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Going green good for global forest business
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Poor forest governance and unsustainable exploitation of forest resources, particularly illegal logging, are speeding up forest degradation worldwide, posing a major threat to local livelihoods and the natural environment.

People from Shuiquan Town of Zaozhuang in Shandong Province plant cypress trees on July 2. Many government employees in the city have become responsible for tree-planting on certain pieces of hilly land in the suburbs.

At the EU-China Conference on Forest Law Enforcement and Governance held last week, China and the European Union met other major timber producers worldwide to discuss joint efforts to combat illegal logging and promote sustainable forestry.

At the EU-China summit in 2005, leaders of the two sides "pledged to work together to tackle the problem of illegal logging in the Asian region". This commitment was reiterated at the Helsinki summit last year.

In a written message to the conference, Vice-Premier Hui Liangyu said that protecting forest resources and alleviating the global environmental crisis is the responsibility of all nations. As a responsible developing country, China would crack down on illegal logging and illegal trade, and strengthen bilateral and multilateral cooperation in promoting forest sustainable management, he pointed out.

"The further development of EU-China cooperation in this field has the potential to have a significant positive impact as EU and China are major importers and exporters of those timber products," said Rui Quartin Santos, Portuguese ambassador to China, representing the EU Presidency.

As an important importer of logs and a consumer and exporter of finished products, China occupies a significant position in global forest product commodity chains.

The large portion of China's imported timber and exported forest products is a result of the development of economic globalization, according to Chen Jiawen, director of the Foreign Capital, Overseas Investment and Trade Division of the State Forestry Administration.

After joining the World Trade Organization, China has lowered import tariffs for many times and created favorable conditions for the entrance of overseas timber and forest products. Starting in 2005, China's timber trade turned from deficit to surplus, with this surplus continuing to increase rapidly ever since.

Processing and assembly have been the main features of China's forest product trade, according to Professor Song Wenming, vice-president of Beijing Forestry University. For example, exports of furniture processed with imported materials accounted for around 41 percent of the sector's total export value in 2006.

China has been the second-largest timber importer in the world, with about 40 percent of raw materials for domestic timber production depending on imports.

According to the Nature Conservancy, in recent years, illegal logging has become more serious in countries such as Russia, Indonesia, Malaysia and Papua New Guinea, which are suppliers of forest products, especially raw wood and sawed timber, for China.

"Apparently, all timber products are imported through legal channels. But it is not clear whether the logging activities in the producer countries were illegal or unsustainable," said David Cassells, director of Asia-Pacific Forest Program of the Nature Conservancy.

According to Cassells, it is estimated that 20 percent or even more of the timber shipped to China from Indonesia could come from illegal logging.

"However, it is not just China's problem. It is also a problem for the producer countries lacking a clear system of auditing and supervision. It is a problem for the US and Europe, which consume a larger part of the finished timber products re-exported," he said.

"The three parties should develop a shared response to illegal logging and the associated trade so that the consumers can be assured that they are buying good rather than bad wood."

An important measure that has recently been adopted by developed countries to deal with increased illegal logging is the "green government procurement of forest products" policy, which requires the government to purchase legal and sustainable timber.

"How to recognize the legal status of imported timber is the biggest challenge for such a countermeasure through trade," said Chen.

He believed that China's own experience showed the reinforcement of forest law enforcement and governance and the effective management of forest resources is the key to cracking down on the illegal logging in producer countries.

China has strict supervision procedures for timber and forest products, which assure the legal source of domestic timber.

In 2007, State Forestry Administration conducted a nationwide forest law enforcement and governance action. It straightened out and rectified 3,277 timber processing and trading venues, severely cracked down on the illegal timber felling, illegal forest land seizures and the illegal timber trade.

However, in many tropical forest countries such as Indonesia, there are no strict supervision measures during the process of logging, transportation and processing. According to Chen, these countries proposed a bilateral cooperation with China's State Forestry Administration to strengthen law enforcement.

Forest certification is becoming an important term in the forest product trade. As many believed, it is a good tool to improve forest management.

At present, the independent Forest Stewardship Council (FSC) certification is the highest and strictest system internationally. An independent FSC-accredited certification body checks whether the forest complies with responsible forest management. It emphasizes that the concept of sustainable forest management goes beyond conservation and the sustainable yield of the forest, but also recognizes the needs of people and communities who depend on forests for their livelihoods.

In the United Kingdom, major retailer B&Q sells 3 million cubic meters of wood products annually, 95 percent of which are certified. In the US, 29 percent of wood products sold by Homebase are certified, while 25 percent of wood products sold by GreatMills are certified.

According to Song, in the European and US markets, certified forest products have a greater competitive advantage as consumers have a growing awareness of forest conservation.

"Though only 10 percent of forest production in the world is certified, certification is growing quite quickly compared to zero percent more than a decade ago," said Cassells.

In China, certified forests remain in the minority. Only some NGOs such as WWF China and the Nature Conservancy are funding some forest companies to help them pass the certification system.

"For the present certification systems from the third party, the procedures are rather complex and the cost is too high. It is still difficult to get certification on a larger scale at present in developing countries," said Chen.

However, some farsighted Chinese timber production companies already can see that the market is changing and are favoring environmentally friendly products.

"Though at present, FSC does not bring added value for our products, it surely has a bright future in the long run," said She Xuebin, president of Guangdong based Yingbin-Nature Wood Industry Company.

Now already 80 percent of wooden raw materials imported by the company from South America pass FSC standards. And the percentage could reach 100 percent by 2010.

According to She, in the European and US markets, FSC-certified timber products could be priced eight percent higher than other similar products.

"A growing awareness of environmental protection in some developed regions in China definitely offers more business opportunities for us in the future," he said.

(China Daily September 25, 2007)

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