Title: Study on certification and labelling of all timber and timber products

Project number: B7/5041/94.01/VIII/FOR

Total Amount: 100.000 ECU

Contractor: International Tropical Timber Organisation (ITTO)

Field: Certification and labelling

Country: International

Date of signature: 20/06/94

Duration: 20/06/94- 31/12/94

Objectives:

To establish a working party in order to examine the following options:

• Examine the consultant's report on timber certification and labelling schemes;
• Consider the impact of certification on competitiveness of timber, cost implications, and the compatibility of such schemes with other international agreements and conferences;
• Examine the options available to and make recommendations regarding the appropriate role of the International Tropical Timber organisation in this field , taking into account work undertaken in other international organisations;
• Report the findings of its examinations and its recommendations for consideration by the International Tropical Timber Council at its Sixteenth Session.

Activities:

• Gather the information available pertaining to timber certification and labelling schemes and initiatives on all types of timbers;
• Prepare an inventory and describe major features of such schemes and initiatives in a consistent form;
• Review such schemes and initiatives and seek the view of International Organisations, the trade, and NGOs on timber certification and labelling schemes, taking into account the views of Governments of member Countries;
• Examine to the fullest extent possible the present reaction to such schemes and Initiatives throughout the supply chain including the final end-user;
• Prepare and present a report for examination by the working party.

Results expected:

Final Report to be examined by the working party.

Beneficiaries:

International organisations, the trade and NGOs on timber certification and labelling schemes, Governments of members States.

Implementation strategy:

The information study shall be undertaken by two experts, one from a producer country and one from a consumer country.

Final Report of 16/05/94. The purpose of the study is:

• to carry out a review of the existing certification schemes and recent initiatives (at regional, national and international level);
• to summarise the views of Governments, trade and industry as well as NGOs on the subject and
• to examine some of the policy implications and requirements of timber certification to provide a basis for further discussion.

The effectiveness of a certification scheme in meeting its main objectives (improved forest management and ensured market access) will depend on several factors including:

Improved forest management

• the share of internationally trader timber in total production (trade significance);
• the amount of additional resources which may be captured by forest managers through higher price (rent capture);

Market access

• the existence of demand for certified timber (market share);
• the willingness to pay a premium for certified timber (price)

Conclusions underline that timber certification alone is likely to be a second-best policy instrument to achieve its main objectives i.e. improved forest management and assured market access. It is likely to require other selective trade measures to enhance its effectiveness;

• Internationally agreed principles and criteria for sustainable forest management and harmonisation of certification systems would be required to avoid the negative impacts on trade of the emergence of several independent schemes. Furthermore, it would be desirable to harmonise or integrate the possible international certification criteria with those applied by national governments to avoid the existence of two parallel sets of standards to be met by producers;
• The lack of systematic and accurate information on the additional costs of sustainable management makes it difficult to assess the respective impact on prices, substitution and other trade effects of certification. Further studies using common approaches are encouraged. Information on the costs of certification of forest management and timber products is equally lacking;
• The potential demand for sustainable produced timber and timber products cannot be determined;
• There is evidence that some consumers are willing to pay a premium for sustainable produced timber products if certified. The willingness is, however, likely to be reflected only partially in actual purchasing behaviour;
• Dependence on the environmentally sensitive European markets by the African and Nordic exporters suggest that, at least in the short run, they could be more affected by certification than other exporters. High elasticity of substitution between sources suggest that trade patterns are likely to be affected by certification;

• Timber certification is likely to favour large-scale forest owners and managers. Special arrangements should be developed for cost-effective certification methods for communities and small-scale producers;

• In forest industries, certifications likely to favour many producers in developed countries compared to those in developing countries due to the better preparedness to comply with inspection procedures. Elimination of the potentially severe impacts on small-scale forest industries should be addressed in policy formulation when the promotion of these industries is a development goal;
• Certification is unlikely, at least in the short run and with the present structure of the supply chain, to result in a significant increase in financial resources to forest managers if specific measures are not taken to redress the problems of rent capture;
• Positive impacts of certification may include expanded use of lesser-used species and promotion of plantation-grown wood;
• Certification is likely to contribute to shorter distribution channels which could increase benefits to both timber consumers and producers;
• The general requirements or principles for a viable timber certification system have been identified: (a) credibility, (b) coverage of all types of timbers,(c) objective and measurable criteria, (d) reliability, (e) independence, (f) voluntary participation, (g) non-discriminatory, (h) acceptable to the parties involved, (i) adaptability to local conditions, (j) cost-effectiveness, (k) transparency, (l) goal-orientedness (m) practicability.
• At least two main options can be identified for international harmonisation and mutual recognition of certification systems: (1) a structure where all the main parties (governments, industry and trade, and NGOs) would be represented, or (2) an NGO-based arrangement. A combination of these may also be considered.

Options for future work:

• Continue policy dialogue;
• Realise further study (requirements, characteristics and implications of viable timber certification systems on all levels; possible mechanisms to internalise environmental aspects in production costs and product prices, Impacts of certification on equitable distribution of benefits and improvement of forest management; Substitution between hardwoods and softwoods as well as timber products and their degree of processing for better assessment of trade impacts of certification; Life cycle analysis of timber products to establish their environmental competitiveness with respect to non-wood substitute);
• Support to developing Countries;
• Institutional Arrangements (Mechanisms for harmonisation and mutual recognition of national and other emerging certification systems; Organisational arrangements for monitoring and evaluation of country-level and other certification systems);
• Designation of special mechanism to provide additional financial assistance to developing countries;
• Identify an international body or bodies to take the lead in the co-ordination of related activities and act as a focal point for the exchange of information.