• DG III's initiative to organise a stakeholder consultation at an early stage in the drafting of their communication is an important and positive step towards creating good co-operation between the different actors involved in drafting and implementing EU forest policies. NGOs would urge the Commission to continue this process and believe that a second meeting with NGOs, Unions and Industry representatives to discuss a first full draft of the communication is required.

• Although the discussion paper outlines the policy objectives of the future communication, the validity of the paper would be enhanced by a description of the practical objectives of this document: e.g. if this paper were to provide a rolling framework for an annual/biannual stakeholder forum where the objectives, constraints and solutions for sustainable development and competitiveness for forest based industries were to be discussed. This should be clearly stated in the future communication.

Key Concerns:

• Sustainable development versus competitiveness: Long-term sustainable competitiveness of EU FB-I can only be ensured if it is based on sustainable development of the whole EU FBI sector;
• Sustainability of the resource base: A sustainable resource base i.e. the forest is a prerequisite to long-term sustainable development of EU FB-I. The Communication should discuss Sustainable Forest Management (SFM) in relation to a sustainable production of the FB-I.

• Economic, Environment and Social Aspects: The Commission stressed that sustainable development includes economic, environment and social aspects and that these three pillars are equally important. However, this is not reflected in the current discussion paper and needs to receive more attention in the Communication. The Communication should provide solutions on how to integrate environment into FB-I industry policy and acknowledge that the integration of the environment and social issues provides an opportunity to improve FB-I sustainability and therefore long-term sustainable competitiveness. At present the draft working paper gives the impression that environment and social legislation are constraints to EU FB-I competitiveness;

• The fair trade versus free trade: The EU should promote fair trade rather than free trade. The Commission should investigate the potential for fair trade and what impacts the un-fair trade policies of third governments have on the competitiveness of the EU FB-I.
• Promotion of wood products consumption : the consumption of forest products as potentially renewable resource should only be promoted when they come from well managed forests and at sustainable production levels;

• Evaluations and individual responsibilities for implementing objectives: The Communication should be based on the conclusions and recommendations of sectoral studies. These should be made publicly available. Clear policy objectives should be stated as well as the timescale for implementing the actions outlined to improve sustainable competitiveness and individual responsibilities, especially those of DG III.

1 Title

• The Title should be amended to "Communication of the Commission on the Global Sustainable Development and Competitiveness of Forest-Based and Related Industries in the EU" to reflect the overall objective and content of the Communication.

• Can the commission explain what they mean by the use of the term 'sustainable' in relation to the 'competitiveness' of the sectors concerned?

1.1. Key features:

• The outline discusses forest industries without mentioning the basis of the industry, i.e. the forest. However, the prerequisite for long term competitiveness is the sustainable use and management of forests, the resource base of the Forest Based Industries (FB-I). Without SFM and sustainable consumption, the basis for "sustainable" competition of the whole sector will deteriorate. The communication should discuss SFM in relation to a sustainable production of the FB-I (This should involve a consultative process with the relevant DGs).

• When discussing the FB-I the Communication should avoid aggregating the different sector players as if they are a homogeneous entity by referring to FB-I as "them" and "upstream". The introduction should outlined their individual characteristics. This would create the basis for a constructive discussion of the key issues for the sustainable competitiveness of FB-I.

• The employment figure should be further refined to identify which industries are providing employment opportunities, where new jobs are created and where new technology is resulting in job losses.

• Companies with less than 20 employees are not included in the statistics on employment. An urgent analysis on the importance of these companies in Europe is necessary as they used to be major employers and providers of tax revenues but have been hit hardest by globalisation and mergers.

• The Communication seems to focus on the FB-I that rely on timber as a raw material i.e. the draft as it stands presents the dominant, but outdated view of forests as being only useful ad a source of timber. No reference is made to industries that use non timber forest products such as the pharmaceutical and other industries. This needs to be rectified.

• No consideration is given to the other services (ecological, cultural and recreational) performed by forests and the economic benefits and jobs they provide.

• Figures on the total volume of wood consumed or processed by the EU FB-I and related industries should be included.

• Figures on trade flows should be inserted these should include how much wood we import, where it comes from, and the case when we do not know its origin.

1.2 Objectives

• The Treaty (Article 130r(2)) requires the integration of environment in all Commission policies. This was reiterated by the Cardiff summit. However, the discussion paper gives the impression that the requirements to integrate environment protection are a vague concern or in some cases are seen as barriers to competitiveness. This should be rectified in the Communication.

• To be added: Develop practical means for FB-I to integrate environment requirements.

1.3 Principles for applying EU Industrial policy to the FB-I sector:

• Bullet point 2 add: ‘in achieving sustainable development’ at the end of the sentence.
• Add bullet point: R&D should focus on improvements to ensure the sustainable management of forest, sustainable production and sustainable consumption.
• Amend bullet point 4 to include a commitment to eliminate costly incentives and subsidies that distort the use of forests towards timber production and away from greatly undervalued recreational and ecological services.
• Add bullet point on introducing legally binding codes of conducts for FB-I in order to level the playing field.

II Competitive Situation

• If the Terms of Reference (ToR) of the Strengthens Weaknesses Opportunities and Threats (SWOT) studies are do not include significant reference to the principle of SFM then their results may be questionable. NGOs would like to see the ToRs of these studies even if the full reports are not available and know who determined the competitiveness of the EU FB-I. The executive summary including the conclusions and any recommendations of all the 4/5 studies should be made available.
• The Commission seems to believe that: "sometimes when publishing industry can't find the (fresh) fibre supply it needs, they need to consider finding/raising alternatives. That's where research comes in." However, research should be concerned with long-term sustainability and could easily conclude that a reduction in consumption is necessary in addition to a diversification of the raw material.
• It would be advisable for the findings of the SWOT studies to be peer reviewed, or commented on by independent experts from different backgrounds.
• The list of characteristics of the competitiveness of the FB-I is unclear. It needs to be further qualified to understand in what way these key features have been taken into account. In particular, the bullet point on legislative and normative handicaps seems to indicate that the Commission sometimes sees environmental legislation as a handicap. If that is the case, it should be rectified in the Communication. Also, it should be made clear that the detail in this section does not advocate a ‘race to the bottom’ approach in what will ultimately be a vain attempt to maintain its competitive edge in the world market.
• This section should include an analysis of the changes the FB-I have undergone within the EU since the Scandinavian countries joined.
• The future communication should also discuss the situation vis à vis the mergers in the FB-I and their impact on competitiveness and sustainable development of this industrial sector as a whole.
• In line 2 of the closing paragraph to this section suggest the insertion of the word "both" after "...impact on...", also "and overall sustainability" after the word "...competitiveness..."
• This section on competitiveness should also include an analysis of the existing subsidies (both direct and indirect) to the FB-I.

III. 1 Globalisation

Environmental NGOs are in general concerned with ever increasing globalisation as it takes control away from local communities and populations and tends to consider environment protection as a barrier to trade. This has been made clear by the most recent WTO ruling by the Appellate Body on Shrimps and Sea-turtles.

Challenges

• Where the procurement of raw materials is discussed more innovative ways of looking at the supply side should be developed i.e. using the cascade model, as well as the use of non-wood fibres.
• Add bullet point: A commitment in the Communication to avoid old-growth sources of wood and to prefer environmentally certified sources based on environmental and social criteria is needed.
• European FB-I should not be allowed to use different standards abroad than within Europe. As these companies are based in the EU, the EU should explore options to eliminate double standards of EU Based FB-I operating abroad. The paper should make clear that the social and environmental standards that are applied to EU FB-I in Europe should also be applied to their operations outside Europe. The dilemma for the application of international legislation may be that some major wood producing and or processing countries are not signatories to international conventions such as the ILO. Perhaps such inequalities in the operating standards of producers in these countries could be levelled through some mechanism in the market place to maintain the relevant sectors competitive position as well as improve social and environmental performance.
• An independent study on the performance of European FB-I outside Europe should be carried out.
• The EU should in fact make a distinction between the concept of free trade and fair trade attempts that are currently being tried i.e. under the Lome agreement to protect smaller local companies in ACP countries. The Commission should investigate the potential for fair trade and what impacts the un-fair trade policies of third governments have on the competitiveness of the EU FB-I.
• The competitiveness of EU FB-I is being undermined by the social and environmental externalities generated by extra-EU players. A possible solution would be to impose economic measures on products entering the EU which receive environmental/social subsidies to enabling producer countries to achieve SFM. These measures would have a clear time limit and would be followed by a demand for compliance with EU environmental/social standards at the international level. This would help alleviate the short term competitiveness imbalance in the market place and introduce long term sustainability to the sector through the introduction of SFM based on environmental and social considerations.
• Third countries are imposing log bans as they feel they are loosing the value added from transforming logs on site. However, as they do not implement SFM they are incurring even higher losses in terms of environmental degradation, social disruption and loss of potential non-timber forest products.

Actions

• Bullet point 2: In any retraining there must be components targeted at the raising of awareness within the sector of the direct link between the industries concerned and the sustainability of the raw materials based. Aspects of the social and environmental dumping by raw materials producers and downstream processors are the major caused of the instability of the industry within the EU. Unsustainable levels of demand in terms of timber volume placed on producer countries by consuming countries must also be considered in this scenario.

III.2 Enlargement

• The impact of the rapid privatisation on the forests of the Eastern European countries needs to be addressed. In relation to this the impact of the Scandinavian countries on Eastern Europe needs to be analysed and potential problems should be addressed through the application of the acquis communautaires by the EU FB-I in line with the comment on the globalisation section dealing with double standards.
• The Communication needs to clarify that the EU will support the adoption of the acquis communautaires by Eastern European countries thus combating the problems of lower social and environment protection and not seeing these as obstacles to free trade.

III.3 Environment

• The paper assumes that EU FB-I are already operating in an environmentally and socially responsible manner. That might be the case for some but more independent research is needed to clarify this situation. Companies should be encouraged to get their management certified according to ISO 9000 and 14000 and/or EMAS.
• If the commission agrees that SFM is prerequisite for long-term survival of FB-I, emphasis should be given to strengthening environmental legislation, not weakening it. At present the draft outline gives the impression that the Commission sees environmental legislation as a barrier.
•  

Challenges:

• First bullet point insert the word 'implementing' at the beginning and the word ‘sourcing’ before ‘sustainable’

• Second bullet point on sustainable consumption fails to acknowledge that the expected increase in the consumption of pulp and paper products are in themselves unsustainable. The Communication should identify the activities needed to achieve a sustainable consumption level in line with the Vth Environmental Action Plan. This should include research should be commissioned to determine levels of consumption by different F-B I sectors both now and in the past and what their ecological footprint is, i.e. where they source their materials now and historically and what has the impact been, possible future sources and sustainability issues etc. These are important issues and at present achieving sustainable levels of consumption is somewhat buried and deserves to be a section on its own.

• Wood has the potential to be an environmentally sound material to use, especially in comparison with other materials such as plastics or aluminium etc. Wood also has the potential to be a renewable resource. Forests, with their intact biodiversity, environmental and social function however are not renewable once cleared for land conversion to agroforestry/plantations. To ensure wood is not substituted by other materials with potential negative environmental or social effects a call for life-cycle assessments for wood products as well as for those materials that wood is substituted with would be welcomed.
• One prerequisite for this is that the FB-I knows where their wood resources originate from and under what forest management these forests are. Independent third party certification can play an important role.

• The scientific world is still extremely unclear about the issue of carbon sinks. It is Statements like "young trees are important for catching CO2" are not based on scientific studies and give a wrong impression of the problem and possible solutions. Likewise the mention of flexible mechanisms under the Kyoto Protocol is inappropriate as the function of such mechanisms remained unresolved after the last COP of the FCCC in Buenos Aires (November 1998).
• The Communication should discourage the destruction of old growth or primary forests both in the EU and third countries.
• The mention of environment credibility and image…campaigns opinion polls is misleading. This point should be deleted, as it is not the role of the Commission to finance the improvement of the image of FB-I. The Commission should encourage industry to improve their image by abiding by environmental and social legislation both within the EU and in supplier countries. The Commission should also outline a set of actions to backstop industry to achieve these goals. This would enable industry to achieve a positive image with consumers that it then deserves.
• It should be clarified that it is a poor choice to participate in that race to the bottom with important ecological and social consequences. It is also a poor choice for mid-term viability of the FB-I. A forward-looking communication would have the courage to explore alternatives to this race to the bottom.

Actions:

• Nothing of substance is proposed references to SFM - eco-certification and emissions. Promotion of independent certification of forests and forest products as a tool to provide market access of products originating from well managed forests and to improve - both in Europe and globally - forest management practices, according to standards and systems at least as performant as the Forest Stewardship Council. Facilitate adaptation of independent certification schemes to European specificities (e.g. small forest ownership structure) and ensuring that any label used in Europe claiming sustainable forest management is based on a system that is based on forest management unit level assessment, performance management standards, credible to consumers and environmental NGOs, based on reliable and independent third party assessment, cost effective, transparent, participatory and voluntary.
• The last bullet in this section again brings forward the idea that the EU, together with industry as indicated in the brackets, promote the use of wood and wood based products. Again this would be counterproductive to the long term sustainability of the sectors dependent on a raw materials base which is currently not sustainably managed and could hasten the collapse of a range of industries. Industry will of course run its own public relations campaigns to promote their own image as ‘environmentally friendly’ whatever that may mean but these campaigns should neither be sponsored or supported in any way until action to ensure SFM and other good environmental and social practice has been independently verified.

III. 4 Impact and consequences of ITC's penetration

• Abbreviations such as ITC and IPR need to be spelt out

III.5 Benefiting from the EU Regulatory Framework

III.6 Improving the image of and co-operation between the different industries of the EU F-B I chain: Towards a cluster approach.

- Survey of up-stream EU F-BI and their structural problems of both large and SME’s and sustainability of operations in the EU and overseas.

III. 5 Improving Human and Technological Base (New out line handed out during meeting)

• The following structure is suggested

• 'Human capital' mentioned in the outline should be replaced by resources stressing that employees fulfil more than just an economic function of the production function. Human resources refers to employees. The innovations, that ensure FB-Is maintain their competitive edge, are developed by people. Therefore they should not be reduce to a pure monetary value/cost.
• Research should focus on improving environmental protection. This can be done to some extent by improving the production process, diversifying the products, including improvements in recycling and to create an added value to side products otherwise considered as waste.