Forestry & Development E-News: July 2009

Forestry and Development (F&D) is an online resource on sustainable forestry. It supports commercial forestry as a viable source of economic growth which is compatible with sustainability.

Contents

Meeting the commitments in Canberra on illegal logging

Expectations have been generated in Canberra that the Australian Government will announce its policy to implement its election commitment to halt imports of illegal timber in August.

Eco-Forestry - not quite paying the bills

A new report from the Japan-based environmental think-tank the Institute for Global Environmental Strategies (IGES) has confirmed that the eco-forestry model in Papua New Guinea is not economically viable.

Carbon trading under more scrutiny in PNG

Carbon trading in Papua New Guinea has been under the policy spotlight with continued reports of irregular dealings of carbon credits in the country.

Chatham House lobbying for constraints

UK think-tank Chatham House has published a new paper on the use of 'illegal logging' legislation and its compatibility with World Trade Organization (WTO) rules.

IFC hostage to greenmail

The International Finance Corporation (IFC) caved in to lobbying from Green groups last month over the financing of cattle-ranching operations in Brazil.

Raising the stakes for Copenhagen

A group of more than a hundred international NGOs congregated in Copenhagen in late May for a preparatory strategy meeting in the lead-up to the UNFCCC meeting in the Danish capital later this year.

Meeting the commitments in Canberra on illegal logging Error! Bookmark not defined.

June: Expectations have been generated in Canberra that the Australian Government will announce its policy to implement its election commitment to halt imports of illegal timber in August.

It has commissioned research on the various means of implementing the policy - industry-based codes, regulations at the border and requirements for certification of legality by importers.

It has also commissioned research on the extent of Australian illegal timber imports and found what all research has shown so far - there are no reliable data - but has it concluded what is also a clear message from the research? The amount of illegal timber entering Australia is unlikely to be significant.

For the Rudd Government, this is not an issue over whether there is any significant public opinion in Australia. It is unlike Europe, where governments urged by Greens have fanned public concern about illegal logging. For Canberra, this is a tactical political issue.

Greens compete for primary Labor votes in areas sensitive to the Labor Party. The Greens and the anti-forestry lobbies - the Wilderness Society, Greenpeace and WWF - play the illegal logging card in the game of political poker with Labor over preferences and competition for primary votes.

WWF and Greenpeace also use the issue to advance their campaign to secure government endorsement of the Forest Stewardship Council (FSC) system to verify certification that forestry is practised sustainably. This is part of a global campaign to diminish the standing of a competing system which is much more popular within the forest industry worldwide, because it adheres to global standards and conformance with quality systems, and does not require the political commitments embedded in the FSC system.

Greenpeace and WWF devote considerable resources to trying to debunk other systems that verify the sustainability or legality of forestry. Some of the material is laughable. Greenpeace produced a report criticising a system to verify the legality of timber which had been developed by SGS, a very reputable global inspection service. Greenpeace complained that some of the verification processes were not at arm's length, and promoted, as it always does, the FSC model as being superior.

The FSC system so egregiously offends global best practice on arm's length separation of the processes of standard-setting from verifying conformance with them, that it is ineligible for recognition by the mainstream global rules governing standards and conformance, which are administered by the family of organisations built around the ISO (the International Standards Organization), of which Standards Australia is a member.

No FSC standard could qualify under the rules of Standards Australia. The Australian Forestry Standard (AFS), which sets the best practice standards used for sustainable forest management in Australia, was developed under Standards Australia rules and approved by it. WWF as well as FSC (which was established and is dominated by WWF) persistently attack the Australian standard.

The threat of imposing a trade ban on imports (which exists until such time as the Australian Government rules it out) has bothered Indonesia, Malaysia and PNG - all targets in the Greenpeace and WWF global campaigns.

Australian officials have stated that they will respect WTO rules in any measure that they implement. They effectively rule out environmental trade bans. But until the Government announces just what action it will take, there will be unease on all sides.

The election commitment has also prompted a minor wave of Green campaigning on the issue in an attempt to gain headlines in the Australian media.

The Government centrepiece thus far is a Memorandum of Understanding between Australia and Papua New Guinea, which will, among other things, investigate opportunities for improving the capacity to address illegal logging by understanding the reasons for illegal logging, identifying approaches to verify legal sources of timber and considering the impact of legality verification systems.

Eco-Forestry - not quite paying the bills Error! Bookmark not defined.

8 June: A new report by the Japan-based environmental think-tank the Institute for Global Environmental Strategies (IGES) has confirmed that the eco-forestry model in Papua New Guinea is not economically viable.

Eco-forestry is the small-scale, community-level model of forestry espoused by a number of NGOs and Greener-leaning development agencies.

The report surveyed nine community-based forestry operations in PNG that receive financial assistance from FORCERT, a not-for-profit business backed by WWF and Greenpeace. The report attempted to provide an economic impact assessment of the eco-forestry operations. However, it concluded that "providing a quantitative estimate of the relative importance of forestry to household income was not possible" because "income flows were inconsistent".

One example of the inconsistent income flows included a case where just two of eighteen weeks' wages were paid because timber harvested was sold into local markets at a sub-optimal price.

The report notes that casual eco-forestry workers were paid between 0.75 and 1.50 kina per hour - lower wages than Greenpeace took Rimbunan Hijau to task for paying its employees in their 2008 campaign against the company.

The report also notes that "because of long periods of non production, actual household income from eco-forestry is well below potential income from a continuous logging operation".

Carbon trading under more scrutiny in PNG

26 June: Carbon trading in Papua New Guinea has been under the policy spotlight with continued reports of irregular dealings of carbon credits in the country.

According to the latest news reports from journalists in the region, the Director of the Office of Climate Change and Environment Sustainability, Theo Yasause, has been suspended pending an internal investigation into the dealings of the Office. There are also reports of carbon 'conmen' selling landowners permits to 'bag' carbon from the atmosphere to the Government carbon trading office.

It appears that publicity about these actions has been promoted by Governors in several provinces.

The reason for the Governors' discontent is that there was no indication that revenue would accrue to them. According to PNG law, some export-oriented activities direct revenue to provincial administrations.

The irregularities, snake-oil salesmen and administrative problems do not bode well for carbon trading in PNG. According to one report, Macquarie Bank has already pulled out of any potential carbon trading in the country, citing a lack of market integrity as the main reason.

Development agencies have something to answer for here. The World Bank actively promoted the idea that carbon credits could be earned and traded in a global emissions trading scheme if deforestation were halted. One World Bank report suggested that revenue from credits could greatly exceed revenue from forestry. The Bank offered to provide seed finance for a fund to support development and trading of credits. A number of national aid agencies chipped in.

But it is abundantly clear that this clever financial engineering is too clever. The EU has said that it does not favour the sale of such a large number of credits from developing countries into the EU trading scheme. Greenpeace and WWF oppose creation of cheap credits like this, and it is now clear there will not be global agreement on an emissions trading scheme in the near future.

Snide remarks are being made about the resurgence of a cargo cult mentality in PNG. But they shouldn't be derided for postulating that there was something worth little which could be sold for a lot more. The idea started in K Street in Washington DC.

Chatham House lobbying for constraints

22 June: UK think-tank Chatham House has published a new paper on the use of 'illegal logging' legislation and its compatibility with World Trade Organization (WTO) rules.

The paper's author, Duncan Brack, contends that "none of the main measures being pursued at present should experience any conflict with WTO rules".

Mr Brack conveniently overlooked the mainstream view among WTO lawyers that measures to restrict trade for non-trade purposes not recognized in the WTO agreements usually get struck down.

This view is clearly share in the European Commission, which constructed an elaborate device to restrict timber imports unless the products are verified as legal under specific rules. They asked that developing countries engage in a ‘voluntary’ partnership agreement (under threat of EU trade barriers) to enter into a bilateral agreement that waives WTO rights

Few countries have completed such agreements, although some (for example Malaysia and Indonesia) have agreed to begin negotiations. The EU should ready itself for protracted Asian diplomacy rather than an early agreement.

But beyond all else, the paper turns the basis of the WTO on its head. Brack asks the question: "do WTO rules constrain policy measures?"

The answer is yes, and for good reason: environmental policy measures such as those being flouted against the trade interests of developing countries deny the opportunity to capitalise on comparative advantage (protecting that right is the reason the GATT exists) and thereby can harm the poor.

IFC hostage to greenmail

12 June: The International Finance Corporation (IFC) caved in to lobbying from Green groups last month over the financing of cattle-ranching operations in Brazil.

The US$30 million IFC loan to Bertin, an integrated cattle-ranching operation with more than 30,000 employees, was to assist the modernization and expansion of existing operations, develop a new operation in Mato Grosso and expand a plastic waste recycling operation.

The IFC withdrew the loan in June of this year after heavy lobbying by Greenpeace, which now claims that the cattle industry in Brazil is the leading driver of global deforestation.

Yet the tactics employed by Greenpeace do not seem to add up - a consumer campaign aimed at markets in the UK, US and EU - does not seem to add up. The biggest consumption market for Brazilian beef is Brazil itself and its main export markets are Russia, Iran, China, Venezuela and Egypt.

The facts are that Bertin sources 85 per cent of its beef from independent ranchers and smallholders, and uses a tracking system to ensure that legal land tenure for its cattle ranching is in place.

The trumpeting of the announcement by Green groups, environmental reporters and bloggers came at the same time that one of Bertin's main rivals, Independencia, laid off 1,400 workers as a response to current economic conditions.

Raising the stakes for Copenhagen

30 June: A group of more than a hundred international NGOs congregated in Copenhagen in late May for a preparatory strategy meeting in the lead-up to the UNFCCC meeting in Danish capital later this year.

WWF, which led the meeting, laid out a bare-bones strategy for NGO actions in the lead-up to Copenhagen.

The strategy recommends domestic approaches by groups in the lead-up to the negotiations, 'supporting the voices of the most vulnerable', strengthening of economic arguments and mobilisation of groups on the ground.

While WWF says that the Copenhagen meeting will "not deliver", the increase in on-ground action will more than likely mean an increase in campaigning against the private sector - particularly forest-related industries.

The recent Greenpeace activity on forestry in the lead-up to the Indonesian elections, as well as the criticisms of the Lula Government's apparent 'concessions' to land tenure reform, are a clear indication of the direction in which things are headed.

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