Transcript No Slide Title

TRADE SIA OF THE ASSOCIATION AGREEMENT UNDER
NEGOTIATION BETWEEN THE EUROPEAN COMMUNITY AND
MERCOSUR
UPDATE OF FORESTRY SECTOR SIA
CONSULTATION DRAFT FINAL REPORT
Prepared by:
Impact Assessment Research Centre
Institute for Development Policy and Management
University of Manchester
Brussels, 19 July 2007
in association with:
MERCOSUR
FOREST SECTOR SIA
Final Report Findings
Peter Nelson
Matthew Ryder
LAND USE CONSULTANTS
COMPONENTS TO FOREST SECTOR
TRADE
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Primary (planting, management and
harvesting)
Secondary (sawn wood, pulp, paper)
Tertiary (ie: printing and publishing)
Foreign Direct Investment
in South America
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FDI is a major influence in development of Mercosur
Forest Industry.
Mercosur relies heavily on FDI = 21.4% of GDP.
EU invested €254.2 billion in 2003 in wood panels, pulp
and paper industries in Latin America, compared with
€176 billion in 2000.
EXISTING TRADE BARRIERS
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Mercosur has no tariffs/ duty on wood but does on
timber products (pulp, newsprint) and machinery for
timber processing,
Tariff barriers less significant than regulatory controls
(eco-labelling and certification).
ECONOMIC DRIVERS
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High level of FDI already committed,
Globalisation of timber industry,
Long term investment structure,
Deteriorating economic conditions in North America
and Europe
SOCIAL IMPACTS
Logging in Natural Forest
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Lack of tenure and community displacement,
Loss of traditional hunting and gathering ground,
Loss of cultural identity,
Ethnic conflicts with migration,
Use of child labour,
Increased disease.
SOCIAL EFFECTS
Development of Plantation Forestry
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Loss of cultural environment,
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Loss of economic self-determination,
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Increased dependency on single product,
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Fewer employment opportunities.
SOCIAL EFFECTS
Secondary Activities
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Greater dependency on FDI
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Selective employment with increased poverty for
unemployed,
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Perceived increase in pollution risk and environmental
change.
ENVIRONMENTAL EFFECTS
Primary Activities
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Increase in illegal logging
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Conversion of natural forest to plantations or
agriculture
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Increased erosion
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Overexploitation of timber
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Irremediable damage to biodiversity
ENVIRONMENTAL EFFECTS
Secondary Activities
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Increased levels of localised pollution from milling and
pulping,
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Deterioration in environmental quality .
Case Study –
Cattle (Beef), BioFuels and Forestry
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Ethanol produced from Sugarcane
Biodiesel from vegetable oils including soybean
Soybean also used as food source
Main production of soybeans on degraded agricultural land.
Expansion of soybean displaces cattle farming which impacts on
primary forest areas.
Brazil
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Produces 66% of Soy products imported by EU (9.5
million tonnes 200
Soybean Production
1980
2005
16 m.t. 50 m.t.
12 m. ha. 21.5 m. ha.
Bovine Meat
Pasture Land
2.8 m.t.
7.8m.t.
200 m.ha.
EU – Demand for BioFuels
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EU consumes 32% of global soy products
Commitment to 10% use of biofuels by 2020 (EU
Action Plan)
Requires 8-36% of EU land area.
2-3% increase in biofuels would generate 400,000 jobs
(1.2 million to reach 10% target.
Flanking Measures
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Certification/ Voluntary Licensing
Chain of Custody
SEA of Forest Development Plans
Wells to Wheels audit
(Biofuels Research Advisory Council (2006)
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Cross-compliance Agriculture/Forestry
Land Strategies for energy crops & forestry
CONCLUSIONS
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Principal changes will affect Mercosur, not the EU.
Existing market conditions do not support sustainable
forestry and trade liberalisation could exacerbate the
current weaknesses.
CONCLUSIONS
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Increased pressures for deforestation, or degradation of
existing natural forest.
Liberalisation will favour large producers over SMEs.
Flanking and mitigating measures required to develop
sustainable plantation forestry, certification and chains of
custody
Integrated solutions are needed for cross-linking economic
sectors of forestry and agriculture.