FRANCES MAPLESDEN
Forest Research, Rotorua, New Zealand
MARY CLARKE
New Zealand Institute of Economic Research, Wellington,
New Zealand
Trade liberalization and the subsequent increase in international trade has been credited with much of the world's unprecedented economic growth in the last 55 years. This expansion in trade has been apparent in the forest products sector with considerable expansion in exports of most products, and an increase in the number of exporters and importers. Export volumes of sawn timber, for example, have doubled since 1970. This expansion in exports reflects the increased global consumption of industrial wood, a trend which is slowing slightly in developed economies, but which continues in developing economies.
The globalization of trade in forest products has generated an interest in issues which affect market access for these products, particularly the measures which impede or restrict trade. Whilst the world has made great progress in cutting tariff rates since the signing of the General Agreement on Tariffs and Trade (GATT) in 1947, the use of non-tariff measures (NTMs) has increased in the last 20 years. The NTMs are less transparent than tariffs and are therefore inherently difficult to identify and quantify. By their very nature they defy a fixed definition because it is difficult to determine the motivation for their existence - whether they are being used to restrict trade, or for other legitimate purposes. The NTMs are not necessarily consistent or inconsistent with GATT or World Trade Organization (WTO) agreements. Their economic and environmental impacts, however, will vary and may be of greater consequence when combined with other NTMs and where tariffs are present.
This paper reviews of the liberalization of trade in paper and wood-based products, and discusses the issues regarding both tariff and non-tariff barriers to the trade. The APEC economies are the particular focus of this paper. The region accounts for half of the global trade in forest products; it has been the subject of much of the recent research on trade barriers.
This section provides an overview of trade patterns in the APEC region and puts the discussion of tariff and non-tariff trade barriers into context.
APEC member economies account for approximately 50 percent of the global trade in forest products. The region dominates global exports of chips and particles (82 percent of the total) (Figure 1), and industrial roundwood (64 percent of the total) (Figure 2). However, the region accounts for significantly less of the global processed forest product imports, particularly pulp and paper (40 percent of total). Japan's dominance as an importer in the region and its preference for importing raw materials is reflected in Figures 1 and 2.
Japan and North America dominate world production and consumption of industrial forest products. China, however, is a rapidly emerging consumer of forest products in the Asia-Pacific region. Canada and the United States of America accounted for 38 percent and 25 percent respectively of APEC economies' forest product exports in 1995. The next largest exporter was Indonesia, accounting for close to 7 percent of exports, mainly of hardwood plywood. The United States of America is also the largest importer of forest products, accounting for 31 percent of forest product imports in 1995. Japan is another major importer of forest products taking 30 percent of the total, followed by China which accounts for approximately 10 percent of imports.
Much of the trade in forest products among APEC economies is within regions or between neighbouring economies. Forest products trade between Canada and the United States of America, for example, is substantial (Figures 3 and 6). Intra-regional trade has grown following the increase in regional trade agreements such as the North American Free Trade Agreement (NAFTA) between Canada, the United States of America, and Mexico[4] and the Closer Economic Relations Agreement (CER) between Australia and New Zealand.
The involvement of APEC developing economies in the forest products trade has increased. China, the Republic of Korea and Chinese Taipei have increased their imports of logs and sawn timber from the developing economies[4] such as Papua New Guinea, the Philippines, Thailand and Malaysia (Figures 2 and 3).
The close regional ties between Canada and the United States of America mean that nearly all United States of America imports of forest products come from Canada; the only exceptions are plywood and veneer, which are predominantly imported from Indonesia and Malaysia (Figure 4). In contrast, Japan's forest product imports tend to come from several APEC economies. For example, Japan imports logs from the Russian Federation, United States of America, Malaysia, New Zealand, Chile and Papua New Guinea (Figure 2).
The dominant change in forest product trade among APEC economies has been the decline in the importance of trade in unprocessed forest products. Since 1990, export values have increased 40 percent for sawn timber, 52 percent for wood-based panels, and 300 percent for paper and paperboard[4]. There has also been an expansion in the trade of processed forest products such as furniture and carpentry products[5]. This increase can be attributed to a number of factors. Government policies encouraging domestic processing, and environmental pressure to ban the tropical log trade are key influences. These pressures have increased the scarcity of large-diameter logs suitable for sawing, forcing a shift to engineered wood products utilizing small-diameter logs. In addition, gains in efficiency and increased use of recycled material, alternative raw materials and residues have enabled growth in the output of products derived from roundwood without increasing roundwood consumption[5].
Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Japan's dominance as the major consumer of forest products within the Asia-Pacific region means it has an important influence on the types of forest products traded within the region. Japan's preference for importing raw materials rather than finished products may, therefore, serve to limit the expansion of the trade in processed wood products.
The dominant change in forest product trade among APEC economies has been the decline in the importance of trade in unprocessed forest products. Since 1990, export values have increased 40 percent for sawn timber, 52 percent for wood-based panels, and 300 percent for paper and paperboard[4]. There has also been an expansion in the trade of processed forest products such as furniture and carpentry products[5]. This increase can be attributed to a number of factors. Government policies encouraging domestic processing, and environmental pressure to ban the tropical log trade are key influences. These pressures have increased the scarcity of large-diameter logs suitable for sawing, forcing a shift to engineered wood products utilizing small-diameter logs. In addition, gains in efficiency and increased use of recycled material, alternative raw materials and residues have enabled growth in the output of products derived from roundwood without increasing roundwood consumption[5].
Japan's dominance as the major consumer of forest products within the Asia-Pacific region means it has an important influence on the types of forest products traded within the region. Japan's preference for importing raw materials rather than finished products may, therefore, serve to limit the expansion of the trade in processed wood products.
Some of the factors influencing the shift to value-added exports, particularly the use of alternative raw materials, have also contributed to the increasing substitution of softwood sawn timber for limited supplies of hardwood sawn timber[5; 6]. This increased substitution of softwoods for hardwoods has led to increased trade by softwood exporting economies such as New Zealand and Chile[4].
Another change in the type of forest products being traded is the decline in importance of tropical forest products. Tropical hardwoods account for 20 percent of industrial roundwood exports, 10 percent of sawn timber, less than 10 percent of pulp and paper exports, 39 percent of wood-based panel exports, and 71 percent of plywood exports in the Asia-Pacific region[5]. The decline in tropical log and sawn timber exports is a result of Malaysian reductions in harvest levels in response to environmental concerns and export market conditions[6]. The decline in tropical forest products trade also reflects increased domestic consumption (and export of processed products) by developing producer economies and recent reductions in demand in Japan[6].
In mid-1997, several important Asian currencies experienced considerable depreciation. In May 1998 the Malaysian, Philippine, Korean and Thai currencies were all trading at approximately two-thirds their previous year's value. The Indonesian rupiah had dropped to 25 percent of its May 1997 value[6].
The FAO report State of the World's Forests 1999[6] identifies four key impacts of the Asian economic crisis on forest products trade. Firstly, there was a reduction in demand for all forest products, most significantly affecting China, Japan, the Republic of Korea and Thailand. Exchange rate depreciation increased the competitiveness of exporting economies such as Indonesia and Malaysia but this was offset by a reduction in demand. The crisis also led to a fall in prices for forest products throughout the Asia-Pacific region, which in turn led to reduced earnings in the forestry sector followed by processing plant closures, and reduced harvests[6]. The effects of the crisis are not depicted in Figures 1-6, as the data were produced before the Asian economic crisis. Although the directions of trade have changed only slightly, the magnitude of trade in some products has changed considerably.
The economic importance of forestry and forest products varies markedly among the various APEC economies. Trade in a number of products is concentrated, with typically one or two importing economies accounting for up to 90 percent or more of the trade. It is therefore not surprising that concerns over trade barriers for these products are focused on relatively few economies. As products become more highly manufactured and as trade becomes more diversified, trade measures will tend to become less of an issue. Concerns relating to non-tariff measures therefore seem to be more related to raw or semi-processed raw material rather than highly manufactured products[3].
Implicit in the argument for free trade is the proposition that a situation where there are barriers to trade is worse than one where free trade prevails. Tariff and non-tariff barriers must, therefore, involve a `cost' for society. While in the case of tariff barriers the government receives a revenue from imports, consumers are worse off and so too are producers. Consumers are worse off because they end up paying more for, or receive less of, imported forest products than they would have had there been no barriers to trade. Producers are worse off because trade barriers encourage them to produce forest products when they lack a competitive advantage. Resources are misallocated; they would have created greater benefit had they been otherwise allocated.
Subsequent to the Tokyo Round of GATT negotiations, considerable effort has focused on reducing tariff barriers to trade. The relative transparency of tariffs has made this possible. The momentum picked up in the 1990s with the Uruguay Round where the forest product negotiations took place in separate fora. There, a number of countries signed up to a zero-for-zero agreement to eliminate tariffs on pulp and paper products by 2004. A similar agreement for wood products was unsuccessful, but some significant tariff concessions were, nevertheless, achieved. As progress has been made on reducing tariff barriers to the forest products trade, attention is increasingly turning towards non-tariff barriers. The Uruguay Round solution to interventions more traditionally thought of as non-tariff barriers was to bind those applied on imports at their tariff equivalent levels, and to commit members to educing their effective subsidies on exports. Attempts at beginning to address the less traditional constraints on trade to come out of the Uruguay Round are the Agreement on the Application of Sanitary and Phytosanitary Measures, and the Agreement on Technical Barriers to Trade. Interventions defended on the grounds of environmental concerns were not addressed.
In 1994, APEC leaders agreed to a goal of free and open trade in the APEC region by 2010 for developed countries and by 2020 for developing countries. In an effort to start taking steps toward this goal, APEC Trade Ministers in mid-1997 called on APEC members to nominate sectors for Early Voluntary Sectoral Liberalization (EVSL). Within a group of over 60 proposals, the forest products sector received nominations from the United States, Canada, Indonesia and New Zealand. The four countries' forest products proposals were subsequently merged together in order to constitute the Forest Products EVSL initiative. New Zealand agreed to act as overall country coordinator for the proposal. Canada, Indonesia, and the United States have remained active proponents of the proposal in a co-sponsor role.
The merged proposal was intended to address trade barriers in the forest products sector (wood, rattan, pulp, paper, printed products, wood furniture, wood chemicals and pre-fab housing) in a comprehensive manner, including tariffs, non-tariff barriers, standards, and economic and technical cooperation. Each of the four co-sponsors assumed responsibility for overseeing one element of the initiative: New Zealand for tariffs, Canada for standards, Indonesia for economic and technical (eco-tech) cooperation, and the United States for non-tariff measures.
Towards the end of 1997, APEC leaders selected forest products as one of 15 EVSL sectors. Within that group of 15, forest products was selected as one of the nine for immediate action.
However, in 1998 some APEC countries expressed reservations about the tariff portions of the initiatives. A major contributing factor was the Asian market crisis. The lack of backing of key members, such as Japan, and the United States' position not to support the proposed tariff reductions unless a majority (85 percent) of APEC members did so as well, prompted a decision late in 1998 to move the tariff portions to WTO. The purpose of the move was to seek a critical mass of support for concluding an agreement in all sectors. Work on the other elements of the sectoral EVSL initiatives continues within APEC.
Accelerated tariff liberalization
The tariff initiative has become known as Accelerated Tariff Liberalization (ATL) in WTO fora. The ATL proposal is:
For wood chemicals, wood, rattan, and wood furniture, developed countries would eliminate tariffs by 1 January 2002. The proposal suggests that developing countries should strive to meet the same targets but accepts that, in special circumstances, and on a case-by-case basis, elimination could be delayed until 1 January 2004.
For pulp, paper, and printed products, existing parties to the Uruguay Round zero-for-zero agreement would accelerate tariff removal to 1 January 2000. Others would attempt to remove tariffs by the same date, but developing countries could delay tariff removal until 1 January 2002, on a case-by-case basis for a limited number of specific products.
The above targets have been endorsed three times by APEC Trade Ministers - at Kuching in June 1998, Kuala Lumpur in November 1998, and Auckland in September 1999.
Non-tariff measures
The second element of the APEC Forest Products EVSL initiative concerns non-tariff measures. The initiative has involved the completion of a study of non-tariff measures. Forest Research, a New Zealand-based firm, was selected by the APEC Secretariat to undertake the study. The analysis and key findings of this initiative are summarized in this paper.
Standards and conformance
The third element involves working to develop an APEC position on standards involving the use of forest products. An APEC sub-committee has been established for this purpose. The principal objectives of the sub-committee are to:
encourage alignment of members' standards with international standards;
achieve mutual recognition among APEC economies of conformity assessment in regulated and voluntary sectors;
promote cooperation for technical infrastructure development in order to facilitate broad participation in mutual recognition arrangements in both regulated and voluntary sectors; and
ensure the transparency of the standards and conformity assessments of APEC economies.
The majority of the sub-committee's work has focused on wood products and their use in construction applications.
Economic and technical cooperation
The fourth element of the APEC Forest Products EVSL initiative is economic and technical cooperation (so called eco-tech), which is technical assistance to developing countries to support the broader APEC goals of trade liberalization and trade facilitation. The APEC members have agreed that candidate initiatives for economic and technical cooperation should focus particularly on programmes which further a number of environmental goals.
Trade in forest products has generally benefited from successive post-war GATT agreements and other international initiatives. Forest product tariffs now tend to be low. Nonetheless, some issues remain and continue to create problems for exporters of forest products. These include:
Tariff escalation: This refers to the extent to which tariff levels rise with the level of value added processing of forest products. The effective rate of protection on the higher value added products is considerably more than that suggested by the actual tariffs as these products compete against products made locally using tariff free raw materials. Major markets where exporters of forest products contend with tariff escalation are Japan, Korea, China, India, Malaysia, the Philippines and Thailand.
Generalized System of Preferences (GSP): The GSP provides lower duty rates for developing country exporters, and has resulted in many products from these countries entering developed countries free or at a reduced rate of duty. Developed country exporters are placed at a disadvantage in some markets. Chile, Malaysia and Indonesia, each of which are significant competitors in the international markets for forest products, are classified as developing countries.
Bilateral and multilateral agreements: The preferences allowed under these agreements work in favour of the signatories and to the competitive disadvantage of other forest product exporters. For example, the North American Free Trade Agreement puts non-signatory exporters on the backfoot relative to Canadian exporters in the lucrative United States market for solid wood products.
Slightly differentiated products: In some markets different tariffs are applied to slightly differentiated forest products. Differential rates on rough, planed and sanded sawn timber in the Japanese market, and on plywood in the United States market, places softwood products at a competitive disadvantage. While the Taiwanese tariffs on plywood and the tariffs applied in China to log and sawn timber favour the import of softwood products.
If the ATL initiative gains traction in WTO negotiations, the implications would be:
Tariff elimination: As the name given this initiative suggests, the primary objective of ATL is to accelerate the elimination of tariffs. It shortens the timeframe for eliminating tariffs on pulp and paper agreed to at the Uruguay Round, and proposes a timetable for eliminating tariffs on wood products, following the failure to strike zero-for-zero deals at the Uruguay Round. Table 1 summarizes the implications.
Table 1: Forest product tariffs under current and proposed liberalization initiatives
Pre-Uruguay Round |
Post-Uruguay Round |
ATL (proposed) | |
Wood |
|||
Wood in rough |
0.0 |
0.0 |
0.0 |
Wood-based panels |
9.4 |
6.5 |
0.0 |
Semi-manufacturers |
0.9 |
0.4 |
0.0 |
Wood articles |
4.7 |
1.6 |
0.0 |
Total |
2.0 |
1.1 |
0.0 |
Paper |
|||
Pulp and waste |
0.0 |
0.0 |
0.0 |
Paper and paperboard |
5.3 |
0.0 |
0.0 |
Printed matter |
1.7 |
0.3 |
0.0 |
Paper articles |
7.3 |
0.0 |
0.0 |
Total |
3.5 |
0.0 |
0.0 |
Notes:
(a) Tariffs are average rates for products imported by developed countries
(b) For wood products, the Uruguay Round tariff reductions were fully implemented as of January 1999
(c) For pulp and paper, the Uruguay Round reductions will not be fully implemented until January 2004
Source: USTR-CEQ 1999
Tariff reductions: The key objective of ATL is to eliminate rather than merely reduce tariffs. However, it is likely that if the proposal is agreed to, some countries will seek to achieve their tariff removal undertakings through staged reductions.
Reduction in tariff escalation: The ATL, which spans the forest products value chain, will further and hasten the reduction in tariff escalation by eliminating tariffs altogether.
Reduction and elimination of preferential margins: Accelerating the liberalization of tariffs on forest products will reduce and eventually eliminate preferential margins over a shorter timeframe than agreed to at the Uruguay Round.
Two recent (1999) studies[7; 8] have attempted to assess the incremental economic impacts resulting from changes in the timing and scope of forest product tariff reductions, as proposed in the ATL initiative. The first was conducted by a United States interagency group under the oversight of the United States Trade Representative (USTR) and White House Council on Environmental Quality (CEQ)[8]. The second is by economists Sedjo and Simpson[7]. Both use a partial equilibrium framework to conduct their analyses and draw their conclusions. Key conclusions common to the two studies were that:
Aggregate world trade in forest products will increase, but the increase will be modest as most of the gains from tariff liberalization have already been realized. The USTR-CEQ study estimates that growth will be 2 percent at a maximum.
The composition of trade in forest products will comprise more value added forest products.
Changes in production and consumption will also be small. The USTR-CEQ analysis puts the change for most forest products at less than 1 percent by 2010 compared to baseline.
The more liberal environment will favour countries with planted forest estates, such as New Zealand and Chile.
On a world scale, however, the change in the rate of harvest will be small. The USTR-CEQ estimate is less than 0.5 percent.
The NTMs can be defined as government laws, regulations, policies and or practices that either protect domestically produced products from the full weight of foreign competition, or artificially stimulate the export of particular domestic products. The NTMs include both formal institutional measures designed to restrict or distort trade patterns, and other restrictions that act as impediments to trade. `Natural' barriers such as cultural attitudes, language and distance from markets, and normal competitive conditions, are not NTMs.
The most comprehensive study to date of NTMs in the forest products sector focused on APEC economies[3]. In this study measures were classified according to the motivation for their introduction: social and political, health and safety, or environmental.
Social/political measures are motivated by factors such as a desire to increase domestic growth, add value to existing resources, protect current local employment and processing, increase the local wood supply to provide the basis for a new or expanded industry, and increase exports. Included in this category are measures such as surcharges, import and export taxes, licences, and quantity control measures, where the motivation is either unstated or is clearly not environmental.
Health and safety measures are intended to protect the economy and its population from the risks of introduced pests and diseases or injury from inappropriate use of materials. Measures covered by this category are those concerning phytosanitary and quarantine requirements, and the codes and standards relevant to the use of wood in structural and non-structural end-uses. Many of these measures fall into the category of impediments rather than formal barriers.
Environmental NTMs include harvesting restrictions where the reason for the restriction is clearly stated as environmental, certification and labelling requirements, and technical standards designed to achieve particular environmental goals such as, for example, a mandated minimum recycled fibre content in paper. Some may query whether measures aimed at `improving our environment' should be regarded as NTMs. However, given that a number of environmental measures have impacts on trade patterns, albeit as a by-product of the intended outcome, these impacts need to be recognized and acknowledged. Bans or quotas introduced for environmental reasons will have the same trade impacts as those justified on social or political grounds. It would be a nonsense to ignore the impacts of the former while addressing the latter.
Despite claims that NTMs have proliferated in recent years, a significant reduction in the incidence of import related NTMs in APEC economies has been reported in the last 10 years[9]. Reasons for this reduction are many and varied ranging from unilateral reform by individual economies, through impacts of subregional trading arrangements to the results of commitments made as part of the Uruguay Round. The APEC members have, in turn, pledged to a number of initiatives that are intended to facilitate trade and will further reduce the incidence of NTMs. Included in these are measures to reduce the transaction costs associated with complex customs procedures, and costs of health and safety. The goal is simplified, harmonized and transparent customs rules and procedures throughout the region, and a reduction in costs of compliance with diverse standards and compliance costs. However, the recent APEC study[3] identified that NTMs affect forestry and forest products trade in all APEC member economies and that major gains have, as yet, to be achieved.
Most economies provide some form of incentive for afforestation. The extent of assistance in the processing sector is more difficult to discern, although it is present in many of the economies.
Other widely encountered NTMs that have significant trade impacts are logging bans, restrictions on the export of unprocessed material, and quotas. These measures are significant in Indonesia, Malaysia, Thailand, the United States of America and Canada. Customs and entry procedures are an issue for some products and economies, as are phytosanitary regulations. Codes and standards, particularly building codes that discriminate against wood, are of concern in the Republic of Korea, the People's Republic of China, Japan and Chinese Taipei. The non-transparent route that is required for standards acceptance is a major concern in Japan.
Illegal activities, although not a category of NTM, are often the result or consequence of some NTMs. The information available on illegal logging and trading in Indonesia, Thailand, Malaysia, China, and the Russian Federation suggests that this activity is significantly distorting trade.
The incidence, impact and issues relating to NTMs motivated by social and political, health and safety, and environmental considerations is discussed below in more detail.
Quantitative restrictions and/or quantity controls have been identified as the most common NTMs applied to the forest products trade. However, because at times there can be a multiplicity of reasons for the introduction of a particular measure with different rationales being given prominence, any attempt at a simple classification of NTMs invariably results in overlap among the various categories. Bans, quotas, entry procedures and even afforestation subsidies can all be characterized, or partially justified, as environmental measures.
Of the various social and political NTMs identified in the APEC study[3] bans and quotas put in place with the goal of capturing an economic benefit for the wood-producing economy appear to have had the most obvious and visible trade effects. North American and Asian log export bans, for example, have quite clearly affected the international log trade.
Bans and quotas, while the most visible of measures, may not be the most trade distorting. They are associated with a limited number of economies and products. This is also the case with industry and export support programmes, entry procedures and para-tariff measures.
Most APEC economies provide afforestation incentives to some classes of wood producers. Even when these incentives are significantly modified or even phased out completely, as is the case in some APEC economies, the impact of past subsidization on forest products trade can persist for many years.
Few direct subsidies to forest product processing appear to exist in APEC economies. Of greater importance are likely to be indirect subsidies, tax concessions and other NTMs that reduce the cost of individual production inputs, that is, raw materials, labour, energy, and transport. Determining the economic impact of these subsidies, however, is difficult because of the variety of forms the subsidies take and the differences in processing technologies among APEC economies. Economies such as New Zealand, Canada and Chile have apparently reduced subsidies but there has been little change in economies such as Japan and the United States of America.
Government assistance to processing industries often involves reducing production costs through low stumpage fees, afforestation subsidies, tax concessions, assisted transport and the provision of infrastructure, such as roads and power generation. The plethora of assistance mechanisms that exist, and the difficulties associated with disentangling true comparative advantage from subsidized advantage, make it difficult to assess the extent to which government assistance creates a barrier to trade.
Codes and standards are necessary adjuncts to trade as they define the product or service passing between producer and consumer. In APEC economies, the main issues in relation to building codes and standards as NTMs include:
differing cultural expectations;
building codes which favour non-wood products;
non-transparent approval systems for the acceptance of new wood products;
non-acceptance of foreign testing methods; and
prescriptive codes and standards, in particular the Japanese Agricultural Standards.
Code harmonization, the development of international standards and the move to performance-based standards will facilitate trade but the slow progress to date suggests that this is one area where gains may only be realized very slowly.
Standards in relation to plant health are generally acknowledged as legitimate, since introduced pests and diseases can have devastating effects on the health of domestic forests. However, the complexity and severity of the requirements and the manner in which they are enforced may have such a substantial effect on trade that they are interpreted as obstacles to trade by exporting countries[10]. Exporters also perceive the costs associated with conforming to phytosanitary rules as being non value-adding compared with other `fitness for purpose' requirements such as kiln-drying or preservative treatment. The APEC study[3] noted the concerns listed below that are perceived by exporting economies as generating obstacles to trade in forest products:
restrictive measures imposed without a formal risk assessment to justify them;
an increasing trend towards imposing restrictions for phytosanitary reasons, particularly in the United States of America and Mexico;
bureaucracy associated with phytosanitary administrative procedures that inhibit the flow of information about requirements and result in time delays;
lack of technology in some developing economies necessary to meet the phytosanitary requirements of some markets.
Assessing the economic impact of environmentally motivated NTMs is difficult as such measures are not easily distinguished from other NTMs.
In recent years, environmentally motivated NTMs have been growing in prominence. They have generated a considerable degree of uncertainty in many markets for three reasons.
Firstly, environmental NTMs are not technically trade impediments and some of these measures have the potential to have positive influences on trade and resource management. The WTO allows members to adopt measures that are inconsistent with traditional trade objectives. These exceptions include measures necessary to protect human, animal and plant life or health, which relate to the conservation of exhaustible natural resources. However, the measures can also result in impacts on trade.
Secondly, environmental measures, such as certification, are considered to be outside the influence of GATT and WTO. In the language of trade negotiators, trade restrictions are confined to formal institutional measures that restrict trade and are the subject of normal international trade agreements as determined by organizations such as WTO[10]. Certification and some environmental measures appear to fall outside this ambit. Adding to the ambiguity, the United Nations Intergovernmental Forum on Forests (IFF), the central arena of the international forest policy debate, urges countries to consider the potentially mutually supportive relationship between sustainable forest management, trade, and voluntary certification and labelling schemes operating in accordance with relevant national legislation. It also urges economies to endeavour to ensure, as necessary, that such schemes are not used as a form of disguised protectionism, and to help to ensure, as necessary, that they do not conflict with international obligations.
Thirdly, distinguishing environmental NTMs from other trade measures is often difficult. The same instruments, such as afforestation and reforestation subsidies, are often used to target more than one objective, for example, forest conservation and future commercial timber production. The impact may well be positive on the environment but potentially distorting on trade. The effects of such measures on economies and trade will depend on how the measures are formulated and applied. Recently, considerable attention has focused on the application side by developing countries. The concern is about discriminatory treatments such as similar standards not being applied evenly to timber products and competing substitutes, and a tendency to target tropical forest products. Such actions have the capacity to divert trade in favour of the non-discriminated countries. In the APEC region, the Association of South East Asian Nations (ASEAN) economies, particularly Malaysia and Indonesia, have been vocal about the use of trade restrictions on environmental grounds. Forest products have been an engine for economic growth in some of these economies.
In the case of subsidies for afforestation programmes, trade diversions may result from different levels of subsidies being applied by various countries. Such measures help to tilt trade in favour of exporting countries that offer a higher level of planting subsidies because the exporters can capture market share by competing at lower prices. To ensure that unfavourable trade outcomes do not arise from the introduction of these measures, there will be a need for more transparency on subsidy schemes and their targets.
The conclusion is similar for certification: change in market position for respective exporters has more to do with the competitive dynamics of exporting countries than the emergence of forest certification. Certification is likely to have a muted impact on trade because the market for certified product is small. The consumer market for certified wood products was less than 1 percent of the total European consumption in 1997, though this trend may be changing with growth in the certified wood products market.
To date, environmentally motivated NTMs and other environmental measures have not had a significant effect on trade. However, the uncertainty they have created remains a threat to the global trading system because the interface between trade, development and the environment will continue to be contentious. As long as the wealth disparities are unbridged and the pressure for land continues, the issue of sustainable development will be difficult to resolve.
The main issues arising from the APEC study were that:
export bans, quotas and licenses have had the most obvious impact on forest products trade;
afforestation subsidies are widespread and potentially have a significant impact;
processing subsidies exist but are difficult to quantify;
discriminatory business practices are trade impediments;
restrictive standards and acceptance routes are impeding market access for new products;
the impact of eco-labelling on trade is relatively minor;
liberalization has shortcomings but trade measures are neither without risk nor cost; and
a multi-sectoral multilateral approach to trade barrier reform is necessary.
Over the last 15 to 20 years export bans, quotas and export licensing have had the most obvious impact on forest products trade. Many of these NTMs were first instituted by the resource-owning economy in an attempt to foster a processing industry and capture the value added by processing for the economy. Although these bans achieved the goal of increased local processing, the actual achievement of value-added processing is more debatable. Evidence that bans and limited export quotas served to depress local log prices is quite strong. This means that the log prices faced by domestic processors in most cases no longer fully reflected the international worth of the product. There is some evidence that bans and quotas may also have encouraged the growth of illegal activity, particularly in economies where the authority's ability to enforce rules is somewhat problematic.
More recently there has been a move to replace some export bans with limited export quotas. In some cases the reason offered for the change is an opportunity to better signal the true worth of the material. In others, the move is part of a series of changes designed to increase competition, mostly forced on economies as part of the price of international support for these economies following the Asian economic crisis of 1997. In this latter case, whether the measures will in fact be fully implemented remains questionable.
The last ten years has also seen the introduction of a number of harvest bans and quotas in a number of APEC economies. These restrictions have been concerned with harvest rather than value-adding and export, and have been instituted expressly for environmental reasons. These environmental reasons have ranged from protection of the habitat of endangered species through to an attempt to slow deforestation.
Although more difficult to quantify in terms of trade impacts, the APEC survey revealed the widespread existence of afforestation subsidies to private sector tree growers. Most APEC economies have had, and continue to offer, afforestation subsidies to some classes of potential growers. Many of these subsidy programmes were initiated with the stated objective of creating the resource base for domestic self-sufficiency (import substitution). A number of the programmes also have successfully created a new export orientated industry.
Although in a number of cases the basis for subsidization has now changed to an environmental protection rather than a resource creating role, echoes of the earlier justification may still be found. Even where little direct subsidization of afforestation now exists, studies suggest that current rules favour afforestation over other forms of land investment. In addition, for those economies that have had significant, subsidized, private sector afforestation programmes, the full benefits of these, in terms of wood supply, have yet to be realized.
For a number of economies within APEC, public rather than private ownership is the norm when it comes to forest ownership but harvest and processing facilities are mainly in private ownership. For economies with this type of industry there are a wide variety of arrangements/agreements designed to transfer timber harvest and management rights from the public to private sector. These arrangements are generally referred to as tenures. In a number of cases tenure arrangements appear to contain an element of subsidization for forest growing. Typical of the arrangements where a subsidy can exist is where payments to public authorities for wood harvested includes an element that is specified to be spent by these public authorities on reforestation. Where the tenure payments do not contain a reforestation payment they are frequently set on the basis that the person/organization purchasing the cutting rights to a particular area will ensure that the area in question is reforested to a specified standard.
Few direct subsidies to forest product processing appear to exist in APEC economies. Of greater importance are likely to be indirect subsidies, tax concessions and other NTMs that reduce the cost of individual production inputs, that is, raw materials, labour, energy, and transport. Determining the economic impact of these subsidies, however, is difficult because of the variety of forms the subsidies take and the differences in processing technologies among APEC economies. Economies such as New Zealand, Canada and Chile have apparently reduced subsidies but there has been little change in economies such as Japan and the United States of America.
Government assistance to processing industries often involves reducing production costs through low stumpage fees, afforestation subsidies, tax concessions, assisted transport and the provision of infrastructure such as roads and power generation. The large number of assistance mechanisms that exist and the difficulties associated with disentangling true comparative advantage from subsidized advantage make it difficult to assess the extent to which government assistance creates a barrier to trade.
The APEC study identified a number of business practices that are impediments to doing business by causing unnecessary delays in trading and imposing restrictive costs to both importers and exporters. Some of these practices include: the use of complex customs procedures, price manipulations, and lengthy and non-transparent product approval processes. Actions to improve these practices will improve steps towards ensuring maximum efficiency in business transactions.
The lack of adoption of international standards and the use of conservative and prescriptive codes and standards appears to be common in APEC economies. This has hindered the development and use of wood-based products that are cost, resource and energy efficient. Progress to date on the development of ISO standards for forest products has been slow. Typically it has taken ten years for ISO standards to progress from first draft to published standards but this is improving with the added impetus given to ISO work by the Agreement on Technical Barriers to Trade (TBT). The TBT Agreement directs members to specify product requirements in terms of performance rather than design or descriptive characteristics. Performance-based standards allow a manufacturer to satisfy customer needs while allowing the use of available resources. Another benefit is that they allow several suppliers to compete on an equal basis rather than favouring only suppliers that can fulfil that prescription.
The agreement calls for harmonization of standards and obliges members to fully participate, within the limits of available resources, in developing and adopting standards at international and regional levels. Code harmonization, the process of defining performance levels for given products or services, and developing standards which meet those levels, will improve trade access by removing barriers within standards and by widening the applicability of those standards.
Fire safety requirements in building codes are often used in APEC economies to discriminate against the use of wood. Although advances in technology allow some wood products to perform to fire safety standards, they continue to be used as a basis for eliminating wood in construction. A typical example of the inadequacy of prescriptive standards versus performance standards for fire safety is that unprotected steel beams will survive only a few minutes in fire before they soften and collapse. In comparison, sawn timber beans with the same load-bearing capacity will survive some 30 to 60 minutes in the same fire before collapsing.
The lack of acceptance of foreign testing methods is an impediment to acceptance of new products in APEC economies. The opportunity for foreign firms to present technical evidence, as in the case of fire safety standards, relating to product performance of wood in structural applications is often impaired. Testing procedures and evaluation criteria are being harmonized internationally through ISO standards, but this is a slow process.
Despite claims that environmental concerns in consuming economies pose a significant barrier to tropical timber products, there is, as yet, little evidence of a significant effect. Certainly the evidence for any impact within the APEC region is not compelling. Some exporters of tropical timbers, surveyed as part of the APEC project[3], did express concern about the impact of environmental measures but these concerns related primarily to Europe rather than APEC itself. However, virtually all of the economies that are potentially vulnerable to demands for eco-labelling are already in the process of creating systems that will allow them to provide certification for their products. The major concern at present appears to relate to the type of certification that will be required.
The APEC report suggested that the welfare and GDP impacts of certification are likely to be relatively minor[3]. From an environmental perspective, however, the introduction of certification practices appears to be having significant benefits as forest managers have taken conscious steps to improve their forest management practices. Unfortunately, at this stage there is an absence of empirical data to clearly quantify such benefits.
Free trade has its shortcomings when externalities are not fully internalized into the cost of production and consumption. It is generally accepted that if the externalities are not fully internalized, trade is likely to exacerbate unsustainable development. However, simply applying an NTM or trade environmental measure because an externality exists provides no assurance that the problem will be rectified. Moreover, there are risks in imposing such measures because of displacement effects and unintended negative spill-overs. If a problem is recognized it is generally more desirable, and cost effective, to quantify it and tackle it directly rather than indirectly through a trade restriction.
Management of environmental issues by economies, business organizations and other entities is becoming increasingly complex, as both global and national environmental issues require attention. Historically trading organizations have been constrained primarily by local attempts to internalize environmental costs for production, but increasingly, international environmental drivers are playing greater roles such as, for example, the protection of global biodiversity or market demand for certified forest products. This greater degree of complexity, which is directly attributable to globalization of world economies, is creating uncertainty and making trading organizations more sensitive to factors that may cause changes to their competitiveness and impact on their businesses.
The APEC report indicated that a multi-sectoral, multilateral approach to trade barrier reform is required in order to benefit economies at a regional level[3]. The result of removing a trade barrier in a particular economy is that there are `winners' and `losers' and the losses in one sector may be out-weighed by the gains in others. The general re-allocation of resources that accompanies the addition or removal of a trade barrier mean that some countries and sectors benefit at the expense of others. The effects of trade barriers must therefore be examined from the point of view of all sectors and economies.
The United States International Trade Commission[1] conducted a symposium on non-tariff barriers to trade and investment in APEC economies. Although not specific to forest products, the results (albeit at a more macro level) were similar to the sector specific APEC study of NTMs in the forest products sector[3]. The Commission concluded that:
The NTMs have a major impact on trade in APEC, far greater in scope than the impact of tariffs. The economic welfare gains from liberalizing NTMs far exceed those from removing tariffs.
The NTMs vary greatly in nature across issues such as government procurement, investment, services and competition policy.
The nature and importance of NTMs depend directly on government practices, but they depend more often on government choices of how to enforce the laws governing private markets. Even NTMs generated largely by private practices raised significant public policy questions.
The most general APEC liberalization scenarios for tariff and non-tariff barriers indicate potential static gains of around 1 percent of APEC GDP. Dynamic models are likely to result in considerably higher gains from trade liberalization.
More specific studies of the forest products sector, such as the recent United States International Trade Commission reports on the United States forest products trade[2; 11] and the International Tropical Timber Organization (ITTO) report on impediments to market access for tropical timber[12] indicate that competition in forest products market is likely to intensify. It has therefore become more compelling for impediments to market access to be overcome. Whilst these reports provide similar conclusions to the APEC study on the extent of NTMs in forest products trade[3], they do not attempt to quantify their economic impacts.
The main conclusions from recent studies regarding barriers to trade in forest products are that:
Most of the economic gains from forests products tariff liberalization have already been realized.
The NTMs are prolific in the forest products trade. The prevalent use of NTMs, in addition to the use of tariff measures, may significantly distort trade, often with accompanying welfare losses.
The environmental impact of trade-affecting measures is more difficult to measure. More detailed life cycle analyses are required in order to compare relative environmental impacts of, for example, global warming potential, biotic depletion, resource depletion and nutrient loads.
[1] US International Trade Commission. 1998. The Economic Implications of Liberalizing APEC Tariff and Non-tariff Barriers to Trade. Publication 3101.
[2] US International Trade Commission. 1999. Conditions of Competition in US Forest Products Trade. Publication 3246. Washington DC.
[3] Forest Research. 1999. Study of Non-Tariff Measures in the Forest Products Sector. Prepared for Committee on Trade and Investment, Asia-Pacific Economic Cooperation.
[4] Food and Agriculture Organization of the United Nations (FAO). 1997. State of the World's Forests, 1997, FAO, Rome.
[5] Food and Agriculture Organization of the United Nations (FAO) 1999. Asia-Pacific Forestry Towards 2010: Report of the Asia-Pacific Forestry Sector Outlook Study, FAO, Rome.
[6] Food and Agriculture Organization of the United Nations (FAO) 1999. The State of the World's Forests, 1999, FAO, Rome.
[7] Sedjo, R.A. and Simpson, R.D. 1999. Tariff Liberalization, Wood Trade Flows, and Global Forests. Discussion paper 00-05. Resources for the Future.
[8] United States Trade Representative and White House Council on Environmental Quality. 1999. Accelerated Tariff Liberalization in the Forest Products Sector: A Study of Economic and Environmental Effects. Washington DC.
[9] Economic Committee Asia-Pacific Economic Cooperation. 1997. The impact of trade liberalization in APEC. APEC #97-EC-01.2; ISBN981-00-9644-5, APEC Secretariat, Singapore.
[10] Bourke, I.J. and Leitch, J. 1998. Trade restrictions and their impact on international trade in forest products. FAO, Rome.
[11] US International Trade Commission. 1999. Hearing on Conditions of Competition in US Forest Products Trade. Testimonies.
[12] Choon, T.S.D., Ginnings, J.M., and International Tropical Timber Council (ITTO). 1999. Report on the Impediments to Market Access for Tropical Timber. Conference: 26th Session, Chiang Mai, Thailand, 28 May - 3 June 1999.
I.J. BOURKE
Food and Agriculture Organization of the United
Nations
Certification of forests and the associated labelling of forest products continue to be a high profile subject in the forestry sector. Despite the considerable attention it has been receiving, it remains a complex and, in most situations, a controversial subject. Currently a wide range of actions are under way concerning certification. Although main emphasis to date has been on timber and timber products, and to a lesser extent pulp and paper products, there is also some interest in developing a certification system for non-wood forest products.
This paper provides a brief background of certification and labelling. It reviews where certification stands at present, what some of the important issues concerning it are, and where it may be going in the future. Because of the complexity of the subject, the wide range of actions and views that exist, and the lack of strong agreement on many issues, the paper should be seen as an information note rather than a detailed analysis of the subject. Its purpose is to provide a basis for more detailed discussion, and particularly to highlight some of the questions that require attention.
Certification is one of a number of market-based instruments that may contribute to improved management of the forests and to improved forestry sector development. Promoters consider that the market will provide an incentive for better forest management because buyers will show a preference for certified products, which in turn will either encourage producers to improve their forest management in order to tap this demand, or force them to do so under the threat of losing markets if they do not. This is the reason it has received so much attention.
Since the stated goal is to improve forest management, the main focus of certification in forestry has been on the standard of management of the forests, not on broader environmental credentials.8 Little attention is being given to tracing the environmental effects as the raw material moves through its processing and distribution phases to its final consumer. Thus, little emphasis is being given to environmental effects such as plant emissions, energy usage, transport, disposal methods, etc. This point is of particular significance to the pulp and paper industry, which has already given considerable attention to many of these aspects.
The basic assumption behind certification is that there is a market demand for products made from wood which comes from sustainably or well-managed forests.9 Environmental groups, who have been the main proponents and driving force behind certification, have repeatedly pushed the view that the consumer is insisting on being given products that meet these requirements. An allied assumption is that these same consumers will provide an incentive to producers by being prepared to pay a higher price for certified than for uncertified products.
However, despite the stated purpose of improving forest management, the main interest of most of those undertaking certification at present is probably in the marketing benefits they feel it may offer them. They aim to either increase market share, or at least avoid loss due to boycotts or restrictions such as are increasingly common in some parts of Europe and the United States of America.
As an instrument, certification has both strengths and weaknesses which vary with the specific circumstances of the country, the ownership of the forests, the social environment and, last but certainly not least, the markets served.
Suggested benefits from certification include the following:
increased market share or at least protection from the loss of the existing market share (mainly against other wood products but also against non-wood products);
a market premium from selling a `green' product;
greater insurance of the markets against market restrictions;
long-term supply security because of the sustainability of the supplying forests;
independent evaluation of forest management practices;
basis of comparing different management practices, and setting common standards;
improved commitment to forest resource management;
improved image with a range of interest groups;
basis for improved control or policing of resource holders; and
protection from action by environmental groups.
Possible disadvantages include:
high cost (both financial and managerial);
reduced (short-term) revenue due to reduced output volumes;
management is distracted from other important activities;
loss of some control to other groups (e.g. to those developing the certification standards; those less close to the resource);
confusion created with consumers; and
wood products placed at a disadvantage vis-ΰ-vis non-wood products (such as plastics, aluminium, etc.) that are not subject to certification.
Its benefits are thus varied, as are its disadvantages. Of note is the increased attention and focus it has brought to forestry issues. The very controversy and the disagreement over what its impacts will be has resulted in a considerably wider and deeper discussion and debate of the issues than would otherwise have arisen. It has been a means of encouraging or forcing industry to take a wider view of many issues; it has resulted in governments paying more attention to many policy issues and to their modification; it has brought a more balanced view from many environmental groups; and there is a wider discussion on what are and are not important values.
Despite the attention it is receiving, and the substantial promotion given it, certification is still in its infancy. Many certification schemes are being developed, but only a small number are operational at present, and the volume of timber covered by them, while increasing, is minor. Part of the reason for the proliferation and the lack of overall agreement rests on the fact that the various groups involved have varying interests, values, circumstances, and opinions on what issues should be addressed, and on what benefits it may have.
Among importing countries, attention continues to be greatest in (and largely restricted to) Western Europe, especially the United Kingdom, Germany, and the Netherlands. Some areas and some major retailers in the United States of America are also showing increasing interest. Important markets in Asia (such as Japan and China) and Latin America (Brazil) are showing limited interest.
Most interest by exporting countries is shown by those whose main export markets are European countries and to a lesser extent the United States of America, hence the effort Malaysia, Indonesia, Canada, Finland and Sweden have put into developing national certification systems. Domestic consumers in most of these producer countries are not showing an interest in certified products. The attention of the main producers is thus because of the interest of some of their export markets, not of their own domestic consumers.
The most obvious sign of growth in certification is the area of forests certified. Little of this is in tropical areas. The Forest Stewardship Council (FSC) reports that about 17.7 million ha have been certified by FSC-accredited certifiers10. This represents about 0.5 percent of the world's forest area. The area certified is not therefore extensive. Of this about 86 percent of the area certified is in temperate countries, largely in Europe and North America. In fact Sweden and Poland alone account for 64 percent of the total, and the United States of America another 9 percent.
This area data provides little indication of what is being traded. While data on trade in certified products is very sketchy, it is clear that the volumes on the market are insignificant in regional or global terms, and most of the trade is concentrated in a few market segments.
Contrary to many statements, the process is not being driven by demand from concerned consumers. It is being pushed, and in some cases forced, by environmental groups, retailers, city and regional councils, and forest owners who see a need to be able to prove their management in order to ensure access to some markets, and/or get a market advantage over other suppliers.
Some recent developments of note are:
A wide range of interest groups in the United Kingdom, including the United Kingdom Forestry Commission, timber growers associations, the timber trade, retailers and a number of non-governmental organization (NGO) groups, have reached agreement on recognition of the United Kingdom Woodland Assurance Scheme (UKWAS), a certification standard for the United Kingdom forests. This may provide a link between this standard and the FSC process in the United Kingdom.
A new European certification process, the Pan-European Forest Certification Framework (PEFC), has been launched. The aim is to establish a framework for voluntary forest certification and a mechanism for mutual recognition between different national systems. National PEFC governing bodies have been established in Austria, Belgium, Czech Republic, France, Finland, Ireland, Norway, Portugal, Spain, Sweden and Switzerland.
Indonesia has established an Indonesian Ecolabelling Institute (LEI), which has developed criteria and indicators for the auditing of forest management on logging concessions, as well as the ecolabelling of products from these concessions. The LEI system is based on ITTO guidelines.
Malaysia has established a National Timber Certification Council (NTCC) which is establishing a national set of criteria and indicators also based on the ITTO framework.
Industry in New Zealand is developing a Verification of Environmental Performance (VEP) report card system.
Commonwealth and State governments in Australia are investigating an Australian Forestry Standard that would allow forest products to be independently certified.
Two important signs of changing attitudes have emerged recently: One is the increased interest/attention that is being given to mutual recognition of the different certification processes, which suggests a greater willingness to acknowledge that many different processes have merit and may even be acceptable alternatives. For example, a leading home improvement chain in the United Kingdom, B&Q, who is a member of FSC and of the United Kingdom WWF1995+Group, recently announced that it would accept Finnish timber certified under the national Finnish Forest Certification System, a certification process which has been developed in competition with the FSC system in that country. The other is the increasing use of the term certification/verification, with the implication that the important issue may be verification - and that there are other means of verifying than through formal certification processes (such as through the national-level criteria and indicator processes). Views on this differ, however.
A degree of consensus has been reached on many of the important issues, but despite the progress made so far and the considerable attention certification is receiving, there are still many issues to be resolved. These include:
· What is the market for certified products?
There is still little evidence of the market impacts of certification - positive or negative. Few of those insisting on certified products appear to be prepared to pay a premium for them. Even in the markets showing greatest interest there is little sign of a substantial demand, or any price premium being paid. Most of the trade is concentrated in a few market segments. Demand is being pushed by retail chains, especially the do-it-yourself retailers, rather than pulled by the consumer. Some products and market segments such as higher-value products, and those under the control of architects, local councils, and large retail stores, show some signs of being able/willing to provide a price premium.
· How will certification contribute to improving forest management where deforestation is greatest - in the developing countries?
Most certification attention is focused on developed temperate countries. Certification may favour industrialized countries where, at least at present, forest management practices tend to be closer to sustainability goals. One positive note in developing countries though, is that certification has already brought increased attention and focus on improving forest management.
· Which system of certification is most appropriate?
There is no consensus on this. There is, however, growing interest in some level of improved mutual recognition between the different certification processes.
· Will certification, intentionally or unintentionally, act as a non-tariff barrier to trade and discriminate against those unable or unwilling to become certified?
This remains a concern for producers in developing countries who feel that rather than encouraging improved forest management certification will act as a barrier to trade, by discriminating either intentionally or unintentionally against those who are not certified. Even though most schemes would be voluntary, they may in reality be compulsory.
· How accurate are the field assessments being made, how to treat composite or reconstituted wood products, how to consider wood from plantations and wood from areas being converted to other land uses?
It is still difficult to predict where certification will finally settle. From the forest management aspect it seems clear that the areas certified will expand as major producing countries, especially Canada, Finland, Indonesia and Malaysia, the United States of America, and some in Europe, finalize the systems they are developing. In turn, the volumes traded will expand.
The market impact will be limited to certain, but a growing list of, countries and certain market segments. Most market attention seems likely to continue to be focused on parts of Western Europe, and to a lesser degree North America. Important consumption areas in Asia (e.g. Japan, Republic of Korea, P.R. China, India, Thailand), the Middle East, and Latin America (Brazil) are likely to continue to show much more limited interest. Clearly, markets in a number of developed countries are moving towards certification regardless of whether it has a strong potential for encouraging improved forest management. In the future, interest may expand and have a significant impact; equally it could remain limited to a few markets and a few specific end-uses (e.g. high-value furniture). Certification may be needed to ensure access to some (a growing number) markets, but there will continue to be many where this is not the case.
Whether certification provides the hoped for stimulus to improved forest management worldwide remains to be seen.
The clear messages are:
Certification by itself is unlikely to ensure sustainable forest management. Nevertheless, certification may have useful positive benefits, including encouraging producers to focus more on a wider range of management issues, informing consumers of the production status of timber, improving market information (and thereby allowing consumers to clearly express their buying preferences), and by promoting product differentiation. Its main contribution may in fact be in providing that extra incentive (positive or negative) for taking improved forest management seriously.
As an instrument, certification has both strengths and weaknesses which vary with the specific circumstances of the country, the ownership of the forests, the social environment, and last but certainly not least, the markets being served.
Although the value and relevance of certification is still open to widespread debate and disagreement, the need to improve forest management practices is not. Producers must pay much greater attention to their management practices than formerly. They must be prepared to prove to others that their practices fit into what is currently considered `best practice'. Certification is one way of doing this, but there are others.
Countries and individual forest owners must be aware of the trends and implications of certification for their own situation. They should assess the implications carefully and determine whether certification is a necessary/desirable action for them, and what the most appropriate certification process to use is.
As an international organization with a global mandate for dealing with all kinds of forests, and types of forest products, FAO is able to play an important role which links the interests and inputs from the many interest groups, be they governmental, non-governmental or private. To do this effectively, it needs the views, inputs, expertise and co-operation of groups such as those represented at this meeting.
FAO has maintained a close involvement with certification, both at the forest management level and in relation to trade. Its recent efforts include involvement in various meetings and working groups which have been concerned with trade issues, such as the trade implications of certification and labelling proposals. Examples are:
A workshop to assist countries in transition in Europe (UN-ECE Timber Committee workshop on Certification of Sustainable Forest Management in Countries in Transition, Prague, Czech Republic, from 29 August to 1 September 1998).
A World Bank workshop on Sustainable Forest Management: Forest Concession and Certification, 1-2 September 1999, Yaoundι, Cameroon; and a World Bank/WWF Alliance seminar Forest Conservation and Sustainable Use Forest Certification/Verification System Workshop, Washington DC, USA. 9-10 November 1999.
Workshops in PR China (International Workshop on the Changing Market of Global Tropical Forest Products and Its Trends to the Year 2010. Beijing, 8-10 December 1998 and China Forestry Policy Forum, Beijing, 7-9 December, 1999.); and Viet Nam (Regional Seminar on Market-Based Instruments for Sustainable Forestry Development, Hanoi, 21-25 June 1999).
In these FAO has provided information and analysis and presented the views that:
the primary aim is to move towards the sustainable management of all forests;
a number of different actions may assist this, but the most appropriate are those that have the most direct effect;
certification is an indirect action that can be of supplementary assistance if carefully planned and implemented;
a number of different approaches can be taken to certification - each has its strengths and weaknesses.
Bass, S. and Simula, M. 1999. "Independent Certification/Verification of Forest Management". Background Paper for the World Bank/WWF Alliance for Forest Conservation and Sustainable Use Forest Certification/Verification System Workshop, Washington DC, USA, 9-10 November 1999.
Bourke, I.J. and Wijewardana, D. 1999. "The Relationship between National-level Forest Programmes and Certification Processes". Paper for the World Bank/WWF Alliance for Forest Conservation and Sustainable Use Forest Certification/Verification System Workshop, Washington DC, USA, 9-10 November 1999.
Hansen, E. and Juslin, H. 1999. "The Status of Forest Certification in the ECE Region", Geneva Timber and Forest Discussion Papers, 1999, ECE/TIM/DP/14.
Hansen, E., Forsyth, K. and Juslin, H. 1999. "Forest Certification Update for the ECE Region", UN ECE-FAO, 1999.
Smith, P.M. 1999. "A Review of Studies on Consumer Attitudes towards Forest Products Marketed with Environmental, Social and/or Sustainability Attributes", FAO, 1999.
8 Certification activities for pulp and paper products extend to an interest in factors other than forest management standards. For example, environmental process-related issues such as plant pollution conditions, the content of re-cycled or waste paper used, or the process used to manufacture the product (such as whether the product is chlorine-free) are of interest. For packing and packaging, regulations are increasingly being introduced which specify the type of material that may be used, re-use and recycling targets, and systems of recovery or return that must be followed.
9 One point that should be noted is that sustainable forest management is possible without certification, but the reverse is not the case.
10 As of 31 January 2000 - reported on the FSC web site.