China and the Mekong: Timber Trade and Governance Snapshot · China and the Mekong: Timber Trade and Governance Snapshot ... •Land allocation process & land use conflicts ... •

China and the Mekong:

Timber Trade and Governance

Snapshot

Kerstin Canby, Forest Trends

January, 2011

China timber product exports (million m3 RWE)

0

10

20

30

40

50

60

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Es

tim

ate

d R

WE

Vo

lum

e(m

illi

on

cu

bic

me

ters

)

Furniture Plywood FiberboardFloorings & Moldings Sawn wood JoineryVeneer Wood chips Other wood

China timber product imports (million m3 RWE)

Logs 1st Q 2010:Total imports +54%Russian +31%NZ +140%Malaysia +114%

Lumber 1st Q 2010:Total imports +104%Russian +77%Canada +200% Thailand +140%USA +66%

0

10

20

30

40

50

60

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Estim

ate

d R

WE

Vo

lum

e (

mill

ion

m3

)

Russia New Zealand Canada

Thailand Vietnam Africa

United States Australia Papua New Guinea

China’s Forest Product Imports, 2009

2009: China only major market show demand growth

China US Canada EU Japan M. East

Softwood lumber +20% -23% -15% -15% -14% +15%

Plywood +5 -16 -16 -29 -17 +16

Particle board +2 -5 -7 -13 -12 +3

MDF +5 -3 -20 -20 -19 +46

Pulp +21 -9 -19 -16 -21

Paper +7 -5 -2 -6 -14

Packaging & Tissue

+2 -21 -2 -16 -13

China’s domestic markets responsible for a large part of global recovery

• Strong economy > strong domestic markets• Lots of people• Stimulus package > infrastructure & construction• Increased acceptance of lumber construction

Numerous green economy programs, but they mainly focus on resource efficiency, not sourcing issues. This changed with recent food tainting scandals.

China’s domestic production• Reduced harvesting in natural forests in 1990s• Plantations plantations plantations• Domestic timber tracking systems in place, butk manufacturers have difficulty • Land allocation process & land use conflicts increasing

• Policy reform allowing households to transfer land rights to outsiders as long as voluntary• 2009 RRI study on Stora Enso plantation program

China Forest Product Exports (US$ billion)

0

5

10

15

20

25

30

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

US

$ B

illio

ns

United States European Union JapanHong Kong Australia Singapore Canada Africa South KoreaMalaysia Others

~60%

China, Thailand and Vietnam Imports

China, Thailand and Vietnam Exports (US$ billion)

Vietnam Forest Product Imports (million m3)

0

1

2

3

4

5

6

7

8

9

2000 2001 2002 2003 2004 2005 2006 2007 2008

Vo

lum

e (

mill

ion

m3

RW

E)

Thailand Malaysia Indonesia China Taiwan

United States New Zealand European Union Laos Brazil

South Korea Japan Canada Russia Others

Vietnam• Like China, stopped harvesting own natural forests

• Demonstrated “leakage” effect on neighboring

countries (implications for REDD+)

• “conversion timber” likely dominant export source

• Plantations plantations plantations• 0 land certified; many CoC certifications• Industry very concerned about Lacey and EU TR• VPA discussions on-going, with preliminary studies

being undertaken w/ strong government – industry collaboration

• national civil society not yet involved

Vietnam Forest Product Exports (US$ billion)

~80%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2000 2001 2002 2003 2004 2005 2006 2007 2008

US$

Bill

ion

United States European Union Japan

China Taiwan South Korea

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Esti

mat

ed R

WE

Vo

lum

e(m

illio

n c

ub

ic m

eter

s)

Malaysia Laos Chile China United States MyanmarNew Zealand European Union Others

Thailand Timber Product Imports (million m3’)

Thailand• Like CN, like VN, stopped harvesting own natural forests; control systems to track domestic harvests• Plantations plantations plantations• 7,000 ha certified (FSC)• History of land conflict, and a highly controversial policy process regarding community forest management / enterprises• Industry very concerned about Lacey and EU TR Regulation, but government slow to respond

Thailand Forest Product Exports (US$ billion)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

US$

Bill

ion

China European Union Japan

United States Vietnam Malaysia

South Korea Taiwan Others

Laos Forest Product Exports (US$ million)

0

20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007

US$

Mill

ion

s

Vietnam Thailand China Japan Taiwan South Korea European Union Others

Laos• “conversion timber” predominant source of timber

• Signif challeges implementing “legal” conversion• Definition of “degraded” forests; size

• Means to justify harvesting timber outside normal quota system?

• Plantations plantations plantations• Land use conflicts increasing

• Unclear definitions of legality – loopholes everywhere

• Log export ban (?)

• Small area FSC certified but no CoCs

• Strong involvement of Vietnamese industry

• Poor environment for civil society

Cambodia Forest Product Exports (US$ million)

0

10

20

30

40

50

60

70

80

90

100

110

2000 2001 2002 2003 2004 2005 2006 2007 2008

US$

Mill

ion

Vietnam China Thailand Taiwan

Japan Malaysia European Union Others

Cambodia• “conversion timber” likely dominant export source

• Land use permits not following legal procedures• Signif challeges implementing “legal” conversion• Importance of Vietnamese & Chinese investment

• No industrial scale concessions since early 2000s; log export ban (?)

• Plantations plantations plantations• Domestic markets > exports• Land use conflicts increasing

• Political patronage networks documented by GW

• Civil society not strong, but improving prospects for CFM

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Esti

mat

ed R

WE

Vo

lum

e(m

illio

n c

ub

ic m

eter

s)

India China Thailand

Vietnam Bangladesh South Korea

Myanmar timber product exports (million m3 RWE)

Myanmar

• Opened up to private sector in 1989• Dominence of Myanmar Timber Enterprise, revenue

generating arm of MoF in logging, transport, manufacturing

• Plantations plantations plantations• Illegal logging and export widely reported• “Legal exports” via Yangoon stamped by government

can be subsequently mixed with “illegal” logs smuggled via Yunnan

• Exports to Europe rumored to be going through Malaysia, or MY / VN or trans-shipped via Singapore.

Summary of main issues:

1. Garden variety issues:

• Re-export problems of VN, Thailand, China

• Capacity, political and financial means for effective

forest governance

• Confusing laws & regulations

• Lack of good data….

2. Land use allocations and conflict

• Land allocations not proceeding according to law

• Underlying this is insecure land tenure, rights of access,

etc.

3. “conversion timber”

• Developmental projects are within sovereign rights of

each individual country, but are not proceeding

according to law

4. Plantations plantations plantations

• Rubberwood, teak, plantations

• Laos able to attract multi-nationals like Stora Enso

• Many pltn investments to feed pulp & paper mega mills

5. Dearth of domestic experts / civil society for both policy and

practical experience with legality verification processes

6. Lack of coordination between BINGOs

7. Potential for REDD / FLEGT mutual benefit huge, but so is

potential to have separate parallel processes

• VN, Cambodia, Laos engaged in UNREDD, FCPF, FIP

plus multiple bilateral donor programs

• REDD processes started ahead of any FLEGT dialogue

• Lao P-RR – majority of “REDD implementation”

activities are basic forest governance: inventories,

monitoring of illegal logging.

• Vietnam UNREDD plans to spend $100m in next 4

years -- $80m on performance based payments

presumably to households

Thank you for

your time

[email protected]

www.forest-trends.org