1.2 Objectives of the Analysis
1.3 Approach and Conceptual Framework
The world economy is growing, with rising production and spectacular recent increases in international trade and investment (Maddison 2001; Khor 2000). The GATT/WTO process has paved the road for the globalisation of trade and market dynamics, including the trade in forest products and services. The process has resulted in decreased tariff barriers to trade which in return has increased the volume of trade in all major products. Forest products trade, however, has not been effected by major decreases of tariff barriers, which are generally rather low, but rather by non-tariff barriers, driven by environmental and social concerns.
It is inevitable that an increase in trade results in growing demands placed upon the environment and in particular upon natural resources and their utilisation. Consequently, global climate change, decrease in forest cover and biodiversity loss have become subjects of international concern and multilateral deliberations on how to safeguard these global public goods. While the Uruguay Round resulted in the establishment of the WTO in 1994, a series of intergovernmental processes such as the United Nations Conference on the Environment and Development (UNCED) acknowledged that holistic and comprehensive approaches are needed to foster sustainable development and to form a new global regime of policy making and governance.
International trade has direct and indirect influences on the environment. The indirect influences are commonly perceived to be more important. At the same time, environmental conditions, policies and regulations influence the market access and competitiveness of individual producers of forest products and thus affect trade flows. While trade in forest products is perceived as the major driving force for sustainable management of natural resources, international trade liberalisation and corresponding national macroeconomic policy reforms have led to expanding exports by developing countries, particularly in commodities, thereby increasing pressure on the environment.
Trade based on unsustainable practices in forest operations has been seen as a major factor contributing to deforestation and forest degradation, particularly in developing countries (e.g. Dudley 1992, Dudley et al. 1995). In a number of tropical countries in Africa, Southeast Asia and the Guyana Shield, export oriented production has apparently accounted for a significant share of forest loss and degradation. In addition to direct impacts, indirect effects, such as opening up forest areas for encroachment, can become or trigger underlying causes of deforestation.
Indirect impacts on deforestation are linked to such factors as changing production and consumption patterns (including expanding demand for food), expansion of subsistence agriculture, demand for fuelwood and charcoal, as well as land tenure patterns. There is increasing pressure on land and water resources for human needs; although 30% of the global land surface is still forested, more than half the original forest area has been lost. Forests continue to be lost at roughly 0.2% per year (FAO 2001).
Given these underlying causes of deforestation, some research findings have concluded that deforestation can only partly be associated with international trade and the process of global trade liberalisation (WTO 1997). The available knowledge and experience on underlying causes of deforestation is still scanty (Tarasofsky 1997). Therefore, the present international dialogue on the interaction between the international trade regime and multilateral environmental agreements (MEAs) continues to be one of the major issues of global interest. This concerns the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the International Tropical Timber Agreement (ITTA), and the Convention on Biological Diversity (CBD). These treaties have been concluded separately from the WTO rules resulting in difficulties of joint application to achieve mutual support and synergies. Since not all countries are signatories to or have ratified all MEAs, there are limitations in the possibility of using MEAs and WTO Rules to define a global regime for trade and conservation and sustainable use of natural resources.
The examination of the relationship between the rules of the WTO and the specific trade obligations of MEAs is an important element of the current implementation of the Doha Development Agenda of WTO and the WTO Committee on Trade and Environment is entrusted to prepare the ground for an improved understanding on the interface between trade and the sustainable use of natural resources, including conservation of biodiversity. In support of this multilateral dialog, the World Summit on Sustainable Development (WSSD) in Johannesburg in 2002 called for enhancing the mutual supportiveness of trade, environment and development, with a view to achieving sustainable development, and promoting mutual supportiveness between the multilateral trading system and environmental agreements.
Even though the ease, speed and volume of information flows are growing even faster than trade and investment induced by the current trade liberalisation, the interface of trade in forest products and services and forest management is not yet sufficiently determined and the impacts and interactions still ask for a broad range of analysis and research. There mutual agreement that trade based on sustainably managed forests brings socio-economic benefits, thereby creating an incentive for the conservation of forest resources, are laid down in all major intergovernmental documents and strategy papers of international organisations such as the World Bank.
However, such benefits can only be achieved, if environmental and social externalities are being internalised in the cost-benefit calculation of forest operations. Certainly, increased returns on forest investment make the use of forest resources more competitive to alternative land uses such as agriculture (Barbier et al. 1993), but the effect of such internalisation of externalities on trade and market access is not yet known beyond the current systems of subsidies in different countries.
With regard to poverty reduction strategies and support to sustainable livelihoods for the rural poor, the value of forests and in particular non-wood forest products and services play a crucial role, even though their international trade has been estimated at US$ 11 billion only (Iqbal, 1995). Forests in the context of agricultural land-use, forest utilisation of forest-dependent communities and forest services such as water and micro-climate should not be underestimated in their overall importance to the local subsistence production of millions of people in the developing world.
In conclusion, the debate of recent years on the production of forest goods and services, deriving both from natural forests and planted forests alike, has increasingly acknowledged the significant role of the forest products trade and the growing markets for forest services. However, despite numerous efforts by intergovernmental deliberations in various fora as well as in the international NGO community and in the private sector, global structural policies and global governance still need major contributions as to clarify the interactions between production, including its social dimension, trade, environment and economic development as globalisation makes it increasingly difficult to countries and their constituencies to govern the changing global structure and to respond adequately to these changes at the national level. Forestry lies at the intersection of all these concerns and perhaps nowhere are the debates about trade more vociferous, and the opposing positions more entrenched, than with respect to forests and the forestry sector as a whole.
The Government of Japan and FAO agreed in 2001 to implement the research and analytic project entitled "Impact Assessment of Forest Products Trade in the Promotion of Sustainable Forest Management". The major contribution of the Japanese Government and FAO's regular programme enabled the Forest Products and Economics Division (FOP) of FAO to set up a project implementation structure which engaged international organsiations, the private sector and the NGO community in a project advisors group for substantive contributions in the process, in a peer review group to revise the entire analysis and in various fora and expert panels. The support which FAO received through a variety of international organisations, in particular ITTO, derived from the interest in the issue of trade and sustainable forest management and from the international intention to overcome the fragmentation of debates, dialogs and deliberations on various substantial issues and policies in a variety of fora which often not connect or find difficulties to come to a more mutual understanding of respective imperatives, policy directives and international agreements. Considering the current trends in the international debates and the increasingly apparent conflicting views, the project was implemented very timely as a substantive contribution.
The objectives of this applied research work are to analyse the impacts of trade in forest products and services on forest management and their interactions in the context of changing international trade patterns and market dynamics though globalisation and trade liberalisation. By taking a holistic and comprehensive approach to this analysis, the research work includes a broad variety of issues which drive or limit trade in forest products and services and which impact on forest management or induce changes in forest operations. The analysis only partly touches upon national and sub-national trade and market development for forest products and services, since domestic conditions vary widely and policy responses by governments need to address need to be very country-specific. However, the analysis fully takes into account those cases, in which national and sub-national markets have a measurable impact on international trade in forest products like China.
Identifying the conditions under which international trade in forest products and services currently develops and taking into account the current international policy debates and recent policy achievements, the analysis focuses on an improved understanding of the interlinkage of trade and forest management based on sound issue-based information and analysis. In particular, current and future policy interventions on the part of government and policy recommendations of major constituencies from civil society and the international community that can influence or could potentially influence the relationship between trade and forest management are at the core of this analysis. To find a path amongst the different interest groups of civil society and the international community, policy makers in trade, forestry as well as other sectors need clear evidence on how trade-related policies affect different groups, e.g. forest investors, employees of forest product companies, local communities, forest landowners and consumers, and how these policies influence incentives to foster to work towards sustainable forest management.
The development of the global and regional trade regime and the international and national efforts in fostering sustainable forest management are closed associated with new challenges in global and domestic governance. One of the objectives of this analysis is therefore the identification of issues, obstacles and best practices with regard to institutional development of governmental bodies, decentralisation of decision making and resource access, in particular for local communities, co-operation mechanisms with governments and civil society, including the private sector, and the establishment of national positions in international trade-related processes based on a national consensus on domestic interests. By addressing governance issues at the international level, the analysis aims to contribute to a more effective steering of the global trade regime considering the diverging and sometimes conflicting views of governments and civil society constituencies from developed and developing countries with regard to national interests and the national sovereignty to manage forest resources, while the joint responsibility of the international community in safeguarding global public goods plays an increasingly important role in the international debate.
The analysis aims to contribute to the current debate on trade in forest products and services and the overall international trade regime by clarifying major issues of common concern. Consequently, the analysis aims to support policy-makers in formulating trade-related policies and responding forest policies that encourage sustainable forest management. The process of this analysis was, however, not closed to the researcher, but FAO offered several fora for debate for interested experts on forestry development and trade in forest products and services as well as trade policy makers and trade negotiators. It was one of the explicit objectives of this analysis to engage a broad range of colleagues from governments, international organisations, the international NGO community and the private sector in this analysis as to provide ground-truthing and a reality check as well as substantial contributions as to improve the collaboration between actors in the international and national deliberations ahead of he international community on the sensitive issue of trade in forest products and services and sustainable forest management.
The overall approach to this analysis on trade in forest products and services and its interface with forest management constitutes an applied research exercise consisting of (i) a review of documents and literature, (ii) the organisation of expert consultations and round tables, (iii) the support of a Project Advisors Group (PAG), (iv) the close collaboration with FAO staff and other organisations such as ITTO on a regular as well as the support through a peer review group of international senior advisors from all regions.
This basic approach was chosen as to avoid an elaboration of this analysis in an "ivory tower" situation given the fact that the international debate and many dialogs at the national level currently focus on the interface and the interactions between trade and environment, in particular forestry. The analysis was conceptualised as a contemporary document established by using a holistic and comprehensive approach by (i) summarising the current situation in trade of forest products and services, (ii) analysing the present trends in trade and market development and (iii) elaborating on views of various constituencies and (iv) researching major issues of mutual concern like governance, industrial structure and the role of environmental services. The analysis should be seen in the framework of governmental deliberations in the different WTO committees like Trade and Environment, Technical Barriers to Trade and Market Access in view of global trade liberalisation.
The study starts by defining sustainable forest management (SFM) tracing the evolution in understanding of the concept. It is clear from this discussion that the divergent perspectives of different stakeholders on forests and on the impacts of trade call for a wider arena of governance across different sectors, including trade, as to increase information flows, transparency on governmental decisions and participation. The study therefore gives particular weight to the various policy debates and the possible coherence of different policies affecting both trade and sustainable forest management.
The methods of this research and analysis are based on review of an extensive number of international publications, " grey" literature of different nature, a variety of internal position papers, both of international institutions and the NGO community, as well as meeting reports and working papers. The analysis also draws extensively on personal communications, discussions and other contributions.
Since the research aimed at a contemporary analysis, a Project Advisors Group (PAG) was formed to steer the implementation of this research project (Annex 1). Several meetings were held to discuss substantive issues and modalities of implementation. Members of the group came from international organisations, the private sector, the NGO community and civil society groups as well as a representative of the Government of Japan as the financier of the project FAO GCP/INT/775/JPN "Impact Assessment of Forest Products Trade in the Promotion of Sustainable Forest Management".
The distribution of tasks in project implementation was organised in a way that FAO entrusted international specialists to contribute to the research agenda by substantive research and analysis on the various issues at hand (Annex 2 List of contributions and their authors). The basic contribution was provided by the International Institute for Environment and Development (IIED) in London, UK. IIED colleagues also served as resource persons in the PAG.
The Forest Products and Economics Division (FOP) of FAO collaborated closely with FAO colleagues from the Forestry Department, the Economic and Social Department (ES) and in particular the Commodities and Trade Division (ESC). Various meetings were held and contributions provided. The project served as an instrument for better substantive collaboration leading to substantive contributions, verification of the analysis and in-depth comments. This method of collaboration within FAO drawing on in-house expertise was fostered particularly in view of the future work on the issue of trade and sustainable forest management considering the importance of the issue at international and national level.
In order to increase international participation and to exchange views on the issue at hand with wider audience, FAO organised an expert consultation held 3 - 5 February 2003 in Rome inviting specialists from all constituencies and international organisations which are involved in the debate on the interlinkages in trade and environment and/or forestry. The consultation was primarrily geared at discussions within the wider forestry community as to increase the mutual understanding in an informal setting (webpage for the proceedings:
On 9 July 2003, FAO and the UN Economic Commission for Europe (UNECE) invited trade policy makers and trade negotiators to participate in an informal round table in the Palais des Nations in Geneva. Six presentations by representatives of governments, the private sector and the NGO community structured this interesting dialog.
Defining sustainable forest management
The broad introduction of the concept of Sustainable Forest Management can be traced to the Non-legally Binding Authoritative Statement of Principles for a Global Consensus on the Management, Conservation and Sustainable Development of all Types of Forests, the so-called Forest Principles1 and Chapter 11 of Agenda 21, which were prominent outputs from UNCED. The guiding objective of the Forest Principles is to contribute to the management, conservation and sustainable development of all types of forests and to provide for their multiple and complementary functions and uses. Principle 2b specifically states that:
“Forest resources and forest lands should be sustainably managed to meet the social, economic, ecological, cultural and spiritual needs of present and future generations.”
“These needs are for forest products and services, such as wood and wood products, water, food, fodder, medicine, fuel, shelter, employment, recreation, habitats for wildlife, landscape diversity, carbon sinks and reservoirs, and for other forest products.”
Although the Forest Principles form a “non-legally binding statement of principles”, they bear the marks of a negotiated text by the international community. The concept of SFM has continued to evolve since 1992 through the international forest policy dialogue (IPF/IFF/UNFF) and a large number of initiatives aimed at translating the concept into practice.
Nine eco-regional forestry initiatives or processes2 involving 149 countries whose combined forest area equals 97.5 percent of the total forest area in the world, have been established since 1992 with the aim of translating the concept of sustainable forest management into practice. Although evolving independently, these eco-regional processes are conceptually similar in objectives and overall approach and have shared information and experiences resulting in a convergence as regards the main elements constituting SFM.
Recently, an International Conference on the Contribution of Criteria and Indicators for Sustainable Forest Management (CICI 2003) in Guatemala agreed that SFM comprises the following seven common thematic areas: (1) extent of forest resources, (2) biological diversity, (3) forest health and vitality, (4) productive functions of forest resources, (5) protective functions of forest resources, (6) socio-economic functions and (7) legal, policy and institutional framework. The degree of implementation of criteria and indicators at the national level varies considerably. However, the concept of SFM has influenced many initiatives at various levels, has led to the revision of forest policies and legislation and has been mainstreamed by local, national regional and international forestry organisations.
Additionally, a number of recent initiatives in forestry are aimed at translating the specific elements of SFM into practice under different circumstances and for different forest management objectives and levels of scale. These include, among many others: National forest programmes; Integrated mountain development; Integrated, participatory watershed management; Protected Area Management; Model and demonstration forests; Participatory/community forestry; Adaptive collaborative forest management; Model Code of Forest Harvesting Practice/Reduced Impact Logging; Integrated pest management in forestry; Integrated and participatory forest fire management; Landscape restoration; and In situ conservation of biological diversity in production forests as well as forest law enforcement.
The results of the aforementioned intergovernmental processes and initiatives held since UNCED demonstrate a move from the focus on whether conservation and sustainable development of the world's forest resources is possible, to a focus on how to implement sustainable forest management practices3.
Amongst the defining characteristics of forests, three are particularly problematic in relation to sustainable forest management (SFM):
• Forests, in particular natural forests have a rather long rotation period which heightens the importance of environmental sensitivity, increases risk and requires high returns or incentives to stimulate investment;
• Forests occupy large areas of land which increases interactions with interest groups on alternative land-uses (including total forest protection) applying political pressure on governments;
• Forests supply important environmental services and subsistence options which makes their use for long-term commercial production contentious.
Any vision of SFM, particularly natural forests, must accommodate long time-frames, meet the needs of multiple interest groups, at local, national and international levels. The combination of these three factors distinguishes forest trade from other trade domains, such as agriculture. Despite this, forestry as a sector or discipline has evolved primarily through the economic importance of timber and the timber trade. This led originally to a narrowing of vision whereby forestry was mainly about the sustainable economic supply of timber. Such a vision is now widely considered to be out of date, if not harmful and broader notions of sustainable forest management which address environmental and social values as well as economic concerns have emerged.
While definitions of SFM beyond generic C&I vary, there is wide acceptance amongst the various initiatives (eg ITTO's Guidelines and Criteria, the Helsinki process, FSC) that the following elements are involved (IIED 1996):
Sustaining yields of goods and services (timber products, non-timber products, protection of soil and water, maintenance of ecosystem functions, continuing forest health and vitality, contributions to local and global climate
Conserving biological diversity (at the landscape/ecosystem, species and genetic levels)
Ensuring positive social and economic impacts (on indigenous people, local communities, landowners, employees and the local and national economy.
These elements are not fully compatible and some degree of trade-off between them is inevitable. For example, it is clear that all consumptive uses of the forest affect some component or attribute of biodiversity, and that only fully protected areas will conserve all components and attributes of biodiversity (Putz et al.. 2000).
Within these elements there will also be different interpretations of the relative importance of the various constituent factors depending on the local context. There are no detailed universal prescriptions. Box 1.1 sets out some technical, social and environmental details to be considered in addressing SFM.
Box 1.1 Challenges of sustainable forest management
|
Production of trees - The technical dimension of SFM Forest are exhaustible: Forest clearance (for agriculture or others) is often the key reason for forest exhaustion in comparison with forest degradation (often through timber extraction). Forests have calculable ecological limits: By setting harvesting limits through 'minimum felling diameters' and required recovery periods through a 'felling cycle', it is possible to tailor the harvesting to the ecological capacity of the forest. The two principal options of plantation or natural forest management both benefit from ecological and silvicultural knowledge, although the uniformity of plantations makes the application of that knowledge simpler. Managing natural forests is technically complex compared to plantations: The quantitative underpinnings which are necessary to match timber harvesting to the natural regenerative capacity in natural forest management are enormous (Ribeiro et al.. 1999). It is difficult to identify the main commercial timbers some 40 metres below the canopy, let alone calculate their growth rates, permissible felling cycles and diameter limits. Plantations offer simplicity but are not the whole answer. While it is possible to overcome some of the risks associated with monocultures (Evans 1999), plantations will never provide the full range of forest products and services required by society. Moreover, while plantation establishment might 'reduce the pressure' on natural forests, they may also reduce the profitability of those forests, and so hasten their conversion to other land uses. Long term economic sustainability in natural forests requires positive discrimination between 'good' and 'bad' practice: The widespread under-pricing of forest products from illegal or undesirable trade presents a formidable challenge to SFM. Notwithstanding the evidence of increase profitability of Reduced Impact Logging (Dykstra 2001), there are numerous reasons why unsustainable logging practices persist in the tropics (Putz et al 1999). People first - The social dimension of SFM. Forests matter to people: Forestry has much to offer for local livelihoods and poverty reduction. For example, a recent review by CIFOR of some 107 studies (Kaimovitz, 2002) shows that forest foods are a regular part of the diet in much of rural Sub-Saharan Africa, whilst in some cases over 50% of farmer's total cash income comes from NWFP like wild honey, charcoal, fuelwood and wild fruits. In many rural African rural areas up to 80% of the population, and in urban areas over 40%, rely on medicinal plants as the main source of health treatment. Between 70 and 90% of the national populations studied rely on fuelwood and charcoal as their main sources of energy. It has long been recognised in India that forest management in defiance of the local needs of the populace leads to conflict and / or resource degradation. (Khare et al 2002). Forests are an important part of cultural and natural heritage: Art, poetry and music have all been used to capture the cultural importance of forested landscapes. In 1972 nations signed up to the Convention for the Protection of World Cultural and Natural Heritage. Subsequent agreements such as UNCED have highlighted the importance of indigenous people's cultures within that heritage. Forestry can stimulate development given appropriate policies and institutions: Trade in forest products can be an important driver for economic development, provided that adequate governance ensures an equitable distribution of benefits, and the sustainable management of the resource. Forest work forces are among the most vulnerable: Forestry in general, and logging in particular, continue to be among the three most hazardous occupations in almost all countries (ILO 2001). Examples of contract slavery and forced labour, plus other human rights abuses have been documented (Bales 2000; ILO 2001) but are less frequent than a more usual litany of worker grievances about low pay, poor conditions and in the case of women, sexual harassment (GFC 2000). These problems are perhaps more widespread and more difficult to control in forestry because of remote locations. The future of trees is on farm? Trees can play an important supporting role in farming systems, not only providing livestock fodder, fruit, medicines and fuel wood, but also acting to enhance the agricultural environment through erosion control and soil amelioration. With the rapid depletion of off-farm resources, many farmers have responded by planting or maintaining trees on farm (Arnold and Dewees 1997). Trees can also provide a measure of seasonal employment (in artisanal production and craft) or longer term capital investments (in timber production) and there has been a growing body of positive experience about outsourcing timber growing in partnership with local farmers (Mayers and Vermeulen 2002). Nature matters - The environmental dimension of SFM Forests provide habitats for most of the world's species: The global environment is host to some 7 million species of living organism (excluding bacteria and viruses). About 85% of these are terrestrial. Almost two thirds of all species occur in the tropics, largely in the tropical humid forests (Pimm and Raven 2000). Forests sequester carbon or reduce climate change:. There is growing evidence that increasing atmospheric concentrations of carbon dioxide are linked with rising average global temperature. The present annual increase of carbon dioxide into the atmosphere is 6-10GtC/yr approximately 20% of which (1.6-2.1GtC/yr) has been estimated to arise through deforestation (Bass et al. 2000). The use of fossil fuels is by far the largest contributor (75%) to global warming. But even the best case scenario of fossil fuel emission control will not reverse the trend in increasing atmospheric carbon dioxide unless a parallel best case forestry scenario halts deforestation and establishes an afforestation programme. |
Defining international trade in forest products and services
Reduced tariff rates are guiding the international trade towards a more optimal trading pattern. The welfare impact is intended to be expressed as a function of lower costs of consumption in consumer countries and as higher return to producer countries of wood and wood-based products. What may emerge is a more efficient, more transparent, more competitive and generally liberalised trading system which potentially fosters sustainable forest management.
Importer countries of roundwood and other primary wood prodcuts have in the recent past reduced tariff barriers to trade to economize on their wood raw material. This has improved their local industrial cost competitiveness. What remains is some import tariff escalation for secondary and processed wood-based products which still has an important bearing on trade in forest and wood based products. Producer countries have introduced export bans, restrictions, quotas and taxes to increase rent capture from their forest resource, and to create incentives for domestic further processing. Lately, many producer country policies have gradually de-regulated the trade. Lowering of the producer country barriers causes necessary structural adjustment measures by the industry of the producer country.
However, tariff barriers, both import and export tariff, are relatively llow in the trade of forest products. As most of the tariffs are converging to effectively very low levels, the further movement towards optimal trading patterns is mostly conditioned by non-tariff measures (NTM) deriving mainly from environmental and social concerns. The debate on the non-tariff measures in forest products trade, the increasing recognition of environmental services which forests provide both as domestic services as well global public goods and the concept of sustainable forest management increasingly provides evidence that the global trading system needs to take into account the interface between forest management and trade as to overcome some serious limitations in trade, in particular from tropical countries.
NTMs are currently widened in the sense that beyond environmental and social concerns the dimension of legality of production and trade in forest products has gained international support and major activities have been launched in the recent past in this regard. While the international trade policy debate and negotiations focus on universal rules and agreements, the "forest law enforcement initiative (FLEG)" aims at bilateral agreements between producer and consumer countries as to avoid a policy debate on the issue of legality in production and trade within the global trade regime.
With the creation of the World Trade Organisation (WTO), States have agreed to act collectively in view of trade liberalization and in forming a new global trade regime for international trade. Consequently, WTO Members may amend international trade laws, waive their application, or issue binding interpretations on how they should apply based on negotiations and unanimous vote of all member states.
Annexed to the WTO Agreement, and forming an integral part to it, are various WTO multilateral and plurilateral agreements, some of which have important implications on how the WTO's 146 Member States regulate their trade of forestry-related products and services. These include:
• General Agreement on Tariffs and Trade (GATT 1994)
• Agreement on Technical Barriers to Trade (TBT)
• Agreement on the Application of Sanitary/Phytosanitary Measures (SPS)
• Agreement on Implementation of Article VI (Anti-dumping Agreement)
• Agreement on Subsidies and Countervailing Measures (SCM)
• Agreement on Trade-Related Investment Measures (TRIMS)
• General Agreement on Trade in Services (GATS)
• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
• Agreement on Government Procurement (Procurement Agreement)
These agreements are of varying importance to the debate on the trade-environment nexus (see Chapter 5 for analysis).
From a legal perspective, the starting point of any discussion on international trade in forest products and services and its impact on forest management is the international recognition of the sovereign right of states to exploit its own natural resources.4 This right is only restricted by the obligation of states not to cause damage to the environment of other states and areas beyond their jurisdiction, and it may also be circumscribed by other international treaty obligations which the states have ratified individually. In the case of the trade in forestry products and services, many states have incurred obligations pursuant to the International Tropical Timber Agreement, 1994 (ITTA), the Convention on Biological Diversity, 1992 (CBD) and the Convention on the International Trade of Endangered Species, 1966 (CITES) as well as under the various WTO agreements.
Other treaties and agreements are currently being screened by WTO bodies for "special trade obligations" (STO) and it remains to be seen what policy implications this process will have. In general, WTO Members have largely agreed upon the meaning of a “multilateral environmental agreement”. It is a legally binding instrument between at least three parties attaining a certain degree of universality that has as an objective the protection of the environment, and which is open to all countries concerned from the start of negotiations. The various more detailed positions taken by member countries could determine, for instance, whether the ITTA constitutes an MEA in the WTO legal context since ITTA has long been treated as an MEA despiet the fact that it primarily constitute a commodity agreement on tropical timber.
It is important to note that the WTO debate and their results on trade and MEA and consequently on sustainable forest management will have an important bearing on regional and bilateral trade agreements. To date, no major progress has been made with regard to the trade-environment nexus and the policy debates on trade and those on sustainable forest management continue in parallel despite the political will of the majority of states to initiate an integration of these debates and to arrive at a more coherent set of international policies and mutually supportive agreements. This situation was taken into account during the research and the definition of trade in forest products and services addresses this overarching policy issue as provide more information and analysis for making progress.
The primary emphasis of this analysis is on the international trade in timber and timber-based products and its linkages with sustainable forest management. The international trade in non-timber forest products and forest environmental services has been minor in volume and value terms relative to timber. However, the domestic trade in non-wood forest products and the emergence of markets for forest environmental services may have impacts on patterns of trade in forest products and thus indirectly on forest management. For example, some tree-based land use options that are currently unprofitable may become viable should new carbon trading credits for forests become available under the Clean Development Mechanism of the Kyoto Protocol (Bass et al. 2000). This will bring new producers and forest areas into the international timber market. Also, non-wood forest products harvested for subsistence and livelihoods of rural communities has an important impact on the policy debate on access to forest resources, the use and the ownership of forest resources as well as land tenure. It is these complementary aspects of NWFP and of markets for environmental services that are of interest for this study since they are causing shifts in the forest resource use and the policy debate on timber and timber-based products trade.
The study adopts a broad definition of forest trade-related policy recognising that the distinction between trade policy and other types of policy is becoming increasingly blurred. It is not sufficient to categorise policies according to whether their primary objective is to promote or restrict trade. A wide range of public policies can now be considered as drivers of or barriers to trade in forest products and services from the measures traditionally associated with trade such as tariffs, import quotas and log export bans to subsidies given to industries in other sectors.
Moreover, stakeholders such as the private sector, investors and NGOs play an increasingly important role at and between all levels in developing and implementing international, regional and national policies that influence the trade and forest management relationship. This broad definition is crucial because as will be discussed later in the analysis, much of the debate about the relationship between trade policy and policies in the forestry sector hinges on what is considered to be legitimate comparative advantage for either of them. Furthermore, the processes of policy making at the various levels touches upon issues of governance which therefore forms an important part of this analysis, including global governance aspects.
Any policy measure that affects the comparative costs of the forest products sector in a particular country can be considered as a potentially trade-related policy even if its primary objective is environmental or social. It is also important in this context that the main driving force of unsustainable forest management or conversion to other land uses like agriculture and infrastructure is the high returns relative to SFM causing high opportunity costs for SFM. Policies relating to other sectors therefore affect the comparative costs of the forest products sector and hence trade, as well as the incentives for sustainable forest management.
Three types of policies can therefore be considered to affect the trade and forest management relationship:
• Policies aimed at affecting forest management and the production of timber and forest services, and which through their impact on cost structures and resource availability might affect trade in forest products and services, or be affected by trade rules.
• Policies explicitly aimed at affecting trade, particularly in forest products and services, e.g. tariffs, bans etc. or NTB like legality certificates which through their effect on trade, might have an impact on forest management.
• Extra-sectoral policies aimed at other objectives not concerning either forest management or trade in forest products and services but which can have significant effects on trade and forest management.
It is necessary to assess the expected outcome of the current trade patterns with regard to trade flows, volume, and market development and their distribution as well as important issues in market access as to be able to analyse the effects of different types of policies, whether forest-related, trade-related or extra-sectoral, on forest management. The starting point in examining these policies is an understanding of how forests and land use alternatives are valued. It is evident that wood production, wood-based products and their trade faces an increasing challenge in particular through the likely liberalisation of the global market for agricultural commodities as well as the increasing demand for unified wood products deriving mainly from planted forests or forest plantations. The overall decrease in investments into natural forest operations and the environmental conditionalities brought forward in SFM of natural forests has definitely a "chill effect" on trade in hardwood, both from temperate and tropical forests.
Defining international trade in forest products and services includes the debates on the roles of criteria and indicators (C&I) for SFM as well as forest certification and forest products labelling. The former being a primarily national policy instrument (deriving from regional C&I processes) and the latter being market-based instruments have influenced the global trade policy debate enormously. Whatever position governments or civil society constituencies take on these issues, it is undebated that in particular the initiatives on forest certification and forest products labelling have been important fora for standard setting in SFM and have increasingly turned the consumers' attention to products of sustainably harvested sources.
1 Full text to be found at http://www.un.org/documents/ga/conf151/aconf15126-3annex3.htm.
2 Temperate and boreal forests are covered
by the Pan-European and the Montreal processes; arid zone forests by the Dry
Zone Africa Process, the Near East Process and the Regional Initiative for Dry
Forests in Asia; and tropical moist forests are covered by the Lepaterique
Process of Central America; the Tarapoto Proposal, ITTO and the African Timber
Organization (ATO). (Some of the regionally based processes cover also other
forest types in the region.) Several countries are member of more than one
process.
3 FAO-FORM,
2003
4 With specific
reference to forests, this principle can be found in Article 13 of the
Non-legally Binding Authoritative Statement of Principles for a Global Consensus
on the Management, Conservation and Sustainable Development of all Types of
Forests, 1992, UN Doc. No. A/CONF.151/26(Vol. III) and is included in treaty
law, such as in the preamble of the Convention on Biological Diversity.
