Transcript Document
Global Human Technology
EC Ad Hoc Meeting
Illegal Logging: Forest Law Enforcement,
Governance and Trade
Results of the SIA on the Forest Sector
Marko Katila
Savcor Indufor
April 12, 2005
Brussels
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Presentation Focus
Main conclusions from the SIA on the forest sector
overview of assessment of M & E measures, including measures to
deal with increases in illegal logging and trade
Important to recognize that:
SIA on forest sector focuses on assessment of incremental
economic, social & env. impacts of possible further trade
liberalisation under Doha
M&E measures analysed in this context and only as one part of a
comprehensive study
How to promote SFM and reduce illegal trade in forest products not
primary study objectives
Study not yet complete and reviewed by EC and the Civil Society
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General Impacts
Further reduction of tariffs unlikely to have significant
aggregate impacts on production and consumption; impacts
larger on trade
Incremental impacts in wood harvesting small in aggregate
Accentuation of negative existing trends such as illegal logging
and trade
Accentuation of other trends such as decliningg trade in logs,
increasing trade in value-added products, increasing South-toSouth and intra-regional trade
Considerable variations in impacts depending on the product,
and economic, social, and sustainability context; producer vs.
exporter, etc.
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Overview of Economic Impacts
Net economic impacts positive
Global roundwood production is predicted to increase
only 0.5%
Impacts on harvesting volumes
not be uniform;
aggregate figure hides variation from –2.7 to 5.8%
Aggregate trade is predicted to increase by about 2%
Employment impacts would vary depending on the
industry and the location
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Overview of Environmental Impacts
Net
effect on environment ambiguous; trade
liberalisation as a magnifier of existing problems such
as illegal logging
In developed countries impacts likely small; Russia and
some accession countries may be exceptions
In some cases increased illegal logging would cause
negative impacts on biodiversity and soil erosion
Some developing and transitional economies may face
environmental costs exceeding economic gains
Negative impacts include increased pollution due to int’l
transport and risk of introducing alien insects and fungi
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Overview of Social Impacts
Impacts ambiguous
Consumers in most countries to gain in welfare due to
lower import prices
Increased illegal logging may cause social conflicts and
infringe on indigenous people’s rights
Likely negative impacts on equity in a number of
countries; benefits to accrue to large companies
Producers in countries with limited forest resources
exports may succumb to increased competition from
imports-->reduced domestic production and closure of
especially small millsunemployment
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Affected Countries and Products
Canada, USA, Finland, Sweden and New Zealand amongst major
beneficiaries in paper products
Wooden furniture, SPWPs, plywood and veneer industry to face
increasing competition in EU
New EU members and accession countries as well as the CIS and
other CEEC countries are likely to increase sawnwood production
Indonesia, Malaysia, Brazil, Chile, are also likely to benefit in
economic terms; wood-based panels and sawnwood and some paper
products would be exported increasingly
Production and exports of wooden furniture and secondary processed
wood products (SPWPs) would increase from countries such as
China, Malaysia, Thailand, Vietnam and Brazil
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Non-tariff Measures
Legitimate NTMs aimed at meeting environmental and
safety objectives not major constraints to trade; improve
access to
markets based on environmentally sound
practices
Elimination of log export bans and prohibitive log export
taxes would result in increased trade in roundwood and in
economic gains
Despite economic inefficiency, a (temporary) ban on log
exports may be justified on environmental grounds in an
environment, where control of corruption and illegal logging
is difficult
Developing countries, small producers and communities are
often disadvantaged when it comes e.g. to benefiting from
forest certification
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Cross-cutting Issues
Env. and social impacts of agricultural trade
liberalisation may be larger than effects resulting from
forest products trade liberalisation
Case studies indicate negtaive impacts related to oil
palm expansion e.g. in Indonesia, and cattle production
and soybean in Brazil
Products of greatest concern:
- edible oils (oil palm, soy bean)
- beef and associated animal feed
- cocoa and coffee
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Key M&E Measures Analyzed
Trade-related M&E measures covered as part of the TOR:
Unilateral preferential tariff treatment
Introduction of a licensing scheme (e.g. FLEGT)
Log export bans and prohibitive export taxes
Unilateral ban on exports not verified as coming from a
sustainably managed source
Unilateral ban on exports not verified as coming from a legal
source
A multilateral Kimberley-like ban on all timber from specified
areas at risk to illegal logging
Others: certification, government procurement, sanitary and
phytosanitary (SPS) measures
a number of non-trade-related measures
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Introduction of a Licensing Scheme/FLEGT (1)
Potential impact determined by:
prevalence of illegal logging, significance of exports and share
of EU in exports
potential expansion to other products and markets a way to
enhance potential impact
Effectiveness (and actual impact in a given country depend on):
clarification of concept of illegal logging
reliable estimation of volume of illegal logging and trade
governance capacity and traditions
Main risks are:
leakage through third countries and further processing in third
countries and/or the country of origin
corruption in the process of granting the licence itself
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Introduction of a Licensing Scheme/FLEGT (2)
Short term impacts likely limited; possibly significant local impacts
(negative and positive) in both the partner countries and the EU
In the longer term there may be considerable impacts through:
elevating the issue to high level political dialogue
providing a concrete model for a country-wide TLS
potential company-wide impacts
EU FLEGT partnerships could act as groundbreakers for similar
partnerships by other countries (Japan, China, etc.)
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Unilateral Ban on Imports of Logs and Wood
Products Not Verified As Coming From a
Sustainably Managed Source
Positive env. impacts; would increase areas under forest certification and
thus promote SFM
Positive environmental impacts enhanced with broader product coverage
Implementation of the scheme technically feasible but cost implications in
raising the level of forest management and implementing certification in
developing countries huge
Higher wood production costs and disruptions in forest product markets;
negative impacts on importing country consumers and producers
At least in short and medium term negative equity impacts: would favour
developed countries and temperate zones, may favour larger companies
and plantations in developing countries
Risks: divertion to third countries, may not provide financial incentives to
adopt SFM; are consumers ready to pay a premium for certified products
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Unilateral Ban…. Not Verified As Coming From a
Legal Source
Positive env. impacts; would increase areas under forest certification and
thus promote SFM; would improve forest goverance in general and
enhance domestic revenue collection and rent capture because of
improved wood pricing
Positive environmental impacts enhanced with broader product coverage
Impact on SFM not as clear as with verification of sustainability, because
difficulties in establishing legality in many countries; legality doesno imply
sustainability
Would add to production costs, which may not be covered by buyers
Scheme would require a national system of issuing a legality license, a
log-tracking system and third-party legal verification
Risks: may lower the standard for legality, technical difficulties in tracing
fibre origin
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Conclusions & Recommendations (1)
Trade liberalisation will increase illegal logging and trade in forest
products in some contextsM&E measures required
A mix of both non-trade and trade-related M&E measures needed;
non-trade measures often crucial because they can address directly
root causes of forest degradation and deforestation
Domestic measures include
improving policy & legal framework with emphasis on clarifying
legal framework concerning illegal acts in forestry and control of
illegal logging, and improving land tenure arrangements
supporting NFPs
improving incentive framework for SFM through more efficient
pricing and transparent log sales aimed at reducing corruption
and collusion
eliminating macro and extra-sectoral policies (e.g. in agriculture)
that cause negative sustainability impacts in forest sector
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Conclusions & Recommendations (2)
Al identified trade-related measures have positive sustainability impacts,
but their effectiveness would depend on conditions and adoption of
complementary measures
Voluntary forest certification is one tool that can directly link trade and env.
objectives to provide incentives for SFM
Voluntary licensing schemes can become more effective with a broader
scope of agreements in terms of country and product coverage,
complemented by voluntary third-party legal verification schemes at
national level
Consideration of “ban options” should be based on an in-depth IAmore
attention to analysis of economic and trade impacts using trade or CGEmodels and impacts on equity
Consider phasing trade liberalisation (in selected countries) to provide
enough time for building up forest governance, management and control
systems in vulnerable countries e.g. through various FLEGT measures
and bilateral and multilateral assistance
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Trade and SFM
Underlying
cause
Immediate
cause
Trade
liberalisation
Domestic
forest policy
Forest
products
markets
Direct
sources of
change
Outcomes
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Agricultural crop
and pasture
expansion
Extrasectoral
policies
Agricultural
markets
Economic
development
Technological
change
Commercial and
subsistence
logging
MEAs and
voluntary
environmental
measures
Population
Institutions
and resource
allocation
Infrastructure
development
SFM
(deforestation/
degradation)
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