WORKING GROUP NO. 3 - GOVERNANCE AND TRADE

• Incentives for plantation development provided by consumption has negative social and environmental consequences

• "Internal" temperate trade growing - has negative consequences too (e.g. reduction in management when cheaper to import from elsewhere)

• Very little consumer pressure to improve management in some major importers (whilst own exports may require improved management) (e.g. China 10 million m³ imports and one own forest certified)

• "Country of origin" of product may not be origin of timber (in trade terms) = C.O.C. problem

• Energy policy - oil company power to override governments and other sectors

• Few public policy levers available

Demand-side/consumption problems

• Trade/import policies inconsistent with development cooperation policies, e.g. low level of linkage with producer government capabilities to capture resource rents

• Tropical timber a relatively low proportion of imports (when it is zero proportion - problem too - no leverage)

• Any action which can take likely to have some perverse consequences (e.g. displacing illegality)

• Illegal/corrupt transport and import chain

• Few mechanisms for deciding what/how much to consume

• Economic policy tends to override all sectoral policies

• Challenge to gain control over domestic market first (management for export market generally "better")

• NFP is promising

• Little plantation investment where natural forest (still) available

• High consumer country tariffs (20-30% on processed timber?) plus rules on domestic controls limits ability to promote local processing

• Security forces, customs, ports and harbours not working in concert with forestry governance

• Low formal constitutional benefits to local society leads to incentive for informal/illegal forestry

• Consumer "countries" have responsibility to invest in producer country capacity and to sort out import barriers

• Ability to control tied to ownership

• "Capacity-building" can be mis-targeted and is meaningless without stimulating incentives for improvement - "carrots and sticks"

• In "out of control" situations log export bans seen as one of few governance options. Others:

• Increase engagement/stakeholder participation-negotiation

• Improved log-lumber tracking systems

• Too many dogmatic/crass macro-economic prescriptions

• Massive revenue losses from illegality = domestic market less controlled than export market (Latin America and Central Africa)

• Small group of producers/buyers have most power (Brazil, Mexico, Central Africa)

• Changes in policies/subsidies in other countries + trade liberalisation = rise of land use alternatives (e.g. soybeans)

• Will out-compete forestry

• Roads - catalytic of markets

• Impact of trade critically dependent on non-trade governance decisions

• Link to other policies, e.g. beef tariffs + soybeans as inputs to beef production chain

• Soybeans in Brazil might help forest management in China!

• Small number of big companies in control of cash crops

Context: Tropical timber production - from "forest rich" areas

• Domestic market may be big

• Different types of producers

• Small-scale - follow the frontier - "termites". Legal and illegal

• Big. More static producers

• Should be able to control because all goes through key gateways (e.g. Belem)

• Trade focused on small number of species - but key factors can enable use of a wide range of others (Latin America + Central Africa)

• Protest/advocacy groups

• Significant effect on export companies leaving free-reign of domestic enterprises

• Consumer pressure and government policy has stimulated certification

• Secured market share (Bolivia)

• Removal of subsidies to parastatals has stimulated community forestry = socially vital

• Regional trade agreement helps this (e.g. NAFTA)

• Trade agreements may increase gap between well-managed export sector and poorly-managed domestic sector

• Knock-on effects: erosion of local governance or stimulus to better pratice?

• Cheaper/more available (subsidised) plantation timber out-competes natural forest (community) management (e.g. US + Chile plantations)