DEFINITIONS
Market Performance. When investigating the market developments, ex post, the trends and fluctuations are a net result from a large number of factors. The most important ones are related to the comparative advantage differences of industrial locations, and competitiveness differences of operators. Market access factors and variation in them are just one group of factors in the matrix.
Market Access. In general terms, market access can be described as the conditions under which producers are able to offer products for sale. These conditions are the consequences of decisions by importers and exporters, and also a consequence of the inherent characteristics of the sector and products. Ideal conditions of the producers and sellers to provide free access to the market to offer the goods for sale. Free market access is equivalent with no barriers to trade. (Even in the conditions of free market access there may exist constraints to market entry. An example is high investment requirements to establish production or distribution networks).
Barriers to Trade. Barriers to trade are (usually national government) policies or actions that interfere with free market buying and selling of goods and services internationally. Both tariff barriers and non-tariff barriers (NTBs) to trade have been used (see non-tariff measures below). As the tariffs have been reduced, the NTBs present the main threat to open world markets and potential efficiency gains from trade. (Impediment. Obstruction, hindrance, restriction, usually in a meaning of a lesser constraint than a barrier).
Forest Governance. Governance concerns all forests, including the forests of temperate and boreal regions. In the tropical forestry, a large number of other instruments complement the legally binding ones. One intends to cover the whole by calling it the (tropical) forest governance. Here used in a meaning to cover forest sector policy, forest legislation, harvesting code, sustainable forest management rules, criteria and indicators for sustainability. In a broad sense it covers the rules, including decision making structure, that control forest management, as well as timber production, processing and trade. (Governance. Exercise of authority or control. A method or system of government and/or management).
International Trade Regime. This is a concept covering the full range of legal instruments to regulate the trade. There are excellent reasons to have a wide regime to be used to enhance the positive and to eliminate the negative aspects of international trade. Especially in tropical timber trade, the complementary instruments are in need, as no one single comprehensive legal instrument exists on forests.
Tariff. Discriminatory tariffs have the effect of artificially creating an advantage for one type of product over the other, which has been disadvantaged. If the tariff is computed on an ad valorem basis, higher freight cost would further accentuate the degree of discrimination. Tariff is linked in certain cases to an arrangement such as the generalized system of preferences (GSP) or duty-free quota, which could be looked at as part and parcel of the tariff structure. Import tariff on imported tropical timber makes it less competitive.
Tariff escalation; Higher tariffs for further processed products. This is particularly relevant for tropical timber, given the range of products from logs to basic and secondary processed wood products. It is also relevant in the sense that tariff escalation could adversely affect tropical log producers aspiring for more efficient use of raw materials.
Non-tariff measures (NTM). Laws, regulations, policies and practices that either protect domestically produced goods from the full weight of foreign competition, or artificially stimulate the exports of particular domestic products. The NTMs include both formal institutional measures designed to restrict or distort trade pattern, and other restrictions that act as impediments to trade. NTMs include standards e.g. on health and plant protection.
Sustainable Forest Management (SFM). ITTO's (1998) definition is as follows: “Sustainable forest management is the process of managing forest to achieve one or more clearly specified objectives of management with regard to the production of a continuous flow of desired forest products and services without undue reduction of its inherent values and future productivity and without undue undesirable effects on the physical and social environment.”
Production and processing methods (PPMs). A concept, which is related to one key issue in the trade and environment regulations. The issue is about measures, which place distinctions on products, based on the processes and production methods used, as compared to distinctions based on the quality of the product as such.
Technical Barriers to Trade (TBTs). TBTs set out procedures for ensuring that technical regulations and standards, including packaging, marking and labeling requirements, do not create “unnecessary obstacles to international trade”. The TBT agreement 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.
Economic distance is closely related to market access. Some, but not all of the components of economic distance are unavoidable. The economic distance between two trading partners can be defined as follows:
[1] Economic distance = Insurance + freight + tariffs + NTMs+transaction cost
Transaction costs can be decomposed as follows:
[2] Transaction costs = Cost of necessary and efficient procedures
+ Cost of unnecessary or inefficient procedures
+ Cost of corruption.
