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This study analyzes the impact of the EU′s policy to prohibit the import of illegally harvested timber on the trade of tropical timber and sawnwood. The analysis uses a difference-in-differences approach based on gravity models, with panel data from over 193 countries that trade tropical timber and sawnwood. The result of the analysis shows that the European Union Timber Regulation (EUTR) reduces the trade of illegally harvested timber. It further suggests that the EUTR caused a relatively larger reduction in tropical sawnwood (−0.21%) than that of tropical timber (0.07%). In addition, the Voluntary Partnership Agreement (VPA) appeared to cause a significant reduction in tropical sawnwood (−0.07~−0.05%), whereas tropical timber did not appear to have been significantly impacted. In particular, the reduction in timber exports in countries that have signed the VPA, which aims to encourage exports of legally produced timber, has significant implications for both the EU and timber exporters preparing for the VPA, as both parties strive to expand the VPA. The results of this study suggest that the EU needs to make additional efforts to address the decline in exports from countries that signed the VPA. [ABSTRACT FROM AUTHOR]

This study provides novel insights into the policy effects of timber legality verification methods, specifically Due-diligence (under the European Union Timber Regulation (EUTR)) and Due-care (under the Lacey Act), on coniferous and non-coniferous lumber trade, highlighting their significance in the context of global lumber trade. Timber legality verification plays a pivotal role in the global timber trade. We comprehensively assess the impact of verification methods on coniferous and non-coniferous lumber trade, utilizing two decades of trade data (1997–2017) across approximately 160 countries. We employ the difference-in-differences method based on the gravity model of international trade, utilizing robust export–import data and demographic profiles. Our findings demonstrate that the effect of EUTR on coniferous lumber imports ranged between −0.32% and −0.05%, and that on non-coniferous lumber imports ranged between −0.44% and −0.05%, whereas the effect of the Lacey Act on coniferous lumber imports ranged between −0.93% and −0.09%. Non-coniferous lumber imports remained unaffected. The Voluntary Partnership Agreement (VPA) led to decreased exports to the EU and US. Our findings hold two key implications. First, Due-diligence exhibits more consistent policy effects than Due-care. Second, supporting VPA-participating countries is crucial for facilitating timber trade. These insights inform timber trade policies and sustainable practices. [ABSTRACT FROM AUTHOR]