Update on Russian Forest Sector and Russian-Chinese Relations : WWF View

1. Update on Russian Forest Sectorand Russian-Chinese Relations: WWF View Elena Kulikova, WWF Russia April, 26, 2007 Beijing, China

2. Content • New Forest Code and subordinated normative documents • ENA-FLEG – current situation • Russia-China relations – last developments • WWF activities

3. Forest complex is in the focus of Russian political authorities • Forest sector problems are discussed with personal involvement of the President

4. New Forest Code:Major Changes • Maximum decentralization of forest management and use system in Russia • Delivery of responsibilities on forest management, use and protection to the regional level (subjects of the Russian Federation)

5. NGOs (WWF Russia, Greenpeace Russia, TRN) Comments on the Code • State ownership but some conditions for privatisation • New classification of forest use types, several categories of protected forest type no longer exist • Designation of protected areas will become more complicated • Ecological expertise (EIA) is disappeared • Mechanism for public participation in decision-making is absent • Rights of local people on traditional livelihoods are not guaranteed • Leasing of forests is allowed for periods of 10-49 years, absence of any obligations related to SFM, biodiversity conservation or solving social issues. • Reorganisation could result in large numbers of job losses in rural areas, increase in social problems and in illegal logging

6. New Forest Code Character • Not forestry oriented • Pro-industry oriented • “Frame” character • A lot of work to finalize forest legislation. 42 sub-ordinate normative acts need to be developed at the federal level, all together 78 with regional norms

7. Normative Acts under New Forest Code: Process of Development and Discussion • 5 major Russian environmental NGOs: Greenpeace, WWF, Biodiversity Conservation Center, International Social and Ecological Union, Transparent World • Joint efforts to ensure openness of the process • Positive tendency: norm drafts are on the web- site of the Ministry of Natural Recourses • NGOs conclusion: norm drafts has significant weaknesses • Set of joint and agreed comments from NGOs to these drafts in constructive manner • 15.03.2007 г. – joint letter to the Minister with attached comments • Public Council within FFA

8. European-North Asia Ministerial Conference on Forest Law Enforcement and GovernanceENA FLEG

9. ENA FLEG: National Action Plan and Russian Federal Forestry Agency (FFA) • Delivered to the Government (autumn, 2006) as a part of developed Programme • Re-arranged into Programme of Measures • MNR as a coordinating agency • Measures are presented in the Programme as normative documents, reports, meetings

10. ENA FLEG: Current FFA Activities • Direct regional control – check up forestry and related operations in the regions: Karelia – North-West Russia (March), Chita – bordering with China (April) • Remote sensing control • Combined check-up with involvement of relevant agencies (inter-agency work)

11. 18 Russian regions 101,2 mln ha -area of remote sensing monitoring ENA FLEG: Practical WorkRemote Sensing Monitoring 2006 1 5 3 2 4 10 6 7 8 15 16 9 12 11 13 14

12. New Export Tariff Policy for Round Wood: New Conditions • Today: 6.5% but > or = EUR 4 • Compare with Canada and USA – 27%, Finland, China – export is prohibited • Resolution of the Russian Government #75: from 1-Jul-07: 20%, but > or = EUR 10 from 1-Apr-08: 25%, but > or = EUR 15 from 1-Jan-09: 80%, but > or = EUR 50 • Main reason for export tariffs revision is quick stimulation of domestic wood processing and raising effectiveness of forest sector

13. New Tariff Policy: Reaction from Outside • Finland: - Plan to Prepare for Russian Log Export Tax Increase - possibilities to replace Russian wood by domestic attract attention of EU countries – bilateral negotiations • Japan • Search for alternatives for Russian wood in other countries • Japanese Association of Forest Importers – wish to share business activities in Russian forest industry development • China: • Rather quiet reaction • Ready to switch round wood trade to processing • Comments by Chinese Deputy Minister of Commerce • Encourage Chinese investments into pulp and paper, sawing and furniture enterprises

14. New Tariff Policy: Reaction from Inside • Russian Far East Industry Calls to Postpone Log Export Tariffs until 2013 • Association Dalexportles addresses the Russian Government • Fixed timeframe of 22 months are insufficient to establish wood-processing capacities • Cause decrease in Far East forest sector, multti-million losses to the economy, social problems and unemployment of 60 000 people

15. Russia-China – New Conditions • Refreshed relations at the governmental level • Changes in market demand FSC certification – new geographic trends • Cross-boarder cooperation • China: no clear intention to actively participate in ENA FLEG? • Japan markets – Public Procurements Rules • US markets – Civil G “8” – Bush-Putin

16. FSC certification in Russia 15 ml ha FSC-certified forests (March, 2007) It comprises more than 10% of commercial forests 2-nd place in the world

17. siblescom томлеспром Geography of FSC certification Russian Federation

18. “Keep it legal” manual • 200 forest sector field staff (producers and inspectors) trained on how to identify illegally-sourced timber and on forestry legislation reforms • Two or three demonstration pilots for “verified legal” wood in cross-border (Russian forest to China factory) • Case study on costs and benefits of a ”verified legal” supply chain • Recommendations to stakeholders on improved methods for legal verification of wood supply WWF Joint work: Systems to identify legally-sourced wood in supply chains involving Russia and China

19. ekulikova@wwf.ru