Non-tariff measures

1. APEC Non tariff measures study finalised

The delayed report on Non-Tariff Measures in the Forest Products Sector from the APEC countries (including the US, Canada, New Zealand, Australia, Russia, China, Malaysia and Indonesia) was finally released last month. Aiming to assess the impacts of non-tariff measures (NTMs) on trade in forest products, the report represents the first serious attempt to categorise the myriad of NTMs in use in the APEC region. However, it also reveals an out of date and complacent attitude to environmental protection and fails to recognise the role of trade in causing deforestation.  Defining NTMs as either environmental, economic or social, the report identifies the most widely encountered NTMs in APEC countries as afforestation subsidies, logging bans, log export bans and quotas. Environmentally motivated NTMs, such as certification, logging bans, recycling and emission-control policies, are viewed as not having a significant impact on trade. Illegal trade activities - in many countries vast and beyond control - are in some cases seen as the result of NTMs and are acknowledged as significantly distorting trade.

However, despite the report’s useful overview of the current use of NTMs, its analysis and conclusions are weak. Free trade is consistently supported even though the authors acknowledge that its benefits are compromised by restrictions to the flow of labour, and by the distortion of prices that fail to reflect the true costs - such as environmental and social costs - of goods and services. In addition, tropical deforestation is blamed on population growth and poverty - an argument discredited by CIFOR and WRI, among others. These issues are of particular relevance in the forest products sector but are not properly addressed in the report, thereby flawing its attempt to address these important concerns.

There is reason to believe that the APEC study will act as a target list for forest protection NTMs to be discussed in the context of the next WTO negotiating round.  APEC ministers recently endorsed a new WTO round of negotiations and encouraged nations to hold the round as soon as possible. Although the study does not explicitly state that the forest protection-related NTMs should be eliminated, the purpose of APEC and other trade bodies is to and increase trade through the elimination of trade barriers.  The list was compiled through "structured discussions with key experts in selected economies. Information was provided through a questionnaire send to member economies by the APEC Secretariat." Through its various analyses, the study predicts that removing certain NTMs will increase trade and economic growth.

The study identifies the following forest protection tools as NTMs

LOGGING BANS AND HARVEST RESTRICTIONS:  For example, China instituted a logging ban to curb massive deforestation that led to erosion and flooding; the U.S. has an Endangered Species Act restricts logging in certain areas to conserve habitat; New Zealand's Forest Amendment Action prohibits nature forest logging without an approved sustainable management plan.

SUBSIDIES AND INCENTIVES FOR AFFORESTATION:  For example, China, Republic of Korea and U.S.A provide financial incentives for reforestation and afforestation.;  Thailand has a government funded tree planting schemes for community forestry.  (The report recognizes growing trend of afforestation schemes to expand industrial fiber sources like plantations.)

RECYCLING AND EMISSION CONTROL POLICY:  Japan restrictions formaldehyde emissions from building products and sets limits on brightness in paper to prevent non-recycled paper from outcompeting recycled paper; USA sets minimum standards for waste paper content in newsprint;  Republic of Korea bans imports of wood preserved chemicals and the chemicals themselves.

PROCUREMENT AND USAGE POLICY:  In the USA a number of local governments such as Santa Monica, California and New Jersey have restricted use of tropical timber in municipal projects;  the USA has a federal minimum recycled content law of 40%;  the Government of Japan is taking measures to reduce tropical hard-wood plywood use by 50% in three years.

CERTIFICATION AND ECO-LABELING:  Private, voluntary efforts to promote use of products that are certified to come from sustainable forestry such as the U.S. Certified Forest Products Council, Canada's EcoLogo Certification scheme, Japan's EcoMarket and Forest Certification Scheme;  Sydney, Australia's Waverly Council "Good Wood Guide."

LOG EXPORT BANS:  Many countries including the USA, Indonesia, Vietnam, Papua New Guinea restrict the export of unprocessed wood such as raw logs to stimulate local processing and development and to reduce volume of wood extracted from forests.

PROTECTIONS AGAINST EXOTIC PESTS AND DISEASES:  For example, Australia requires kiln drying and restricts imports of sawn timber containing bark;  Japan requires inspection and fumigation of logs under all circumstances;  Mexico requires that all U.S. sawn timber carry be certified to come from pest-free areas;  the USA requires that solid wood packing material from China be heat treated or fumigated;

While the APEC NTM study does identify many forest conservation measures as trade barriers it also lists numerous policies and regulations that cause forest destruction as trade barriers.  For example, the study discusses raw material subsidies like artificially low stumpage rates, export subsidies which encourage expansion of plantations and exotic tree species, transportation subsidies like road building and shipping credits, energy subsidies and regulations that lead to illegal logging.

The APEC study looks specifically at four case studies using a "General Equilibrium" model to assess the impact of NTMs on trade.  According to the study:

REMOVING ALL EXPORT AND IMPORT TARIFFS AND SUBSIDIES would reduce global GDP by 1.4%  and increase output of forest products of $2 billion.

REMOVING TROPICAL WOOD CERTIFICATION REQUIREMENTS would increase forest product exports and GDP among tropical wood exporting countries and increase imports among countries with certification requirement such as Japan, USA, Europe and Australia

REMOVING INDONESIA'S LOG EXPORT RESTRICTION would increase exports from $60 million to $900 million (66%), depress global log prices, and increase global wood, pulp and paper production by $80 - $90 million.

REMOVING THE CANADA-US SOFTWOOD LUMBER AGREEMENT (which attempts to rectify the unfair advantage Canada's forest sector has over the USA due to its subsidies) would increase Canada's lumber exports to the USA by 7.5% to 10% and Canada's lumber exports to all

APEC countries by 4.6% to 6.2%.