1. Challenges for Sustainable Timber Production and Export for Tropical Countries : Perspectives from the Asia-Pacific Region ____________________________ ____________________________ Nirmal Andrews Regional Director and Representative UNEP-ROAP

2. Forests and Forest-Based Trade in Asia-Pacific: Some Facts and Figures: State of the Forests: 18.8% of world’s forests in Asia-Pacific; Average per capita availability of forest area in the region @ 0.2 hectares < 1/3 of the world average of 0.65 ha/person; Within Asia, deforestation rates highest in SE Asia with 23 million ha lost in the past decade, almost half of all forested land Driving forces of deforestation include population pressure, heavy dependence on fuelwood, timber and non-timber forest products, as well as conversion to agricultural, industrial and urban land Forest-Based Trade: Forest-based trade contributes 2% of GDP of world economy (4% or higher in tropical exporting countries) Indonesia and Malaysia the only tropical countries ranked among the top 10 exporters of Timber and other Forest Products (FAO, 1997) Increasing shift in production and export of timber sourced through sustainably managed forests, in conformance with the ITTO’s Year 2000 objective

3. Sustainable Forest Management and Trade: Evolution and Application Origins of certification and establishment of the FSC Growing acceptance of the concept and objective of certification as a voluntary means to identify timber / timber products from sustainably managed forests Growing dissatisfaction among tropical timber exporting countries on the criteria and process by which certification is granted The irony: While the impetus for certification arose from concerns over tropical deforestation, certification is mostly expanding in the developed countries

4. Snapshot Status of Global Forest Certification:

5. Snapshot Status of Regional Forest Certification: % Total Certified Area by Land Type Communal 2.1% Public Private Type Plantation 72.6% Plantation / Natural 7.2%

6. Certification: Some Key Issues and Concerns for Developing Countries Domination of FSC and its influence on market demand for certification according to its own criteria and standards Multiple requirements of different markets and buyers on the type of certification acceptable Lack of progress towards mutual recognition of a growing number of certification schemes in both developed and particularly developing countries (e.g Indonesia, Malaysia, PNG) Potential threat to certification posed by WTO rules: Discrimination b/w ‘ sustainably and ‘ unsustainably ’ harvested timber regarded as a trade restriction

7. Particular Challenges Faced by Small Forest Enterprises (1): Two basic challenges: A) getting certified and B) getting certification to work in their favour A) Constraints faced in order to get certified: –High cost of certification –Compliance with rigorous standards –Access to certification services Certification Success Stories: –Deramakot Forest Reserve in Sabah, Malaysia –Community based forest cooperative in Philippines

8. Particular Challenges Faced by Small Forest Enterprises (2): B) Getting certification is the lesser challenge- Reaping the benefits of certification is the far greater challenge … –Proportion of timber exports from certified forests increasing much more rapidly in developed countries resulting in no significant increase in market share for developing country producers –Research indicates that there is little willingness to pay price premia for certified timber amongst consumers in developed countries; the demand is generated primarily from bulk buyers and retailers to ‘ green ’ their image and thereby gain a competitive edge –Reluctance by the tropical timber industry to increase the cost of (certified) timber, as this may encourage further substitution by temperate timber and non-timber substitutes

9. Conclusion and Recommendations (1): Bottom line: Certification appears to be a necessary but not sufficient condition for the tropical timber trade to benefit from improved market access and price premia, where applicable

10. Conclusion and Recommendations (2): Suggested Next Steps: Support should be provided for tailored capacity building to exporting developing countries, including institutional strengthening, stakeholder participation, auditing systems, training and better understanding of the benefits/limitations of certification Major internationally recognized certification schemes (such as FSC) should actively promote mutual recognition of other schemes, particularly national schemes from developing countries which take into account country-specific and realistic guidelines for sustainable forest management

11. Conclusion and Recommendations (3): Suggested Next Steps: Dialogue and cooperation should be intensified between producer and buyer groups in developed and developing countries with a focus on educating all stakeholders and particularly the consumers about the principles and complexities of SFM and certification Developing countries should also shift some of their focus on high-growth markets for timber such as Brazil, China, Japan, and South Korea where certification may not be required, but could provide a competitive edge in the longer-term

12. Thank You for your kind attention !!