US, EU consumption driving chinese imports of illegal wood

Environment News Service - March 23, 2006
JAKARTA, Indonesia
The United States, the European Union, and Japan are the main markets for Chinese manufactured wood products from countries where there is illegal logging, corruption, or human rights violations, finds a new report released today by international and Chinese organizations.
The report, entitled "China and the Global Market for Forest Products: Transforming Trade to Benefit Forests and Livelihoods" is based on five years of research by the Center for International Forestry Research (CIFOR) in Jakarta; Forest Trends in Washington, DC; as well as the Center for Chinese Agricultural Policy and other Chinese and regional organizations.
"China's expanding timber industry could have major positive implications for China's leadership as they handle social unrest in rural areas that are now emerging due to the increasing disparity between rural and urban incomes," said David Kaimowitz, director general of CIFOR.
"Few consumers realize that the cheap prices they pay are directly linked to the exploitation of some of the poorest people on Earth and the destruction of their forests," said Andy White, lead author of the report.
About 70 percent of all timber that is imported into China is converted into furniture, plywood and other processed products, and then exported. This booming trade coupled with China's own domestic growth and demand for paper products is having a devastating impact on forests and poor forest communities globally.
The report also finds that China has a tremendous opportunity to boost its own timber production, reduce its reliance on raw materials imports and alleviate rural poverty by strengthening property rights and removing policy barriers that have prevented local communities and people from investing in forest production.
Imports of forest products from China bound for the United States and the European Union have increased almost 900 percent since 1998, the report documents.
The United States now accounts for almost 40 percent of all forest product imports - by far the largest destination of Chinese exports. U.S. demand for all products manufactured in China grew by 24 percent between July 2004 and July 2005 alone.
Meanwhile, China has become the world's leading importer of wood from tropical, developing countries. China has captured one-third of the global trade in furniture over the last eight years.
"It is clear that China is in the middle of a global commodity chain, feeding consumption by consumers in the U.S. and EU who are demanding low priced forest products," said Michael Jenkins, president of Forest Trends. "There are key roles for consumer countries to play in transforming this trade into one that benefits forests and people."
The report calls on international governments and the forest industry to increase transparency and accountability procedures and crack down on corruption and money laundering that drives the illegal business.
The report's recommendations call on the Chinese government to:

• Implement public procurement policies requiring all governmental contracts to require the purchase of only verifiable legally produced and traded wood products - starting with a pilot program to ensure legal sourcing related to the 2008 Beijing Olympics
  
• Expand the use of anti-corruption tools and money laundering tools to control illegal behavior by major forest industry and traders at home and while operating abroad
  
• Encourage forest industry and traders to adopt strict and transparent codes of conduct, certification and log tracking systems, helping the global forest industry clean up and rid itself of illegal actors
  
• Strengthen property and resource rights of indigenous and local communities - ensuring that they have full rights to own, use and trade forest products and services and promote initiatives that support small and community-owned enterprises
  
• Develop major education programs, particularly in consuming countries, to inform importers, retailers and consumers of the social, environmental and economic impacts of illegal forest product trade
  
• Strengthen aid programs between donor and developing countries on illegal logging and trade
  

"We welcome the valuable information and insights that this work provides. It makes clear that importing countries, like the UK, have a key role to play in ensuring that our imports come from legal and sustainable sources," said Gareth Thomas, parliamentary under secretary of state at the United Kingdon's Department for International Development .
"The UK will follow up these recommendations and continue to participate with others in negotiating agreements to crackdown on illegal logging across the world," Thomas said.
The report forecasts continuing strong domestic and export demand for Chinese manufactured wood products and for home grown and imported timber, but also shows how China is not likely to meet its own 2015 targets for domestic wood production.
This finding is backed up by a recent announcement by officials of China's National Development and Reform Commission who estimate a domestic timber supply gap will reach 150 million cubic meters by 2015, with the gap to be filled by imports, increased efficiency in wood processing, and the substitution of wood products.
Unless farmers and local communities have greater incentives to plant and manage plantations on their collectively owned forest land, and forest ownership and management reforms are advanced on public lands, the domestic timber supply gap may rise even further, the report predicts. Kaimowitz
"With China's timber products so popular," said Kaimowitz, China can better attend to environmental issues and set an example in good forest management."
"This report accurately reflects the globalization of the forest product industry," says John Begley, CEO of Port Townsend Paper.
"We must stop looking at our business as independent geographical areas and view it as global system. If our industry is to remain competitive in the world marketplace, we need to make sure everyone operates with consistent practices," Begley said. "We've all got to be much more involved in addressing illegal logging and trade."
The UK Department for International Development and the Swedish International Development Cooperation Agency supported this analysis financially and are credited by the authors for their "broader support to advance market and policy reforms to improve livelihoods and enhance forest conservation in the Asia-Pacific Region."
To read  "China and the Global Market for Forest Products: Transforming Trade to Benefit Forests and Livelihoods,"  and download the report, please visit:
http://www.forest-trends.org/programs/pacific_rim.htm