Trade, Sustainability and Development – August 2013

Trade, Sustainability and Development’ is a monthly newsletter that focuses on sustainable development in the developing world. It consolidates three of World Growth’s publications into a monthly newsletter, and carries World’ Growth’s mission to promote economic development through free trade and open markets.

Greenpeace action on GM in Philippines a “setback for science”

One of the Philippines’ most respected agricultural researchers, Dr. Emil Q. Javier, has hit out at a Greenpeace legal action that has resulted in a halt on field trials of genetically modified aubergines in the Philippines.

Dr Javier, the former President of the University of the Philippines, stated that the new ban is “a huge setback to the struggling science community,” and “a serious curtailment of the academic freedom of the University of the Philippines.”

Greenpeace launched the legal action through the Philippine Court of Appeals earlier this year, with the finding handed down in May.

Greenpeace claimed that the trials could endanger consumers and “create aggressive weeds”.

Dr Javier pointed out that halting the confined field trials of the crop “may also negatively impact research in the Philippines on other important crops.”

The Greenpeace legal action follows a two year campaign against biotech crops in the Philippines. This campaign was precipitated by the widespread adoption of genetically modified corn varieties in the country. The adoption of the crop has significantly improved yields for farmers.

A similar campaign was launched in India that saw the halting of trials of another variety of aubergine.

It also follows a widespread scare campaign against ‘Golden Rice’, a modified rice variety that contains vitamin A. The Greenpeace campaign has resulted in the effective halting of trials of Golden Rice in China.

Similarly, Greenpeace activists in Australian were found guilty last year of destroying an trial GM wheat crop that was designed to encourage drought resistance.


Australian Government withdraws from Indonesian REDD project

The Australian Government has shelved its flagship project in Kalimantan that aimed to reduce emissions from deforestation and forest degradation.

The Indonesia-Australia Forest Conservation Project (IAFCP) was part of a larger AUD100 million program launched by the Australian Government in 2008.

The program was designed to rehabilitate peatlands that were drained under Soeharto ‘mega rice’ project.

The program was the subject of considerable criticism in 2012, when AusAID’s former chief economist Stephen Howes pointed out significant problems with the project’s research outcomes and implementation timetable.

Since then, there has been much stronger criticism of the project from other quarters, particularly Indonesian NGOs that stated the program did not adequately address underlying land tenure issues.

WALHI, one of Indonesia’s most vocal NGO coalitions stated that: “The KFCP did nothing to assist local communities to assert their customary rights and develop capacity for sustainable land management. Over five years the project has produced no significant environmental outcomes, it created conflict in local communities and confusion about the status of their land.”

The shelving of the project coincides with a drop of more than 10 per cent in the value of the voluntary carbon market.

The fall in value was noted in a new report published by environmental advocacy group Forest Trends. The report also noted that the volume of forest-based voluntary carbon credits is still lower than its peak in 2010, and that more than 90 per cent of these credits are being purchased by private-sector companies in Europe or the US.

While the volume of credits sold increased, this was not enough to offset the drop in the price of carbon credits across the board. This lower price raises questions about the viability of the voluntary market for resource holders wishing to sell credits, as well as investors seeking to make a speculative return.


Trade fight over US ‘dolphin safe’ labelling continues

The Mexican government intends to contest the US’s new regulation on ‘dolphin safe’ labelling in the WTO and seek authorization to impose trade sanctions against the US.

This is the next step in a long running dispute over use of environmental labelling to restrict trade.

The WTO ruled last year, in a complaint brought by Mexico, that the US dolphin safe labelling regime unfairly restricted Mexican imports of tuna into the US market. The WTO confirmed that labelling requirements discriminated against Mexican tuna imports. It gave the US until mid July to alter the measure.

The revised US regulation strengthens the criteria for dolphin-safe labelling. It requires, as a new condition for all canned tuna sold in the US to use the label, certification that no dolphins were killed or seriously injured during fishing operations. Previously this was not required for tuna caught where most of Mexico’s tuna fleet operates.

Mexico claims the regulation still discriminates against its tuna exports and fails to comply with the WTO’s ruling. The new requirements are supported by NGOs which have long advocated restricting trade to advance environmental goals.

WTO rules permit legitimate environmental regulation, but ensure this is not used to unduly restrict trade in competitive industries, which are a source of growth in developing countries. Mexico’s tuna industry reportedly employs more than 10,000 people and generated US$112 million in 2011.

If the WTO decides the US has not complied with its ruling, Mexico may retaliate by imposing trade barriers on US products.


Global forest certification players exchange words over new ISO standard

A proposal for a new International Organization for Standardisation (ISO) standard for chain-of-custody certification of timber products has drawn the ire of the world’s two largest certification systems.

The Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC) – which are responsible for around 98 per cent of all voluntary forest certification – issued a joint statement criticising the ISO proposal.

The organisations have stated that “an ISO chain of custody standard would not add value to global efforts to promote sustainable forest management through forest certification. . . Dividing the supply and production chains results in sub optimal results”.

The statement has in turn prompted criticism from The Forest Trust (TFT), an emerging player in due diligence on forest-based products, and MixedWood, one of the US leading forest products consultancies. TFT CEO Scott Poynton’s response was particularly critical, stating that “the statement amounts to a call for no new competition . . . their opposition to the new ISO COC standard merely sounds like an exercise in gross self-interest.”

The key sponsors of the ISO proposal are Germany and Brazil, both of which have sizeable interests in the global products trade. Both PEFC and FSC have called upon ISO members to vote against the proposal.


In Brief

Singapore (Morgan Stanley): Cost of sustainability; no longer an option

With the increased focus on sustainability issues among palm oil companies, the costs to achieve sustainability objectives, not limited to RSPO certification and compliance, are likely to increase over time. As the costs of achieving sustainability increase, smallholders or small-scale plantations that lack the size and market access could have difficulty absorbing higher costs or passing them on to their customers. The increased costs could squeeze smallholders and producers out of the market.

Jakarta (Jakarta Post): RI deplores EU’s decision to delay forestry sector

The Indonesian government has said that it regretted the European Union (EU)’s decision to delay the signing of the Forest Law Enforcement, Governance and Trade, Voluntary Partnership Agreement (FLEGT-VPA), previously scheduled for July 15 to Sept.30. The Forestry Ministry’ director of forest products management and marketing, Dwi Sudharto, said in Jakarta on Sunday that the government was now asking the EU to prove its commitment to promoting legal timber trade and forest management improvement.

Beijing (Financial Times): EU and China settle trade fight over solar panels

The EU and China have settled a trade fight over solar panels that upset relations between two of the world’s largest economies and threatened to spread to other industries in a spiral of tit-for-tat retaliation. The settlement – known as a price undertaking – is on terms favourable to Beijing. It will allow Chinese companies to export to the EU up to 7 gigawatts per year of solar products without paying duties, provided that the price is no less than 56 cents per watt.

Buenos Aires (Wall St Journal): Argentina’s Biodiesel Boom Turns to Bust on EU Tariffs, Policies

Argentina’s leadership in the global market for so-called green motor fuels is in jeopardy as European trade barriers and erratic policies at home cripple a once vibrant sector that used to generate more than a $1 billion a year in badly needed export sales. In May, the European Union slapped antidumping duties ranging from 6.8% to 10.6% on Argentine biodiesel imports and also imposed similar taxes on biodiesel from Indonesia.

Washington (Reuters, WTO): U.S. will join EU’s case against Russia’s auto recycling fee

The United States plans to join the European Union in a World Trade Organization case that challenges a Russian auto recycling fee program as an illegal trade barrier against imported cars, the top U.S. trade official said on Thursday. “There’s now a case being brought against them on the auto recycling fee in the WTO and we’ll be joining that case,” Froman told the House of Representatives Ways and Means Committee at a hearing on the U.S. trade agenda.

Brussels (European Commission): EU publishes initial Trans Atlantic Trade and Investment Partnership Position Papers

Jakarta ( Indonesia pushes for more in green list

Local stakeholders, including the business community, have voiced support for the government’s efforts to have agriculture-based products, such as palm oil and rubber, included on Asia-Pacific Economic Cooperation’s (APEC) list of environmentally friendly goods despite a lack of support from the majority of members. Amin Subekti, an executive of Indonesia’s APEC Business Advisory Council (ABAC), said on Thursday in Medan that local business representatives would encourage their members to approve the inclusion of local agro-based products as one of the key recommendations to APEC leaders.

Washington (Inside US Trade): Obama Proposes Plurilateral WTO Talks To Liberalize Green Goods, Services

As part of his comprehensive plan for addressing climate change that was unveiled on June 25, President Obama announced the United States will work with other World Trade Organization members to launch new plurilateral trade negotiations aimed at achieving free trade in environmental goods.

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