Asia Pacific Economic Cooperation (APEC) was initiated in 1989 and initially comprised the (then) six ASEAN members and six countries deemed as their "official Pacific dialogue partners", Australia, Canada, Korea, Japan, New Zealand and the United States. More latterly membership has been granted to China, Hong Kong, China-Taipei, Papua New Guinea, Mexico and Chile. APEC was established as an informal consultative forum particularly to promote trade liberalisation. Most particularly, the organisation supports the concept of "open regionalism". That is, the promotion of regional growth and development without discriminating against the rest of the world.
The centre of APEC's influence on trade over the coming decades is the Bogor Declaration of Resolve signed in 1994 which proposes a timetable for the liberalisation of trade across the region. According to the Bogor timetable negotiations to achieve free trade will commence in 2000 and be completed within 10 years for the developed nations, 15 years for the newly industrialised countries and 20 years for the developing countries. In keeping with the concept of "open regionalism" trade concessions would then be extended to non-members on a reciprocal basis to promote world-wide trade liberalisation. It is envisaged that tariff reductions will commence from their Uruguay Round bound levels, or for non-WTO members (Brunei, China, China-Taipei, Papua New Guinea, Vietnam) according to a mutually agreed path.
For the Asia-Pacific region then, APEC may well provide a short-cut to future trade liberalisation under the GATT and may well form the basis of a non-European trade bloc. In terms of forestry trade the eighteen members of APEC control a substantive portion. In 1994 APEC members accounted for 48 percent of forest products exports and also 48 percent of imports.
Figure 1: Share of World Trade by Region (1994)
Assuming the terms of the Bogor Declaration are adhered to, then by 2010 a substantive framework for free-trade within the region is likely to be in place. Although APEC is not designed to become an economic and customs union like the European Union, nor a free-trade area like that covered by the North American Free Trade Agreement, it provides a smaller, and hence more flexible, forum than the WTO or GATT, to facilitate progress in trade liberalisation. Given the relatively strong support by APEC members for the zero-for-zero agreement on wood products (USA, Canada and New Zealand were proponents), the variety of free-trade relationships between the various members (NAFTA, ASEAN, ANZCER, Hong Kong and Singaporean free-ports), and the already generally low tariffs in the forest products sector, APEC probably provides the best path toward creating a largely free-market bloc for trade in forest products. Given the importance of the Japanese, Korean and Chinese markets in the region, the extent to which these countries are prepared to undertake further liberalisation, and the extent to which the ASEAN countries are prepared to offer concessions will be primary determinants of APEC's influence on the forestry trade.
ASEAN was established in 1967 as a means of promoting economic growth, regional peace and stability, and collaboration and assistance in, and between, the countries of South-East Asia. The original membership comprised Indonesia, Malaysia, Philippines, Singapore and Thailand. Brunei joined in the 1970's and Vietnam in July 1995.
In 1977 the ASEAN nations reached an agreement on the establishment of ASEAN preferential trade arrangements. However, by 1987 only 5 percent of trade between member states was covered by the arrangements due to provisions allowing "sensitive" products to be excluded. In 1987 an agreement to restrict the levels of "sensitive" products to 50 percent of the value of trade was reached. In 1992 an agreement establishing a Common Effective Preferential Tariff (CEPT) scheme was initiated. At the same time agreement to establish an ASEAN Free-Trade Area (AFTA) in 2008 was reached. The AFTA agreement proposed tariffs on manufactured and processed agricultural goods be reduced to a maximum of 20 percent over the subsequent eight years, and further reduced to a maximum of five percent in the following years leading to the implementation of a free-trade area in 2008. In 1995 an agreement to accelerate AFTA implementation to 2000 was reached.
For forestry, the major implications of ASEAN and AFTA are to confer preferential advantages to the large producers (Malaysia and Indonesia) in, particularly the Thai market, but also in the Philippines and Brunei. The importance of sectors such as plywood to Indonesia and Malaysia are likely to cause some competitive tensions between the two while the relative strength of forestry in these two countries may serve to dampen development prospects particularly for Vietnam and the other emerging Mekong countries in the absence of protective measures.
The South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) was established in 1981. The Agreement is a non-reciprocal arrangement under which Australia and New Zealand offer preferential trade access to the developing nation members of the South Pacific Forum. For most products this entails duty-free access. The agreement is designed to ameliorate the large deficits run by the island countries in their trade with Australia and New Zealand.
The relative strength of the Australasian forestry sectors and the already relatively low tariffs for forestry products mean SPARTECA has very limited and insignificant implications for forestry trade.
In 1982 Australia and New Zealand signed a Closer Economic Relations Trade Agreement (ANZCERTA) aimed at phasing out tariffs between the two countries and the progressive elimination of import licensing and trade quotas. The Agreement is now fully implemented and has probably had quite a significant impact on the development of the Australasian forestry trade, particularly given New Zealand's concurrent expansion in forestry production.
A significant change over the past decade has been New Zealand radiata pine's superior competitiveness in the Australian market over North American sawn timber, due in part, at least, to the tariff advantages. New Zealand has substantially eroded particularly Canadian market share in the Australian market during this period. Australia's tariff reductions in the GATT round will have reduced New Zealand's advantage and, given the onset of Australia's own increased production, its markets are likely to become increasingly competitive.
As noted earlier, at the time of preparing this paper neither China nor China-Taipei are formal contracting parties to the GATT nor foundation members of the World Trade Organisation (WTO). However, both countries have expressed a desire to join the WTO and have entered into market access negotiations designed to reduce trade barriers in each to acceptable levels. Negotiations have presently deadlocked over the extent of reform required, however, negotiations on forest products tariffs appear to be close to settlement with some relatively substantive tariff reductions likely to be agreed. Early reports of Chinese negotiations suggest tariffs on wood and pulp products are likely to halve (on average) while paper products are likely to reduce by even slightly more (on average). Table 5 provides a summary of likely wood product tariff changes in response to China's accession to the WTO.
Table 5: Estimated Chinese Tariff Reductions to Meet WTO Criteria
Product |
Average post-Uruguay Applied Tariff |
Anticipated Average WTO Accession Settlement |
Wood Products (Ch 44) |
20 % |
10 % |
Wood Pulp (Ch 47) |
2% |
1 % |
Paper and Paper Products (Ch 48) |
31 % |
14 % |
Source: Author (Anecdotal)
Although there are presently few indications of when China and China-Taipei's Accession might take place, and consequently when such tariff reductions might be implemented, the present impasse allied with the length of the Uruguay Round implementation phase suggests that the bulk of tariff gains from such accessions will not be realised until well into the next decade.
