WTO-UNECE Workshop, 23/03/2010 Emerging Trade Measures in Timber Markets

Session: Tariffs in Timber Markets and the Doha Development Agenda:

”Forest Products’ Trade - a long-term EU Perspective”

European Commission: prepared by

Cornelis KEIJZER, DG TRADE/A2-G3

Jeremy WALL, DG ENTR/G/4

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Outline of PresentationOutline of Presentation

Pre-Uruguay Round situation for EU forest-based sectorPre-Uruguay Round situation for EU forest-based sector

Uruguay Round impacts of and on EU forest-based sector Uruguay Round impacts of and on EU forest-based sector

Post-Uruguay Round developments: forest-based sectorforest-based sector

Doha Development Agenda (DDA)Doha Development Agenda (DDA)

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1993: pre-Uruguay Round (UR) situation1993: pre-Uruguay Round (UR) situation

EU-12 still a major importer of most FP EU-12 still a major importer of most FP

Some multilateral sectoral agreements; inter-sectoral trade-Some multilateral sectoral agreements; inter-sectoral trade-offs, offs,

Domination of trade negotiations by “Quad” (USA, Canada, Domination of trade negotiations by “Quad” (USA, Canada, Japan, EU)Japan, EU)

USA & Canada sought “double zero” - immediate removal of USA & Canada sought “double zero” - immediate removal of all FP import tariffsall FP import tariffs

EU offer: - wood: significant reductions on line-by-line basisEU offer: - wood: significant reductions on line-by-line basis

- paper:- paper: 10-year phase-out of tariffs10-year phase-out of tariffs

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Uruguay Round AgreementUruguay Round Agreement (Marrakech 1994): (Marrakech 1994):

10-year phase-out of EU paper tariffs accepted 10-year phase-out of EU paper tariffs accepted as key component of overall UR dealas key component of overall UR deal

but only matched by other “Quad” partners and but only matched by other “Quad” partners and mostly OECD membersmostly OECD members

thus leaving “free riders”, including low-cost FP thus leaving “free riders”, including low-cost FP producers with less stringent environmental rulesproducers with less stringent environmental rules

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Post-Uruguay Round - 1Post-Uruguay Round - 1

EU enlargements (1995, 2004, 2007): increased sustainable EU enlargements (1995, 2004, 2007): increased sustainable forest resources (+/- 90 % processing wood) & industry, andforest resources (+/- 90 % processing wood) & industry, and

made EU net exporter of many FP: panels, paper, printing, made EU net exporter of many FP: panels, paper, printing, (sawnwood)(sawnwood)

Increasing environmental consciousness in EU et al., butIncreasing environmental consciousness in EU et al., but

WTO Trade & Environment Cte.: no generalised solutionsWTO Trade & Environment Cte.: no generalised solutions

In any case, EU policy and legislation promote environmental In any case, EU policy and legislation promote environmental conditions & monitoring…conditions & monitoring…

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Post - UR 2: EU environmental measures

EU mandatory measures: Packaging Waste Directive EU mandatory measures: Packaging Waste Directive (recovery, re-use, recycling); VOC Directive; IPPC; EMS; etc.(recovery, re-use, recycling); VOC Directive; IPPC; EMS; etc.

EU voluntary measures: EMAS, eco-label, green procurementEU voluntary measures: EMAS, eco-label, green procurement

EU forest-based sector: EU forest-based sector: - forest & chain-of-custody certification- forest & chain-of-custody certification- industry commitments (e.g. paper recovery targets)- industry commitments (e.g. paper recovery targets)

These measures add to costs for forest management and These measures add to costs for forest management and manufacturing forest products, but …manufacturing forest products, but …

……are not reflected in FP prices which are often set are not reflected in FP prices which are often set internationally in US$ by lowest-cost producers (NB strong €!)internationally in US$ by lowest-cost producers (NB strong €!)

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Post-UR 3: forest-based industry (F-BI) trends

EU increases roundwood imports, especially from Russia EU increases roundwood imports, especially from Russia (2005-6: +/- 25 Mm³/year), since then drastically reduced(2005-6: +/- 25 Mm³/year), since then drastically reduced

Low return on investment (ROI) for EU forest-based Low return on investment (ROI) for EU forest-based industries (F-BI)industries (F-BI)

EU F-BI: outward investment into e.g. sub-tropical forest EU F-BI: outward investment into e.g. sub-tropical forest plantations and millsplantations and mills

3rd-country, low-cost (wood, energy, labour) producers don’t 3rd-country, low-cost (wood, energy, labour) producers don’t match strict EU environmental conditionsmatch strict EU environmental conditions

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Doha Development Agenda (DDA):Doha Development Agenda (DDA):

origin: 1996: WSSD (Jo’burg): Millenium Goalsorigin: 1996: WSSD (Jo’burg): Millenium Goals

DDA: “Quad” no longer dominant; rise of “BRICs” et DDA: “Quad” no longer dominant; rise of “BRICs” et al.; multilateral negotiations stalledal.; multilateral negotiations stalled

Meanwhile, many bilateral & pluri-lateral dealsMeanwhile, many bilateral & pluri-lateral deals

Discussion of “environmental goods” Discussion of “environmental goods”

EU & less-developed states: development EU & less-developed states: development agreements, GSP – including forest products agreements, GSP – including forest products

EU FLEGT Action Plan (2003EU FLEGT Action Plan (2003→→), FLEGT VPAs ), FLEGT VPAs (2006(2006→→), “due diligence” (2008), “due diligence” (2008→→))

USA : Lacey Act Amendment (2008) ; Switzerland, USA : Lacey Act Amendment (2008) ; Switzerland, Norway, Georgia, Australia?Norway, Georgia, Australia?

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EU approach to DDA – F-BI background:EU approach to DDA – F-BI background:EU import tariffs: pulp & paper 0%; wood very low (plywood EU import tariffs: pulp & paper 0%; wood very low (plywood ≤≤10%), but….10%), but….

……UR FP deal has limited reciprocity by key competitorsUR FP deal has limited reciprocity by key competitors

General increase in NTBs (NB MADB) and dumping into EUGeneral increase in NTBs (NB MADB) and dumping into EU

NAMA: “Swiss Formula” to eliminate/reduce most/all tariffsNAMA: “Swiss Formula” to eliminate/reduce most/all tariffs

EU strategy: sectorals (in addittion to the formula) as a EU strategy: sectorals (in addittion to the formula) as a complementary modality. EU (co-)sponsors sectorals for: complementary modality. EU (co-)sponsors sectorals for: textiles, textiles, machinery, chemicals & jewellerymachinery, chemicals & jewellery

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THANK YOU! MERCI! SPACIBA!

Useful Internet links:

http://ec.europa.eu/trade/index_en.htm

http://madb.europa.eu/mkaccdb2/indexPubli.htm

http://ec.europa.eu/enterprise/sectors/wood-paper-printing/index_en.htm

http://ec.europa.eu/development/policies/9interventionareas/environment/forest/flegt_en.cfm

http://ec.europa.eu/environment/forests/flegt.htm

http://ec.europa.eu/environment/forests/illegal_logging.htm