Trading Away Forests: Emerging and Current WTO Threats to Forest Protection

by Rory Cox, Paige Fischer and Victor Menotti

In a plan that could turn out to be destructive for the world's remaining forests, the United States and industry groups are pushing hard for adoption of a global agreement for free trade in forest products. The proposal for an "Advanced Tariff Liberalization" agreement at the World Trade Organization (WTO) would eliminate tariffs worldwide on raw logs and wood and paper products and could open the door to negotiations of regulatory barriers to trade, including some environmental safeguards.

Proponents of the initiative say it would create a "level playing field" in forest products and, by removing "arbitrary" barriers to trade, lead to a more efficient allocation of industry resources. They also claim that it will create more opportunities for trade in value-added products.

But environmentalists fear a free logging agreement would increase consumption of forest products -- and destruction of the forests themselves. And they worry that further globalization of the industry will undermine many forest protections as well as remaining local community control and ownership of forest resources.

Trade in value-added wood products is not the point of contention between environmentalists and trade policy makers. Environmentalists want local communities in forest-rich countries to benefit from processing wood before export. But they fear that a free logging agreement will grant multinational corporations greater mobility and access to the world's forest resources. Such an agreement would exacerbate the severe threats that existing WTO rules already pose to forests world-wide.

Tariffs and Trees

To maximize the consumption of forest products world-wide, corporations want unfettered access to all consumer markets. Sellers of forest products want to eliminate what they call the "barriers" to penetrating foreign consumer markets, such as tariffs (or import taxes), quotas (or quantitative limits on imports), and even local building codes that require non-wood construction materials.

The free logging agreement would knock down the tariff and quota barriers to trade in forest products. In an initial enthusiastic response to the proposal, global forestry consultant Jaako Poyry predicted that free trade in wood and wood products, combined with other economic factors, would increase consumption by 3 to 4 percent world-wide. These numbers were touted by the American Forest and Paper Association (AFPA) in an April 1999 news release. But as environmentalists began citing the figures to warn of imminent danger to the world's forests, the industry pulled back. Jaako Poyry "clarified" that the 3 to 4 percent estimate reflected many expected future developments, including global economic growth, not just the effects of free trade in forest products.

A November 1999 study by the Office of the U.S. Trade Representative (USTR), conducted in response to vocal environmental and Congressional opposition to the free logging proposal, concluded that "international trade in forest products is not a major factor affecting global forest conditions and management, though the effects can be locally or nationally significant in some countries."

By 2010, USTR determined, a free logging agreement would increase global timber harvesting by only .5 percent. USTR claimed a free logging deal would shift timber harvesting from primary forests to secondary forests and plantations.

On the negative side, it conceded that free trade in forest products would "cause incremental increases in harvests in some countries." By 2010, Malaysia would see tree-cutting increase by an extra 2.6 percent, and Indonesia would see an extra 4.4 percent jump in tree harvesting.

Environmental groups say the study is inadequate because it only assesses the impacts of the acceleration of tariff elimination, not the process of tariff elimination itself. As the policy director of one environmental group describes it, "It is as if there is a car speeding at 80 miles-per-hour toward a brick wall, and at the last moment it speeds to 85 miles-per-hour, and a government study looking at this only does an assessment of a 5 mile-per-hour crash."

Environmentalists also dismiss out of hand the USTR claim that global trade does not affect forest management.

"The quest for a competitive edge under further trade liberalization in the forest sector may lead to environmental devastation and species extinction," argues "Our Forests at Risk: the World Trade Organization's Threat to Forest Protection," a September report issued by the Earthjustice Legal Defense Fund and the Northwest Ecosystem Alliance.

The report focuses on the forest industry in British Columbia, Canada to buttress its claims. For decades, the report says, British Columbia has permitted timber cutting far above the long-term sustainable level. It has encouraged over-logging with low "stumpage rates" – letting private loggers cut on public lands at below market rates. In response to such allegations by U.S. timber interests, the U.S. Commerce Department concluded British Columbia's low stumpage rates constituted an unfair subsidy to industry. To resolve the dispute, the United States and Canada negotiated a Softwood Lumber Agreement (SWLA) that sets a quota on Canadian softwood exports, with most of the quota coming from British Columbia, "The stumpage rates and the SWLA quota provide nearly the only constraint on British Columbia logging levels," which, the report documents, are already devastating British Columbia ecosystems.

"Removing tariffs will undoubtedly accelerate the elimination of the world's remaining primary forests and the species that depend upon them," concludes the report.

WTO's Raw Attack on Forest Regs

These new pressures on forests, environmentalists argue, come on top of the WTO's existing threats to regulations that protect forests.

First, although many countries continue to ban raw log exports, such bans are prohibited in all but rare cases under WTO rules.

The United States currently bans all raw log exports from lands west of the Mississippi River. Canada imposed a ban on the export of raw logs in order to build up its domestic processing industries. Indonesia imposes export taxes on unprocessed logs.

The theory behind raw log export bans, especially for developing countries, is that if countries can obtain the greater income from value-added forest products, they will have less need to engage in rapid overlogging to earn foreign currency. Although export bans have not guaranteed forest conservation improvements, it is certain that denying governments the right to control their outward flow of forest products shifts control to global corporations whose only responsibility is to satisfy investors.

Second, because exotic beetles, moths, fungae and other pests often "hitchhike" on international shipments of wood products that have not been processed or treated with chemicals and fumigants, invasive species are a growing danger as the volume of forest product trade increases. When imported into a country where forest ecosystems do not have natural immunities against these pests, large-scale infestations, disease and destruction can result. Controlling damages of exotic species invasions can cost billions of dollars for the governments of major importing nations of raw wood products.

The only way to stop exotic species from crossing the oceans is to impose border controls that either prohibit imports of unprocessed wood products, or require that they be treated with strong chemicals.

But WTO rules impose a series of screens on bans, inspections or border controls designed to combat invasive species. Under WTO rules, invasive species regulations must adhere to international standards where they exist. Any regulation more stringent than the international standard must be scientifically based and backed by a risk assessment, can be applied only where "necessary" to protect animal or plant health and cannot be applied in such a way as to constitute a disguised trade barrier. These are high hoops to jump through, as Australia discovered when the WTO disallowed its ban on Pacific Salmon, a ban designed to protect Atlantic Salmon raised in its waters.

Environmentalists point out that the WTO rules make it impossible to take precautionary measures to protect species.

In a response to such arguments, USTR is content to echo WTO rules. A spokesperson for the United States Trade Representative (USTR) wrote to environmental groups that rules regarding the risk of invasive species "in no way affects the legitimate sanitary and phytosanitary measures adopted by countries to protect forests. Based on existing international rules, countries have the right to take sanitary and phytosanitary measures necessary … provided that such measures are based on scientific principles, and do not arbitrarily or unjustifiably discriminate among countries (which is certainly the case with respect to U.S. measures.)"

USTR: Stumping for Industry

By now, almost nothing USTR says or does surprises forest activists.

USTR helped give birth to the free logging agreement proposal in 1997. At a meeting of APEC (Asian Pacific Economic Cooperation), a Pacific Rim free trade negotiating body, the United States, Canada, New Zealand and Indonesia "nominated" the forest products sector for Early Voluntary Sectoral Liberalization (EVSL). Resistance from Japan at subsequent APEC meetings led the issue to be moved to the WTO, which has greater authority and is more all-encompassing.

When the EVSL plan was launched, APEC proponents claimed that the initiative would promote economic growth, improve living standards and result in "greater choice" for consumers throughout the APEC region.

APEC also claimed that EVSL would be good for the environment. As one APEC documents states, "Sustainable management of forestry resources is a priority for all APEC countries. Barriers to trade which discourage trade in value added forest products are a major obstacle to achieving sustainable management of forestry resources."

Environmentalists, who have long emphasized the vital importance of community control over forests as central to forest protection, were immediately critical of the EVSL proposal.

U.S. government environmental rhetoric is mere greenwashing to obscure an industry-designed plan to intensify logging and forest consumption, the forest activists believe. For them, a January 1998 internal memo from the U.S. Forest Service shows the real priorities and unconcern for the environment in key U.S. government agencies.

The memo discussed a program called "ecotech," involving economic and technical co-operation with APEC countries. Ecotech is supposed to provide economic and technical assistance to enable members to develop their forest industries. The U.S. Forest Service's responsibilities included providing assistance to programs for forest monitoring, reduction of fire risk and disaster preparedness.

The memo makes clear that these efforts are only to aid the health of the industry, not the forests: "The United States' key interest in the ecotech portion … is a ‘defensive one.' One, we need to ensure that any perceived lack of progress or cooperation on this element not cause delays in the tariffs portion of the initiative. Two, we need to ensure that the ecotech exercise not be used to promote projects or policies we have opposed in other international fora, such as environmental certification of forest management practices and ecolabeling of wood products, or the new need for new international agreements on forests."

Negotiating with the USTR: Like Talking to a Brick Wall

As the free logging agreement proposal has moved forward and environmental concerns have grown, many groups have tried to engage USTR, or at least get information from the office. The USTR has responded to requests for documents by taking the position that environmentalists need "special authorization," even to review unclassified documents that were shared with business groups. Pressed on the issue, one USTR official asked an environmental activist what her group's stand on free trade was.

In contrast, industry has had free access to USTR. The USTR has set up several Industry Sector Advisory Committees (ISACs), including one for the wood and one for the paper industry.

Through ISACs, the timber and paper industry has extensive and preferred access to government decision-makers, and to information. ISAC members are routinely consulted when informal negotiations are taking place, and they are the main source of advice for the USTR when they negotiate, according to spokespeople at the International Trade Commission and the Department of Commerce.

Some environmental representatives do sit on a USTR Trade and Environment Policy Advisory Committee, but it meets periodically and does not discuss issues at the same level of detail as the ISACs.

The AFPA has enjoyed access to the USTR's office through representation on the forest products ISAC, and is in constant correspondence with the USTR, as information revealed under the Freedom of Information Act shows.

The AFPA itself says the association has worked "side by side" with USTR Charlene Barshefsky to sell their agenda to APEC member countries. As one example, when USTR wanted background information for talking points at the 1998 APEC meeting in Malaysia, it asked the AFPA for its ideas on how to succinctly represent the industry's position. These talking points included, for example, the promises of greater access to packaging materials in Southeast Asia, and other promises meant to play well to developing countries.

While the AFPA has the greatest contact with the USTR's office, the Newspaper Association of America, the Direct Marketing Association, the Printing Industries of America and the American Furniture Manufacturers Association have also aggressively supported USTR's efforts on behalf of the industry.

"Obstructionist" Japan

In the international negotiations, Japan is the lone primary resister to the WTO's forest trade plans. Japan is the second largest consumer of wood fiber in the world, and the U.S. and other countries' forest product companies covet its market. Unlike other, poorer nations in the WTO, Japan is a powerful player and, much to the chagrin of U.S. policymakers, is using its position to further its own forest products agenda.

Japan has been protecting its forest products industry with high tariffs on processed wood imports, while it has been pushing the United States to lift its ban on unprocessed wood exports from public lands, covered under the 1990 Forest Conservation Act. These two conflicting policy objectives have kept the free logging agreement from passing to the industry's satisfaction in previous APEC fora, and they promise to be a sticking point in future WTO negotiations.

The industry strategy, which is fully supported by the USTR's office, is to paint Japan as a rogue and irrational state.

"In the current financial crisis in Asia, Japan has not lived up to its role as the regional leader," says AFPA President W. Henson Moore. "Because it is the largest industrial power in Asia, open markets would benefit Japan and its people and be a positive step towards mitigating the Asian financial crisis by helping to boost the economies of other Asian countries. So far, Japan has steadfastly refused to help."

Japan, on the other hand, asserts that it will not be able to reduce its dependence on excessive logging in other countries unless it can increase self-sufficiency at home. The Tsugi Cedar plantations that have dominated Japan's country-side since after World War II are now coming of age. "Without revenues from the domestic timber industry," says the Ministry of Agriculture, Fisheries and Forestry, "Japan cannot afford to manage and harvest these forests in order to meet some of its demand at home."

Eager to break into the Japanese market, the U.S. industry has enlisted elected representatives to persuade Japan to change its policy.

The Forestry 2000 Task Force is a group of U.S. Members of Congress that serves as a political mouthpiece for the forest industry. Forestry 2000 has taken an active role in trying to persuade Japan to lower their tariffs on finished wood products. "The Japanese consumer," one Forestry 2000 letter to the Japanese government stated, "now more than ever, needs an affordable housing solution. Tariff elimination should bring housing costs down and increase domestic consumption."

The Tokyo office of the AF&PA, however, admitted that it is not consumers who are pushing for new housing codes that favor U.S. processed wood products, but high-level bureaucrats at the Ministry of Construction.

Citizen Actions

In the last year, Japan has gained an important ally in its efforts to forestall the free logging agreement. U.S. and global environmental awareness of and opposition to the agreement has intensified greatly in the last year.

At the urging of activists, in July 1998, 48 members of Congress from both major parties called on President Clinton to withdraw from negotiations on the free logging agreement. Citing threats to the environment, labor and domestic sovereignty, the lawmakers cite serious concerns such as the lack of an environmental impact statement on the effects of the logging agreement, and the lack of transparency in negotiating the agreement. George Miller, D-California, the senior Democrat on the House of Representatives Resources Committee, spearheaded the initiative.

As their campaign has gained steam, environmental groups are hopeful that they can stop the free logging agreement from reaching the WTO's table.

In addition to mobilizing demonstrations at the upcoming Seattle WTO Ministerial, environmental groups sued the U.S. government over USTR's exclusive consultations with timber corporations. The lawsuit, brought by the Earth Justice Legal Defense Fund on behalf of plaintiffs including the Pacific Environment and Resources Center, the Northwest Ecosystem Alliance, the Sierra Club, the Buckeye Forest Council and the International Forum on Globalization, charges that the skewed make-up of the ISACs violates Federal Advisory Committee Act requirements that federal advisory committees be "fairly balanced" in terms of the point of view represented.

In November, a federal district court ruled on behalf of the environmentalists, holding that the U.S. government had violated the law by barring environmental groups from its formal consultations with corporations. The judge has ordered U.S. Trade Representative Charlene Barshefsky to name at least one representative from the environmental community to each of the panels that advise her on negotiating strategy and other matters involving international trade in wood and paper products.

"We have fought for years for strong forest protections only to have our government support trade policies that threaten to eliminate that protection and open the door for commercial exploitation without regard for the ecological consequences," says Joe Scott of the Northwest Ecosystem Alliance.

Environmentalists do not intend to capitulate to the trade offensive against the forest protection victories of communities around the world.

Rory Cox is research director at the Pacific Environment and Resources Center in Oakland, California. Paige Fischer is the director of the forests and trade program at the Pacific Environment and Resources Center. Victor Menotti is the director of the environment program at the International Forum on Globalization.