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.