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REPORT

1. The FAO Advisory Committee on Paper and Wood Products held its forty-fourth Session in Oaxaca, Mexico on 8 and 9 May 2003. Mr James Griffiths chaired the Session which was attended by 52 participants, including 19 members and 2 international organizations, from 24 countries (see Annex 1).

Item 1. Opening of the Session and welcome addresses by representatives of the Government of Mexico and FAO

2. Mr James Griffiths, Chairman of the Committee, opened the Session and welcomed the participants. Mr Carlos Sacal, president of Smurfit Carton y Papel de Mexico, welcomed the participants and described the situation of forestry and the pulp and paper industry in Mexico. He presented a comparison of the relative importance of the sector in Mexico, Canada, the United States and the European Union.

3. Mrs Piñeiro, from the Secretary of Agriculture and Forestry, State of Oaxaca, welcomed all the participants to Oaxaca and wished them a fruitful Session. She recalled the exceptional cultural wealth of the state and of the city of Oaxaca. She presented the characteristics of the state's forest resources.

4. Mr Wulf Killmann, Director, Forest Products and Economics Division, FAO, welcomed all participants on behalf of Dr Jacques Diouf, Director-General of FAO. He expressed the Organization's appreciation for the hospitality of the host country and of Smurfit Carton y Papel de Mexico. He welcomed the new Committee members: Mr M. Leonel (Brazil), Ms M.S. Arwidson (Sweden), Mr I. Hasan (Indonesia), Mr Y. Saeki (Japan), Mr Y. Ishak (Malaysia) and Mr M. Edwards (South Africa). He expressed the Organization's gratitude to the members of the Committee and their advisers for their contributions to the activities of the Committee in terms of time and expertise. He also acknowledged the support and guidance of the Committee in the activities of the Forestry Department related to the forest industry sector. He recalled the uniqueness of the Committee and its important role as a liaison between the private sector and FAO.

Item 2. Adoption of the provisional agenda

5. The Agenda was adopted as proposed (Annex 2).

Item 3. Review of actions taken by FAO on the recommendations made at the 43rd Session of the Committee (FAO and panel discussion)

6. Mr Wulf Killmann reviewed the activities undertaken by FAO and their relevance to the recommendations made by the Committee at its previous Session. The recommendations addressed the following issues:

i) Mutual recognition (MR): FAO participated in various meetings on certification in Asia and Africa. The Organization is willing to support national certification schemes but requires a request from the countries before initiating any action. FAO is organizing a meeting for June 2003 of the Chief Executive Officers of the various certification schemes. The purpose of this upcoming meeting is to discuss, at the highest level, how to promote a mutual understanding between the various certification schemes. The next step will depend on the output of the meeting.

ii) Climate change: FAO organized the "Second Expert Meeting on Harmonizing Forest-related Definitions for Use by Various Stakeholders" in Rome in 2002 which included discussion on carbon-related terminology. The Organization continues to collaborate with the Secretariat of the UNFCCC both during sessions of the Subsidiary Body for Scientific and Technological Advice (SBSTA) and COP and on modalities and definitions for the Clean Development Mechanism. FAO participates in the Intergovernmental Panel on Climate Change's effort to elaborate Good Practice Guidance and the Fourth Assessment Report. Jointly with IUCN and UNEP, FAO undertook capacity building and training workshops for afforestation and reforestation under the Clean Development Mechanism in Latin America and Africa, managed a monthly electronic newsletter on forestry and climate change and prepared publications on this issue. FAO also contributed to "International Calculation Tools for Greenhouse Gas Emissions Monitoring" prepared by the Confederation of European Paper Industries (CEPI).

iii) Sustainable development: FAO recruited a consultant to identify its strengths and weaknesses and its possible role in poverty alleviation. The Committee on Forestry (COFO) recognized "Forests, Poverty Alleviation and Food Security" as a priority programme for the Forestry Department. FAO also jointly organized a seminar with UNECE in Romania on "Strategies for the Sound Use of Wood" and presented a paper.

iv) World Forestry Congress (WFC): FAO is awaiting input from the International Council of Forest and Paper Associations (ICFPA) on a possible joint exhibit at the WFC in Quebec City (September 2003).

v) Recognition of ICFPA: The International Council of Forest and Paper Associations (ICFPA) has been granted liaison status with FAO, and can now be represented in FAO meetings. FAO endorsed ICFPA's declaration on illegal logging and is looking forward to developing further cooperation between the two organizations.

vi) Statistics on recovered paper: FAO participated in the preparation of a proposal to rationalize recovered paper definitions and classification.

Comments from the Committee regarding FAO's activities

7. The Committee expressed its appreciation for the work achieved by FAO and for its efforts in reaching out to industry to facilitate dialogue and build more productive cooperation. The Committee was happy to see that its recommendations are taken into consideration in forestry programmes and that they had been endorsed by COFO.

8. The initiative of bringing executives of the various certification schemes together is supported by industry. FAO's role as a moderator and facilitator on the subject was recognized. Certification schemes should provide an opportunity to small stakeholders to participate in certification programmes to allow them to sell their wood to markets more efficiently.

9. Industry recognizes that a special effort is required to establish credibility with small stakeholders in order to improve the links between industry and local communities. It welcomes FAO's experience in this area, especially in highlighting the most effective type of partnership between the private sector and local communities. Balancing local social needs (buying wood from local stakeholders who are not certified) and global market demands (all wood should be certified) presents a difficult challenge which will have to be met in order to promote sustainable forestry at the local level.

10. In some regions, governments are committed to improving the situation of local people and to addressing poverty alleviation with the help of FAO. To do so, it is important to create an environment and an infrastructure to release the creativity of the people in improving their own lives. The private sector's expertise in this field should be utilized and the acquired knowledge continue to be made available to FAO to benefit local communities and small forest owners. It is recommended that FAO use its credibility to publicise the benefits of cooperation between all stakeholders, including the private sector. It is further recommended that FAO establish how the paper and forest products sectors can contribute to poverty alleviation.

11. The Committee was informed that the procedures for holding sessions outside Rome will be simplified by using a shorter format for the letter of agreement. This will result in two documents: one between FAO and the government of the country where the session is to be held specifying protocol and responsibilities; and the other between FAO and the host association/company detailing the mutual duties of both parties in terms of physical facilities (e.g. offices, meeting room, audio visual equipment) and personnel.

Item 4. Directory of initiatives promoting sustainable forest management

12. The paper presents a survey of international initiatives related to the conservation and sustainable use of forest resources. The purpose of the directory is to provide an up-to-date overview of the major initiatives on sustainable forest management underway, their possible implications for the forest products sector and possible future trends.

13. The directory also aims to inform ACPWP Members of initiatives that may be beneficial to engage in and how to do so. It outlines upcoming meetings on issues that may be of interest to industry. The Committee asked FAO to issue a monthly newsletter providing a calendar of upcoming meetings (including date, place and subject), and update the document regularly.

14. It is recommended that a list of donors and support agencies be added to the document.

Item 5. Recommendations of the Committee to FAO for 2003-2004

15. The Committee recommended that FAO undertake the following activities in the next year:

16. The following additional proposals were presented:

17. In addition to recommendations for FAO's work plan, Members stated that industry appreciated the good collaboration with FAO and expressed their willingness and availability to support FAO's work. The Committee is looking forward to FAO's proposals for assistance.

18. All of the recommendations are acceptable to FAO, although some, such as the global forestry convention, will require further internal discussion. Others are already being implemented, such as activities on forest health and hygiene (pests and diseases).

Item 6. Good governance in forestry

Item 6a. Defining illegal logging: what is it and what's being done about it?

19. In the last few years, illegal logging has emerged as a serious concern in the forestry sector worldwide. Government officials, business persons and social activists have denounced it. The paper presented on the topic outlined various definitions of illegal logging, how it affects, and is of concern to, a wide range of interest groups, and some activities currently underway to fight it.

20. Illegal logging differs from country to country without a single universally accepted definition. However, it is generally agreed that illegal logging takes place when timber is harvested, transported, bought or sold in violation of national laws. The concept of illegal logging also includes the avoidance of taxes and duties and the over- or understatement of sales and profits through inappropriate use of transfer pricing. The main consequences of illegal logging are:

21. Current activities to combat illegal logging include:

22. The eradication of illegal logging and the implementation of SFM are closely linked. During the World Summit on Sustainable Development (WSSD), developing countries recognized that business development in the natural resources sector is part of the solution to poverty alleviation as it creates jobs, encourages training and allows value added. In these countries it should be emphasized that industry development be done in a sustainable way.

23. A fight against illegal logging requires close collaboration between governments, NGOs and the private sector as agreement on definitions and solutions is required. FAO is especially well-suited as a neutral facilitator for such an activity.

Item 6b. Certification of sustainable forest management (SFM) and mutual recognition (MR)

24. About four percent of the world's forests (approximately 150 million hectares in 2003) are certified. Certification schemes include the American Tree Farm Systems (ATFS), Canadian Standard Association (CSA), Forest Stewardship Council (FSC), Pan European Forest Certification (PEFC) Sustainable Forestry Initiative (SFI), Malaysian Timber Certification Council (MTCC), Lembaya Ekolabel Indonesia (LEI) and Sistema de Certification Forestal Chileno (CERTFOR).

25. Mutual recognition is defined as "reciprocal and non-discriminatory arrangements under which one certification system recognizes and accepts other certification systems as being substantively equivalent in intent, outcomes and process in identified critical elements". In the future it will involve initiatives at multiple levels (company, bilateral, multilateral), use of existing schemes, development of shared common elements, and governmental decision.

26. Certification presents both an opportunity and a risk: opportunity for companies who invest in SFM and certification and get acceptance in the market place, and risk in that it may lead to non-tariff trade barriers. It was suggested that FAO analyse the relationship between the World Trade Organization (WTO) rule on non-discrimination and the movement toward certification and SFM. Some Committee members asked about the interaction between FAO and WTO on removal of trade barriers and poverty alleviation. In response, it was commented that the UN agency in charge of trade issues is WTO and that FAO does not have a mandate to be involved in international trade negotiations. Within WTO there is a Committee on Trade and Environment where FAO is an observer. FAO can only provide information to WTO on forestry issues. For example, FAO is organizing a meeting for July 2003 with trade negotiators where they will be briefed on issues raised during the meeting on Forest Products Trade and Sustainable Forest Management organized by FAO in February 2003.

Item 6c. Review of poverty alleviation through forestry activity

27. Recent global estimates indicate that more than one billion people live in poverty, which means they live with less than US$1 a day. The World Bank now defines poverty as "a pronounced deprivation of well-being related to lack of material income or consumption, low levels of education and health, vulnerability and exposure to risk, voicelessness and powerlessness." The major international development agencies have agreed that poverty eradication should be their primary goal and at the Millennium Summit in 2000, world leaders agreed to reduce by half the proportion of people living in extreme poverty by 2015.

28. Since July 2002, all concessional lending from the International Development Association of the World Bank Group must be based on Poverty Reduction Strategy Papers (PRSP). The "FAO Forum on How Forests Can Reduce Poverty" resulted in an Agenda for Action that covers four points:

29. FAO prepared some guidelines on how to improve partnerships to fight poverty and is asking industry's cooperation in testing these guidelines.

30. In South Africa, a major problem is that the role of forestry as an economic and social element to progress is not fully understood. There is a need to bring knowledge to communities on the benefits brought about by forestry. Education is the best tool to fight poverty and illegal logging. This could be done through education at the primary school level as well as through information campaigns to the public at large. The preparation of such information could be initiated by FAO, and would consist of simple and easy to understand documentation on the role of forests and wood in society, the economy and the environment.

31. FAO is planning a study on "Outgrower schemes - lessons learned". The study aims to gain greater knowledge on policies and institutional conditions which create obstacles to SFM and on the possible contributions of the forest and pulp and paper industries to poverty reduction. FAO is looking for assistance from the private sector to complete this study.

Item 7. The present situation of Mexican forestry

32. Seventy percent of Mexico is classified as forest lands (approximately 142 million hectares), of which only 29 million are commercial forests. Additionally, about 12 million hectares are considered to have a high potential for commercial plantations.

33. During the mid 1980s, the rate of deforestation in Mexico was 600 000 ha per year, by the mid 1990s it grew to 700 000 ha per year, and by 2000 had reached 800 000 ha per year. Despite all of the programs initiated by the National Forestry Commission (CONAFOR), deforestation is likely to continue for many more years.

34. Global warming is threatening the diversity of the Mexican forest resources by eliminating or reducing the range of endemic species and restricted provenances with unique gene complexes.

35. Reforestation in degraded forest lands is part of the goal to reach fully sustainable forest management. However, the National Reforestation Program (PRONARE) needs to resolve the problem of seedling mortality caused by adverse conditions.

36. Mexico establishes commercial plantations to counteract deforestation, for employment generation in rural areas and to provide industry with high quality, lower priced wood. Plantations will reduce the pressure of illegal harvesting for firewood and charcoal on the natural vegetation.

37. Forest certification is becoming important to forestry in Mexico. Eventually every enterprise implementing a forest management plan to sustainably use the resource should be certified. It is CONAFOR's role to enforce forest certification of each project authorized under the support of the Forestry Development Program (PRODEFOR).

38. The forest industry in Mexico has to overcome its commercial deficit and face the challenge of the new world trading arena. Mexico is geographically close to the world's best markets and has favorable forest land and ecological conditions to produce at least 50 million m3/year of wood at competitive prices within the next 30 years.

39. CONAFOR bears the government's responsibility to face the challenge to revert the degradation of the Mexican forests and improve the way of life of the 12 million people living on forest lands. This organization must be sound and stable in order to guarantee long term goals for the benefit of Mexican forests.

Item 8. Classification of recovered paper

40. Recovered paper is a major component of the raw material supply for paper production and often exceeds 40 percent of the total raw material. There is a need for reliable global information as well as standard definitions and classifications of the various grades. This information would need to be simple and easy to understand. It is proposed to have four main groups of recovered paper. It would be left to national associations to decide how to fit their grades into the following four categories.

41. ICFPA, representing 80 percent of world paper production, and likely 80 percent of the collection and use of recovered paper, will collect, evaluate and present data as proposed. The results will be shared with FAO and be published on a quarterly basis. The Committee will assess results and recommend a course of action to be followed by FAO.

42. On the subject of statistics, some Committee members expressed the difficulty they have in completing the FAO capacity and production survey. The difficulty arises due to the fact that European rules prohibit supplying capacity and production figures on an individual grade basis when there are fewer than three producers. On the other hand, this restriction does not apply to other countries. Aggregating the data will result in a loss of information, while keeping it as it is causes discrepancy in the subtotals. FAO is fully aware of the problem and is looking forward to proposed solutions from the Committee.

Item 9. Climate change

Item 9a. Climate change, forestry and harvested wood products after COP8

43. One hundred and ten Parties, 31 from Annex 1 countries, representing 43.9 percent of Annex I emissions, have ratified the Kyoto Protocol (KP). When and if Russia joins, the KP will enter into force.

44. Harvested Wood Products (HWP) can be a carbon source as well as a carbon sink. However, unlike forests and agricultural lands, they were not included in the Marrakech Accord for the first commitment period. The introduction of HWP may have some impacts on the nexus of trade and the KP:

Item 9b. ICFPA Calculation Tools for Estimating Greenhouse Gas (GHG) Emissions from pulp and paper mills

45. In May 2001, the ICFPA Climate Change Working Group initiated a project to develop guidelines for Calculation Tools for Estimating GHG Emissions from Pulp and Paper Mills. The tools are based on the principles developed by IPCC (Intergovernmental Panel on Climate Change) under the UN Framework Convention on Climate Change (UNFCCC) and the World Business Council on Sustainable Development (WBCSD) Green House Gases protocol, and are consistent with those developed by WRI. The tools explain how to report given emissions, but not what emissions should be reported.

46. The Tools are now available on the WBCSD website (executive summary only) and on the Confederation of European Paper Industry's (CEPI) web site. They cover:

47. The Calculation Tools for Estimating Greenhouse Gas (GHG) Emissions from Pulp and Paper Mills have already proved their usefulness at the EU-level as they are being used by the consultant commissioned by the European Commission to draft general and sector specific guidelines for GHG emissions monitoring in the framework of the Emissions Trading Scheme that will come into force in January 2005.

Item 9c. Carbon in harvested wood products

48. Using FAO statistics, it was recently estimated that HWP produced by the global forest products industry in 1990 contained 346 million metric tonnes of carbon. More importantly, the analysis indicated that the stocks of sequestered carbon in HWP (products in use and in landfills) were increasing at a rate of 139 million metric tonnes of carbon per year in 1990. This annual increase in sequestered HWP carbon represents an equivalent net removal of carbon from the atmosphere that is substantially more than the annual direct greenhouse gas emissions from the global forest products industry - perhaps more than twice the global industry's emissions.

49. While HWP are being used, the carbon they contain is sequestered from the atmosphere, but the time in use varies considerably from one type of product to the next. After use, some of the discarded paper, paperboard, and wood products are disposed in landfills. Over time, a portion of the carbon in the HWP in landfills is converted into carbon dioxide and methane. Methane is important to consider as it is 21 times more potent as a greenhouse gas than carbon dioxide. In the context of climate change, the carbon in HWP is important for at least three reasons. First, the carbon in HWP is sequestered from the atmosphere while the products are being used. Second, after use, a certain fraction of HWP is disposed of in landfills where it continues to sequester carbon. Third, methane released to the atmosphere from HWP in landfills adds to the greenhouse gas levels in the atmosphere

50. The carbon sequestered in HWP (paper, paperboard and wood products) is clearly an important part of the industry's impact on the global carbon balance. The amount of carbon sequestered annually in HWP is equal to or greater than the amount emitted by the industry's manufacturing facilities. Methods have been developed to estimate the amounts of carbon sequestered in HWP during use and in landfills. A number of national inventories already include this carbon and IPCC is developing guidelines to assist in the analysis of the data.

51. Increasing the amount of carbon in storage in forests will result in increased costs. These costs, as well as those incurred in monitoring the carbon, will have to be borne by either the forest or carbon owner.

52. Paper recycling decreases the amount of material going to landfills and thus reduces methane emissions. By lengthening the life and the use of the products it increases the amount of CO2 in stock.

Item 9d. More wealth through a sustainable use of renewable raw materials

53. In Europe, between 50 and 60 percent of the energy required for the production of wood-based panels and pulp and paper is based on bio-fuels, with the pulp and paper industry as the largest producer of renewable energy. Wood is the only renewable resource that is used as a value added raw material and as a fuel. Respecting European targets for renewable energy systems (RES) only through woody biomass would require an additional 163 million cubic metres of wood, which would create market distortions in availability and price of wood-based raw materials. Therefore, it is essential to respect a hierarchy in the use of renewable resources: first for products and second for energy.

54. The value added in the pulp and paper industry is 993 euros per tonne of dry wood, while it is 1044 in the wood products industry and 118 if the wood is used as bio-energy. In terms of employment the pulp and paper industry generates 124 man-hours per tonne of dry wood compared to 54 in the wood products industry and 2 in bio-energy. With respect to the carbon cycle, the pulp and paper industry provides far greater benefits in terms of employment and value added than direct burning of the wood.

Item 10. Discussion on pertinent issues raised during presentations and recommendations

55. FAO acknowledges the recommendations presented under Item 5.

56. Regarding the additional proposals, FAO has the following comments:

Item 11. Date and place of next Session

57. The Committee has been invited by the Australian Paper Industry Council to hold its 45th Session in Canberra, Australia in 2004. The tentative dates are 17 and 18 April 2004. The Committee recommended that the secretariat contact all members to ensure the acceptability of the dates and confirm them as soon as possible. It was also recommended that preparatory meetings take place during the second half of 2003, and that agreement procedures between the Australian government and FAO be initiated as early as possible.

58. The 46th Session will take place in Rome, Italy in 2005. The Committee member from Thailand offered to host the 47th Session of the Committee in 2006.

Item 12. Any other business

59. There was no other business on the agenda.

Item 13. Closing remarks

60. Messrs Norman Bellino, FAO Representative to Mexico, and Mr Wulf Killmann, Director Forest Products and Economics Division, thanked the participants for their excellent contributions and their active participation in the discussions. They reiterated FAO's appreciation for the continuous support of Committee members and wished a safe return to all participants. They expressed special thanks to the government of Oaxaca for inviting the Committee and to Messrs Carlos Sacal and Jose Pontones from Smurfit Carton y Papel de México for the excellent organization of the Session and hospitality displayed during the time spent in Oaxaca.

61. The Chairman thanked Mr Jacques Lahaussois, technical secretary, who is retiring shortly after the 44th Session, and complimented him on his good work. The technical secretary thanked all members of the Committee for their support during his tenure. The Chairman declared the 44th Session closed.

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