WORKING GROUP NO. 2 - TRADE, FINANCE AND INDUSTRIAL STRUCTURE

Introduction

• Questions abstract

• Problems needed to be identified

• What is the Problem?

• Production-Export side as detailed in different regions

• Consumption and Demand side

• Possible Solution

• No consensus

Problems

1. Impact of Trade is critically dependent on non trade governance issues: trade is a multiplier effect. If trade has a negative impact, increased trade will as well. Market and policy failures: no internalisation of externalities (trade favours lower cost producers)

2. Sequencing. Trade liberalisation happens without any regulatory regimes or in countries with weak institutions is wrong way round

3. Power of trade decisions does not lie with the people impacted by these decisions

4. Trade measures in one country result in costs to another country (footprint). China as a case soya bean.

Production and export problems

1. Other land uses such as agriculture and oil exploration and the trade in products coming from them probably have a bigger effect on forests than trade in forest products

2. Problems of ownership and tenure result in negative trade impacts. Ability to control tied to ownership. Ghana case study

3. Cheap imports

4. No interest for lesser known species

5. Tariff escalation: higher tariffs for processed products

6. Domestic markets are less well governed than export markets

7. Perverse subsidies

8. Illegal logging

Consumption/Demand problems

1. Lack of coherence between different policies (trade policy inconsistent with development policy)

2. Corruption in importing chain

3. Unsustainable consumption patterns, depends on definition of Sustainable Forest Management. Forest product consumer preferences shaped by corporate sector;

4. No consumer pressure in China and Japan. Swallow

5. Imports, reprocessing and exports complicate understanding trade flow

6. Lack of market signals for sustainable timber production

Solutions

General Solutions

1. Transparency; participation of civil society in decision making processes, support for independent monitoring

2. Better collection of trade data and management

3. Any trade agreement which has an impact on land use needs to be preceded by a sustainability impact assessment including full stakeholder participation

4. WTO needs to allow for observers of other bodies as well as civil society participation

Solutions re: Production, Consumption

1. National forest programmes, based on participatory approach

2. Sustainability Impact Assessment of any trade agreements, particularly agriculture negotiations

3. More emphasis on impact of agricultural subsidies and negative impact and empower the right forces

4. People cannot trade what they cannot control. Land rights and user rights should be clarified and enforced. Clear land rights would facilitate enterprise and trade

5. Decentralisation

6. Ensure no subsidies got to plantations; illegal supply should not undercut legal supply; paying for environmental services

7. Wait for markets to appear, market promotion

8. Get rid of tariff escalation

9. Institutional strengthening, consumer awareness, paying for environmental services, better internal regulation (concession bidding and forest taxation, monitoring and logging and monitoring of revenue flows)

10. Research is needed, better understanding. Grey area

11. FLEG(T) process (data, regional to international, link to other processes, independent monitoring); UNFF

Solutions re: Consumption, Demand

1. Changing way policies are made, governments work

2. Independent monitoring, transparency, chain of custody verification

3. Raising awareness, reducing paper consumption, education

4. Raising awareness

5. Improved data collection, chain of custody verification

6. Procurement policies and forest certification, short term displacement problems (regional-multilateral agreements)

7. Lack of regulation of Foreign Direct Investment by receiving country and the financial institution itself

DOCUMENTATION OF CHARTS:

SUPPLY-SIDE PROCESSES

• Cross-sectoral planning coordination (especially agricultural policies - important role NFPs) and discuss in Doha/WTO

• FAO NFP facility programme and cooperation

• Developing sustainable livelihoods for forest based communities (raising social capital)

• Decentralisation processes

• Managing cross-sectoral influences:

• Agriculture

• Energy

• Tourism

• Theoretical considerations:

• World Bank efforts

• Promotion of SFM:

• NFP

• NBSAP

• Certification

• Participation

• Regional C&I processes:

• National, regional and international initiatives on NFPs and NBSAPs

• Several certification initiatives

• Institutional strengthening and capacity building:

• National level

• Sub-national level

• Increase transparency

• Examples

• Bolivia, Mexico

•

• Ecuador (Green surveillance)

• Promote the use of non-traditional species

• Old story, why hasn't it worked?

• Increasing awareness/education/ understanding of the costs of non-sustainable forestry management and the adoption of alternative policy options (needs research)

• Transparency general principle

• Support independent monitoring

• Include participation of civil society in decision making processes

• Eliminate "perverse" subsidies

• Forest trade data collection and management at global level improved

DEMAND-SIDE ACTIONS

• General Recommendations:

• All actions need financial and technical support

• Capacity building

• Promote effective due diligence by investors in forestry

• Improved demand for certified wood products through public procurement and public awareness

• Decrease tariffs for wood products from sustainably managed forests

• Bilateral agreements (MOUs)

• Investigate potential to use existing money-laundering legislation

• Include SFM considerations in public procurement regulations (EU and other fora?)

• Demand side impacts:

• Reduce paper consumption in North

• Certification

• NGOs, Germany/USA

• Stop dumping

• campaigns against illegal unsustainable plantations

• WTO subsidies

• Improve financial conditions for sustainably produced timber

• USAID

SUPPLY-SIDE INSTRUMENTS

• Clear land ownership rights

• Diversity in ownership

• Land management planning

• Examples:

• Eastern Europe, Thailand

• Cameroon

• Promote payments, markets for environmental services

• Example:

• Costa Rica

• Log tracking/certification, NGOs activities

INTERNATIONAL ACTIONS

• Reform/improve trade regulations framework

• Increase transparency

• Support civil society participation unions?

• Increase equality:

• Support 677?

• Develop alternative channels

• Impact assessments:

• EU?

• UNFCCC:

• Increase forest lobby:

1. Get informed

2. Get involved

3. Get united (NGOs)

• Current decisions are not good for forests

• FLEG(T):

• Data and statistical analysis

• Regional & international

• Link to other merger processes

• Independent monitoring

• International legally binding instruments

• CBD/UNFF processes

• Agreed framework at global level on SFM definition (context: public procurement, non-discrimination)