Working Group II considered programme element IV, trade and environment relating to forest goods and services, on 11 September. J.E.K. Aggrey-Orleans (ITTO) introduced the Secretary-Generals report (E/CN.17/IPF/1996/22), which delegates considered along with a summary document (E/CN.17/IPF/1996/CRP.2) containing only the conclusions and proposals for action. The report addresses market access and trade barriers to forest products; relative competitiveness of forest products; promotion of less used species; certification and labelling; full cost internalization of environmental impacts; and market transparency. The report proposes that the IPF call on relevant international organizations to: support developing country efforts to increase productivity and efficiency of downstream processing activities; conduct analyses of the costs and benefits as well as the potential substitution effects resulting from a transition to SFM; form a working group on procedures for country certification schemes; undertake efforts to promote harmonization and mutual recognition of standards among certification schemes; and create a global database to improve market transparency.
Delegates discussed the report on 11 September. From these discussions the Secretariat produced a draft negotiating text that delegates considered on 16 September. The Secretariat then produced a revised draft negotiating text that was discussed on the final day. During the course of these rounds of discussions, delegates submitted a wide range of comments.
On general conclusions on trade and environment, the EU emphasized that trade-related mechanisms must be compatible with World Trade Organization (WTO) rules. The G- 77/CHINA noted the need to consider both market and non-market values of forest- related goods and services and recommended greater emphasis on the mutually supportive roles of trade and environment. He proposed deleting text suggesting that trade restrictions may be necessary to achieve environmental objectives in special circumstances. The US, the EU and CANADA objected to the possible need to explore an agreement on trade in forest products, while the G-77/CHINA, BRAZIL, COLOMBIA and environmental NGOs supported the idea. ZIMBABWE recommended further studies on non-wood forest products and on domestic trade in forest products. UGANDA stated that the report overemphasizes international trade at the expense of domestic and regional trade.
On market access, COLOMBIA said the reduction of non-tariff and tariff barriers should take place in the context of instruments that seek to control multinationals. IRAN said measures that affect trade in forest goods should not decrease the purchasing power of developing countries. To a proposal requesting the WTO to further reduce tariff and non- tariff barriers to trade in forest products, NORWAY added a reference to the WTO Committee on Trade and Environments work to ensure mutually supportive roles of trade and environment. UGANDA expressed concern that unilateral tariffs were not considered. Environmental NGOs called for adjustment of tariff and non-tariff barriers to ensure consistency with efforts to promote SFM. They proposed language on the possibility that non-tariff barriers may promote SFM and on the exceptions to WTO rules contained in the Uruguay Round agreements. The G-77/CHINA recommended new proposals for: assessment of the effectiveness and trade impacts of subsidies; removal of all unilateral bans and boycotts; and exploration of the possible need for an agreement on trade in forest products and for voluntary codes of conduct. Timber industry NGOs suggested including the potential negative effects of trade restrictions in forest products.
On relative competitiveness of forest products, GREENPEACE INTERNATIONAL said the IPF should not cast substitution of forest products (with non-wood forest products or with forest products produced with more efficient technology) in a negative light, as it can serve to reduce pressures on the worlds forests. The US and environmental NGOs called for further studies on how best to use markets and economic instruments to promote SFM. Regarding efforts to promote downstream processing industries and exports of processed products, industry NGOs emphasized that these efforts should not take the form of tariff and non-tariff barriers, and environmental NGOs stressed that they be consistent with wider environmental and social considerations. The G-77/CHINA suggested a new proposal regarding mechanisms for community-based processing and marketing of wood and non-timber forest products.
On promotion of less used species, AUSTRALIA said ITTO should continue its work in this regard, provided it is within the context of SFM principles. The US, supported by environmental NGOs, proposed a reference to community-level efforts in technology development. Environmental NGOs proposed promotion of non-timber forest products.
On certification, the EU proposed adding and labelling to the title of the section and language noting that voluntary certification and labelling are not considered to be non- tariff barriers. CAMEROON said schemes must be developed according to specific national conditions. PERU said certification should include its own system of C&I to assess SFM. SWITZERLAND emphasized the need to distinguish governmental measures from voluntary private sector measures. The NETHERLANDS stressed the need to focus on all forests rather than strictly tropical forests. AUSTRALIA stated that certification at the regional and provincial levels should also be explored. FRANCE noted that market demand for certified products and its consequences for SFM have yet to be proved.
The US said certification is not a magic bullet that will bring about SFM, but is one useful tool that can complement other beneficial policy instruments. A proliferation of schemes will likely help rather than hamper certification, and competition among schemes is a positive development. The EU said proliferation of different schemes with different criteria could damage the credibility and effectiveness of certification and labelling. The G-77/CHINA supported a proposal calling on trade agencies to promote international harmonization and mutual recognition of standards among schemes. CANADA contested the conclusion that there is a proliferation of schemes but noted their small number and limited experience in certification. He said the proposal to promote international harmonization is premature at this stage, and several other delegations echoed this sentiment.
The GLOBAL FOREST POLICY PROJECT said that because certification schemes are private and voluntary, governments should play no significant role in enforcing harmonization among them. The RUSSIAN FEDERATION highlighted the important roles of governments in providing information, support and monitoring of certification. The G-77/CHINA emphasized the role of governments in ensuring transparency, full participation, nondiscrimination and open access of schemes. He also highlighted that certification should observe sovereignty.
The US stressed the need to involve exporters in the development of schemes. GERMANY called upon relevant agencies to promote information exchange. The EU added references to the Agreement on Technical Barriers to Trade, including application of credibility, non-deceptiveness, cost-effectiveness and encouragement of mutual recognition and equivalence to certification schemes. AUSTRALIA proposed new language regarding performance standards and environmental management systems as important components of SFM.
The GLOBAL FOREST POLICY PROJECT said that country certification is extremely controversial and could trigger a consumer backlash and renew country bans and boycotts of forest products. Environmental NGOs, supported by AUSTRALIA, recommended deleting the reference to feasibility of country certification. Regarding an initial proposal for the formation of a working group to consider the formulation of procedures for country certification schemes, UGANDA, MALAYSIA, NEW ZEALAND, PAPUA NEW GUINEA and INDONESIA supported it, while the US, FRANCE, CANADA, the EU, NORWAY and environmental NGOs argued that it is premature to do so at this stage. The G-77/CHINA proposed language noting that the Panel did not endorse the concept of country certification.
On full cost internalization, NORWAY noted that the treatment of this issue overemphasizes the increased costs incurred in the transition to SFM. He added language stating that without full cost internalization, socioeconomic and environmental costs may not be reflected in the market. CANADA said studies must address subsidies and the distribution of impacts. Industry NGOs noted that only limited consensus exists on definitions, measurements and techniques to introduce environmental costs into pricing mechanisms. Environmental NGOs added language noting that reallocation of costs and benefits is likely to result, and a reference to environmental and social implications.
On market transparency, CANADA stated that more work is needed on information gaps on trade barriers before work begins on a new global database. The ENVIRONMENTAL INVESTIGATION AGENCY called for the formation of an inter-agency task force to assess the extent of illegal logging, timber smuggling and transfer pricing, especially with respect to the activities of transnational corporations. The EU and environmental NGOs called for an independent global assessment of the illegal forest products trade. Discussions on this programme element will continue at IPF-4.
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