By Jemima Garrett on Radio Australia

British think-tank Chatham House says Papua New Guinea could improve its international reputation and its forest governance by negotiating a forest partnership agreement with the European Union.

Photo: Papua New Guinea is the world's second largest producer of tropical logs but its timber industry has been under fire. (Credit: ABC licensed) 

In Chatham House's report, 'Illegal logging in PNG', the organisation found illegal practices in forestry are widespread and transparency in the industry among the worst in the world.

Chatham House's Sam Lawson says Papua New Guinea should look to follow the lead of other countries that have signed a Voluntary Forest Partnership Agreement on Forest Law Enforcement, Governance and Trade with the EU.

"They are very important in that they harness the assistance of the European Union in a significant manner in helping address forest governance issues within a country," Mr Lawson told Radio Australia's Asia Pacific program.

"It is the best thing that PNG could do right now in terms of finding ways to get help to tackle this problem."

Mr Lawson says even if Papua New Guinea does not negotiate a forest partnership agreement, a fully-fledged timber tracking system would improve its reputation.

"It is about setting up systems which are of an international accepted standard, which guarantee that each log that leaves the country is legally harvested and that involves chain of custody," he said.

"These are the kind of systems which are being set up by the EU in these VPA (Voluntary Partnership Agreement) countries and are what is increasingly required in order to be able to guarantee the legality of the timber, and ultimately to be able to guarantee that it has a market in the international market."

Government 'slow to act' on Commission advice

The PNG government has been criticised for its management of the timber industry and for being slow to act on the recommendations of the Commission of Inquiry into Special Agricultural and Business Leases (SABL).

However, it has won praise for a new National Responsible Development strategy - which aims to put the country's many natural resource industries on a sustainable footing.

Mr Lawson says a Partnership Agreement with the EU would also help.

"Other countries have reached out to the international community for their assistance and PNG has not been doing that. PNG has been left behind."

"There have been numerous bi-lateral agreements involving countries like Indonesia. Most of the countries of South East Asia are now talking to the European Union about this issue. PNG has remained very, very quiet."

Action is being taken, industry says

The executive officer with the Forest Industries Association, Bob Tate, says the EU has little to contribute to PNG's forestry industry.

"The European Union has a long history of total opposition to commercial forestry in Papua New Guinea, in particular, and the Pacific in the broader sense," he said.

"The Europeans are intent on the imposition of their view of the world. We sometimes call them eco-imperialists.

"They are more interested in protecting their trading advantages in wood products, especially against the emerging manufacturers in Asia and China in particular."

Chatham House and others are urging Papua New Guinea to strengthen its certification and chain of custody standards in the timber industry.

They found that the use of legally flawed Special Agricultural and Business Leases was one of the main problems in the timber industry in the country.

Mr Tate says the industry is already acting.

"The Forest Industries Association commenced the independent certification of legality compliance in PNG. We still strongly support those initiatives," he said.

"PNG has just completed its own, not government sponsored, but hopefully government-endorsed, legality standard and the FAI has obtained funding from the International Tropical Timber Organisation to build on that legality standard with an internationally acceptable chain of custody standard for PNG.

"[SABLs] are still only a minority of logging operations and we hope as the government ministerial committee works its way through the SABL debacle that many of those SABLs will be either rectified or terminated."