|CCP: GR-RI-ME-OF 01/6-Rev.1
COMMITTEE ON COMMODITY PROBLEMS
JOINT MEETING OF THE
Rome, Italy, 3-5 July 2001
REPORT OF THE SEVENTH SESSION OF THE SUB-GROUP ON HIDES AND SKINS
1. The Seventh Session of the Sub-Group on Hides and Skins was held in Rome from 4 to 6 June 2001. It was attended by delegates from the following countries and Member Organization: Algeria, Angola, Botswana, Brazil, Bulgaria, Ecuador, Ethiopia, European Community, Finland, Germany, Greece, Guatemala, Islamic Republic of Iran, Kenya, Libya, Malaysia, Mali, Mexico, Nicaragua, Niger, Nigeria, Philippines, Spain, Sudan, Tanzania and the United Kingdom. Observers attended from the Common Fund for Commodities (CFC), the Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE), the Eastern and Southern Africa Leather Industries Association (ESALIA), the International Trade Centre UNCTAD/WTO (ITC) and the United Nations Industrial Organization (UNIDO).
2. The Session was opened by Ms Paola Fortucci, Director, Commodities and Trade Division, on behalf of the Director-General. The Session elected Mr P. Hellemaa (Finland) as Chairperson and Mr N. De Luna (Philippines) as Vice-Chairperson. The provisional agenda (CCP: ME/HS 01/1) was adopted.
3. The Sub-Group reviewed recent developments and the short- term outlook for the world hides and skins and derived products markets with the help of document CCP: ME/HS 01/2 and additional information provided by delegates on their respective countries. The Sub-Group noted that prices had recovered since mid-1999, sustained by improved demand, especially for high-quality leather. It also noted that the supply of bovine hides continued to increase in 2000, with higher output in developing countries. Trade in bovine hides had recovered, and export earnings, sustained by higher prices and the rise in the volume of shipments, increased in 2000. However, while export prospects appeared good in general, it was stressed that efforts needed to be pursued to improve quality, so as to enhance the value of the sector and its contribution to poverty alleviation, especially for some African exporting countries.
4. The Sub-Group noted that in the European Community, output of bovine hides had declined in 2001, as food-safety concerns had reduced beef demand. These difficulties were expected to continue until consumer confidence in meat was restored, and this may take two to three years.
5. The Sub-Group noted that because of the rise in prices, tanning industries in some producing countries were unable to compete with exporters for supplies of raw materials. As a result, many tanneries were operating well below capacity. In response, some countries had introduced export restrictions.
6. Some delegates noted the increasing importance of camel hides and reptile skins and requested that, if possible, the Secretariat provide information on a broader range of hides and skins.
7. Following a request made at its Sixth Session, the Sub-Group reviewed linkages between trade and environmental policies on the basis of document CCP: ME/HS 01/3. It noted that the analysis in the document was rather theoretical, but considered that it provided a useful foundation for further work which should be pursued.
8. The Sub-Group agreed that the tanning industry should seek to minimise any environmental pollution, and recognised the need for regulatory frameworks to support this objective. However, in noting that the industry was subject to increasingly stringent regulations, it cautioned that regulations needed to be framed with care so as to avoid damaging the competitiveness of the industry. The high costs of compliance with environmental policies, the limited monitoring capacity in some developing countries and the possibility that environmental regulations might be misused as non-tariff barriers to trade were also noted. Some delegates suggested that market-based measures, such as tradeable emission quotas, might be more effective and less commercially damaging than inflexible regulations or the use of taxes on pollution. The Sub-Group recommended that further analysis be undertaken, but that it should incorporate empirical data into the conceptual framework so as to produce results of direct relevance to the hides, skins and leather sector.
9. The Sub-Group noted the offer by the representative of UNIDO for her organization to act as a focal point for environmental issues in the tanning and leather industries. It looked forward to continued support from UNIDO in furthering efforts to reduce environmental damage from tanning.
10. At previous Sessions the Sub-Group had expressed a wish that it be kept informed of the prevalence and impact of restrictive trade policies, and on this occasion it reviewed export restrictions on the basis of document CCP: ME/HS 01/4 prepared by the Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE). The Sub-Group expressed its thanks to the representative of COTANCE for preparing and introducing the document. It noted in particular the tabulated data on export constraints in the document, and requested that its members notify the FAO Secretariat or COTANCE should any of this information be incorrect.
11. The Sub-Group expressed concern at the disruption caused to global trade by export restrictions on hides and skins. At the same time, it noted that restrictions are typically imposed in order to meet economic and other objectives of producing countries, and that export restrictions may be considered in the next WTO round of trade negotiations.
12. The Sub-Group considered this topic on the basis of Secretariat document CCP: ME/HS 01/5, supplemented by two presentations. The Director of ICEC (the Italian certifying body for tanneries and leather) presented a programme developed on behalf of Italian importers to prepare a standard framework for imported hides and skins. The framework stressed various aspects of quality of raw material, of product information, and timeliness of delivery. Each exporting country would specify its own standards, within the common framework, for the grades they wish to export.
13. The delegate of the United Kingdom, on behalf of the Leather Technology Centre, demonstrated a multi-lingual computer programme on CD ROM which provided information for training and reference purposes on the causes, prevention and remedies of the major defects in hides and skins. While the programme is directed at production in Europe, much of its content would be applicable to other countries.
14. The Sub-Group noted that low quality of hides and skins constrained many developing countries from achieving their potential in production and tanning of hides and skins. This resulted in a considerable loss in foreign earnings and employment. It was stressed that the quality of hides and skins is determined largely by the standard of animal husbandry. Systems to identify hides and skins as they move through the processing chain and to encourage improvement on farms will assist in improving the quality of hides and skins.
15. The Sub-Group requested that a workshop be held in Africa in order to assist African countries identify actions required to meet the quality requirements of importers. It requested that the Secretariat arrange the workshop with support from the Common Fund and other appropriate agencies.
16. The Sub-Group reviewed its development strategy assisted by document CCP ME/HS 01/6, supplemented by a document from its Fifth Session, CCP ME/HS 96/9.
17. The Sub-Group noted that activities pursued in commodity development have been in line with this strategy and agreed that the priorities identified in its original strategy document should by-and-large remain its priorities for development activities in the future. Some additional items were suggested, including requirements for promoting the image of the industry, for attracting investment and for capacity building in producing countries. However, it also noted that the so-called strategy might more accurately be described as a list of items for attention rather than as a strategic plan. It requested the Secretariat to develop the list into a strategic plan, incorporating realistic goals. In doing so, the Secretariat would liaise with delegates to the Session and with other relevant players in the hides and skins sector. A draft of the new strategic plan should be presented to the Sub-Group at its Eighth Session.
18. In its role as International Commodity Body under the rules of the Common Fund for Commodities, the Sub-Group assessed the progress which has been made on its on-going project and reviewed the efforts made to secure assistance for additional commodity development activities from the Common Fund for Commodities. It did so on the basis of document CCP: ME/HS 01/7.
19. The Sub-Group noted that the project "Raw Hides and Skins Grading and Pricing System in Selected African Countries", financed by the Common Fund for Commodities, was launched in 1999. It noted further that implementation of the project was in line with the work plan, with the exception of some activities in Zambia which were behind schedule.
20. The Sub-Group was informed that as a result of the introduction of the grading system the quality of raw hides had improved in Ethiopia, Kenya, Tanzania and, to a lesser extent, Zambia. Workshops had increased awareness of the value of the hides and skins among producers, butchers, selectors of the hides and skins, and others in the processing chain.
21. Delegates from the countries involved in the project provided additional information on the progress achieved and expressed satisfaction with the results so far attained. The Sub-Group noted that a mid-term evaluation of the project is expected to take place later in 2001. It requested that its own assessment, that satisfactory progress has been made, be transmitted to the Fund.
22. The Sub-Group also reviewed the progress of two project proposals which had been submitted to the CFC for consideration:
23. The Representative of the CFC provided the Session with comments and suggestions on how these two project proposals might be modified so as to meet the requirements of the Fund. The Sub-Group, having endorsed the proposals, requested that their proponents should revise them, with assistance if required from the Secretariat, the CFC or other appropriate agencies, so that they might be successfully resubmitted to the Fund.
24. The representative of the ITC suggested two new project ideas to the Sub-Group, one being that the CFC support future "Meet in Africa" trade fairs, the other that a project be developed to commercialise hides and skins production in Africa. The Sub-Group urged that the ITC formulate them, at least as project outlines, for consideration by its next Session.
25. The Sub-Group noted with satisfaction that changes to the Chapter 41 of the Harmonised System of International Trade Classification had been agreed by the World Customs Organisation. The Sub-Group, at its Fifth Session, had proposed such changes so that the classification system would better reflect the changed composition of world trade in processed and semi-processed leather. It thanked the Secretariat, COTANCE, and the WCO for their efforts in having the revised classification adopted.
26. The Sub-Group urged that all countries ensure that operators and customs officials receive appropriate advice and assistance in order that they would be prepared for the implementation of the revised classification at the beginning of the year 2002.
27. The Sub-Group reviewed those decisions of the Sixty-third Session of the Committee on Commodity Problems related to the operations of intergovernmental commodity bodies, on the basis of paragraphs 25 to 32 of the Report of the Sixty-third Session of the CCP, CL 120/6.
28. The Sub-Group considered that its functioning had been largely in line with the recommendations of the CCP and that no change was required. Delegates expressed satisfaction with the work of the Sub-Group, including particularly the provision of statistical information.
29. The Sub-Group agreed that its Eighth Session would be held in about two year's time. Unless there was an invitation from a Member country to host the Session, it would be expected to be held in Rome, in the same week as the 19th Session of the Intergovernmental Group on Meat. The exact date and place of the Session would be determined by the Director-General in consultation with the Chairperson.
30. The Sub-Group requested the Secretariat to prepare the Report of the Session and send it initially to each Delegation which might advise of any serious omission or error. Following final clearance by the Chairman the Report would be considered adopted. The Sub-Group requested that the Report be despatched to Member Governments within two weeks of the Session.