MERCOSUR MERCOSUR FOREST SECTOR SIA FOREST SECTOR SIA

PETER NELSON PETER NELSON LAND USE CONSULTANTS LAND USE CONSULTANTS

STUDY TEAM STUDY TEAM

n n LAND USE CONSULTANTS (UK) LAND USE CONSULTANTS (UK) n n ECOSTRAT CONSULTANTS (BRAZIL) ECOSTRAT CONSULTANTS (BRAZIL) n n IARC, Institute for Development IARC, Institute for Development Policy and Management (IDPM), Policy and Management (IDPM), University of Manchester (UK) University of Manchester (UK)

STAGES OF THE SIA STAGES OF THE SIA

n n SCREENING SCREENING n n SCOPING SCOPING n n DETAILED ASSESSMENT DETAILED ASSESSMENT n n RESULTS RESULTS

KEY STAKEHOLDERS KEY STAKEHOLDERS

n n INTERNATIONAL INTERNATIONAL NGO’s NGO’s n n FOREST INDUSTRY FOREST INDUSTRY REPRESENTATIVES REPRESENTATIVES

n n RESEARCHERS RESEARCHERS n n COMMUNITY INTERESTS COMMUNITY INTERESTS n n DEVELOPMENT COOPERATION DEVELOPMENT COOPERATION AGENCIES AGENCIES

CONSULTEES CONSULTEES n n EU (DG Trade and Development EU (DG Trade and Development n n Civil Society Organisations Civil Society Organisations n n DFID Forestry Advisors DFID Forestry Advisors n n Commonwealth Secretariat Commonwealth Secretariat n n International Centre for Trade and Sustainable International Centre for Trade and Sustainable Development Development

n n Forestry Departments (in respective Forestry Departments (in respective Governments) Governments)

n n OECD OECD n n UNEP UNEP n n FAO FAO

METHODOLOGICAL METHODOLOGICAL DEVELOPMENT DEVELOPMENT

n n Non Non­ ­tariff standards and regulations tariff standards and regulations are potential barriers to trade. are potential barriers to trade. But: But:

n n Environmental protection measures Environmental protection measures have economic role in promoting have economic role in promoting more sustainable forestry. more sustainable forestry.

n n Study will therefore explore carbon Study will therefore explore carbon storage, watershed protection and storage, watershed protection and Non Non­ ­timber forest products. timber forest products.

SCREENING SCREENING n n FOUR KEY QUESTIONS FOUR KEY QUESTIONS n n Are there current economic, social and Are there current economic, social and environmental stresses in the Region? environmental stresses in the Region?

n n Are trade measures likely to have Are trade measures likely to have significant economic, social or significant economic, social or environmental impacts? environmental impacts?

n n Are significant cumulative effects likely to Are significant cumulative effects likely to occur? occur?

n n Is the existing regulatory framework Is the existing regulatory framework sufficient to implement appropriate sufficient to implement appropriate mitigating/enhancement measures? mitigating/enhancement measures?

Are there current economic, social Are there current economic, social and environmental stresses in the and environmental stresses in the

Region? Region? n n Competition between forestry and Competition between forestry and other land use. other land use.

n n Deforestation Deforestation – – global warming, global warming, reduced capacity to assimilate reduced capacity to assimilate carbon carbon

n n Land Conflicts Land Conflicts – –social / cultural social / cultural inequalities. inequalities.

Are trade measures likely to have Are trade measures likely to have significant economic, social or significant economic, social or

environmental impacts? environmental impacts?

n n Clear need for action Clear need for action – – but does trade but does trade liberalisation affect the issues? liberalisation affect the issues?

n n Yes Yes – – Within Within region, region, n n Externally, investment decisions thought Externally, investment decisions thought to play key role, to play key role,

n n Role of Role of NTFPs NTFPs, carbon trading, watershed , carbon trading, watershed management, gene pools, management, gene pools,

n n Non Non­ ­tariff based impacts. tariff based impacts.

Are significant cumulative effects Are significant cumulative effects likely to occur? likely to occur?

n n Potentially, Yes, Potentially, Yes,

n n Land use, Land use,

n n Micro Micro­ ­climate, climate,

n n Rates of run Rates of run­ ­off, off,

n n Changes in soil type Changes in soil type

Is the existing regulatory framework Is the existing regulatory framework sufficient to implement appropriate sufficient to implement appropriate mitigating/enhancement measures? mitigating/enhancement measures?

n n Clear evidence that existing Clear evidence that existing regulatory framework fails to protect regulatory framework fails to protect natural capital or ensure efficient natural capital or ensure efficient conversion to economic / social conversion to economic / social capital. capital.

STUDY FOCUS STUDY FOCUS

n n MARKET ACCESS MARKET ACCESS • • Tariff measures Tariff measures • • Non Non­ ­tariff measures (Sanitary and tariff measures (Sanitary and Phytosanitary Phytosanitary measures) measures)

n n SUBSIDIES SUBSIDIES • • Management, transport, equipment Management, transport, equipment

n n OTHER ISSUES OTHER ISSUES • • Eco Eco­ ­labelling, certification labelling, certification

WTO FORESTRY SIA FINDINGS WTO FORESTRY SIA FINDINGS

n n World trade liberalisation has limited World trade liberalisation has limited impact on timber production / impact on timber production / consumption, consumption,

n n Adverse effects most noticeable in Adverse effects most noticeable in countries with poor forest countries with poor forest governance, governance,

n n Forest Forest­ ­rich export oriented countries rich export oriented countries stand to benefit, stand to benefit,

WTO FORESTRY SIA FINDINGS WTO FORESTRY SIA FINDINGS n n Critical balances between forestry / Critical balances between forestry / agriculture trading standards agriculture trading standards affecting land affecting land­ ­use, use,

n n Ideal model Ideal model: efficient wood pricing; : efficient wood pricing; effective domestic resource taxes and effective domestic resource taxes and incentives for sustainable incentives for sustainable management, management,

n n Options Options: voluntary certification, : voluntary certification, import licensing, legal compliance import licensing, legal compliance schemes, standards harmonisation, schemes, standards harmonisation, help to help to SMEs SMEs. .

Forest Area in Millions of Hectares Forest Area in Millions of Hectares

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Brazil Argentina Paraguay Uruguay

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%age Forest Cover %age Forest Cover

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Annual Exports / Imports Annual Exports / Imports

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$US Million

Rates of Deforestation Rates of Deforestation

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Brazil 2004

Brazil 2020

Argentina 2004

Argentina 2020

Paraguay 2004

Paraguay 2020

Uruguay 2004

Uruguay 2020

%age Fo

rest Cover

FORESTS IN BRAZIL FORESTS IN BRAZIL n n Equatorial and Tropical forests of very Equatorial and Tropical forests of very high biodiversity and cultural value, high biodiversity and cultural value,

n n World’s largest producer and consumer of World’s largest producer and consumer of tropical timber, tropical timber,

n n 103 million m3 of industrial timber + 103 million m3 of industrial timber + paper and pulp, paper and pulp,

n n Sao Paulo State consumes more than Sao Paulo State consumes more than France, UK and Spain annually, France, UK and Spain annually,

n n 5 million ha of plantations. 5 million ha of plantations.

Forests in Paraguay Forests in Paraguay

n n 1:20 1:20 th th size of Brazil. size of Brazil. n n Between 46 Between 46­ ­60% of land area under 60% of land area under forest, forest,

n n 5 5­ ­10% deforestation per year, 10% deforestation per year, n n Privately owned (laws permit 75% Privately owned (laws permit 75% conversion). conversion).

n n Exceptional biodiversity is Exceptional biodiversity is threatened. threatened.

FORESTS IN URUGUAY FORESTS IN URUGUAY n n 1:50 1:50 th th size of Brazil, size of Brazil, n n Only 7% forestry land cover, BUT, Only 7% forestry land cover, BUT, n n 50% is managed pine and eucalyptus 50% is managed pine and eucalyptus plantation and expanding rapidly, plantation and expanding rapidly,

n n Very supportive government policies, Very supportive government policies, n n Major international investment Major international investment (Finland, Holland, Spain, Chile, (Finland, Holland, Spain, Chile, Canada), Canada),

n n New pulp mill under construction. New pulp mill under construction.

FORESTS IN ARGENTINA FORESTS IN ARGENTINA n n SA second largest country (1/3 SA second largest country (1/3 rd rd size size of Brazil), of Brazil),

n n Temperate climate ideally suited for Temperate climate ideally suited for plantation forestry, but historically plantation forestry, but historically poor management, tax evasion and poor management, tax evasion and inefficient industrial base ( inefficient industrial base (SMEs SMEs), ),

n n I million Ha mixed plantations I million Ha mixed plantations – – 20 20 million suitable for expansion, million suitable for expansion,

n n New Zealand, Chile main investors. New Zealand, Chile main investors.

TRADE AGREEMENTS TRADE AGREEMENTS n n Mercosur has to be considered in the Mercosur has to be considered in the light of intra and other inter light of intra and other inter­ ­regional regional

n n Agreements: Agreements: n n Customs Union of Andean Customs Union of Andean Community (CAN), Community (CAN),

n n Central American Common Market, Central American Common Market, n n Free Trade Area of the Americas Free Trade Area of the Americas (FTAA). (FTAA).

MERCOSUR MERCOSUR – – EU TRADE EU TRADE BALANCE IN FOREST PRODUCTS BALANCE IN FOREST PRODUCTS Between 1991 Between 1991 – – 2000 forestry products 2000 forestry products trade expanded from US$ 23 billion to 36 trade expanded from US$ 23 billion to 36 billion: billion:

n n Mercosur exports to EU Mercosur exports to EU US$ + 2.5 billion US$ + 2.5 billion

n n EU exports to Mercosur EU exports to Mercosur US$ + 11 billion US$ + 11 billion

EXISTING TRADE BARRIERS EXISTING TRADE BARRIERS

n n Mercosur has no tariffs/ duty on Mercosur has no tariffs/ duty on wood but does on timber products wood but does on timber products (pulp, newsprint) and machinery for (pulp, newsprint) and machinery for timber processing, timber processing,

n n Tariff barriers less significant than Tariff barriers less significant than regulatory controls (eco regulatory controls (eco­ ­labelling and labelling and certification). certification).

FOREST DIRECT INVESTMENT FOREST DIRECT INVESTMENT

n n Significant growth potential, Significant growth potential, esp esp Argentina and Brazil, Argentina and Brazil,

n n But constraints include poor forestry But constraints include poor forestry and land use governance, unsettled and land use governance, unsettled land tenure disputes, unrealistic land tenure disputes, unrealistic valuations of forest resources. valuations of forest resources.

INDICATORS INDICATORS Economic Economic n n Quality and value of production and Quality and value of production and trade in timber and trade in timber and NTFPs NTFPs, ,

n n Government revenues Government revenues n n Changes in levels of income and Changes in levels of income and employment, employment,

n n Size and number of timber Size and number of timber processing plants (saw mills, pulp processing plants (saw mills, pulp mills). mills).

INDICATORS INDICATORS Social Social n n Number of forest Number of forest­ ­dependent people, dependent people, livelihoods and development, livelihoods and development,

n n Land tenure and user rights, Land tenure and user rights, n n Community relations and workers’ Community relations and workers’ rights, rights,

n n Health and safety, Health and safety, n n Employment and income distribution. Employment and income distribution.

INDICATORS INDICATORS Environment Environment n n Total area of forest cover, (natural Total area of forest cover, (natural and plantation) and rates of change, and plantation) and rates of change,

n n Percentage of certified forest, Percentage of certified forest, n n Areas under sustainable Areas under sustainable management, management,

n n Extent of forest reserves protecting Extent of forest reserves protecting against logging, biodiversity and against logging, biodiversity and species loss. species loss.

INDICATORS INDICATORS

Process Process: : n n Domestic policies (forest licences), Domestic policies (forest licences), n n Government capacity and Government capacity and commitment (forest policy, commitment (forest policy, enforcement, use of revenues) enforcement, use of revenues)

n n Forest sector management capacity. Forest sector management capacity.