Working Group II conducted initial negotiations on proposals for action on Friday, 14 February and Tuesday, 18 February. Delegates continued negotiating contentious issues in a contact group throughout the second week and in the closing Plenary. They exchanged views on conclusions on Thursday, 20 February. The final document contains action proposals on: market access; relative competitiveness; lesser used species; certification and labelling (C&L); full-cost internalization; and market transparency.
MARKET ACCESS: The final document proposes: studying trade-related measures impacts; undertaking measures to improve market access; implementing voluntary private sector codes of conduct; considering options on a possible agreement on trade in forest products; and removing unilateral measures.
On improving market access, delegates accepted a US proposal to replace WTO members with countries. A G-77/CHINA proposal to add language that environmental measures should not lead to disguised non-tariff trade barriers was not accepted. The final text recommends: reducing tariff and non-tariff barriers; promoting mutually supportive trade and environment policies; and avoiding conflict between forest-product trade measures and international obligations.
The G-77/CHINA, supported by MALAYSIA and BRAZIL, supported language on exploring a possible agreement on trade in forest products and extending the concept of ITTAs Objective 2000 to all types of forests. The US, supported by the EU, NEW ZEALAND, the REPUBLIC OF KOREA and CANADA, proposed alternative language inviting countries and international organizations to take note of the 1994 International Tropical Timber Agreement (ITTA) and the commitment made by ITTO members to review the scope of this agreement in 1997. CANADA stated that consumer member countries of the ITTO have already stated a corresponding commitment to SFM. BRAZIL said a forest products agreement would level the playing field between countries with tropical forests and those with boreal and temperate forests. MEXICO and MALAYSIA stressed that any future mechanism must explore the possibility of giving balanced treatment to forest products from all types of forests. Delegates could not reach consensus on this item because some countries argued that an additional agreement on trade in forest products is unnecessary given the ITTA, the 1997 review and the parallel consumer statement, while others wanted a new agreement to cover more than tropical timber. The final document explains that, without reaching consensus, delegates discussed the following options: noting the ITTA 1994; exploring extension of the concept of Objective 2000 for all types of forests; exploring a possible agreement on trade in forest products; examining further initiatives on trade liberalization within the WTO; exploring within an INC possibilities to promote SFM and trade in forest products in an international, comprehensive, legally-binding instrument on all types of forests.
Delegates conducted extensive debate on removing unilateral bans and boycotts. The EU, supported by JAPAN, proposed removing trade-restrictive measures when inconsistent with international agreements. The G-77/CHINA, supported by MALAYSIA, insisted on retaining a reference to bans and boycotts imposed by local governments. The US noted that trade measures may be an effective and appropriate means of addressing environmental concerns. The final text notes that the Panel considered the relationship between international trade obligations and national measures, including actions imposed by subnational jurisdictions, but was unable to reach consensus. It lists proposed options on: removing all unilateral measures to the extent that they are inconsistent with international agreements; removing all unilateral bans and boycotts inconsistent with international trade rules; and observing that these matters should be considered in fora with competence in trade issues.
RELATIVE COMPETITIVENESS: One proposal for action recommends economic studies of potential competition between wood and non-wood substitutes. JAPAN deleted references to competition between different forest products and products from different regions of origin. An additional proposal calls for support for developing countries to increase productivity and efficiency in downstream processing. The US replaced promote with support, where appropriate, community-based processing and marketing of forest products.
LESSER USED SPECIES: Delegates adopted proposals for action on: intensifying efforts to promote lesser used species; implementing policies for utilization of economically viable lesser used species; and transferring technology and supporting efforts to develop and adapt technologies to increase utilization of the species.
CERTIFICATION AND LABELLING: Delegates agreed on proposals to: consider the potentially mutually supportive relationship between SFM, trade and voluntary certification and labelling (C&L); assist developing country efforts; apply concepts such as open access, non-discrimination and cost-effectiveness; conduct further study; consider the CIFOR C&I project; bring current trends into perspective; and exchange information.
On the relationship between SFM, trade and C&L, the G-77/CHINA proposed new language on governments role in ensuring that schemes: are transparent, voluntary and nondiscriminatory; have open access and full participation; observe national sovereignty; and do not conflict with relevant domestic regulations. The language was not accepted. SWITZERLAND, supported by CANADA, noted that the role of governments in C&L schemes is not yet clear, so countries should support rather than ensure that schemes are not used as a form of disguised protectionism. SWITZERLAND replaced the reference to the Technical Barriers to Trade (TBT) Agreement with international obligations because many C&L schemes are private and thus not covered under WTO rules.
On assistance to developing countries, the US recommended replacing support for measures relating to voluntary C&L with enhancing assessment capabilities regarding trade of sustainably produced forest goods and services. INDONESIA proposed measures relating to enhancing developing countries capacity regarding trade that may be undertaken through C&L. Delegates agreed to enhance capacity of developing countries in relation to voluntary C&L.
Delegates debated application of the concepts of equivalent standards and mutual recognition at length. The G-77/CHINA said that mutual recognition is very important to developing countries. The US transferred the reference to the action proposal on aspects requiring further study. AUSTRALIA added the concept of transparency. The US emphasized applying credibility to certification by separating it from a clause on open access and non-discrimination. Other concepts that delegates agreed should be applied to certification include: non-deceptiveness; cost- effectiveness; participation; and SFM.
On further studies, the need to take account of C&I frameworks was reformulated, based on a US proposal, to study the relationship between various C&I frameworks and certification. The US, supported by AUSTRALIA and JAPAN, proposed deleting a reference to the potential role of governments in developing, implementing, promoting and mutually recognizing C&L schemes, but the EU and SWITZERLAND objected. CANADA opposed a US proposal to delete further study on accreditation. Delegates agreed to add accreditation processes to a clause on monitoring practical experience with certification. The IPF accepted new clauses from the G-77/CHINA on the needs of countries with low forest cover and on the impact of certification schemes on relative competitiveness. In a clause on bringing current trends into perspective, delegates agreed to replace equivalency and mutual recognition of standards with the EU-proposed comparability of standards and avoidance of duplication of efforts.
Delegates conducted extensive debate on the conclusions on C&L. A call for further study of the feasibility of country certification was replaced with feasibility and credibility of certification at different levels in a conclusion on putting international attention to C&L into perspective. Delegates deleted language stating that the Panel did not endorse the concept of country certification from a conclusion on the role of governments. The EU, the US and NEW ZEALAND deleted bracketed text emphasizing that certification should apply at the forest management unit level. These countries also advocated deleting language stating that certification should observe sovereignty and be transparent, but the G-77/CHINA objected. The sovereignty language appears in the final conclusion. Delegates debated the role of governments at length, with the G-77/CHINA stressing that developing countries strongly support the role of government in certification schemes. Based on proposals by the EU and the US, the final conclusion states that governments have a role in encouraging rather than ensuring transparency, full participation, non-discrimination and open access to certification schemes.
FULL-COST INTERNALIZATION: Delegates agreed on proposals to: explore full-cost internalization; undertake analyses of implications for development costs and SFM; and encourage sharing of information and experiences on implementation. The G- 77/CHINA proposed exploring ways and means rather than examining mechanisms for full-cost internalization, and CANADA added for wood products and non-wood substitutes.
MARKET TRANSPARENCY: Delegates agreed to action proposals to expand work on market transparency, including possible development of a global database, and to provide an assessment on illegal trade in forest products.
On the assessment of illegal trade, the US recommended that it be undertaken by an independent group of experts and added that it should incorporate information from all relevant sources and major groups. The G-77/CHINA proposed that countries provide an assessment and other relevant information. BRAZIL noted that existing studies and discussions seem to target specific countries as illegal traders. He stressed that it is illegal harvesting rather than illegal trade that must be countered, and thus it is enforcement of domestic legislation rather than formulation of new international regulations that should address this problem. Countries can therefore share information describing their own enforcement. The EU proposed that the assessment by countries be provided to the UN Secretary-General, to which the G-77/CHINA replied nice try. INDIA said this would be a serious infringement on national sovereignty and reminded delegates that there are two sides to illegal trade, one where timber is harvested and the other where it is consumed. Delegates accepted the G-77/CHINA formulation and an EU-proposed insertion on considering measures to counter such illegal trade.
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