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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 conceptand objectiveof certification as a voluntary means to identify timber / timber products from sustainably managed forests • Growing dissatisfaction among tropical timber exporting countries on the criteriaand 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 Public 2.1% 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) gettingcertified 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 !!