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Report from
Europe
ATIBT discusses competitiveness of African wood in domestic and
EU markets
Unlike the ATIBT Forum in 2014 which was wide ranging and covered
tropical timber trade trends globally, this year＊s meeting focused more
on linkages between African producers and European buyers.
Around 150 participants attended the meeting in Milan on 14-15 October
drawn mainly from African governments and trade associations,
European-owned tropical timber operators in Africa, and European
importing companies, trade associations and other policy makers.
Consideration was given to the emerging role of Africa＊s domestic
tropical timber market, and how this will impact on future development
of the industry. Discussion also focused on the role and impact of trade
policy instruments such as the EU Timber Regulation (EUTR), Voluntary
Partnership Agreements (VPAs), and private sector forest certification.
An informative session on recent developments in Africa＊s timber markets
was introduced by Franck Chambrier of SIAG, the forestry operators
association in Gabon. Mr Chambrier highlighted that while the level of
commercial timber consumption in Africa is low compared to other parts
of the world, this is likely to change in the future.
He noted that at current rates of growth, Africa will be home to more
than one quarter of the world＊s population before 2050. This combined
with rising living standards is already driving a rapid increase in
regional demand for building materials and furniture products.
Significant obstacles hindering intra-Africa trade
While the opportunity is there, Mr Chambrier noted that there are
significant obstacles undermining competitiveness of wood products in
Africa. He said that in many market segments, African wood materials
were uncompetitive compared to non-wood products and imports.
He particularly highlighted lack of connectivity and poor internal
infra-structure noting that ※it is easier to send a container to China
than to another African country§.
Africa-wide there is a need to convert a large informal sector based on
small scale artisans and handicrafts into a more modern formal industry.
Alongside this, Mr Chambrier identified a need to develop technical
standards for African wood products that are relevant to African people
and conditions.
Drawing on experience in the Ivory Coast, Raphael Tsanga of CIFOR agreed
that there are tremendous opportunities to develop the regional wood
market in Africa and highlighted that significant progress is already
being made. He observed that improvements in governance and land tenure
reforms are helping to boost growth, increase demand for wood products
and encourage investment in processing facilities
.
There are already numerous companies producing tertiary wood joinery and
furniture products for the local market which is ※beginning to show good
results.§ He noted that efforts to improve the quality of housing and
interior design in Ivory Coast will offer new opportunities in the
future. Ivory Coast is implementing a policy to increase social housing
for which wood is being used in conjunction with steel structures.
Investment by Asian operators in Gabon
Pierre Liu of UFIAG, the association of Asian forest sector operators in
Gabon, explained to the ATIBT forum that these operators, from an
initial interest only in exporting logs, are now increasing their
investment in wood processing in the country.
Apart from the restrictions imposed on log exports from Gabon, this
trend was driven by Gabon＊s relative social and economic stability,
great availability of raw material, and government incentives. He
suggested that Asian operators investing in wood processing plants in
Gabon are already benefitting from greater profitability compared to
those exporting only logs.
Francoise Van de Ven, representing UFIGA, the Gabon forest industry
association, highlighted the particular opportunities created by the
rise of local wood markets for small and medium-sized enterprises (SMEs)
in Africa.
While forest concession management in Africa typically requires a huge
injection of financial and technical resources, wood product
manufacturing facilities supplying the local market can start small and
build up over time. These operations also provide an outlet and testing
ground for lesser-known African timber species. Once these woods are
better known in Africa, it becomes easier to promote their value in
international markets.
Cluster SMEs to raise competitiveness
Sophie Bourcer of OLAM, a global agri-business company, also
highlighted the potential to develop a vibrant wood processing sector in
tropical Africa based on clusters of SMEs. Ms Bourcer described a
project to create wood furniture manufacturing cluster in a special
economic zone (SEZ) in Gabon.
Companies operating in the SEZ are offered a range of incentives such as
no income tax for first ten years and a preferential rate of 5 per cent
over the next five years. There are now 50 to 60 companies operating in
the zone with the main focus on producing wood furniture to European
quality standards.
Such has been the success of the zone that its area has been extended
from 15 to 37 hectares.
Ms. Bourcer said that shared infra-structure within the Gabon furniture
cluster results in lower costs for Individual operators. Workshops have
been established to provide a range of services 每 such as kiln drying,
machine tooling and furniture design. For supply of raw material, the
zone hosts a saw mill and units for manufacturing plywood and board.
There is also a show room for international buyers to visit.
While Ms Bourcer noted the success and progress of the initiative in
Gabon, she also said that furniture production in the cluster is still
not sophisticated by international standards and there are many
challenges to overcome.
While Africa has numerous small scale carpenters, they do not yet have
experience of mass production and there is a significant need to upgrade
skills. Gaining access to qualified designers is a huge challenge,
something that can only be achieved by operators working together
through clusters like this. Although infra-structure and connectivity
are improving, these remain challenging issues.
Industrialists ask - Is EUTR helping to fight illegal trade or just
undermining the value chain?
The impact of EUTR requirements for legality due diligence on the
tropical wood trade was another key theme of discussion at the ATIBT
forum. Stefano Cora of the Italian timber trade manufacturing company of
the same name commented from the perspective of a large European
importing company.
He began by asking perhaps the most critical question surrounding EUTR:
※Is all this red tape really helping the fight against corruption or is
it just undermining the value chain?§
Mr Cora questioned the uneven playing field between requirements for
wood sourced from inside and outside the EU: ※the truck drivers
delivering timber from Bulgaria frequently do not fulfil all their legal
obligations 每 for example for tax payments, licenses and insurance - and
yet this is never challenged 每 why is it necessary for importers to
raise questions like this with African suppliers when rules are not
enforced within the EU?§
Mr Cora also noted variation in EUTR application across the EU. ※Some
countries and customers demand very detailed due diligence 每 others just
require a very basic declaration that due diligence is taking place 每
its necessary to find a balance between these two extremes and to ensure
greater consistency across Europe§, said Mr Cora.
Mr Cora concluded: ※I don＊t want to criticise EUTR but it needs to be
improved 每 for Cora, EUTR has to become a useful tool 每 this can be an
opportunity for our sector, it requires that companies improve their
knowledge of supply chains and the supply base which in turn improves
business practice and decision-making§.
These sentiments were echoed by several other speakers. Andre de Boer,
Secretary General of the European Timber Trade Federation, said that
※While it has faults, in principle we believe EUTR is a good mechanism.
Illegal wood is bad for brand image and undermines competitiveness of
legal supplies and the long-term sustainability of supply§.
Mr de Boer also observed that ※EUTR is being implemented fairly
effectively across several member states including the UK, Belgium,
Netherlands, and Germany 每 however other member states had no national
legislation until recently and there is still overall lack of
consistency in implementation§.
Mr de Boer noted that the European Commission is currently reviewing
EUTR and that ETTF had submitted detailed comments on how it may be
improved. These comments highlighted the need for more concerted efforts
to ensure EUTR is enforced effectively and consistently across all EU
Member States and for greater central guidance and support for other
measures to harmonise due diligence systems.
Call for forest certification to given ※green lane§ in EUTR
The ETTF is also calling for FSC and PEFC certificates to be given a
※green lane§ through the due diligence process in the same way as FLEGT-licenses
and CITES certificates. Mr de Boer noted that ※in the Australia illegal
logging law, certified timber is accepted full stop - this principle
should apply in the EU§.
Eric Boilley of Le Commerce du Bois (LCB), the French timber trade
association, demonstrated that FSC and PEFC certification is, in
practice, already given a green light without any further due diligence
by many operators. LCB is formally recognised by the EC as a Monitoring
Organisation with competence to develop and monitor company conformance
to an EUTR due diligence system.
Mr Boilley showed that the due diligence system developed by LCB
requires operators to first assess whether a product is certified or
uncertified and only requires additional risk mitigation measures in the
case of uncertified product. He noted that in practice LCB ※accepts 100%
that independently certified product is not going to be illegal§.
According to Mr Boilley ※LCB is trying to coordinate public and private
sector procurement criteria in France - we can＊t have a different
approach between the two - now we need a collective solution at EU
level§. He also expressed concern about a ※minimalist approach§, noting
that LCB ※wants consistent demand for something that is more than an
assurance of legality but instead assures sustainability§.
Mr Boilley received firm support for this stance from a representative
of Rougier, the French owned tropical wood company with large operations
in Africa, who expressed frustration at the lack of automatic
recognition for FSC certified timber in due diligence procedures
developed in other EU member states such as the UK.
He wondered why FSC certificates issued to forest concessionaires in
Africa could not be given equivalent status to FLEGT licenses,
particularly as they assured not only legality but also conformance to a
wide range of other sustainable forestry criteria.
In response, Alain Penelon speaking on behalf of the European Forestry
Institute (EFI) noted that it＊s not possible simply to transform
private-sector forest certification into a FLEGT License. The latter is
required to be a national regulatory system and once operational must be
applied to all exports of timber products within the scope of the VPA
into the EU.
There must be equitable access to the licensing system for all operators
wishing to export from the country. However Mr Penelon also noted that
timber from FSC and equivalent third party certified concessions in
Africa should, in practice, be readily recognised as negligible risk
through standard EUTR due diligence procedures.
A government representative of the Republic of Congo also noted that the
option of building private sector certification programs into the FLEGT
licensing framework is acknowledged in their VPA with the EU. He noted
that a process is currently underway to assess how far private
certification standards align with the legality grid agreed nationally
through the VPA process in the Congo.
There will also be an assessment of the extent to which private sector
certification systems tracking and accreditation procedures conform to
the requirements of FLEGT licensing system.
If the results of these assessments are positive, then the Congo would
push for EU recognition of these certificates as FLEGT licenses. It was
suggested that ※if we have to wait for the entire national system to be
finalised, the first FLEGT licenses will not be authorised [from the
Congo] for at least 5 years§.
Overcoming other barriers to EU market access
While there was a strong focus on the role of certification and
FLEGT licensing, other presentations to the ATIBT forum highlighted
other competitiveness issues that need to be addressed to ensure
continued market access in the EU.
Rupert Oliver of the FLEGT Independent Market Monitoring (IMM) mechanism
which is hosted by the ITTO and funded by the EC, reported on the
results of a systematic review of factors impacting on the EU market for
tropical timber.
The IMM review shows that there are many factors outside the scope of
the FLEGT VPA process and forest certification systems have the
potential to act as a drag on both the supply and demand of wood
products from tropical countries in the next decade.
Prominent among these factors are the following: the continued weakness
of the EU recovery following the global financial crises; the ongoing
shift in global economic activity to emerging markets; continuous
product innovation to broaden applications for temperate wood and
non-wood products; the strong commitment of competitors to market
development; the potential for increased production of hardwoods in
Europe and other temperate countries; and the relative lack of freight
infrastructure in most VPA partner countries.
According to Mr Oliver, the implication is that the process of FLEGT
licensing, even when combined with the EUTR, cannot be regarded as a
※magic bullet§ that, on its own, will transform the EU market for wood
products from VPA partner countries.
On the other hand, the review highlights that the VPA process has strong
potential for overcoming some of the most significant existing obstacles
to market development in the EU and beyond for wood products from VPA
partner countries.
For example, by strongly emphasizing good governance〞which aligns with
lower commercial risk〞the FLEGT VPA process can help remove barriers to
inward investment in sustainable tropical timber industries.
It can also help overcome market prejudice against tropical timber in
the EU and turn around environmentalist campaigns so that they become a
voice in support of the industry.
Details of the IMM market review, together with data on the share of
timber from FLEGT VPA countries in specific sections of the EU market
are contained in ITTO Technical Series 45 ※Europe＊s changing tropical
wood trade§ now available on the ITTO website (see http://www.itto.int/technical_report/).
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