Ecolabeling to protect environment, trade

Ecolabeling to protect environment, trade

By Ronald Nangoi

JAKARTA (JP): Ecolabeling, or certification of timber
products, is part of the international community's effort to
protect the global environment by fostering sustainable forest
management.

Ecolabeling also reflects the growing environmental awareness
among the world's traders. As we know, GATT recently included
environmental issues in its new borderless agenda. This is a
complicated matter, since one could argue that the environmental
efforts contradict economic development programs.

World trade in timber products has increased due to the demand
caused by population growth. Consequently, the supply of timber
is considered a major cause of deforestation, over 17 million
hectares per year. Deforestation is certainly one of the main
sources of the degradation of the environment, including air
pollution, greenhouse gases and soil erosion. All these issues
have been highlighted in the time since the Stockholm Conference
on the environment in 1992. To stop deforestation, ecolabeling is
to be adopted to guarantee sustainable forest management.

Despite international concerns, developing countries are
suspicious of ecolabeling because they believe that it is in the
interest of developed countries to threaten their trade in
timber. Developed nations seem to only campaign to protect
tropical forests which are located mostly in developing
countries, including Indonesia. Therefore, ecolabeling and other
measures to protect the environment have been seen as trade
barriers. Countries with tropical forest resisted on the grounds
that ecolabeling ran counter to a state's sovereign right to
manage its own resources.

Some highly environmentally aware countries have imposed
national regulations on imports, like:

1. The introduction of a bill by the U.S. Congress in 1991
that all tropical timber imported bear a label indicating the
country of origin and the name of species. The label does not
include any consideration of the quality of forest management but
could serve as a country certification scheme. Some basic
provisions on reporting are included. Further legislation has
been introduced to the U.S. Congress to ban all imports of
tropical timber unless it can be verified, through a
comprehensive, reliable and independent certification system that
the wood originates from sustainable managed forests.

2. Netherlands Framework Agreement on Tropical Timber (NFATT),
which only accepts imported timber that originates from
sustainable managed forest.

Some argue that the trade of forest products is fiercely
competitive and threatens the developed countries timber
industries and that ecolabeling and sustainable forest management
has only been implemented to protect their domestic industries.
Some even view the forest management practices in several
industrial nations as far from sustainable or environmentally
friendly.

However, sustainable forest management has not been objected
to in principle by developing countries. The inclusion of all
kinds of forests by WWF may have satisfied the tropical
countries. Indonesia has a particularly strong commitment to
sustainable forest management and is active in national, regional
and international environmental conferences, including forest
management. However, Indonesia has made it clear that it does not
wish to be dictated by developed countries.

Understanding the benefits of sustainable forest management,
Indonesia implemented reforestation on its production forests (64
million hectares), protection and conservation forests (49
million hectares) and conversion forests (30 million hectares)
under the Decree of the Indonesian Minister of Forestry No.
252/Kpts II/93 introduced on April 29 1993. This decree covers
the sustainable natural production forests in Indonesia,
including all the legalities, funding and mechanisms. Indonesia
has set up an ecolabeling preparation team which brings together
the government, the private sector and NGOs and is led by Dr.
Emil Salim, former minister for environment and population. A
working plan involving the Ministry of Forestry and the
Indonesian Forestry Community is being shaped and will be tried
in 1995.

Indonesia's reliance on forest export products has forced the
country to show concern for forest management programs. The trade
was worth US$6.5 billion in 1993 and is likely to reach $10
billion by the year 2000. The country has launched a program to
strengthen legal standing, boundary protection, matching
industrial capacity to sustainable raw material supply, plus
evolving silvicultural systems. Based on estimates of production
areas, boundaries and staff levels, Indonesia reckons it will
cost about $1.00 per cubic meter of log production.

Therefore, it is quite unreasonable for developed countries to
condemn Indonesia regarding deforestation issues. Indonesia has
taken the lead in being much more receptive to the idea of
ecolabeling and the World Forestry Conference in Bandung in
February 1993 reaffirmed its intention of meeting ITTO's Target
2000.

Supporting sustainable forest management is timely, since
Indonesia has a large share in the hardwood timber trade.
Indonesia and Malaysia account for 80 percent of the worldwide
trade of approximately 68 million cubic meters of roundwood. A
non-cooperative attitude may threaten Indonesian trade of wood or
timber products.

The inclusion of environmental issues in the world trade
systems, such as GATT, should make it worth while for Indonesia
to be subject to ecolabeling or certification schemes. The
development of "green economics" could signal the development of
environmentally based economic policies. Once ecolabeling is
implemented in the year 2000, other timber products will have no
world market access.

This will certainly have a great impact on the business sector
and means that environmental issues must be taken into serious
account by companies, particularly timber companies, when
formulating corporate strategies. Even now they are expected to
relinquish some of their profits to support the funding of
sustainable forest management, particularly through the Village
Development schemes (HPH Bina Desa).

At a microeconomic level, the change toward strategic and
societal marketing has been highlighted for quite a long time.
Social, environmental and external variables should be considered
in the implementation of marketing management. It is therefore
pointless for firms to be against the ecolabeling and
certification programs.

Environmental considerations in business policy may only
reflect a company's ability to adapt to economic, trade, and
commercial changes for its long-term survival. It wouldn't be
wise if a company was concerned about the environment merely
because of boycott threats by developed countries.

The writer is a lecturer at Tarumanagara University, Jakarta.

Window: It is quite unreasonable for developed countries to condemn
Indonesia regarding deforestation issues.