Forest Management Practices in Canada as an International Trade Issue

Government Response to the Final Report of the Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources

Tabled in the House of Commons by Honorable Ralph Goodale, Minister of Natural Resources, October 2001

INTRODUCTION

The Government of Canada has carefully considered the report of the Standing Committee on Aboriginal Affairs, Northern Development and Natural Resources entitled Forest Management Practices in Canada as an International Trade Issue (Final Report) adopted on May 11, 2001.

The Standing Committee began its study in 1998, wanting to learn about the connection between Canada's forest management practices and the export of our forest products. An interim report focussed on issues identified by British Columbia, with a second phase examining issues in Ontario, Quebec and New Brunswick. In addition, the Committee heard from 43 individuals from 20 organizations, which included government, labour, and industry, as well as Aboriginal and environmental groups.

Of the ten recommendations made by the Committee, five directly pertain to the potential role for the Government in forest certification. The remaining five call for federal action in supporting forest research and development, marketing Canadian scientific expertise, providing information on the state of Canadian forests and forestry practices, delivering that information to the international marketplace, and monitoring potential infringements to international trade rules and the potential emergence of non-tariff trade barriers.

With regard to forest certification, the Committee found that there should be several recognized certification systems available within Canada, each respecting principles of openness, transparency, accountability, and equity. The Committee also suggested a role for the federal government in encouraging the training of sustainable forest management certifiers, ensuring the policy-making and regulatory functions of governments and international institutions is maintained, and, promoting mutual recognition among certification systems internationally. The Government responses are both supportive of the Committee's observations and recommendations, and they expand on the Government's current and evolving activities in these areas. This activity includes the Government's recent undertaking to consult -- on behalf of the Canadian Council of Forest Ministers (a council of all federal and provincial/ territorial ministers with responsibility for matters relating to forests in Canada) -- on certification systems in Canada and to facilitate the acceleration of certification of managed forest lands in Canada.

On other aspects of the role of the federal government, the Committee emphasized the necessity that forest management be governed by sound scientific principles and underlined the vital importance of research performed by the Canadian Forest Service of Natural Resources Canada.

The response to the Committee's recommendations demonstrates the Government's recognition of the significance of the forest sector and of trade in forest products to Canada's economic and social well being. The response also demonstrates the Government's proactive leadership and aggressive involvement in matters related to the continued vigour and competitiveness of Canada's forest sector.

The Committee's work on this issue is appreciated, as are the many insights it provided in the final report. These findings are integral to the work of the Government and to its continued interaction with the myriad players involved in Canada's forest sector.

GOVERNMENT RESPONSES

Recommendation 1

The Committee acknowledges that market access problems resulting from boycott campaigns of Canadian forest products are not going to be resolved by forest certification alone. In recognizing that it may be a partial solution, the Committee recommends that, should it seek a role in certification, the federal government, along with the provinces and territories, encourage the recognition of a diversity of forest certification systems.

Response

The Government concurs with the Committee's observation that Canadian forest product exports have been the object of protest campaigns which have been highly visible and often based on partial or misinterpreted information. In response, the Government and the provinces and territories, through the Canadian Council of Forest Ministers (CCFM) has established the International Forestry Partnerships Program (IFPP), which is designed to present a more accurate view of Canada's forest policies and practices by offering first hand views of our forests and forest management to key decision makers and international opinion leaders. The CCFM has recently renewed the IFPP and extended their support of it to 2005. At a more global level, it is Canada's contention that issues regarding forest policies and practices could also be addressed if negotiations for an international forest convention are successfully launched-an initiative for which Canada has been the leading proponent for roughly the past decade. The Government further contends that an international, legally binding instrument, such as a convention, based on a common understanding of sustainable forest management, would facilitate the trade of forest products originating from sustainable sources by virtue of the government signatories clearly demonstrating to consumers their commitment to, and compliance with, sustainable forest management practices.

The Government shares the Committee's perspective that consumers' and producers' interests are best served by having a choice of certification systems. It is the long standing view of the Government that there should be a choice of systems available to Canadian industry and landowners. It is also the Government's view that a diversity of certification systems is necessary to reflect the variety of producers' circumstances and certification approaches as well as being a safeguard against the risks associated with monopolies. In this context, the Government will continue its efforts to encourage and support the recognition of a diversity of forest certification systems.

Recommendation 2

The Committee recommends that the federal government, in cooperation with the provinces and territories, take all necessary proactive measures to ensure that no certification system, or similar process, has the effect of superseding or usurping the policy-making and/or regulatory functions of any level of government in matters relating to forest management or international trade.

Response

Canada's federal and provincial and territorial governments have in place a rigorous array of policies and legislation governing the use of Canada's natural resources, including forests. Governments' roles include developing and enforcing legislation, regulations and policies that support sustainable forest management as well as ensuring a fair and equitable rules-based international trading system. The policies and regulations developed by provinces and territories, and the broader Government-led national and international initiatives, are recognized as an important backdrop to certification in Canada and make up the primary framework and standards that guide sustainable forest management (SFM) in Canada. The Government believes that certification, as a market-based activity, should build on these responsibilities but cannot replace the public accountability responsibilities of governments.

Certification provides a means to respond to the consumer's desire to have access to products produced from sustainably managed forests. It is the Government's perspective that to be effective, any certification system must clearly relate to agreed-to principles of SFM and that they be responsive to the influence of internationally and nationally recognized processes of SFM, such as the CCFM's criteria and indicators of SFM as well as those criteria and indicators of the Montréal Process.

Consistent with the generally accepted view that certification is primarily a voluntary, arm's-length-from-government, marketplace activity between producers and buyers of forest products, the Government will, in collaboration with provinces and territories, continue to encourage the promotion and recognition of Canada's SFM framework (of legislation, regulations, policies and practices) by credible certification systems and their proponents. The Government agrees that certification systems should, at minimum, be related to internationally and nationally recognized processes, provide an independent and arm's-length assessment of SFM, and not be discriminatory or trade distorting. In particular, while recognizing provincial and territorial responsibilities in domestic forestry matters, and while promoting a choice of certification systems, the Government will continue its role as a facilitator of activities among the provinces and territories, and stakeholders, and will provide technical and scientific expertise for certification systems development.

Internationally, the Government will continue to pursue intergovernmental dialogue and monitor international trends so as to ensure that international trade rules are respected. The Government will actively address market access concerns related to certification and will, as a priority, actively work with all stakeholders and through appropriate institutions, including the World Trade Organization, to avoid the development of trade distortions and technical barriers to trade that may result from certification.

Recommendation 3

The Committee recommends that the federal government, in cooperation with the provinces and territories, encourage the training of SFM certifiers.

Response

Canada's forestry-related companies, while evolving in an already highly regulated forest management environment, have voluntarily chosen to expand their efforts to meet the demand for certification, as it offers a means to respond to consumers' desires to have products from sustainably managed forests. To date, more than 44 million hectares of forest in Canada have been certified under one of the four certification systems available in the country (those of the Canadian Standards Association (CSA), the Forest Stewardship Council (FSC), the International Standards Organization (ISO), or the Sustainable Forestry Initiative (SFI) of the American Forest and Paper Association). The forest industry estimates that the area of certified forest will approach 92 million hectares by the end of 2003.

In Canada, auditors for both the ISO 14000 and CSA Z-809 certification systems are accredited through the Canadian Environment Auditors Association, a government-recognized organization operating under authority of the Standards Council of Canada. The SFI operates in a similar fashion. The FSC, however, has their own accreditation system which is independent of government and other established standards organizations. Therefore, there is little opportunity for the Government to influence the FSC accreditation or certification process.

While existing certification systems share many common objectives, the various certification approaches have different systems for training and accrediting "certifiers". Although it is recognized that the demand for certification audits is increasing, evidence suggests the supply of trained auditors is keeping pace with this demand. The Government will, however, continue to monitor the situation closely and take appropriate action, if required.

Recommendation 4

The Committee recommends that the federal government, in cooperation with the provinces and territories, monitor the openness, transparency, accountability and equity of certification systems to ensure that different forest types are treated in a similar fashion within Canada and around the world.

Response

The Government, in partnership with provinces and territories, monitors domestic and international developments and issues related to certification on an ongoing basis. Canada's position in national and international forests-related fora has been that SFM certification systems should be non discriminatory. In the Government's view, every applicant should have an equal opportunity to achieve SFM certification regardless of forest type and ownership. Geopolitical considerations such as country, tropical versus temperate forest, or private versus public ownership, as examples, should not have an impact on the opportunity to achieve certification. The Government also supports the idea that no SFM certification scheme should be promoted through unfair marketing practices.

As certification systems proliferate globally, Government will work in partnerships to more actively promote the principles of openness, transparency, accountability and equity. In Canada, to facilitate consistency both with public policy and across regions, Government input in the development of certification systems and standards for SFM will reflect the need for equal opportunity for all Canadian enterprises and citizens. As described under Recommendation 5, this need may be most effectively met through favouring a better understanding, by stakeholders of barriers to certification and equivalency issues and views on opportunities for advancing progress while respecting the uniqueness and diversity of Canadian circumstances.

Recommendation 5

The Committee believes that the time is right to encourage formal talks leading toward mutual recognition of forest certification systems. As Canada is a leader in sustainable forestry the Committee recommends that the federal government, in cooperation with the provinces and territories, encourage a process with all interested countries and other parties with the goal of developing an international mutual recognition framework for certification systems. Such discussions could be held as part of, or in parallel to, the current talks around the development of an international forest convention.

Response

The Government believes that the interests of consumers and producers are best served by a multiplicity of certification systems in the marketplace. The development of effective approaches to equivalency and mutual recognition should retain such multiplicity thus avoiding the limitations of monopolies, and would promote a better understanding of how different certification systems relate to each other.

Domestically, the importance of mutual recognition was further supported at the August 2000 meeting of the CCFM at which Ministers pledged to consult with industry, non-governmental organizations, Aboriginals and labour with a view to assessing the status of implementation of certification in Canada and seeking their views on barriers to certification and equivalency issues and opportunities, including options for Government, for advancing progress. The Government, in collaboration with the provinces and territories, initiated broad consultation with stakeholders and have reported the results to the CCFM . The results of these consultations have reinforced the CCFM view that there is a need for broader dialogue in Canada between environmental non-government organizations and industry. In addition, it was reaffirmed by all stakeholders that there is a both a desire and a need for governments to be involved in this dialogue.

Internationally, the Government will solicit the perspectives of other governments with regards to the potential for equivalency or mutual recognition of certification systems. Recognizing however, that certification is generally considered a marketplace activity between producers and consumers of forest products, at arm's length from government, national and international discussions pertaining to equivalency will extensively involve buyers, consumers, ENGOs, and the forest industry, and proponents of different certification systems.

Recommendation 6

The Committee recommends that the federal government, in cooperation with the provinces and territories, continue to support research and development activities in order to ensure that Canada continues to be at the forefront of the science of innovative forest management practices. In particular, support should be given to the Canadian Forest Service and its research centres and to the Model Forest Program.

Response

The Government, through the Department of Natural Resources Canada, undertook in 1997 to engage all major proponents of the Canadian forest research community to develop a strategic national forest science and technology development (S&T) agenda. The resultant National Forest S&T Course of Action identifies seven broad thematic areas which will guide the actions of the Canadian forest S&T community. The Government is now actively promoting the further development and implementation of this Canadian S&T agenda.

In support of the first priority of the National Forest S&T Course of Action--Forest S&T Management: A Team Approach--a national coalition (FORCAST) of the federal and provincial/territorial governments, forest-related industries, academia, and Aboriginal and conservation groups has been established to guide the advancement of forest S&T in Canada. FORCAST is a 25-member, not-for-profit coalition whose mandate is to coordinate forest research across Canada.

Within the context of the National Forest S&T Course of Action, the National Advisory Board on Forest Research (NABFOR), which reports to the Minister of Natural Resources Canada, has recommended priorities for research, including an increased emphasis on intensive forest management research. Interest in climate change, endangered species, indicators of sustainability (which relates directly to certification), water production and quality, and ecosystem integrity is increasing nationally and internationally as is the desire to access the Government's scientific forest information and expertise. The Government already funds climate change research, including forest research, through the Climate Change Action Fund, for which a three year extension was announced in Budget 2000. Additional funding for climate change research was also announced in Budget 2000 through Action Plan 2000. Budget 2000 also provided funding for re-assessing species at risk, another program which includes opportunities for forest research. Natural Resources Canada continues to explore other possibilities for forest research with other government departments.

The Government is aware of the important role played by research and technology activities in providing the tools and knowledge required to manage forest resources in a sustainable way, and also in meeting its international commitments and the expectations of its wide range of clients. An opportunity exists for expanding the S&T capacity in the forest sector, both within and outside the federal government. This will help to foster Canada's international competitiveness, and the continued benefits derived by Canadian society from a successful forest sector. The major challenge lies in designing a framework that will be conducive to synergies amongst all players, with a view to working in unison toward the common good. Ultimately, this will require increased resources at all levels, so as to bring Canada's S&T efforts in line with those of other major forest players.

The Government continues to ensure that Canadian forest-related S&T remains at the forefront, however, through increased support to national, non-government research organizations including those of Forintek Canada Corporation, whose mandate is to respond to the technology needs of Canada's solid wood products industry, the Forest Engineering Research Institute of Canada (FERIC), which works to improve methods of harvesting and growing trees and transporting wood with the goal of ensuring an environmentally and economically sustainable forestry industry, and the Pulp and Paper Research Institute of Canada (Paprican), which undertakes research and aims to increase the availability of knowledgeable specialists in pulp and paper technologies through education programs. To this end, in its 2000 Budget the Government increased its contribution to these organizations by $15 million over a three-year period. These three national forest-related research organizations operate through funding by a combination of government and private sector contributions.

The Government also actively participates in two of Canada's Networks of Centres of Excellence which are research-based partnerships related to forestry that involve industry, academia and other governments across Canada: the Mechanical Wood- Pulps Network, which develops technology and expertise that enables Canadian-based manufacturers to market products worldwide that contain improved mechanical pulps or processes and equipment for their manufacture and; the Sustainable Forest Management Network which provides research support for the development of a management protocol for Canada's boreal forest that will sustain its physical, biological, ecological and economic dimensions for future generations.

Further to the Government's 2000 Budget commitments and recent announcements by Industry Canada, Genome Canada will receive an investment of $300 million for its biotechnology work, which includes forest biotechnology. An additional $100 million was also provided for a Sustainable Development Technology Fund to stimulate the development and demonstration of new climate change and environmental technologies. Natural Resources Canada's On-line initiatives, as part of the broader Government On-line initiative which received $160 million over two years, will focus on the generation, integration, management and dissemination of knowledge to support the sustainable development and stewardship of Canada's natural resources.

The Government also concurs with the Committee's observations that the Model Forest Program of the Department of Natural Resources Canada--Canadian Forest Service, is an important initiative to achieving and demonstrating sustainable forest management in the Canadian context. Through the Model Forest Program, the Government brings together stakeholders representing a range of values and interests to work together for the innovation, testing and demonstration of sustainable forest management practices. The Model Forest Program has supported S&T research across a wide spectrum of forest-related issues to provide knowledge in support of their partnership-based development of sustainable forest management practices and measures (local-level indicators). The Government is confident that as the Model Forest Program further matures and more effectively shares its experiences in partnership-based approaches to innovative sustainable forest management practices, its impact on the broader forest-based community will increase. The Government is strongly supportive of Canada's Model Forest Program and will continue to meet its commitments to the program within the terms of its mandate. The Government renewed the Model Forest Program for an additional five years in 1997.

Recommendation 7

The Committee recommends that the federal government, in partnership with the provinces and territories, actively market internationally Canadian scientific expertise in forest management and progress in the certification of Canadian forests.

Response

The Government currently participates in, and continues to enhance, a range of activities to increase international awareness of Canada's forest-related scientific expertise and accomplishments in forest management, including science expertise that can be used specifically to support sustainable forest management certification.

The Government is undertaking a range of international forest science and technology development (S&T) research collaborations, as well as science-based awareness promotional activities, to ensure international awareness of Canadian expertise in forest S&T. Government activities in this regard include collaborative research programs with other nations and working arrangements between individual scientists. The Government also participates in international forest S&T organizations, such as the International Union of Forest Research Organizations (IUFRO), the International Geosphere-Biosphere Program (IGBP), the North American Forest Commission (NAFC), the International Boreal Forest Research Association (IBFRA), and the European Forest Institute (EFI). The Government also has assumed a lead role, or is a predominant contributor to, major international forest S&T conferences, seminars and workshops, international criteria and indicators of sustainable forest management initiatives (the Montréal Process), and the furthering of progress toward achieving an international convention on forests.

The Government also maintains cooperative arrangements with counterpart international organizations in other countries such as France's Institut National de la Recherche Agronomique (INRA), Japan's Forestry and Forest Products Research Institute (FFPRI) and the United States' Department of Agriculture Forest Service. Canadian forest S&T advisors residing in Canadian Posts abroad, both in developed and developing countries, as well as those residing in the foreign embassies located in Ottawa, are considered integral to Canada's continuing ability to expand international recognition of Canada's forest-related S&T activities, achievements and progress toward achieving forest certification. To this end in part, the Government has established an Interdepartmental S&T Counsellor Tasking Group which, by engaging foreign Post S&T Counsellors, will facilitate international S&T dialogue and enhance the awareness of Canada's capacity in forest-related S&T internationally. The Government has also established, and is maintaining, joint forestry S&T cooperation agreements with the European Union, France, Germany, Japan and China, and is exploring similar relationships with other countries.

The Government is of the view that to be effective, any certification system must be based on and supported by state-of-the-art science. Recognizing that the Government does not endorse any particular certification system, it will continue to enhance, through, as examples, the aforementioned mechanisms, international awareness of progress in the certification of Canadian forests.

The Government is also currently refining its international forest-related science strategy which will realize a strengthening of Canada's international S&T linkages.

Recommendation 8

The Committee recommends that the federal government , in cooperation with the provinces and territories, encourage the gathering and dissemination of accurate and up-to-date information on the state of Canadian forests and forestry practices.

Response

The Government is supportive of the Committee's recommendation and views the enhancement of Canada's capabilities in this regard as a national priority.

Canada's comprehensive National Forestry Database Program (NFDP) was established in 1990 under the auspices of the CCFM as a cooperative effort between the Government and the provinces and territories to develop a public information program and to provide forestry information for federal, provincial and territorial policy development. A recent assessment of the NFDP concluded that although the original objectives of the program had been achieved, a newer, more refined approach is required to support Canada's responsibilities and commitments to respond to the myriad domestic and international forest-related, data-reliant initiatives in which Canada is involved. For example, those reporting commitments related to criteria and indicators of sustainable forest management and climate change.

At the August 2000 meeting of the CCFM, Ministers confirmed their priority of improving access to timely and accurate forest information in order to facilitate communication and encourage effective implementation of sustainable forest management practices. To this end, the CCFM agreed to initiate the first developmental phase of a National Forest Information System (NFIS) which is intended to ensure the acquisition, integration, processing and dissemination of data and information to support the analysis of, and reporting on, forestry issues. To achieve this, the CCFM mandated a Steering Committee to develop an infrastructure and a governance model that will address policy issues that relate to transparency, access, harmonization and linkages among existing and new databases. The Steering Committee will also look at opportunities for cooperation and coordination with other government departments and agencies and, ultimately, non-governmental organizations.

Further to its ongoing commitments to disseminate accurate and up to date information of the state of Canadian forests and forestry practices, the Government reports annually on the state of Canada's forests through its publicly available report to Parliament. The Government also coordinates national information collection and dissemination relating to the CCFM-led criteria and indicators of sustainable forest management initiative--the first national status report having been released in August 2000.

The CCFM's International Forestry Partnership Program (IFPP) is an established tool for disseminating factual and authoritative information on the state of Canada's forests to key export markets. In 1999, the CCFM renewed the IFPP for a further five years and provided the necessary funding to achieve the program objectives. The program communicates Canada's sustainable forest management policies and practices to key decision-makers and other influential people in the United States, Europe and Japan. The IFPP continues to be successful in positioning Canada as a leader in sustainable forest management, and in ensuring that trade barriers, based on criticisms of Canadian forest management practices, are not erected in Canada's export markets.

Recommendation 9

The Committee was inspired by the presentation of various workers groups, in particular that of the IWA Canada and IWA local 2171, who, along with the Forest Alliance of B.C., proposed a program that would incorporate, among other things, people who work and live in the forest as agents to deliver the message of the state of Canadian forests and forest management to the international marketplace. The Committee therefore recommends that the federal government, in cooperation with the provinces and territories, either initiate such a program or participate in one already proposed by workers groups like the IWA Canada and IWA local 2171.

Response

Canada is engaged in various elements of an overall international forest policy strategy to ensure continuous access to export markets, to convey factual and authoritative information to key decision-makers and opinion leaders about forest management policies and practices in Canada and to enhance our commitment to sustainable forest management. The recently renewed five-year CCFM International Forestry Partnerships Program (IFPP) is integrated with this international forest policy strategy. The IFPP builds on Canada's domestic accomplishments and initiatives, at the federal, provincial/territorial and non-government organization levels, to position Canada as a recognized steward and manager of sustainable forests. The IFPP links with various stakeholders of the Canadian and the international forest community to position Canada as a responsible forestry nation. In implementing these activities and developing and promoting Canadian positions, policies and initiatives in the domestic and international domains, Canada consults and involves a wide array of representatives from the Canadian forest community including, for example, labour, Aboriginals, private woodlot owners, environmental non-governmental organizations, professional foresters, academia and researchers.

Various initiatives are currently being implemented to continue to position Canada as a leader in sustainable forest management, domestically and internationally, including: Canada's National Forest Strategy, a broadly based commitment by government and non-government organizations to the practice of sustainable forests across the country; both the CCFM's and the Montreal Process' criteria and indicators for SFM initiatives, which provide frameworks for monitoring and measuring progress toward SFM within Canada and, in the case of the Montreal Process, internationally; Canada's involvement in and promotion of an international instrument, such as a convention, on forests; Canada's participation in the G-8 Action Program on Forests; and the Forest Biological Diversity Program.

Recommendation 10

The Committee recommends that the federal government, in partnership with the provinces and territories, rigorously monitor potential infringements of international trade rules as set out by the World Trade Organization and other international trade agreements. The government should also encourage international organizations of which it is a member to adhere to standards that do not support any activities that may in turn encourage the setting up of non tariff trade barriers.

Response

The Government agrees with the Committee's observation that we need to rigorously monitor the establishment of technical regulations or standards-related measures, and to avoid any potential actions which may infringe international rules as set out in the World Trade Organisation (WTO) and other international trade agreements. In consultation with provinces and territories as well as our trading partners, the Government will continue to improve monitoring in this area. The Government also agrees that international organisations should develop, apply and enforce, as appropriate, standards which meet the objectives they are designed to address while at the same time imposing minimal restrictions on international trade.

Canada is working actively in a number of international fora to remove unnecessary regulatory-based trade barriers which increase costs to producers, exporters and consumers. In the area of standards-related measures, the Government is committed to improving transparency and promoting regulatory reform. The Government is also committed to ensuring that standards, particularly voluntary measures, should not be more trade restrictive than necessary to achieve their regulatory objective and that the measure chosen does not constitute an arbitrary or unjustifiable discrimination, or an unnecessary barrier to trade.