Forestry & Development E-News
www.forestryanddevelopment.com July 2007
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	Developing countries block anti-forestry moves in CITES Developing countries foiled an effort by NGOs at an international meeting in the Netherlands at the beginning of June to convert the international convention to control trade in endangered species into a tool to control trade in timber. The meeting of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) had been the subject of intense lobbying over the previous few months. NGOs such as Greenpeace and Friends of the Earth had been attempting to have a number of timber species listed on Appendix II of the convention. This would have regulated international trade in the timbers through the issuing of export permits. CITES was originally set up to stop trade in ivory and animal parts. In recent years there has been agreement to restrict trade in some species of mahogany. At this meeting, NGOs had targeted merbau in particular, releasing a report claiming that merbau exports from PNG and Indonesia were illegal and endangering the species. Another report released by Greenpeace focused specifically on Dutch importers in an attempt to gain leverage at the CITES meeting. However, no countries buckled to NGO pressure and the timber was not nominated for review. UN Under-Secretary General Achim Steiner also praised Indonesia's efforts at tackling illegal logging at the meeting. NGOs also targeted Spanish cedar and rosewood. The EU proposed that the timbers be placed on Appendix II which specifies species which are endangered. But these proposals were withdrawn once it became clear that they would be voted down. Opposition was strong from Central and South American countries where the species play an integral part in forestry industries. The targeting of commercially viable species within CITES is another chapter in the NGO global campaign to restrict commercial forestry, following campaigns against illegal logging. Rather than basing campaigns on facts, there has been a specific targeting of species that form a valuable part of the forest trade. This international trade in forest and wood products is a vital contributor to economic growth and poverty reduction in developing countries. Despite this, China's largest home improvement chain, B&Q, has halted the sale of merbau in China. B&Q has ceded to the demands of Greenpeace, which claims that illegally harvested merbau is being smuggled into China, and is urging its competitors to follow suit. The Chinese State Forestry Administration (SFA) has dismissed Greenpeace's claims as baseless. Full briefing documents from the CITES meeting can be viewed here.
	In Other News ITTO FUNDS PILOT PROJECT IN PNG The International Tropical Timber Organization (ITTO) will jointly fund a Timber Legality and Traceability Verification (TLTV) pilot system with Saban Enterprises Limited, a PNG-based timber company. The funding agreement demonstrates a commitment to legal logging in PNG from both the private sector and the international community. Saban Enterprises Limited, a subsidiary of Rimbunan Hijau (PNG), will participate in the ITTO pilot scheme on timber tracking, a voluntary scheme designed to strengthen forestry law governance and enforcement on global timber markets. The scheme will promote the production and trade of timber from legally and sustainably managed forests, and provide importers with the confidence they seek with respect to the harvesting of timber in accordance with PNG law. The ITTO will assist in funding the SGS TLTV system, which will independently demonstrate that Saban Enterprises Limited’s Australian timber exports meet all PNG forestry laws, policy requirements and standards. The PNGFIA (PNG Forest Industries Association) announced earlier this year that it would introduce a TLTV scheme in 2007. Implementation of a TLTV scheme will provide concrete evidence that those who sign up are not engaged in illegal logging. YALE MIXES IT IN THE GLOBAL FORESTRY DEBATE Two recent interventions suggest that members of the Yale Center for Environmental Policy and Law, an environmental institution that carries significant international influence, are becoming activists in the global forestry debate. In 2005 and 2006, the Center published a general rating of sustainability of forestry in developing countries. Its standard was that not more than 3 per cent of forest was being logged annually. Papua New Guinea (PNG) met that standard; the average cut rate in PNG is 0.7 per cent. The results were published in the Pilot 2006 Environmental Performance Index. In October last year, the PNG forest industry cited the Yale rating at an illegal logging conference hosted by the International Tropical Timber Organization (ITTO) in Port Moresby. It has been cited since. It appears that PNG’s leading anti-forestry NGO complained to Yale about this. After that, a member of the Center wrote to media in PNG and Australia stating that the index now should not be used as a measure of sustainability. Several anti-forestry campaigners and NGOs have made statements indicating that the PNG election should be decided on forestry issues. Around the same time, research by a member of the Yale Center was used as part of a campaign to pressure financial institutions not to finance timber companies. The paper criticized HSBC and Credit Suisse for facilitating an IPO by Malaysian-based conglomerate Samling on the Hong Kong stock exchange. The researcher had studied the activities of Samling’s subsidiary, Barama, in Guyana. BankTrack, a small NGO set up by other NGOs to pressure financial institutions to adhere to the Equator Principles (which commit financial institutions to become de facto regulators of forest business backed by project finance), criticized the banks for supporting the IPO, while at the same time they were adherents to the Equator Principles. HSBC correctly pointed out that the activity was an IPO and that the Equator Principles only applied to project finance. HSBC must have been surprised because some time before it had announced a generous grant to WWF to support environmental activities. WWF UK is a leading member of Banktrack. After the brouhaha about the Samling IPO died down, an HSBC announcement indicated that the bank was providing $100 million in grants to several NGOs for work on climate change, one of which was WWF. Macquarie Bank, the third supporter of the IPO, has not been criticized by NGOs. It is not an adherent to the Equator Principles. G8 BACKS WORLD BANK FOREST CARBON PLAN The G8 has supported a World Bank proposal for a US$250 million pilot facility to provide finance to developing countries which manage forestry to reduce emissions of carbon dioxide. Known as the Forest Climate Partnership Facility (FCPF), it has been put together under the World Bank's new Global Forest Alliance (GFA). Details of how the scheme will work are unclear, but it appears to encourage reforestation, reduction of deforestation and restrictions on the conversion of forest land to other uses. Initial presentations on the FCPF indicated that subsidies will be used to prevent conversion of land for both agricultural and biodiesel purposes. There are also indications that the Facility aims to promote the creation of carbon credits which can be traded. A related concept fostered by the Bank is a scheme to reduce emissions from deforestation or forest degradation (REDD). This has been endorsed in principle by the Rainbow Coalition of small countries with significant forest industries. One aspect that the proposal suggests is adoption by forestry developing countries of binding targets to reduce emissions in return for funding. This would be contrary to the developing country position on the Kyoto Protocol that developing countries should not accept binding targets and that for them, development takes priority over the environment in climate change policy. The notion of accepting payments for not harvesting timber may seem like an attractive prospect for developing countries. Already, a number of governments have indicated preliminary support, including the Democratic Republic of Congo and a number of regional governments in Indonesia. The palm oil industry has already come under attack from NGOs such as Greenpeace, who say that palm oil plantations destroy habitat, and that biodiesels contribute heavily to climate change. Ironically, experts point out that palm oil plantations are very efficient carbon sinks. MALAYSIA AND INDONESIA DEFEND PALM OIL The Malaysian and Indonesian governments have launched a campaign to defend their countries' palm oil industries internationally. The palm oil industry has come under increasing attack from NGOs around the world. Malaysia’s Plantation Industries and Commodities Minister, Datuk Peter Chin, led a delegation of palm oil industry representatives on a six-day trip to The Hague, Brussels and London on 2-9 June, aimed at addressing negativity towards palm oil. Indonesia has planned to send a delegation to visit London in July for similar purposes. Several environmental NGOs have claimed that a combination of palm oil plantations for biofuels, as well as illegal logging, is causing damage to Indonesia’s rainforests. WWF and Friends of the Earth in the UK have been running a campaign against the oil palm industry, targeting supermarket chains such as TESCO, and food manufacturing companies, claiming that palm oil plantations endanger orangutan habitats. Greenpeace has also heavily criticized palm oil as a source for biofuels, claiming that its green credentials are false. Malaysia and Indonesia are the world's two largest producers of palm oil. The palm oil industry contributes approximately 3 per cent to Malaysian GDP and constitutes one-third of agricultural output. In Indonesia, the industry employs more than 4 million people. The Malaysian and Indonesian governments have also stated that they will set up a joint economic committee that will examine illegal logging. CHINESE ACTION ON ILLEGAL LOGGING The US and China have announced a consensus on a number of environmental and energy issues at the Strategic Economic Dialogue (SED) on May 22 and 23. The SED aims to incorporate environmental objectives into a broader economic framework. Three policy areas in particular were addressed by the Dialogue: clean coal technology, clean energy, and agreements on illegal logging, oceans and fisheries. Both nations have agreed to engage in a dialogue to produce a bilateral agreement on illegal logging by the end of 2007. China’s Foreign Ministry spokesperson, Jiang Yu, has stated that China is taking measures to address illegal timber imports from countries such as Myanmar. The State Forestry Administration (SFA) has also announced that China is currently negotiating an MoU with Myanmar on forest cooperation. US CONGRESS CREATES NASTY TRADE AND ENVIRONMENT LINKAGE The Democrat-controlled US Congress and the Republican Bush Administration have agreed to place environmental conditions in free trade agreements (FTAs). In future, FTAs will require compliance with the terms of nominated multilateral environmental agreements (MEAs). This will include the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), one of the handful of international environmental agreements adopted by the US. This foreshadows the possibility that if a partner in a bilateral FTA with the US fails to abide by obligations under CITES, the dispute provisions of the FTA may be invoked, invalidating other rights secured under the agreement. At present, there are no penalties for failing to apply obligations under CITES. This requirement will only become law when Congress re-enacts law which US Administrations have traditionally used to secure Congress’s approval of trade agreements. The old law was time-bound and lapsed at the end of July. Re-enactment is unlikely in the remainder of the second Bush term. Nevertheless, the Administration is likely to use the terms on environment settled recently with Congressional leaders to guide the terms of FTAs in the future. The USTR has also announced that it will work with the Peruvian government to prevent illegal logging as part of the US-Peru FTA.
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