Target Agricultural Supply Chains to Tackle Deforestation

 A view of a forest land clearing in South Aceh, Indonesia. Photo: Getty Images
A view of a forest land clearing in South Aceh, Indonesia. Photo: Getty Images

Ever since the collapse of the attempt to negotiate a global agreement on forests at the UN Conference on Environment and Development (the ‘Earth Summit’) in 1992, there has been, in effect, no rules-based international order relating to forests.

Recent developments, however, hold out the prospect – faint though it may be – of the emergence of an international framework promoting forest governance and law enforcement by regulating trade in timber and agricultural commodities associated with deforestation.

There is no doubt that this is an urgent challenge. Over the last 60 years, the world has lost almost 10 per cent of its remaining forests. Although, overall, deforestation has slowed or reversed in temperate and boreal areas, it remains unsustainably high in tropical forests.

Continued deforestation contributes to climate change (accounting for 12–14 per cent of global greenhouse gas emissions), disrupts local temperatures and water cycles, destroys habitats and wildlife (forests provide habitats for two-thirds of land-based plants and animals), and threatens the lives of forest communities and indigenous peoples. More than 1.6 billion people – about a fifth of the global population – depend on forests for food, medicines and fuel, as well as their jobs and livelihoods.[ii]

Efforts to date to create a legally binding global framework for the protection of forests have foundered mainly on developing countries’ insistence on retaining sovereignty over their ability to exploit their own natural resources; not an unreasonable position, especially given that the arguments for such a treaty were mainly advanced by industrialized nations, which had deforested their own land centuries before.

Instead, a patchwork of multilateral agreements, UN and regional strategies, action plans, declarations and bilateral arrangements have attempted to address different aspects of forest policy, such as climate change, biodiversity or illegal logging, in most cases without significant impact. Forest targets set recently – such as the aim of ending deforestation by 2020 expressed in the UN Sustainable Development Goals and the UN’s Global Forest Goals – will be missed.

But some progress in addressing deforestation has been made in recent years in one area: improvements in forest governance through tackling international trade in illegally logged timber – a major problem for many forest-rich tropical countries. Over the past 20 years or so, producer and consumer countries have increasingly cooperated to exclude illegal timber from international trade.

The US, the EU, Australia, Japan and South Korea have all adopted domestic legislation designed to close their markets to illegal timber products. Under the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) initiative, a series of bilateral Voluntary Partnership Agreements (VPAs) have been negotiated between the EU and timber-exporting countries.

These agreements have established legality assurance and licensing systems designed to ensure that only timber products verified as legally produced can be exported to the EU (and, in practice, to other destinations). In turn, FLEGT-licensed products are granted easier access to the EU market than timber from other countries. Australia’s legislation explicitly recognizes FLEGT licences, potentially beginning to lay the foundations for an international regime.

Such initiatives remain at an early stage. Only one producer country – Indonesia – has so far introduced a full export licensing system. Nonetheless, the evidence suggests that it is now becoming easier to sell Indonesian timber products on the EU market as a consequence – indicating that such policies can be effective.[iii]

More importantly, even in countries yet to introduce a licensing system, such as Ghana, the process of negotiating and implementing the VPAs has itself triggered significant improvements in forest governance: enhancing the transparency and accountability of forestry administration, as well as recognition of community rights, while creating new mechanisms for exposing corruption along the entire supply chain. This has helped to lead to a measurable decline in illegal logging in a number of countries, including Ghana.[iv]

To have a greater impact on deforestation, however, policy needs to go further than addressing trade in timber alone. This is because the main global driver of deforestation is not logging for timber but clearance of forests for agriculture. The key point here is that trade patterns for agricultural commodities are similar to those for timber: developing countries export commodities such as palm oil, soy, beef, cocoa and rubber to consumer markets such as the EU, the US, Japan and, increasingly, China and India.[v]

Interest is therefore growing, particularly in the EU, in adapting the experience of the FLEGT initiative for agricultural trade. This could include requiring businesses selling ‘forest risk commodities’ on the EU market to have in place a system of due diligence, designed to minimize the risk of agricultural products associated with deforestation (and with other undesirable activities such as human rights abuses or the use of child labour) entering the supply chain.

The EU Timber Regulation, introduced under the FLEGT initiative, includes this kind of due diligence approach for illegally logged timber. Discussion is also starting about adapting the bilateral partnership agreement model currently used for timber so that it can be applied to commodities such as cocoa, a major driver of deforestation in West Africa.

All these discussions are taking place against the background of a wider debate on the responsibility of business for environmental harm and human rights abuses associated with corporate operations and supply chains. The debate has been stimulated in part by the adoption of the UN Guiding Principles on Business and Human Rights, agreed in 2011, and subsequent instances of national legislation such as the UK Modern Slavery Act of 2015 and the French Devoir de Vigilance law of 2017.

Does this route offer the chance of building a global framework that offers effective protection to forests? There are undoubtedly formidable obstacles. All countries tend to resist external efforts to regulate their right to exploit their natural resources – but the FLEGT approach, based around enforcing the laws of the producer country, places them in control of the standards to be regulated.

It also focuses on the root cause of much deforestation: weaknesses in governance and law enforcement. Unlike previous attempts at a binding agreement on forests, this approach uses trade as a lever, conditioning access to consumer markets on products meeting specified standards. It places requirements not just on governments but on the businesses buying and selling the products.

The new European Commission, due to take office towards the end of this year, will have the opportunity to propose a new Action Plan on Deforestation, building on the experience of the FLEGT initiative and dealing with the EU’s impact on forests worldwide.

This will be a potentially important moment for forest governance: if it is to tackle deforestation effectively, the Action Plan should include both proposals for regulation to deal with agricultural commodities associated with deforestation that are placed on the EU market and a plan to establish dialogue along the supply chain with major consumer and producer countries, with the aim of developing the beginnings of a global framework.

Until agricultural supply chains are tackled effectively – which must involve action by consumer-country governments and businesses – tropical forests will never be effectively protected. An international initiative focusing on trade in forest risk commodities offers a possible route forward.

Duncan Brack, Senior Research Fellow, Energy, Environment and Resources.

Notes

[i] Food and Agriculture Organization of the United Nations (2016), Global Forest Resources Assessment 2015, http://www.fao.org/forest-resources-assessment/past-assessments/fra-2015/en/.

[ii] Seymour, F. and Busch, J. (2016), Why Forests? Why Now? The Science, Economics and Politics of Tropical Forests and Climate Change, Center for Global Development, https://www.cgdev.org/publication/why-forests-why-now-science-economics-and-politics-tropical-forests-and-climate-change.

[iii] Oliver, R. (2019), ‘The changing tropical timber trade’, presentation to Forest Governance Markets and Climate forum, London, March 2019.

[iv] Overdevest, C. and Zeitlin, J. (2016), Experimentalism in Transnational Forest Governance: Implementing EU Forest Law Enforcement Governance and Trade (FLEGT) Voluntary Partnership Agreements in Indonesia and Ghana, Amsterdam Centre for Contemporary European Studies, SSRN Research Paper 2016/02, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2802659.

[v] Brack, D., Glover, A. and Wellesley, L. (2016), Agricultural Commodity Supply Chains: Trade, Consumption and Deforestation, Chatham House Research Paper, https://www.chathamhouse.org/publication/agricultural-commodity-supply-chains-trade-consumption-and-deforestation.

This essay was produced for the 2019 edition of Chatham House Expert Perspectives – our annual survey of risks and opportunities in global affairs – in which our researchers identify areas where the current sets of rules, institutions and mechanisms for peaceful international cooperation are falling short, and present ideas for reform and modernization.

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