5.1.1 International Trade Regime
5.1.2 International Forest Regime and Multilateral Environmental Agreements
5.1.3 The Rio-Process and Post-UNCED Deliberations on Forests
5.2 Policy Issues, Instruments and Processes
5.2.1 Trade Debate in the Global Forest Policy Dialog
5.2.2 Analysis of the Intergovernmental Debate on Trade in Forest Products and Services
5.2.4 Role of Market-based Instruments and Private Sector Initiatives
The international trade rules have been extensively reviewed in the literature in respect of the appropriateness of the disciplines and how they should be best applied in order to avoid unnecessary adverse effects. The following is a short description of the international trade regime and regional trade agreements impacting on forest products trade and markets for environmental services.
World Trade Organization (WTO)
The purpose of the Uruguay Round was to advance the liberalization of international trade. The issues related to technical barriers to trade, sanitary and phyto-sanitary measures, subsidies and intellectual property rights are discussed in Chapter 6. In this section the relevant provisions of the GATT 1947 and 1994 are summarized. The WTO agreement listed below have or could have specific implications for the conservation and sustainable use of forests:
• GATT General Agreement on Tariffs and Trade
• TBT Agreement on Technical Barriers to Trade
• SPS Agreement on the Application of Sanitary and Phyto-sanitary Measures
• TRIPS Agreement on Intellectual Property Rights
• Agreement on Implementation of Article VI (Anti-dumping)
• SCM Agreement on Subsidies and Countervailing Measures (Agriculture Agreement on Agriculture
• GATS General Agreement on Trade in Services
• Agreement on Government Procurement
• TRIMS Agreement Trade Related Investment Measures
The need to consider environmental protection in the context of the international trade rules under the various agreements of General Agreement on Tariffs and Trade (GATT/WTO) has been recognized. The WTO Committee on Trade and Environment (CTE) has reviewed environmental issues related to products and their production and processing methods (PPMs) but no significant decisions have been made due to slow progress in this area. This is a sign of the lack of consensus between member countries on moving forward. In the area of forests, the CTE has, nevertheless, recognized environmental benefits arising from the removal of trade restrictions and distortions (WTO 1997). The core principles of General Agreement on Tariffs and Trade (GATT/WTO) are (i) non-discrimination, (ii) most favored nation (MFN), and (iii) national treatment (NT). The two latter ones can be called “liberalizing principles”. The MFN treatment, by construct, first applied to trading partners on bilateral basis, partners often agreeing on mutual concessions in terms of tariffs. WTO membership guarantees a permanent and unconditional MFN status.
The principle of national treatment means that an imported product, on entering the importing country, must be accorded treatment no less favourable than that accorded to the domestic product. NT includes three main elements:
• The imported product must not be subject to internal taxes or other internal charges in excess of those applied to a like domestic product.
• The imported product must be accorded treatment no less favorable than that accorded to a like domestic product in respect of rules and requirements relating to sale, purchase, transportation, distribution or use of the product.
• No member country can have a regulation laying down that in use of a product, a certain amount or percentage must be from domestic sources.
The MFN principle requires equal treatment between all WTO member nations, e.g. extending any trade preferences agreed by any two countries to all others (with some exceptions set forth in GATT 1947 Art. I.2). Article XI prohibits quantitative restrictions on exports and imports of goods, except in certain very specific circumstances.
The WTO contains rules and jurisprudence on import restrictions based on both legality and environmental considerations. In addition, some of the instruments to combat illegal trade, such as verification of origin, certification and labeling, are under continuous discussion in the Committee on Trade and Environment, and Committee on Technical Barriers to Trade.
Article XX of GATT provides general exceptions applicable to all GATT obligations. One exception is for measures necessary to protect human, animal or plant life or health (Art. XX(b)). Other relevant exceptions are for measures relating to the conservation of exhaustible natural resources taken in conjunction with domestic restrictions (Art. XX(g)) or measures necessary to protect public moral (Art. XX(a)). However, none of these measures may constitute arbitrary or unjustifiable discrimination between countries or constitute a disguised restriction on international trade (Art. XX, Chapeau).
The objectives of the Technical Barriers to Trade (TBT) Agreement are (i) to ensure that technical regulations and standards are not used as disguised protectionist measures, and (ii) to reduce the extent to which technical regulations and standards operate as barriers to market access, primarily encouraging their harmonization. The main substantive provisions of the Agreement have been summarized below (TBT Agreement, Annex 3):
• In respect to standards, products originating from other WTO Member countries shall not be accorded treatment less favorable than like products of national origin.
• Standards and the process of their preparation shall not create an unnecessary obstacle to international trade.
• International standards shall be used if they exist and are relevant.
• National standardizing bodies shall participate in the preparation of international standards.
• The standardizing body in a Member country shall avoid duplication of or overlap with the work of other standardizing bodies in the national territory or of international or regional standardizing bodies.
• Every effort shall be made to achieve a national consensus on standards.
• The standardizing body shall specify standards based on product requirement in terms of performance rather than design or descriptive characteristics.
• At least every six months the standardizing body shall publish a work program on standards under preparation or adopted. The titles of specific draft standards shall, upon request, be provided in English, French and Spanish.
• Before adopting a standard, the standardizing body shall allow a period of at least 60 days for the submission of comments on the draft by interested parties.
• Upon request, the standardizing body shall promptly provide a copy of draft standard, which has submitted for comments.
TBT agreement sets out procedures to ensure that technical regulations and standards, including packaging, marking and labeling requirements, do not create “unnecessary obstacles to international trade”. The TBT seeks to ensure that product standards are not used as disguised protectionist measures, and to reduce the extent to which they act as barriers to market access.
The TBT Agreement deals with two types of possible barriers to trade: (1) Technical regulations refer to “product characteristics or their related processes and production methods, with which compliance is mandatory”. (2) A standard is “approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not mandatory”. As certification of forest management is usually a voluntary activity, the TBT provisions on standards would appear to be relevant.
Process and Production Methods (PPM) is about how a particular good is produced. The basic principle of GATT/WTO is that any product should be considered as such, without consideration of how it is made.
A core issue in the trade and environment debate concerns the treatment of measures, which place distinctions on products based on their processes and production methods, as compared to distinctions based on the quality of the product as such. Holistic environmental regulation, by definition, addresses the manner in which products are produced, thereby treating the same products differently. Often, countries introducing such PPM based measures on their own products look to treat imported products similarly, inter alia, to offset any negative competitiveness effects.
Sanitary and phyto-sanitary (SPS) measures are used to guarantee that the producer has been capable of cleaning, sanitizing, sterilizing or by other means to render the offered commodity free from unwanted dirt, seeds, pests or germs. Standards in relation to plant health are generally acknowledged as legitimate, since introduced pests and disease can have devastating effects on the health of domestic forests.
Protective measures of SPS type are regulated under the WTO Agreement on Sanitary and Phyto-sanitary Measures (SPS Agreement). The SPS Agreement states that such regulations should not become unnecessary barriers to trade. It requires that any sanitary or phyto-sanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, and is based on scientific principles and sufficient scientific evidence (Art. 2.2). Although there is a presumption in favor of using international standards, countries may take stricter measures if there is a scientific justification or as a result of a prescribed risk assessment (Article 3(5)).
Government purchases make a very important share of the total markets. Government expenditures make between 10 to 25% of the Gross Domestic Product (GDP) in OECD countries. The purchase decisions of governments are important from several viewpoints: (i) economic influences, (ii) environmental influences, and (iii) leverage impact on the rules and functioning of the market in general. The Plurilateral Government Procurement Agreement (GPA) is different from most WTO agreements in the sense that it is plurilateral, i.e. the countries that are WTO members do not automatically become members in this agreement. The GPA has around 30 signatories, mostly from OECD countries. The objective of GPA is to require that governments are fair and transparent in their tender bidding.
GPA is different from GATT in the sense that it does not rule against discrimination between similar products, but it rules against discrimination between foreign and domestic suppliers. GPA rules that technical specifications should be “based on international standards, where such exist, otherwise on national technical regulations, recognized national standards, or building codes.” A national technical regulation is any standard set by a recognized body. Thus it is likely that ISO 14001 Environmental Management System (EMS) as well as eco-label programs would be acceptable from the point of view of GPA.
Regional Agreements related to trade and the EU
The North American Free Trade Agreement (NAFTA) Article 104 lists seven international environmental agreements (IEAs), and agrees that they will surpass NAFTA in the case of disagreement. They include CITES which has direct relevance to tropical timber. The domestic laws resulting from the listed IEAs must be those “least inconsistent with the other provisions of NAFTA.” So a party would have to show that a challenged measure could not have been somehow 'better', or more consistent with NAFTA. But the more NAFTA-consistent alternative does not need to be politically or economically feasible.
There are eight member countries in the Association of South East Asian Nations (ASEAN). They are Malaysia, Indonesia, Philippines, Singapore, Thailand, Brunei, Vietnam and Myanmar. As one means to step up the intra ASEAN trade, a Common Effective Preferential Tariff (CEPT) scheme was initiated in 1992. The objective was to arrive at an ASEAN Free Trade Area (AFTA) in the year 2008.
Initiated in 1989, Asia-Pacific Economic Cooperation (APEC) initially comprised the then six ASEAN members, i.e. Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand and their six “official Pacific dialogue partners” namely Australia, Canada, Korea, Japan, New Zealand and the USA. Later, the membership was enlarged to include China, Hong Kong, Taiwan, Papua New Guinea, Mexico and Chile.
Under the Bogor Declaration signed in 1994, APEC agreed on a timetable for trade liberalization to commence in the year 2000 and be completed within ten years for the developed nations, 15 years for the newly industrialized countries, and 20 years for the developing nations. As APEC is committed to the principle of “open regionalism”, trade concessions would be extended to non-members on a reciprocal basis.
In 1997, APEC economies agreed to include forest products among the nine sectors which would be liberalized as part of an Early Voluntary Liberalization (EVSL) initiative. In November 1998, APEC agreed to move these sector discussions on tariff reductions to the WTO for finalization and implementation on the basis of an agreed framework on product coverage, end rates and end dates. The initiative was later called accelerated tariff liberalization (ATL).
As part of the ATL on forest products, it was also agreed to conducted a survey to review the non-tariff measures affecting trade in forest products with a view towards improving trade conditions, including the harmonization of standards pertaining to wood products use in construction. The ATL expands the so-called “zero for zero” agreement among some APEC members to eliminate tariffs on forest products between themselves. A similar effort to achieve this target in the Uruguay Round failed, and the full objective of the process within APEC has also not been achieved.
Mercosur, Mercado Común del Sur or the Southern Common Market, is a subregional integration agreement involving Brazil, Argentina, Uruguay and Paraguay, with Chile and Bolivia holding a special associated status. It is now a customs union (all members have the same tariffs to the outside world) and is committed eventually to becoming a full common market. In this sense it aspires to regional integration like the EU, rather than a free trade area like NAFTA.
The Mercosur structure, though still evolving, provides several environment-related innovations. Mechanisms for public participation were provided in the original Protocol of Ouro Preto, through a Foro Consultivo Económico y Social (social and economic advisory council, which exists as part of the Mercosur institutional structure). This forum receives information from labor, business and consumer representatives. Experts from the public also attend relevant meetings of Mercosur's many technical sub-committees.
More explicit environmental and trade linkages are made through various legal mechanisms that combine as elements of a developing regime. Several resolutions of the Grupo Mercado Común and decisions of the Consejo de Mercado Común have touched upon environmental issues. The Canela Declaration of 1992 created an informal working group, the Reunion Especializada en Medio Ambiente, to study environmental laws, standards and practices in the four countries. This forum evolved into the creation of a Sub-Grupo No. 6 on the environment, which is one of the recognized technical working bodies of Mercosur. This group has discussed issues such as environment and competitiveness, non-tariff barriers to trade, and common systems of environmental information. This body has been involved for over two years in negotiating a new environmental protocol, which is being added to the Treaty of Asunción of Mercosur. The draft agreement provides a comprehensive stand-alone treaty for upward harmonization of environmental management systems and increased cooperation on shared ecosystems, in addition to mechanisms for social participation.
The European Union (EU) - holding the competence for trade policies for member states - is in a process of harmonizing all major aspects of economic policy as well as many related policy areas. At the heart of the EU is a customs union and a single market, with a common external tariff. It is a supranational organization, widely interpreted as providing for the shared exercise of its member states' sovereignty. The EU can legislate in the sense that it can adopt binding legal instruments through the action of its institutions alone. For this purpose it has a comprehensive institutional structure, involving legislative, executive, judicial and advisory organs.
The growing global economy is placing an increasing strain upon global ecosystems. Sometimes this strain involves the over-exploitation of species, putting them at risk of extinction. Due to the integration of the global economy, such overexploitation appears to be often driven by international trade. As regards timber from natural tropical forests, however, it needs to be recognized that the volume of trade has not shown a growing trend.
The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) was adopted in 1973 to prevent over-exploitation of endangered species through international trade. The Convention bans commercial trade in species most threatened with extinction (listed in Appendix I) and strictly controls trade by means of export permits in other species that might be threatened with extinction unless trade is controlled (listed in Appendix II). The Convention also creates an Appendix III, which contains species nominated by individual Parties, for which those parties undertake to issue export permits. In 2002, seven tree species appear in Appendix I, twelve in Appendix II, and six in Appendix III, although only two are traded in significant volumes.
Recent CITES proposals to control the trade of certain timber species have been particularly controversial. Some exporting developing countries have raised concerns about the current listing criteria as they apply to trees. However, other countries have firmly defended the listing criteria as adequate for tree species, and the current polarization may well continue for some time. There are also disputes about whether there is scientific evidence that a tree species proposed for listing is really endangered or threatened by international trade. The problem is compounded by generally poor data on tropical forests, and limited information on trade flows by species.
The trade regulation of mahogany (Swietenia macrophylla) is a recent case in point, as the species has been proposed three times for CITES Appendix II listing, with a negative result each time (the last vote being very close). Bolivia, Brazil and Costa Rica have now listed it on Appendix III. The international attention led to the establishment of a regional Working Group on Mahogany, which has developed a number of proposals for joint actions and improved cross-border co-operation between the involved countries.
A CITES listing tends to have a negative impact on trade flows of the listed species. CITES is aware of this problem, and a Timber Working Group was established to make recommendations on proposals for listing of tree species, as well as on implementation of appropriate export controls on listed species (FAO 1997). To make CITES listing effective, adequate enforcement measures both in exporting and importing countries are needed.
The efforts by CITES to protect and improve the survival of all endangered species living in forests are widely supported because of the increasing global pressures. From the trade point of view, such trade measures as CITES listings should be limited to what is necessary to achieve the objective. On the other hand, CITES trade restrictions should be made and implemented effectively so that the survival of a species, which is endangered by commercial trade, is indeed ensured by the measures taken (Simula 1999).
The twelfth Conference of Parties (COP12) of CITES in November 2002 made the following updates:
- included Swietenia macrophylla in Appendix II (starting from November 2003)
- included Araucaria araucana in Appendix I.
The Convention on Biological Diversity (CBD) is one of the most important of the MEAs from the point of view of forestry. Most of the environmental effects are indirect in causing changes in levels and patterns of production and consumption (WTO 1997). While recognizing the potential benefits of trade to the environment, there can also be negative effects, and therefore trade liberalization should be implemented in conjunction with environmentally sound policies (United Nations' Commission on Sustainable Development, CSD 1996). Complementarity can be observed in the WTO and CBD rules. The following inter-linkages between CBD and the WTO rules can be identified in the area of forest bio-diversity (cf. Downes 1998; Simula 1999):
Monitoring of trade impacts on bio-diversity. CBD Article 7 requires Parties to assess and monitor the status of bio-diversity and the activities likely to interfere with conservation and sustainable use. In the forestry sector, there is a particular need to carry out bio-diversity assessments including the impacts of trade on bio-diversity.
United Nations Framework Convention on Climate Change (UNFCCC)
The United Nations Framework Convention on Climate Change (UNFCCC) addresses the issues related to climatic influences, including the interface with forest ecosystems. The interface between forest resources and climate change has three main facets: (a) What will be the impact of climate change on forests (on which little scientific information is available). (b) An important share of carbon emissions is coming from deforestation and forest degradation, which is also the main reason for the loss of bio-diversity. (c) Enhancing the role of sinks in mitigation of emissions as outlined by the Kyoto Protocol. The Clean Development Mechanism (CDM) will be applied to afforestation and reforestation and is expected to mobilize significant amounts of financing to increase forest bio-mass in developing countries.
It is possible that the range of eligible activities for CDM will be broader after the first Kyoto commitment period (2008-2012) furthering the potential role of this instrument to raise funds for SFM in developing countries. From the trade point of view, this may become an issue when the increased carbon stocks are renewed at the age of final harvest, releasing probably significant volumes of timber for industrial use, fuelwood and other purposes. This increased supply would change market situation, both nationally and internationally. The assessment from the trade point of view would be related to the reward which the forest owner receives for the environmental service he is providing through carbon sequestration.
UN Conference on Environment and Development (UNCED)
The relationship between economic development and environmental degradation was first placed on the international agenda in 1972, at the UN Conference on the Human Environment, held in Stockholm. In the following period, the notion that environmental protection and natural resources management has to be integrated with socio-economic issues of poverty and underdevelopment increased. In 1987, the UN World Commission on Environment and Development (WCED; Brundtland Commission), chaired by the Norwegian Prime-Minister Gro Harlem Brundtland, has been capturing the idea in the definition of "sustainable development" in its report "Our Common Future: The World Commission on Environment and Development", widely known as "The Brundtland Report". After considering that report, in 1989 the UNGA called for the UNCED and the process of planning and negotiations among all member states of the UN was initiated. After four sessions of the Preparatory Committee, the conference, also known as the “Earth Summit”, was held at Rio de Janeiro/Brazil from 3 to 14 June 1992.
The primary goal of the conference was to come to a common understanding that social, environmental and economic needs must be met in balance with each other for sustainable outcomes in the long term. It made history by bringing global attention to the concept of sustainable development as a workable objective for all actors at different levels and by bringing stakeholders together. It thus produced a new plan for international cooperation and policy on environmental and developmental issues.
In Rio, governments adopted three major agreements aimed at changing the traditional approach (that was primarily focused on economic growth) to sustainable development:
1. The Agenda 21 is a comprehensive programme for global action in all areas of sustainable development. Divided into IV Sections and overall 40 Chapters, it addresses today's pressing problems, clarifies appropriate challenges and contains detailed proposals for action. Besides technical issues, the programme also takes into account socio-political dimensions in participatory decision-making processes. Its Chapter 11 “Combating Deforestation” of the Agenda 21 outlines the field of forestry. Issues being addressed are e.g. the maintenance of multiple functions of all types of forests, sustainable management and conservation of all forests, afforestation, reforestation and the establishment of capacities for planning, assessment and systematic observations of forests and processes.
2. The Rio Declaration is a series of 27 principles defining the rights and responsibilities of States among each other and the relationship between state and society. Amongst others, it addresses industrialised countries as the most important polluters and is calling for the integration of environment protection in all fields of policy, participation of the public and effective environment legislation.
3. The Forest Principles are a “non-legally binding authoritative statement of [15] principles for a global consensus on the management, conservation and sustainable development of all types of forest”65. This statement is the first global consensus reached on forests. Because of differences in attitude between developing and industrialised countries, e.g. concerning the integration of all types of forests and financing mechanisms, a forest convention could not be achieved.
UN Commission on Sustainable Development (CSD)
The UN Commission on Sustainable Development (CSD) was established by the UNGA in December 1992 as a functional commission of the ECOSOC to ensure an effective follow-up of UNCED. It receives substantive and technical services from DESA/Division for Sustainable Development.
The original mandate of CSD is to review progress at the international, regional and national levels in the implementation of the outcomes of UNCED, in particular the Agenda 21. The main bases for that process of monitoring and identifying problems faced by countries are annually reports submitted by governments. In this regard, CSD strives for enabling countries to gather and report the data needed, e.g. using a list of indicators from which governments will choose those appropriate to local conditions. The role of CSD is furthermore to promote dialogue and to build partnerships for sustainable development with governments, the international community and the major groups identified in Agenda 21 as key actors.
Achieving sustainable development worldwide depends largely on changing patterns of production and consumption. In this area, CSD e.g. focuses on impacts on developing countries, including trade opportunities and assessment of the effectiveness of policy instruments, including new and innovative instruments. In 1995, the Commission also adopted a work programme on the transfer of environmentally sound technology, cooperation and capacity building. The programme places an emphasis on three interrelated priority areas: access to and dissemination of information, capacity building for managing technological change as well as financial and partnership arrangements.
The Commission meets annually in New York for a period of two to three weeks and reports to the ECOSOC and, through it, to the Second Committee of the UNGA (Economic and Financial Committee). The 1st Session was held in June 1993. A five-year review of Earth Summit progress (Earth Summit + 5; Rio+5) took place in June 1997 by the 19th UNGA Special Session (UNGASS) in New York. The ten-year review followed in September 2002 by the World Summit on Sustainable Development (WSSD; Earth Summit + 10; Rio+10) in Johannesburg. The 10th Session of the CSD in 2001 acted as the Preparatory Committee (PrepCom) for WSSD. The WSSD reiterated the initial functions of the CSD as a high level forum on sustainable development, and enhanced the Commission's mandate to elaborate policy guidance and options for future activities to follow up the Johannesburg Plan of Implementation.
Intergovernmental Panel on Forests (IPF) and Intergovernmental Forum on Forests (IFF)
At its 3rd Session in 1995, the CSD established an ad hoc open-ended Intergovernmental Panel on Forests (IPF) for two years (1995-1997) to provide a forum for the international forest policy dialogue. The UNGA, at its 19th Special Session in June 1997, decided to continue that dialogue on forests through the ad hoc open-ended Intergovernmental Forum on Forests (IFF). ECOSOC established the IFF, again under the auspices of the CSD, for another three years (1997-2000).
In July 1995, an informal, high level Interagency Task Force on Forests (ITFF) was set up by eight international organisations (FAO, UNDP, UNEP, ITTO, World Bank, CSD, and the Secretariat of the CBD) to coordinate the inputs of these organizations to the forest policy process.
The overall objective of IPF and IFF is to develop coherent policies to promote the management, conservation and sustainable development of all types of forests. Both institutions met four times within the appropriate period. Government and Organization Led Initiatives (e.g. Six-Country Initiative of Finland, Germany, United Kingdom, Honduras, Indonesia and Uganda) organized expert meetings to discuss particular issues before scheduling them for discussion in formal sessions.
In pursuing its mandate, the IPF was expected to focus on 12 programme elements clustered into the following five interrelated categories and to submit final conclusions and policy recommendations to the CSD at its 5th Session in April 1997:
- implementation of forest-related decisions taken during the UNCED at the national and international levels, including an examination of sectoral and cross-sectoral linkages,
- international cooperation in financial assistance and technology transfer,
- scientific research, forest assessment and the development of criteria and indicators for sustainable forest management,
- trade and the environment in relation to forest products and services,
- international organizations and multilateral institutions and instruments, including the appropriate legal mechanisms.
- In February 1997, IPF-4 presented in its final report a set of proposals for action. However, IPF delegates could not agree on a few major issues such as financial resources, transfer of environmental sound technologies and trade related matters, or whether to begin negotiations on a global forest convention.
- The IFF aimed at facilitating the implementation of the IPF proposals for action, i.e. at moving from dialogue to action, and at resolving several issues on which IPF had not reached consensus. In February 2000, at its final meeting, the IFF adopted a report containing additional proposals for action (see below). However, the issues related to legal and financial mechanisms affecting sustainable forest management remained too controversial for governments to reach a final agreement.
- UN Forum on Forests (UNFF)
- Following the IFF recommendations, ECOSOC established the UN Forum on Forests (UNFF) as a part of the IAF in October 2000. UNFF was set up as a subsidiary body of ECOSOC and thus has a comparable legal entity as CSD.
- The main objective of UNFF is to carry on the five-year IPF/IFF process (1995-2000), i.e. to promote “…the management, conservation and sustainable development of all types of forests and to strengthen long-term political commitment to this end…”66 In order to achieve that objective, the following principal functions have been identified:
- to facilitate implementation of forest-related agreements (e.g. IPF/IFF Proposals for Action) and foster a common understanding on sustainable forest management;
- to provide for continued policy development and dialogue as well as to address forest issues and emerging areas of concern in a holistic, comprehensive and integrated manner;
- to enhance cooperation as well as policy and programme coordination on forest-related issues;
- to foster international cooperation and;
- to monitor, assess and report on progress of the above functions and objectives;
- to strengthen political commitment to sustainable forest management.
- States Members contribute to the UNFF process through dialogue and voluntary reports culminating in the annual session of the Forum. The UNFF Secretariat, as mandated by UNFF-2, has provided a suggested format for the national reports. Country and Organization Led Initiatives (e.g. Eight-Country Initiative of Australia, Brazil, Canada, France, Germany, Iran, Malaysia and Nigeria) also contribute to the development of UNFF themes.
- By 2005, the UNFF will evaluate the efficiency of IAF and “...will also address the institutional framework of the United Nations Forum on Forests...” In addition, the Forum is authorised to negotiate the recommendation of a mandate for developing a legal framework on all types of forests.
The Collaborative Partnership on Forests (CPF) was established by ECOSOC in April 2001, following the IFF recommendations. It is serviced by the UNFF Secretariat. Like UNFF, CPF is an element of the IAF.
The CPF is an innovative partnership of 14 major forest-related international organizations, institutions and convention secretariats: CIFOR, ITTO, IUFRO, CBD Secretariat, GEF Secretariat, UNCCD Secretariat, UNFF, UNFCCC Secretariat, UNDP, UNEP, ICRAF, World Bank, IUCN
The objectives of the CPF are to support the work of the UNFF and member countries and to enhance cooperation and coordination on forest issues. Basically, CPF
1. promotes the implementation of the IPF/IFF Proposals for Action by
- providing information and technical assistance to countries,
- facilitating regional and international initiatives,
- identifying and mobilizing financial resources,
- strengthening political support for sustainable forest management and
2. provides expertise and advisory services to UNFF by
- preparing documentation for UNFF sessions,
- supporting intersessional activities,
- CPF reports annually on its activities to UNFF in a document entitled “CPF Framework”.
- In order to carry out its work effectively and efficiently and to follow a principle of shared responsibility, the CPF has designated focal agencies and supporting agencies. The key tasks of the focal agencies include appropriate elements addressed by UNFF. For instance, in the field of criteria and indicators of sustainable forest management, FAO and ITTO are the focal agencies. They are supported by CIFOR, IUFRO, CBD and UNEP. However, the focal agency system is rather adverse in regard to the holistic approach of the implementation of the IPF/IFF Proposals for Action.
Food and Agriculture Organization
The Food and Agriculture Organization of the United Nations (FAO) helps to facilitate contacts and information flow among on-going, new and emerging processes and between these and other related programs, such as national forest programs and the global forest resources assessment in the forestry field, and works within the framework of the Convention on Biological Diversity (CBD) in the field. Also, FAO's statistical and analytical work on trends and outlooks for forest product supply and demand is highly relevant. FAO has also monitored the developments in the tariff and non-tariff barriers to trade through a series of studies (including Bourke and Leitch 2000).
With regard to market access, FAO is giving priority to:
• Ensuring compatibility and comparability in the various on-going initiatives, as well as harmonization of forest-related concepts and definitions among them; this work has direct relevance to trade.
• Support to country capacity building and training.
• Promotion of development of appropriate links between criteria and indicators for SFM applied at (i) the national, and (ii) the forest management unit (working) levels; and appropriate linkages between these and efforts towards the development and implementation of forest certification programs.
• Publication of well-focused, practical guidelines on the assessment and measurement of indicators ensuring compatibility between the assessment guidelines, at global level;
• Assistance to countries in securing necessary resources and support, drawing on both national and external sources, for the further development, testing and implementation of criteria and indicators; support to institutional twinning between developed and developing countries to further the implementation of sustainable forest management practices.
In the area of certification, FAO will continue to maintain an interest in global trends and opportunities, related to both market and forest management aspects. As an organization, which acts as a neutral forum, it will assist where appropriate. In this respect, in association with ITTO, FAO held a consultation dealing with the subject of mutual recognition between certification processes held in Rome, in 2001.
International Tropical Timber Organization (ITTO)67
The International Tropical Timber Organization (ITTO)
was established under the auspices of the United Nations in 1986 amidst
increasing worldwide concern for the fate of tropical forests. While almost
everyone was alarmed at the rate of deforestation occurring in many tropical
countries, there was also considerable agreement that the tropical timber trade
was one of the keys to economic development in those same countries. The
reconciliation of these two seemingly disparate phenomena is ITTO's story.
ITTO's origins can be traced back
to 1976 when the long series of negotiations that led to the first International
Tropical Timber Agreement (ITTA) began at the fourth session of the United Nations
Conference on Trade and Development (UNCTAD) as part of that
organization's Programme for Commodities. The eventual outcome of these
negotiations was the ITTA, 1983, which governed the Organization's work until 31
December 1996, when it was superseded by the ITTA, 1994. Negotiations for a successor to this
agreement are now under way, again under the auspices of UNCTAD.
As the first ITTA was being
negotiated in the early 1980s, concern over the fate of tropical forests was
increasing and the international community was being asked to take action. By
then, conservation had become at least as important a consideration in the
negotiations as trade. This was reflected in the preamble to the Agreement, in
which conservation and trade were accorded equal importance. The ITTA that
eventually came into operation was no conventional commodity agreement. It was,
in reality, as much an agreement for forest conservation and development as for
trade. In effect, it preceded the concerns which featured in the 1987 Brundtland
Report and at the Earth Summit in 1992 and its trade components were as much
instruments for tropical forest conservation as ends in themselves.
The ITTA, 1994 builds on the foundations of the previous agreement, focusing on the world tropical timber economy and the sustainable management of the resource base, simultaneously encouraging the timber trade and the improved management of the forests. In addition, it contains broader provisions for information sharing, including non-tropical timber trade data, and allows for the consideration of non-tropical timber issues as they relate to tropical timber. ITTO occupies an unusual position in the family of intergovernmental organizations. Like all commodity organizations it is concerned with trade and industry, but like an environmental agreement it also pays considerable attention to the sustainable management of natural resources. It manages its own program of projects and other activities, enabling it to quickly test and operationalize its policy work. Other features include:
• an equal partnership in decision-making, policy formulation and project development between producing members (tropical developing countries) and tropical timber consuming members (mostly temperate developed countries);
• the active participation of civil society and trade organizations in meetings and project work;
• the formulation and implementation of projects in producing member countries, using mostly local expertise;
• twice-yearly meetings of its governing body (the International Tropical Timber Council), meaning a comparatively rapid pace of debate, decisions and action.
ITTO develops internationally agreed policy documents to promote sustainable forest management and forest conservation and assists tropical member countries to adapt such policies to local circumstances and to implement them in the field through projects. In addition, ITTO collects, analyses and disseminates data on the production and trade of tropical timber and funds a range of projects and other action aimed at developing industries at both community and industrial scales. Examples include pilot and demonstration projects, human resource development projects, and research and development projects; the Yokohama Action Plan sets out the types of activities that the Organization should undertake in project and policy work. All projects are funded by voluntary contributions, mostly from consuming member countries.
Non-member stakeholders have established two advisory groups to facilitate their participation in the Council and to provide input to the Council's decision-making process. These are the Trade Advisory Group (TAG) and the Civil Society Advisory Group (CSAG).
The International Tropical Timber Agreement (ITTA) is in the very focus of the international debate on market access for tropical timber. Market access has been subject to periodic investigations. ITTO's work on this subject area was summarized in Chapter 1.1. It shows how complex the issue is and how difficult it is to make concrete progress in reducing market barriers and impediments.
ITTA is a commodity agreement, however, with a strong environmental link. ITTO has a double role: (1) promotion of trade of tropical timber, and (2) dealing with the environmental issues. The ITTO Mission Statement reads: “The ITTO facilitates discussion, consultation and international cooperation on issues relating to the international trade and utilization of tropical timber and the sustainable management of its resource base”.
In carrying out its mission, ITTO has faced a large number of challenges. In the words of ITTO Yokohama Action Plan (2002): “The linkages of the supply chain from sustainably managed resource to consumer require an integrated approach to maximize synergy. Managing and harvesting the resource, processing and marketing are mutually interdependent: it is important that the development and gains in one element are incorporated fully into the others.” The ITTO Yokohama Action Plan (2002) describes the strengthening of the several linkages. These include the founding membership in Collaborative Partnership on Forests (CPF
The Intergovernmental Panel on Forests (IPF) and its successor the Integovernmental Forum on Forests (IFF), through a long process from 1992, spearheaded the development and monitoring of national forestry programmes (nfps) to cover a wide range of approaches for addressing forest sector issues in a holistic, comprehensive and multi-sectoral manner in the context of wider strategies and programmes for sustainable development. Because the IPF/IFF came under the aegis of the UN Commission for Sustainable Development, which in turn reports to the UN General Assembly, countries are under political obligation to give effect to its proposals at national level. The IPF/IFF 'Proposals for Action' consist of some 270 generic suggestions for policies, legal frameworks, forest plans and management, agreed. The UN Forum on Forests (UNFF), the successor to IPF/IFF, is charged with coordinating the implementation and monitoring of the Proposals for Action, and with organising continuing dialogue.
There are several benefits deriving from the swathe of soft law developed by the UN process. As a result of the extensive diplomatic activity, forests are established as an important international concern among politicians and officials. Civil society and business won better access to deliberations, and some of their innovations were showcased. Coordination between the UN bodies with responsibility for forests has improved. The primacy of country-led, multi-stakeholder national forest programmes (nfps) was agreed. Finally, the limits to intergovernmental processes were accepted - especially the need to avoid imposing international precepts.
While the UNFF was intended to address trade issues, the view of NGOs (e.g. Tarasofsky 2001) is that virtually no substantive agreement or progress on these issues has occurred and that little further contribution to trade policy can be expected from UNFF. However, Tarasofsky does see a role for the UNFF in addressing the problem of illegal logging and illegal trade, areas where effective dialogue between countries is needed.
Since the international trade regime is legally based, it is a much stronger influence on forest trade than the above 'soft' processes and their social and environmental intentions. The rapid rise to predominance of the WTO as the trade regime 'umbrella' is now somewhat tempered by the increase in powerful regional and bilateral initiatives. However, neither the WTO nor regional trade organisations have forestry expertise in their staff or delegations. And it is only really ITTO in the international forest regime that is competent to help shape the trade regime, addressing the many trade uncertainties which limit progress in implementing forestry agreements and instruments, e.g. how far certification is a trade barrier.
From an international legal perspective, the starting point of any discussion on international trade and forest products and services is a recognition of the sovereign right of every State to exploit its own natural resources.69 This right is 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 treaty obligations which the State has accepted.
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),70 the Convention on Biological Diversity, 1992 (CBD),71 and the Convention on the International Trade of Endangered Species, 1966 (CITES),72 as well as under the Marrakesh Agreement Establishing the World Trade Organization (WTO), 1994.73
With the creation of the WTO, States have created what is possibly the most important international legal regime currently in existence. Its rules undoubtedly affect the international trade in forest products and services, but they also respect the large measure of autonomy that WTO Members have to determine their own policies on the environment.74
In November 2001, the WTO's Ministerial Declaration at Doha (“Doha Declaration”) provided a mandate for negotiations on a variety of subjects, which have implications for the trade in forest products. The negotiations, which cover 21 listed subjects, are to be pursued until their conclusion not later than 1 January 2005.75 In the interim, a stock-taking will take place when committees report to the Fifth Ministerial Conference in Cancún in September 2003.
The WTO was established with the conclusion of the Uruguay Round of multilateral trade negotiations, and entered into force on 1 January 1995.76 Annexed to the WTO Agreement, and forming an integral part to it, are various multilateral and plurilateral agreements, some of which have important implications on how the WTO's 146 Member States77 regulate their trade of forestry-related products and services.
The work of the WTO is carried out by various committees and councils, whose membership consists of all WTO Members. For the most part, these bodies report directly to the General Council. The plurilateral committees, like the Committee on Government Procurement, do not include all WTO Members, only those Members that have ratified the Government Procurement Agreement. Therefore, although it has a duty to inform the General Council of its activities, negotiations in this Committee do not affect all WTO Members.
The General Council is the key decision-making branch of the organisation on almost all issues, and also acts as the Trade Policy Review Board and the Dispute Settlement Body.78 It carries out the day-to-day work between ministerial conferences. It is made up of the 146 Member States of the WTO, each one having an equal say. The only body that has more authority than the General Council is the Ministerial Conference, which is made up of the international trade ministers from all Member States. It has the authority to take decisions on all matters under any of the multilateral trade agreements.79 Although it is technically distinct from the General Council, the Ministerial Conference relies on the General Council to carry out its day-to-day activities, given that it meets only every second year.
Multilateral Environmental Agreements (MEA) and WTO
To date, the Members that have shared their opinions have largely agreed upon the meaning of a “multilateral environmental agreement”. It is a legally binding instrument between at least three parties that has as an objective the protection of the environment, and which is open to all countries concerned from the start of negotiations.80
The WTO agreements are based on a few core tenants. These are the reduction and eventual elimination of barriers to trade and the guarantee of non-discrimination. Non-discrimination obliges each Member to treat products of other Members in a manner that is no less favourable than the treatment afforded to national products and to the products of a Member's most favoured nation. Typically, the agreements also contain exceptions to the core rules. In GATT Article XX, for example, exceptions are provided for measures that are necessary to protect plant life or health and measures that relate to the conservation of exhaustible natural resources.81
The objectives of the Convention are “the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources,” including by access to them and transfer of technologies.82 The Convention leaves implementation up to the parties, and imposes obligations on States to comply with the Convention to the highest level possible given their capabilities and resources.
As its name suggests, the objective of CITES is to control the trade in endangered species and their parts so as to ensure that their survival is not threatened. It establishes trade controls, which require that all import, export, re-export and introduction from the sea of species covered by the Convention has to be authorized through a licensing system.
The objectives of the Agreement include the promotion and enhancement of the tropical timber trade, encouragement of reforestation and sustainable use and management of forests, and perhaps most importantly for our purposes, consultation and co-operation between members.83
Meaning of STOs
The subject of the relationship between MEAs and the WTO is not new to the CTE. Previous CTE discussion on this relationship, however, focused on “trade measures” for environmental purposes, rather than on “specific trade obligations”, as stipulated in the Doha Declaration. The term “STO” is thought to have a more particular meaning than the term “trade measures”. All negotiating Members seem to agree that the form of a trade obligation includes many possibilities, ranging from trade bans to notification procedures or labelling requirements. However, there is disagreement on whether an STO covers non-mandatory measures, or measures for which implementation depends upon the discretion of parties to the MEA.
Although Switzerland has identified both of these MEAs as “setting out types of measures and policies that can and must be adopted in pursuit of a specific objective negotiated by the contracting parties,” Korea has explicitly denied the existence of an STO in either of the treaties.84 CITES has been identified by the EC as an agreement for which trade measures have been key to its success.85 Members tend to agree that it contains STOs, pointing particularly to Articles III, IV, V and VI.86 There is disagreement between the US, on the one hand, and Korea and India, on the other, over whether Article VIII also contains STOs.87 In the opinions of Korea and India, neither Article VIII nor Article XIV contain STOs.
Relationship between Existing WTO Rules and Specific Trade Obligations
When it comes to the relationship between STOs and the WTO, many Members have expressed the view that an STO should not always be automatically presumed to be in
conformity with WTO rules.88 Instead, according to Chinese Taipei, the legitimacy of a trade measure should be examined in light of the principles of necessity, proportionality, and transparency, and in light of whether it is based on sufficient scientific evidence and whether it conforms to the chapeau of Article XX.
In the opinion of the EC, Norway and Switzerland, on the other hand, MEAs and the WTO are mutually supportive, especially with respect to the common goal of sustainable development.89
Dispute Settlement Body (DSB)
At times, the General Council convenes to discharge the responsibilities of the DSB,90 which is charged with the administration of the Dispute Settlement Understanding (DSU). The DSB is empowered to establish panels, adopt panel and Appellate Body reports, monitor the implementation of rulings and recommendations and authorize the suspension of concessions when a Member does not comply with a ruling.91
The dispute settlement mechanism is one of the cornerstones of the organization. It levels the playing field by giving access to all WTO Members binding dispute settlement. Also, it adds to Members' confidence that their mutual commitments and obligations will be respected. It does not impose new trade obligations, but is used by Members to enforce the WTO covered agreements.
The CBD and TRIPS Article 27.3: Traditional Knowledge and Access to Genetic Resources of Forests
The TRIPS Agreement attempts to introduce a greater degree of order and predictability to the way that intellectual property rights are protected around the world by bringing them under common international rules. It establishes minimum levels of protection that each Member has to give to the intellectual property of other WTO Members. In doing so, it strikes a balance between the long-term benefits and possible short-term costs to society. The idea is that society benefits in the long-term when intellectual property protection encourages creation and invention, especially when the period of protection expires and the creations and inventions enter the public domain.
Article 27 of the TRIPS Agreement provides broad subject matter scope for patent protection, extending it to products and processes in all fields of technology. It also provides that Members will not discriminate with respect to the enjoyment of patent rights based on the place of invention, field of technology, or whether products are imported or locally produced.
Paragraph 3 of Article 27 provides that “Members may also exclude from patentability:
(a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals;
(b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. […]
The exclusions in Article 27:3 seem to be narrowly framed, but do leave substantial room for interpretation. What is clear is that paragraph (b) allows for the exclusion of animals and plants from patent protection, but does not allow this exclusion for certain microbiological products and processes. Moreover, it requires Members to provide plant variety protection either through patents or by a sui generis system.
The objectives of the Convention on Biological Diversity (CBD) are “the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources,” including by access to them and transfer of technologies.92
The term "biosecurity" - in increasingly common currency, and as used by FAO - encompasses all policy and regulatory frameworks to manage risks, including relevant environmental risks, which are associated with food and agriculture, fisheries and forestry. A related term, “biosafety”, is used in the Cartegena Biosafety Protocol (see below), where it specifically refers to the release and cross-boundary movement of living modified organisms (LMOs). Trade liberalisation and its associated increases in travel and transport of goods have led to an increase in the movement of living organisms across borders. Biosecurity policy frameworks are thus becoming increasingly important, and affect forest trade in three main areas:
• Forest plant protection and
phytosanitary hazards. This covers such issues as quarantine legislation and
measures and the prevention and control of insect pests and diseases, and is
covered at the international level by the International Plant Protection
Convention.
• Alien invasive species. Invasive species are a growing concern because of increase in trade and travel, and may affect the forest sector in two different ways: Firstly, invasive plants or animals may pose a risk to a particular forest species, habitat or ecosystem. Indeed, invasive alien species are recognised as one of the greatest threats to the ecological and economic well-being of the planet, ranking second among the major causes of biodiversity loss. Secondly, forest trees may also invade degraded habitats, agricultural or grazing lands, or even other forest types. The naturalisation and uncontrolled expansion of exotic trees and shrubs outside their introduction area is often considered to be negative. International agreement on how to address the trade-related aspects of invasive alien species is weak as yet, although the CBD and other international bodies have recognised the importance of the issue (as have various Criteria and Indicators initiatives). In 2002, FAO issued guidelines on the surveillance of invasive wood-borers - which is an increasing problem in many countries as untreated solid-wood packaging is used in trade.
• Genetically modified organisms have caused increased concern about environmental risks related to their use in the food and agriculture sectors (including forestry and fisheries). The transboundary movement of LMOs is now subject to multilateral consensus in the form of the Cartagena Protocol on Biosafety, which entered into force on 11 September 2003. The Protocol also establishes a “Biosafety Clearing-House” to facilitate the exchange of information and experiences on LMOs and to assist countries in the implementation of the Protocol. However the application of precautionary measures, as captured in the Protocol, have in recent years come under attack in the WTO as unwarranted barriers to international trade. As a result, several issues relating to the implementation of the Biosafety Protocol and the development of international consensus on the trade-related aspects of invasive alien species are uncertain. Indeed the current US-EU dispute on genetically modified organisms serves to highlight these problems.
Genetic modification of forest tree species has been contemplated for addressing traits such as virus resistance, insect resistance, lignin content and herbicide tolerance. There is no reported commercial production of genetically modified forest trees, although a 1999 study indicated that since 1988 there have been 116 field trials in 17 countries and involving at least 24 tree species (FAO, 2003). It is acknowledged that biosafety aspects of genetically modified trees need careful consideration, especially because of the long generation time of trees and the potential for dispersal of pollen and seed over long distances. Along with these other aspects of biosecurity, trade in LMOs is likely to be a significant challenge for policy frameworks aiming to influence forest trade in coming years.
Differing Views on Whether the CBD and TRIPS Conflict
It has been suggested that as much as 90 percent of the world's traditional knowledge and genetic materials are located in developing countries.93 It is therefore not unexpected that a north-south divide has developed on the issue of intellectual property rights when it comes to traditional knowledge and access to genetic materials.
The main issues up for discussion in the TRIPS Council are whether there is a conflict between the TRIPS Agreement and the CBD, and whether something needs to be done by the TRIPS Council to ensure that the two instruments are applied in a non-conflicting and mutually supportive way. However, as with other topics of negotiation in Doha, these matters have been stalled.
One View: Inherent Conflict between TRIPS and the CBD : By requiring that certain genetic material be patentable or protected by sui generis plant variety rights and by not preventing the patenting of other genetic material, TRIPS allows genetic resources to be appropriated by private parties. This, they claimed, runs counter to Article 3 of the CBD,94 which guarantees the sovereign right of States over their own genetic resources.
Discussions predating the Doha negotiations demonstrate that the Members have mostly been engaged in discussions on procedural matters rather than on substantive issues. This has included a debate over which negotiating forum is best suited to tackle the issues. As per usual, those States that want reform would like the negotiations to take place in a forum where action can be taken, the TRIPS Council, not outside the WTO or in the CTE, which can merely recommend action.
Another View: TRIPS and the CBD Are Mutually Supportive: Contrary to the view expressed by many developing countries, Canada, the EC, Japan, Norway, Switzerland and the US have argued that there is no conflict between the CBD and TRIPS.
On the other hand, those that want a continuation of the status quo and resist a revision of the TRIPS Agreement prefer discussions to take place in their respective frameworks, including WIPO or in the CTE, which has also been given a mandate to pursue negotiations on the relevant provisions of the TRIPS Agreement.95 . In their opinion, the TRIPS Council should only deal with issues not already tackled by WIPO.96
A Third View: TRIPS and the CBD Potentially Conflict: A third view was expressed that there is the potential for conflict between the two agreements, depending on the way the agreements are implemented at the international and national levels97, there is a high degree of interaction between them.98 These countries argue that it would be more cost-effective to establish an internationally accepted solution to avert biopiracy rather than divert national resources to expensive judicial processes for the revocation of patents that include illegal genetic resources, as has already been experienced by India and Amazonian countries. The TRIPS Agreement should be implemented in a way that is supportive of the CBD.99
Early Quest for Solutions
First, Australia and Japan have suggested exploring the possibilities to make more effective use of the existing intellectual property system to protect traditional knowledge.100 Second, a proposal by Switzerland that has been supported by the EC, India, Brazil and the US, suggested the establishment of a database on traditional knowledge and genetic resources to help prevent the grant of patents for subject-matter that should not be patentable.101 Third, the US put forth the position that the best way to address issues of traditional knowledge is through a system of bilateral contracts between the holders of such knowledge and persons or companies wishing to access it.102 Fourth, Brazil and Indonesia promoted the use of a sui generis system of protection of traditional knowledge. A system that provides proprietary rights can ensure that market forces will operate to generate fairness and equity.103
Finally, many countries, led by Brazil, pushed for a patent application system that contains disclosure requirements.
a) the source of any genetic material used in a claimed invention;
b) any traditional knowledge used in the invention;
c) evidence of prior informed consent from the competent authority in the country of origin of the genetic material; and
d) evidence of fair and equitable benefit sharing.104
According to Brazil and India, these requirements would create greater legal certainty and predictability for governments, investors, traditional communities and researches.
On the other hand, Japan, Korea, the US and Norway have argued that these requirements would be unnecessarily burdensome, costly and, according to the US, would encourage investors to keep their inventions secret rather than applying for patents.105 Unlike other developed countries, however, the EC has not been adverse to the implementation of a disclosure system.
Labelling
Over the past years there has been a significant increase in the number of timber labelling and certification schemes. It has been estimated that currently some 109 million hectars of forest is certified in some manner.106
Forest certification remains one of the most contentious issues in international forest policy because it is a trade-related instrument and States feel that it could influence their competitiveness and market access.107 “The issue of 'packaging, labelling and recycling' requirements […]resulted in North-South coalitions and pitted northern governments against each other, as demonstrated by ongoing disputes involving Canada and the United States against EU labelling of wood products, and EFTA's early challenge to EU packaging and labelling requirements.”108
The eco-label debate has taken on increased importance over the years, taking place in the Committee on Trade and Environment (CTE) and in the TBT Committee. The most specialised treaty to regulate labelling, is the Agreement on Technical Barriers to Trade.
The TBT Agreement does not contain exceptions like those found in GATT Article XX that apply to the whole Agreement. Instead the preamble holds that “no country should be prevented from taking measures necessary to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the environment”.
One of the most basic requirements found in the TBT Agreement is that technical regulations or standards should not be applied in a manner that results in less favourable treatment being afforded to imported products as compared to like products of national origin.109 Therefore, one of the basic questions regarding a scheme to label products from sustainably managed forests, for example, is whether the labelled timber is deemed to be 'like' timber products that are not labelled.
According to the WTO Appellant Body, the determination of “likeness” is based on four general criteria: (i) the properties, nature and quality of the products; (ii) the end use of the product; (iii) consumer taste and habits in respect of the product and (iv) the products' tariff classification.110 The list of criteria does not seem to allow for differentiation of products based on their production and processing methods (PPM).
The TBT agreement distinguishes between schemes with which compliance is voluntary, called standards,111 and those that demand mandatory compliance, technical regulations.112 The rules for technical regulations are in the TBT agreement itself, while rules that apply to standards are described mostly in the Code of Good Practice for the Preparation, Adoption and Application of Standards (the Code) annexed to the TBT agreement.113
Although it is frequently assumed that voluntary eco-labelling schemes would not fall within the scope of the TBT Agreement, there are many indications that they could in fact be covered by the TBT, including the Code. Importantly, the annexes are an integral part of the TBT agreement.114
The Doha Declaration goes on to give the CTE a mandate to focus on environmental labelling requirements. The mandate is to identify “the need to clarify relevant WTO rules.”115
The role of the CTE on labelling differs even from the day-to-day work of the TBT Committee in that it is in a position to provide recommendations only. As such, the topic of labelling in the CTE can be described at best as a forum for discussion and proposal-making rather than result-driven negotiations.
To date, the CTE has struggled over how to deal with an issue that most Members recognise as belonging to the TBT Committee. In June 2002, the EC remarked on the growing concern over the impact of labelling on trade, as demonstrated by the fact that the number of TBT notifications relating to labelling was higher than in any other year.116 Given the increased concern about labelling expressed by Members, as well as the potential trade impacts, some Members have expressed that in addition to the on-going work in the CTE, a deepening of discussion on the issue of labelling should take place in the TBT Committee.117
Public Procurement
Government procurement occurs when governments purchase goods and services, including photocopy paper, building supplies and many other products derived from forest resources. Government expenditures typically make up a large portion of GDP, between 10 and 25 percent in OECD countries, having an enormous influence on economies and on the environment.118 This has led governments to consider green procurement strategies to favour environmental protection and reduce damage to the environment.
Unlike the TBT Agreement and other WTO agreements, the GPA is plurilateral not multilateral, meaning that not all WTO Members are party to it. In fact, less than thirty States are currently party to the Agreement, and this includes the EC as well as its fifteen member States. All Parties are developed countries, however, a number of Eastern European countries, Chinese Taipei and Panama are currently negotiating their accession to the GPA.
Like with the WTO's agreements, the cornerstone of the GPA is non-discrimination. In respect of the procurement covered by the Agreement, Parties are required to give the products, services and suppliers of any other Party treatment 'no less favourable' than that they give to their domestic products, services and suppliers.119 The GPA relies heavily on transparency of national laws, regulations, procedures and practices. The Agree120ment also contains exceptions from its obligations in order to protect human, animal or plant life or health.121
By limiting the negotiations to transparency issues, the Ministerial Conference demonstrates the hesitation among Members to push for an all-encompassing multilateral treaty on procurement. Moreover, by stalling the negotiations until after the Fifth Ministerial, in September 2003, the Ministerial Conference is tacitly admitting that an agreement will not be easy to achieve. According to the mandate, the success of multilateral agreement hinges on the requirement to help developing countries in matters of technical assistance and capacity building. They must be assured that their development priorities will be taken into account.
The Ministers call for negotiations to build on the progress made in the Working Group on Transparency in Government Procurement, a body whose original mandate was to develop elements for inclusion in an appropriate agreement.122 Again, this open language seems to admit that whatever gains have been made to date by the Government Procurement Committee, will not necessarily be maintained in the new negotiations. What is clear from the negotiations is that the environmental dimension to procurement has received no attention thus far,123 despite discussions predating Doha on whether or not to include GATT Article XX-like exceptions in an agreement.124
Worldwide, illegal logging and trade threaten the environment, the forest economy and rural livelihoods. In many forest rich countries, particularly those in the developing world, illegal logging exceeds legal operations, sometimes by a large margin. Illegal logging worldwide is a multibillion-dollar operation, reaching as much as $ 10 billion a year. In addition, failure to collect appropriate rents from timber concessions - some of which may be due to practices that violate the law -- is estimated to cost countries some $ 5 billion a year in lost government revenues (World Bank, 2002). An undetermined but substantial volume of forest products is also traded illegally.
Illegal logging and trade is a worldwide phenomenon present not only in developing countries, where the problem is more serious, but also in several industrialized countries. Moreover, an assortment of corporations from advanced countries illegally harvest and trade forest products in both, home countries and abroad. Thus, actors from both the developing and the industrialized worlds are engaged in illegal logging and trade.
Illegal logging and trade has a number of intensely deleterious effects. Besides losses of Government revenues they result in patterns of use of resources that have little to do with economic efficiency or environmental quality. Illegal activities undermine sustainable forest management operations. They also tend to work against the well being of the rural poor, when these lose out to powerful interests that, using fraudulent methods, take control of forest resources of vital importance for their subsistence. In various cases, illegally sourced and exported timber has been instrumental in financing regional or national conflicts, the so-called “Conflict Timber” (Marijnissen, 2003).
Global awareness of the many problems associated with illegal logging and trade has increased sharply during the last few years. While in various countries some of the actions that contribute to the control of illegalities, such as legal reforms and improved monitoring of forest resources, were in the past included in initiatives to enhance the levels of forest governance, there were few specific concerted efforts to attack illegal acts per se, to mainstream law compliance considerations in policy and legislative design. Some activities such as those associated with corruption were considered as taboo and avoided in debates at international forums.
Today, it is recognized that controlling illegal activities in the forest sector is a necessary condition for sustainable forest management. Furthermore, it is now widely accepted that, in this undertaking, advanced and developing countries share a responsibility because of the influence of trade and highly mobile investment in the improving law compliance in the sector.
The idea of managing trade of forest products by rejecting imports of those that could not be proven to be legally sourced, while favoring or accepting those that can, has gained considerable acceptance during the last few years.
But controlling trade is just one tool. Industrialized countries and other groups, recognizing the limited impact that an international trade exclusion could have on the overall volume of illegally sourced and traded wood (only a small proportion of the total volume of wood harvested in developing forest rich exporter countries), also started implementing initiatives to improve law compliance in exporting countries, including measures not directly related to international trade, such as reforming policy and legislation and supporting mechanisms for increasing transparency in decision making.
Further, while national governments remain the most important actors with regard to legislation and enforcement, NGOs, private businesses, institutional investors and consumer groups are also playing a role in shaping new policy instruments for the control of unauthorized activities in the forest sector. In particular, international NGOs have been effective in raising awareness of the nature and magnitude of the problems and in prodding governments to organize corrective actions. Boundaries between initiatives by different groups interested in controlling illegal logging and trade are becoming blurred as coalitions involving various actors organize joint actions. For example, there are several cases of international NGOs and advocacy groups acting in concert with interested government in detecting forest crime and documenting illegal activities as well as in designing policy reforms.
What is illegal logging and trade?
The international debate has yet to agree on a proper definition of illegal logging and trade. The main issues in achieving a widely accepted operational definition of illegal activities are;
• What is the scope of illegal acts?
• How to harmonize societal objectives in different societies?
• How to handle the dynamic nature of laws and regulations that constantly change over time?
• How to distinguish between laundered wood and other illegal wood?
• Should we distinguish between illegal and criminal acts?
What acts should be included in a definition of illegal logging and trade?
In its narrower connotation, illegal logging occurs when timber is harvested in unauthorized ways, in violation of established laws and regulations (See Callister, 1999; FAO 2002; Commission of the European Communities, 2003). For example, wood may be harvested in excess of legal limits, in places where such harvest is prohibited such as in national parks and protected areas, in locales where forests provide essential environmental services such as upper watersheds and riparian zones. Wood may be simply stolen from the rightful owners
The production, trade and consumption chain is long, involving many other activities associated with just cutting wood and some of these activities are often included in the definition of illegal logging. For example, the definition of illegal logging in Malaysia includes unauthorized construction of infrastructure and forest roads, encroachment of forest reserves for agricultural activities, the employment of unlicensed workers and contractors, unregistered machinery and “other” (unspecified) breaches of rules and regulations (MTC, 2002).
The Royal Institute of International Affairs has adopted a broader definition of illegal logging:
“Illegal logging takes place when timber is harvested, transported, bought or sold in violation of national laws. The harvesting process itself may be illegal, including corrupt means to gain access to forests, extraction without permission of from protected area, cutting of protected species or extraction of timber in excess of agreed limits”. Illegalities may also occur during transport, including illegal processing and export, misdeclarations to customs, and avoidance of taxes and other charges”
There are no clear rules for establishing the boundaries of the set of activities covered under the definition of illegal logging and trade. For example, should wood originating in forest lands acquired with illegal proceeds be considered illegal, when the enterprise has followed all rules and regulations related to land acquisition and forest management? The economic and social environment in which wood is produced, harvested, transported and sold is broad and a single activity in the forest sector could be related to many others in other sectors, some of which may be illegal. Obviously, at some point a boundary must be set but it is not clear, or universally accepted, where this boundary should be.
In this report, and interpreting the span of actions discussed in the international debate on the subject, we have adopted the categorization “illegal logging and trade” to encompass illegal harvest, transportation, processing and trade of wood products. Thus, practically all unauthorized major activities in the forest sector are part of “illegal logging and trade” concept. The box below contains a list of examples of illegal logging and trade activities.
A vast number of initiative, bilateral agreements, programs and support mechanisms have been established in the recent past. After the major regional meeting of the Forest Law Enforcement and Governance (FLEG) process for South east Asia in September 2001, the Bali Declaration has triggered many actions on the ground particularly in Indonesia. In October 2003, the first Africa Forest Law Enforcement and Governance (AFLEG) meeting was and it is designed to fit within the New Partnership for Africa's Development (NEPAD) and the process of the Ministerial Conference on Forests (COMIFAC) in Central Africa. Including the bilateral agreements between Indonesia and China, Japan, Norway and Great Britain, all of these initiatives and measures are aimed voluntary cooperation and are so far not subject to trade disputes.
Any attempt to manage international trade to preclude illegally sourced and traded forest products from reaching markets in consumer countries opens the possibility of a challenge at the World Trade Organization (WTO). Considering the international trade regime of the WTO, measures potentially discriminating against trade of illegally sourced timber, below the relevant legal provisions of WTO are listed and analysed.
A challenge in WTO could happen mainly in the context of two agreements, the General Agreement on Tariffs and Trade (GATT) and the Agreement on Technical Barriers to Trade (TBT). There are several articles in both agreements that could be used to defeat an initiative to prevent imports of illegally sourced wood (see Box 5.1 below).
Box 5.1 Examples of illegal logging and trade activities- continued
Corrupt activities
• Obtaining logging concession through bribes
• Bribing road and customs police and other controllers
• Restricting information about timber concessions to a few favored companies
• Establishing unnecessary qualification requirements to exclude unwanted companies from concession contracts
• Leaking confidential concession bidding information to preferred contractors
• Other manipulation of bidding processes to suppress competition.
The GATT articles rule out discrimination in trade of “like” products from members or between imports and products of domestic origin. They also prohibit import restrictions other than import duties, taxes, fees or other charges. Because restrictions such as licenses should be avoided under GATT, given that they discriminate between exporting countries, they could be challenged. However, some point out that this challenge could be neutralized in all cases where importer and exporter countries voluntarily enter into an agreement to restrict trade. The country that accepts the restriction is the one at disadvantage, the one discriminated against. Therefore, it could be convincingly argued that discrimination is not against third countries.
On the other hand, any restriction such as a license, that is not an import duty or other import charge, could be challenged under GATT Article XI. This would be considered as a technical regulation and therefore fall under TBT. With regard to TBT Article 2.1, a challenge would hinge on the de definition of illegal and legal timber and on whether these two types of products are “like” products.
Unfortunately, the Agreements provide no definition of what “like” products are. In theory, the concept could refer to the characteristic of the product itself or also include the features of the production process. If the clause is interpreted as forbidding discrimination based on how wood is harvested and processed, then restrictive measures such as verification of legality may be challenged. The GATT/TBT agreements do not provide an objective and easy basis to pass a judgment on this theme. However, even if illegal and legal timber were considered as “like” products, GATT does not rule out process based trade discrimination under certain circumstances (Brack, 2003). Furthermore, discrimination between like products is possible under GATT Article XX
In connection with TBT Article 2.2, WTO also gives little guidance on how to interpret the mandate to “avoid unnecessary obstacles to international trade”. However, the Article allows for the need to fulfill a legitimate objective including animal or plant life, or health and the environment. The control of illegal logging can be argued to protect the environment and therefore be justified under the provisions of this article.
Since there is no international standard defining illegal wood, Article 2.9 would require members to comply with the notification requirements.
Overall, these articles do not seem to pose insurmountable problems for schemes restricting illegal wood from importing markets. It is interesting that some restrictive measures such as the licensing schemes similar to the one proposed in the European Plan of Action exist and have not been challenged in the WTO because all participants are involved voluntarily (Brack, 2003). This leads many to conclude that a WTO dispute involving a verification and licensing scheme as the one in the European Plan of Action, although possible, would probably not arise.
However, there is no relevant experience with the application of the TBT agreement to illegal wood and therefore no precedent that would allow a more definitive judgment on the possible success of a challenge to restrictive trade measures against illegally sourced wood. Only time and experience can provide a definitive answer to this debate.
The Communication from the Commission to the Council and the European Parliament
In May 2003, the European Commission issued a so-called communication to the European Parliament proposing a package of measures to address the problem of illegal logging and trade, including a Plan of Avtion (Commission of the European Communities, 2003). In line with the results of the regional FLEG, the plan is one of the most comprehensive international initiatives to fight illegal logging and associated trade to date. Through the Plan of Action, the EU will help interested countries set up a voluntary scheme of licenses to check the legal origin of forest products. Producing country partners would allow wood exports to the European Union only when their legal origins can be validated according to a standardized procedure. The process would be monitored by independent entities. The EU would also support activities aimed at restricting investments in activities that may induce illegal activities, and address problems arising from the use of illegally sourced forest funds to finance armed conflicts.
Specifically, the Plan would:
i) Foster development cooperation to implement measures to reduce the illegal logging problem but avoiding actions that would have adverse impacts on poor people and in improving the capacity of countries to monitor and segregate illegal forest products, to increase transparency and promoting policy reform. The Plan would also help producing countries improve their government capacity to prevent, detect illegal logging and to enforce the law.
ii) Manage trade in timber, by extending international cooperation, developing a multilateral framework and a voluntary licensing scheme to attest the legality of timber that is exported to the European Union.
iii) Guide public sector procurement to deal with legality when specifying procurement procedures.
iv) Promote private sector initiatives to encourage actors in the corporate sector to favor good practices in the forest sector and to source only legal timber.
v) Encourage financing and investment safeguards, aimed at banks and financial institutions that invest in the forest sector to mainstream environmental and social impact as well as explicit conformity with legislation in their operations.
Box 5.2 GATT and TBT
|
GATT Article
1: no import discrimination against like products from third
states. |
The Plan focuses exclusively on the legality issue and not on sustainable forest management. It does recognize that some activities may be legal but may not lead to sustainable forest management (for example the authorized conversion of forest lands to alternative uses) or vice versa, that some activities may be illegal but could result in sustainable forest management (traditional community lands, not legally recognized as community owned, but often managed in sustainable ways). It justifies this approach by indicating that the law usually requires sustainable forest management and that therefore following legal prescriptions would result in well managed forest resources. Should this not the case, the EU would encourage and provide support for a revision of the legal framework. The Plan recommends that all donors attach importance to community-based forest management and to addressing some of the underlying causes of illegal acts, such as land tenure and access to forest resources and facilitate the adoption of policy reforms to reduce the impact of these causes. The Plan would promote transparency and dissemination of information to the public.
Recognizing the importance of the EU as a market for exporting countries and its responsibility not only to work to stop imports of illegally sourced timber but also help exporting countries to ensure better law compliance, the Plan includes the installation of an independent and voluntary legal timber verification system. Once legal timber has been identified, partner exporting countries would voluntarily issue an export certificate without which timber would not be released for circulation within the European Union. Since wood may be exported from non-partner third countries, the Plan aims at developing a system to verify that timber imports from these countries is also legal. This would be facilitated if a regional agreement could be developed and therefore the Plan suggests constructing an agreement between the EU and the ASEAN countries as a first step in this direction.
Noting that there is no Community legislation to make it illegal to import illegally sourced wood and to impound illegally sourced wood, the Plan proposes further research on how to reverse this situation. The questions to be investigated include how such legislation may impact the work of customs services responsible for enforcing the law and the procedures to be followed for segregating illegal wood arriving into the European Union from exporting countries that do not participate in the voluntary licensing scheme incluidng shipments from non-partner countries suspected to be of illegal origin.
Then Plan also includes exhortations to EU member states to adopt policies to exclude illegally sourced wood from public procurement. The Commission also proposes to address the promotion of voluntary corporate codes of conduct. And noting that investment entities can exert a strong influence in shaping activities they finance, the Commission proposes to encourage banks and financial institutions to consider environmental and social considerations when assessing investments in the forest sector. The plan would also foster procedures for project screening, to reduce illegal forest sector activity, by Export Credit Agencies, the European Investment Bank and the Cotonou Investment Facility. The Commission plans to investigate ways to integrate illegal logging activities into the money laundering legislation.
In addition, the Plan proposes actions to strengthen the operation of CITES, carry out work to define conflict timber and address in cooperation programs the problem of using forest resources as an instrument for sustaining armed conflict. The Commission would prepare country and regional strategy papers to help plan joint activities. Focus would be kept on countries that have mustered the necessary political will to tackle illegal activities in the forest sector. Initially, the partnership agreements would cover a limited range of solid wood products (roundwood and rough sawnwood) due to the difficulties of ascertaining the origin of timber products with a more advanced degree of industrial processing.
A Joint Work Program is being prepared with Member States to facilitate the implementation of the Action Plan. Through an agreement with the Government of Indonesia the European Commission is supporting, with an € 2 million contribution, the establishment of an Illegal Logging Response Centre. The Centre will build up the capacity of the Government of Indonesia to combat illegal logging, particularly in national parks and protected areas, disseminate information, provide evidence for supporting legal action against transgressors and research underlying causes of illegal activities in the sector.
Some observers have criticized the Action Plan for not securing effective participation of civil society and forest peoples in decisions that may affect them. FERN also called the attention to the fact that, in certain countries, participation of vulnerable groups may be difficult and even dangerous and suggests therefore that the Plan include measures to ensure that forest peoples views are integrated in the design of corrective actions without threatening their integrity and human rights. FERN also suggests that the EU ensure the inclusion of illegal logging in reviews of money laundering legislation. For example, illegal logging could be listed as an offense under the Third Directive on Money Laundering in the legislative proposal that the Commission is about to submit to the Council and the Parliament, thus making it imperative for Banks to report any activity considered suspicious.
Furthermore, the Plan has been criticized because it does not provide a concrete and workable way to actually stop illegal wood from entering the EU. The Plan only promises to research this issue. The WWF pointed out that the Action Plan does not acknowledge the problems of illegal timber trade in the accession countries despite the fact that they have been openly recognized at the recent Ministerial Conference for the Protection of Forests in Europe. Based on this analysis FERN has made concrete proposals for attacking these problems (See Box below).
Despite these perceived deficiencies, the Plan is perhaps the most concrete and decisive international initiative to combat illegal logging and associated trade. Its future effectiveness will depend on the ability of the Commission to establish partnership agreements with a substantial number of producing exporting countries and thus avoid the diversion of illegal timber exported through third countries. It will also depend on the possibilities of making illegal any import of illegally sourced timber into the European Union. This implies installing credible and effective tracking systems and the necessary institutional infrastructure in partner exporting countries. Effectiveness will also require an EU tight customs system that would be able to detect and enforce prescriptions against illegally sourced products. As discussed later in the text, its effectiveness would also depend on surviving WTO disputes. These are all formidable challenges.
The Plan may also encourage exports of illegally sourced wood to other world markets that do not demand validation of product legality. Furthermore, there is always the open question of whether the simple threat of the restriction would not generate powerful short-term incentives to illegal logging by all those operators that want to export as much as possible before rules come into effect.
Understandably, in its first stages, the Action Plan focuses on solid wood products with low processing (roundwood and sawnwood), as the feasibility of tracking products with a greater degree of industrial processing having a complex mix of wood raw material inputs, is rightly judged to be low. However, this will also limit the impact of the Plan.
Box 5.3 FERN Recommendations
|
FERN recommends the Council to: • provide the European Commission with a mandate to negotiate bilateral agreements to ensure legality in the trade of forest products that include certificates of legality based on a system of independently-monitored legality verification in the producer country. These agreements need to be fair and workable, include the participation of affected communities and respect human rights. • make it illegal to import illegally-sourced timber into the EU. In addition to new legislation FERN believes that it is important for the Council to: • ensure mandatory application of best available environmental and social standards and procedures by European ECAs to all their operations and instruct the European Commission to develop and apply binding standards and procedures to the Cotonou Investment Facility; • ensure all EU member states adapt their government procurement policies to incorporate legality criteria as well as sustainability criteria for timber and wood products; • instruct the European Commission to include illegal logging in the list of offences in the draft of the new Money Laundering Directive, to be agreed within the next three years, and shift the burden of proof so that banks have to report any activity they should consider suspicious based on the information they have available; • ensure all member states implement the EU Money Laundering Directive in such a way that banks have to report on any activity they should consider suspicious and that all criminal activities are eligible; • instruct the European Commission to include funds for the prevention of illegal logging under the programming of Country Strategy Papers; • request the European Commission to develop concrete strategies to address illegal logging in accession countries and Russia. Source: FERN, July 2003 |
Although the European Union weighs heavily among importing regions of roundwood and sawnwood, these internationally traded products conform only a tiny proportion of logging in exporting countries. These countries produce some 420 million cubic meters of industrial roundwood but less than 20 million, or less than 5%, are exported. Also, they produce some 90 million cubic meters of sawnwood but only 13 million or some 14% enter the international market. Both products combined represent about $ 6 billion in exports (total developing country forest products exports are some $23 billion, while global trade of all forest products is about 130-140 billion per year). Total trade of forest products has increased only by 18% since 1990, which is much less than the growth in other sector manufactures. Further, exports of roundwood show a decreasing trend while those of sawnwood, only a moderate increase. Trade in ITTO primary products has in fact decreased by almost 40% since 1990, from $13 billion to $8 billion today126. They accounted for 80% of total trade value in 1990 but today this proportion is only 42%.
However, these exports are concentrated on a few countries (Indonesia, Malaysia, Brazil, Gabon, and Cameroon) and therefore, should the plan manage to involve those countries from the very beginning, its impact would be greater than the numbers above may suggest. Nevertheless, the fact remains that the roots of illegalities in the forest sector are overwhelmingly a domestic economy problem and that trade can have a moderate impact only. The future importance of the Plan may reside more in the other activities that will support, such as capacity building and policy and legislative reform, in raising awareness of the problem and fostering political commitment to solutions. This, of course it is not a limitation of this scheme only, but of all initiatives that rely on managing international trade to reduce illegal logging in forest rich exporting developing countries.
With the Plan being sent to the Council and the European Parliament, discussions will likely focus on some of these issues. The Group on Forests will formally discuss the Plan at a meeting that will take place in September 2003. During the Italian Presidency (July-December 2003), the Council is expected to produce its conclusions on the Plan.
“A resolution from the European Parliament on illegal logging remains elusive after a dismal debate at the Industry, Trade, Research and Energy (ITRE) committee on 26 November. Discussing a motion put forward by UK MEP Nicholas Clegg, the committee members delayed Parliamentary support for the FLEGT Action Plan (…) some ITRE members even tried to introduce amendments that would undermine achievements so far. For example, Finnish MEP Samuli Pojhamo sought to ensure that companies operating legally would not have to prove the legality of their operations. If accepted this would make a nonsense of the Commission's plan to develop partnership agreements - based on a licence of legality and associated chain of custody - to create a level playing field where all companies would have to comply with the same process. The ITRE discussion went from bad to worse when the MEPs decided to reopen the motion for further amendments. More positively, British and separate Commission delegations now visiting Helsinki may improve Finland's understanding of the need to respect the law and promote good governance in the forest sector, and we hope to see a better approach in the near future.
Meanwhile, before the end of 2003 the European Commission is expected to present the Council with a 'road map' laying out the steps ahead to implement the Action Plan. We hope this will be made publicly available and that a broad and effective stakeholder consultation process is included in it. (…) (Quoted from: FERN Newsletter November 2003)
Conclusions
There is a large number of international initiatives aimed at curbing illegal logging and trade in producing exporter countries. Greater awareness of the deleterious effects of illegal acts that make the achievement of traditional objectives, such as sustainable forest management, almost impossible in some producing countries, has triggered a considerable number of initiatives involving international organizations, consumer and producer country governments, international and national NGOs, consumer groups and private commercial corporations.
Greater coordination would be desirable but is probably difficult to achieve in practice. There is not much coordination between the numerous action plans and schemes to control illegal activities. A global convention or action plan to combat illegal activities in the forest sector has yet to be produced. Promoters of actions against illegal logging and trade have designed schemes that rely on bilateral agreements or on actions with a regional scope. This is due to the perception that reaching a global convention or plan of action on this politically charged and sensitive issue would probably involve lengthy negotiations and could lead to uncertain results that many believe would reduce the quality of such a convention the a minimum common denominator. CITES and CBD are global frameworks including forests but they are not geared towards controlling illegal logging. Therefore, staged approaches involving bilateral agreements and regional schemes are probably the best practical way to deal with this issue. However they have problems of their own.
The most important international initiatives originate in the industrialized world. International strategies have largely originated in the industrialized world and this has made some developing producing countries see them with apprehension. Some see activities aimed at controlling illegal logging and trade as a new non-tariff trade barrier hindering developing country producers' market access in the industrialized world. Others fear that the imposition of (developed country) values on what should be legal and what should not, would infringe on the sovereignty of producing countries that may not agree with those values. Most international schemes have gone around this problem by defining as illegal all that wood that has not been harvested, transported, processed and traded in accordance with the producing or importing country laws and regulations. Eventually, this may lead to problems: an importer country could sanction imports from a country that does not accept, in its legislative framework, some values held as desirable by the importing country or by most of the international community.
Using international trade as a tool to curb illegal logging and trade is probably useful but it is a partial remedy only. The effectiveness of the multiple international actions to curb illegal logging has yet to be demonstrated. For one thing, they are all very recent and have not had the time to fully operate and show results. Further, some of the schemes that rely mainly on managing international trade by keeping imports of illegal wood out of the market will likely have a limited global impact because only a fraction of wood enters international trade. In this respect, the relative potency of trade measures is likely to be higher in Africa than in Asia or Latin America.
Because of the difficulty in monitoring the movement of products, schemes concentrate on those products whose origins are relatively easier to track because their limited degree of industrial processing, such as sawnwood. But exports of these products are a small proportion of producer countries' output.
Nevertheless, some of the main producer countries do export a substantial proportion of their production and therefore in these cases, trade influence is expected to be significant. Further most, if not all, of the international tools used to control illegal logging and trade also can be used to curb these activities in the domestic markets and therefore genuinely committed countries have a greater opportunity to increase law compliance across the board. Associated programs such as those supported to streamline the policy and legal framework, the instauration of tracking systems and the many aspects of capacity building schemes are bound to increase the level of governance of the sector overall. Thus, managing international trade can be a potential entry tool to improve governance and the efficiency of forest administration in producing countries.
Present schemes may lead to trade diversion involving countries that are less interested in curbing illegal activities. In absence of a global program to combat illegal logging and trade, regional programs and, more so, bilateral programs must face diversion of trade through third countries where wood may be laundered or simply absorbed as imports without questions asked. Some large importers are not significant participants in some of the international trade schemes aimed at combating illegal activities in the forestry sector and therefore provide alternative and less stringent markets for some operators. If, as a result of international trade controls legal wood becomes more expensive and illegal wood -- facing reduced international demand -- less expensive, unscrupulous importing markets may have an additional incentive to buy illegal wood. Thus, it seems urgent that international agreements be expanded as quickly as possible to involve a large number of participating countries, all playing by the same rules of the game. To design appropriate and specific mechanisms, it is also urgent to investigate the economic impacts of controlling measures and how they may affect the system of commercial incentives and deterrents to illegal logging and trade.
The credibility and effectiveness of international programs to control illegal logging and trade depend on sound product tracking systems. Credibility and effectiveness of methods to deny market access to products that can not be demonstrated to have legal sources depend largely on effective product tracking systems in producing countries. Product tracking systems must be successful in stopping all varieties of illegally sourced and traded wood, including laundered wood. This will be difficult to achieve. All procedures are vulnerable to “leakages” as certificates are open to fraud. The practical difficulties in segregating illegally sourced wood and illegally traded forest products make it difficult for enforcing agencies to detect and stop these products before they reach the market. Future actions will have to dedicate a great deal of attention to the establishment of credible and fraud-free systems of tracking wood products.
Further, importing countries need to put in place legislative reforms. Currently there is no legislation in major importers such as the European Union, the USA or Japan, to exclude illegally sourced wood from their markets. Without such legislation, the effectiveness of interdiction programs may be greatly diminished.
International schemes may face WTO tests but these are likely to be passed. Timber licensing mechanisms that would exclude illegally sourced wood from importing country markets may encounter challenges in the WTO. However, careful analysis suggests a WTO dispute from voluntary agreements is unlikely to be successful. Nevertheless, only a concrete WTO ruling would dispel the uncertainty surrounding this issue.
Main responsibility for combating illegal logging and trade will depend fundamentally on decisive action by producing countries. The main causes of illegal logging derive from national conditions leading to poor governance and accordingly solutions depend on a strong national political commitment, and other national actions such as policy and institutional reform. Trade restrictions will not address some of the underlying causes of illegal logging, such as imbalances in the supply and demand of industrial wood derived from policies that have fostered industrial over capacity, or the pervasive presence of corruption in the allocation of forest concessions. This is the reason for most international initiatives, even those relying primarily on managing trade, giving attention to supporting actions against illegal logging targeted to producer country factors that induce or facilitate illegal logging such as reforms of the legislative framework and institutional strengthening. Eventually, better governance in producing countries is what will make a difference.
Trade in Certified Forest Products and the Role of Labels
Systems for independent voluntary certification of forests as sustainably managed and of the products derived from them have been in place since the early 1990s. The most widely established certification scheme at an international level is that of the Forest Stewardship Council which extends to forests in a wide range of developing countries although over 80% of the certified forest area is in non-tropical countries (see Table 2.4). Interest in certification continues to be greatest in Europe, especially Germany, the Netherlands and the United Kingdom (Bourke 2002).
Evidence that certification is having a significant impact on forest management or on forest governance is tenuous. One reason for this is limited state involvement in the certification process, as required by FSC and WTO rules Certified forests tend to be those already relatively well-managed (Bass et al. 2001) - a reasonable level of regulatory capacity is needed for certification to be successful. Indeed, as pointed out by May (2002), the control of illegal logging is a precondition for the growth of certification. Thus, certification may only marginally benefit existing forest governance.
Three further recurrent drawbacks of certification which limit its scope are:
• Strong policies or hefty subsidies are still generally required to facilitate the participation of smaller operators;
• Proliferation of certification schemes causes producer and consumer confusion;
• Chain of custody certification remains problematic, for example with multiple source forest products, and this creates credibility problems.
Yet there are some positive examples of certification influencing forest management directly and indirectly through strengthening forest governance. The main positive governance impacts identified by reviews or evaluations of certification experiences (Bass et al. 2001; Eba'a Atyi and Simula 2002) relate to private or community level forest governance. They include improved forest management planning and administration (including internal monitoring, evaluation and reporting procedures), increased dialogue with government and other stakeholders, increased acceptance of community representatives in local and national policy fora, and at a more general level, increased company and supply-chain transparency.
There are also emerging examples of how certification can help stimulate enabling SFM policies (Box 5.1). These include raised awareness of the potential of SFM, decentralising and democratising the policy processes (e.g., via certification working group debates on certification and procedures, and the stimulus to multi-stakeholder forest fora), better policy definition (from agreements on certification standards), and an interdisciplinary sharing of ideas (Bass et al. 2001).
The process of developing national criteria, indicators and principles for SFM in South Africa has been triggered by certification discussions (Mayers et al. 2001). An important legal development has been to make certification mandatory within two years of leasing state forest land, so that it becomes a (cheaper) proxy to direct state monitoring of forest concessions.127 Perhaps above all certification has intensified the profile of social issues, enabling genuine forest sector contributions into wider national debates and negotiations on labour, land rights and 'affirmative action' (Frost et al. 2003).
In some countries certification is beginning to take on a voluntary monitoring function of SFM; in Cameroon, Papua New Guinea and Ghana, 'privatised' chain of custody verification mechanisms are emerging which will help enforce forest management and transport regulations.
Box 5.4 Governance benefits from certification in Latin America
|
Much of the more positive developing country certification experience is emerging from Latin America, particularly Bolivia, Mexico, Guatemala, Brazil and Costa Rica. In the former three countries the benefits are felt especially in the community forestry sector. The key to the growth of certification has been enabling policy and institutional (including land tenure) reforms preceding or accompanying certification. In Bolivia, for example, the 1996 forest law and the more vigorous monitoring of forest management plans by the Superintendencia Forestal has created incentives for certification by (a) showing the seriousness of forest management plans, and (b) making certified forests exempt from government audits (Contreras and Vargas 2002). Legislation has also provided strong incentives for certification in Guatemala, where certification within three years is a condition of community concessions in the Mayan Biosphere Reserve (Bass et al. 2001). In Brazil, the governance benefits from Brazilian plantation sector certification include provision for the resolution of land tenure disputes linked to outsourcing arrangements, and development of a set of national standards for certification of forest management and chain of custody systems (CERFLOR) (May 2002). Brazil now has a buyers' group of about 70 companies, spanning a wide range of forest products, supplying both the domestic and export market. |
65 A/CONF.151/26
(Vol. III)
66
E/2000/L.32, paragraph 1
67 see: www.itto.or.jp
68 References and Quotations at the end
of the Chapter
69
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). The principle is
also enunciated more generally in Principle 21 of the 1972 Stockholm
Declaration, Rio Principle 12, and UNGA Resolutions 626, 1803, 2158 and 3171. It
has been accepted as customary international law (see Texaco v. Libya, 53 ILR
389) and is included in treaty law, such as in the preamble of the CBD. For a
discussion of the principle more generally, see Nico Schrijver, Sovereignty over
Natural Resources, Cambridge: CUP, 1997, at pp. 260-266.
70 23 ILM 1195
(1984).
71 31 ILM 818
(1992).
72 12 ILM 1085
(1973).
73 33 ILM 1125
(1994).
74 Appellate Body
Report, US - Standards for Reformulated and Conventional Gasoline ("US -
Gasoline "), WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3, p. 30.
75 Ministerial
Declaration adopted on 14 November 2001 by the Ministerial Conference, Fourth
Session, Doha, WT/MIN(01)/DEC/1 ("Doha Declaration").
76 Marrakesh
Agreement Establishing the World Trade Organization, 1994 [hereinafter the WTO
Agreement].
77
As of 4 April 2002.
78
WTO Agreement, Article IV(2), (3) and (4).
79 WTO Agreement,
Article IV(1).
80
Argentina, TN/TE/W/2; EU, TN/TE/W/1; Chinese Tapei, TN/TE/W/11; India,
TN/TE/W/23; Japan, TN/TE/W/10; note however that Japan has also suggested that
MEAs that have been signed and adopted but are not yet in force should also be
included in discussions.
81
GATT, Article XX(b) and (g).
82 CBD, Article 1.
83 ITTA, Article
1.
84 TN/TE/W/13,
para. 10.
85
TN/TE/W/1.
86
India, TN/TE/W/23; Japan, TN/TE/W/10; Korea, TN/TE/W/13; Norway,
TN/TE/W/25; US, TN/TE/W/20.
87
US, TN/TE/W/20; Korea, TN/TE/W/13; India, TN/TE/W/23.
88 Australia,
TN/TE/R/1, para. 20; Brazil, TN/TE/R/2, para. 17; Chile, TN/TE/R/1, para. 24;
Chinese Taipei, TN/TE/W/11, para. 9; Cuba, TN/TE/R/2, para. 56; Hong Kong,
China, TN/TE/R/1, para. 35; Pakistan, TN/TE/R/1, para. 43; US, TN/TE/R/2, para.
9.
89 EC, TN/TE/W1;
Norway, TN/TE/W/25; Switzerland, TN/TE/W/4.
90 WTO Agreement, Article IV(3).
91 DSU, Article
2(1).
92 CBD, Article
1.
93 Thomas Cottier,
"The protection of genetic resources and traditional knowledge" (1998) JIEL
note36,p 564
94
Kenya, on behalf of the African Group, IP/C/W/163.
95 Doha Ministerial
Declaration, para. 32(ii).
96
Switzerland, IP/C/M/35, para. 247; see also the pre-Doha statement by
Australia along the same lines, IP/C/M/28, para. 150.
97 Brazil,
IP/C/M/29, paras. 146-148; India, IP/C/M/30, para. 169; Indonesia, IP/C/M/32,
para. 135; Norway, IP/C/M/32, para. 125; Venezuela, IP/C/M/28, para.
165.
98 Australia,
IP/C/W/310; Czech Republic, IP/C/M/33, para. 126; EC, IP/C/M/35, para. 233;
Japan, IP/C/M/32, para. 142; Norway, IP/C/M/32, para. 125 and
IP/C/W/293.
99
China, IP/C/M/35, para. 248.
100 Australia, IP/C/W/310; Japan,
IP/C/M/29, para. 157.
101
Switzerland, IP/C/W/284; EC IP/C/M/32, para. 137; India, IP/C/W/198;
Brazil, IP/C/W/228; US, IP/C/W/209.
102 IP/C/W/257.
103 Brazil,
IP/C/W/228; Indonesia, IP/C/M/32, para. 134.
104 Brazil, IP/C/W/228, IP/C/M/32, para.
128, IP/C/M/33, para. 121.
105
Japan, IP/C/M/32, para. 142; Korea, IP/C/M/32, para. 240; US, IP/C/W/216,
IP/C/W/209; Norway, IP/C/W/293.
106 ITTO, Forest Certification: Pending
Challenges for Tropical Timber, (Technical Series 19, October 2002).
107 ITTO, Forest
Certification, supra note 106, p. 7.
108 Gregory C. Shaffer, "The World Trade
Organization under Challenge: Democracy and the Law and Politics of the WTO's
Treatment of Trade and Environment Matters," (2001) Harv.Env.LR 25, p. 30.
109 Ibid.
110 EC-Asbestos, AB
Report, adopted 5 April 2001, WT/DS135/AB/R, para. 80.
111 See Annex 3 of
the TBT Agreement, the Code of Good Practice for the Preparation, Adoption and
Application of Standards (the Code).
112 TBT Agreement, Article 2.
113 For more on
this topic, see Carlos Lopez-Hurtado, "Social Labelling and the WTO Law," (2002)
5 JIEL 719.
114
TBT Agreement, Article 15.5.
115 Doha Declaration, para.
32(iii).
116 G/TBT/W/175,
WT/CTE/WE/212.
117
Japan, G/TBT/W/176; EC, G/TBT/W/175.
118 IISD, Environment and Trade: A
Handbook, UNEP, IISD, 2000, p.59.
119 Article III:1 of the GPA.
120
121 Article XXIII
of the GPA.
122
WT/MIN(96)/DEC, para. 21
123 .Konrad von Moltke, "After Doha -
Assessing the outcomes of the WTO Fourth Ministerial," April 2002, available at
www.issd.org.
124 WT/WGTGP/W/32, para. 20.
125 See World Bank
www.worldbank.org/forestry/afleg, Forests Monitor
http://www.forestsmonitor.org/news/news.htm, and IUCN Regional Office for West
Africa http://www.iucn.org/places/brao/eng/programmes/forets/afleg/afleg.htm
126 Plywood,
sawnwood, venner, logs, furniture, moulding, woodwork, etc.
127 Although there
is a concern that this could reduce the effectiveness of voluntary market-based
certification (Mayers et al., 2001).
