the export process virtually paperless.