WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/CTE/W/89
20 July 1998
(98-2864)
Committee on Trade and Environment Original:  English/
anglais/
inglés
COMMUNICATION FROM THE SECRETARIAT OF THE INTERNATIONAL
TROPICAL TIMBER ORGANIZATION
The attached background paper1 has been received from the Secretariat of the International
Tropical Timber Organization (ITTO).  It is being circulated to Members of the CTE in preparation
for the Information Session with Secretariats of Multilateral Environmental Agreements on
23 July 1998.
Comité du commerce et de l'environnement
COMMUNICATION DU SECRÉTARIAT DE L'ORGANISATION
INTERNATIONALE DES BOIS TROPICAUX
La note d'information ci-jointe1 a été reçue du Secrétariat de l'Organisation internationale des
bois tropicaux.  Elle est distribuée aux membres du Comité du commerce et de l'environnement en
vue de la séance d'information avec les Secrétariats des Accords environnementaux multilatéraux qui
aura lieu le 23 juillet 1998.
Comité de Comercio y Medio Ambiente
COMUNICACIÓN DE LA SECRETARÍA DE LA ORGANIZACIÓN
INTERNACIONAL DE LA MADERA TROPICAL
La Secretaría de la Organización Internacional de la Madera Tropical ha enviado el
documento de base adjunto1, que se distribuye a los miembros del CCMA como parte de los
preparativos para la reunión de información con las Secretarías de Acuerdos Multilaterales sobre elMedio Ambiente, que se celebrará el 23 de julio de 1998.
                                                     
1 English only/En anglais seulement/En inglés solamente.WT/CTE/W/89
Page 2
RECENT TRADE-RELATED DEVELOPMENTS IN THE INTERNATIONAL
TROPICAL TIMBER AGREEMENT (ITTA)
Note by the Secretariat of the International Tropical
Timber Organization
I. INTRODUCTION
This is a background paper on recent trade-related developments in the International Tropical
Timber Agreement (ITTA).  The purpose of this paper is to contribute to the discussion on recent
trade-related developments in multilateral environmental agreements (MEAs) within the context of
the linkages between the multilateral  environment and trade agendas to be considered by the WorldTrade Organization Committee on Trade and Environment (CTE) at its meeting on 23-24 July 1998 in
Geneva, Switzerland.
II. BACKGROUND
The ITTA is one of several intergovernmental international commodity organizations (ICAs)
negotiated by United Nations conferences under the auspices of the United Nations Conference on
Trade and Development (UNCTAD).  Unlike the conventional ICAs which focus on price
stabilization measures (commonly referred to as the ICAs with economic provisions ) or those
considered as administrative agreements , the ITTA is often categorized as a developmental
agreement  which seeks to establish mutually supportive relationships in the promotion of sustainable
forest management, international trade in tropical timber and development of forest industries through
international cooperation, policy work and project activities.
The ITTA, 1983 was adopted in 1983 and entered into force in 1985.  In November 1986, the
International Tropical Timber Organization (ITTO) began to function in the administering of the
provisions and operation of the agreement followin g the appointment of the Executive Director and
the selection of Yokohama as the headquarters.  The ITTA, 1983 was succeeded by the ITTA, 1994
which has been put into force on 1 January 1997.  Presently, the membership of the ITTA, 1994
stands at fifty-one 51, comprising 27 producing members and 24 consuming members including the
European Union.  Although the ITTO is an intergovernmental organization, it adopts a policy of
openness to ideas from members of the trade and non-governmental organizations (NGOs).  Many of
its members include advisers from trade and on from environment in their delegations.
III. TRADE-RELATED MATTERS IN THE ITTA
Under the ITTA, 1983, matters related to trade were incorporated in three of its eight
objectives, namely:
(b) To promote the expansion and diversification of international trade in tropical timber
and the improvement of structural conditions in the tropical timber market, by taking
into account, on the one hand, a long-term increase in consumption and continuity of
supplies, and on the other, prices which are remunerative to producers and equitable
for consumers, and the improvement of market access;
(d) To improve market intelligence with a view to ensuring greater transparency in the
international tropical timber market; and
(g) To improve marketing and distribution of tropical timber exports of producing
members.WT/CTE/W/89
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It would appear that these objectives provide the basis for the promotion of international trade
in tropical timber in the conventional sense of the term.  However, the reference to the continuity of
supplies and market transparency in the foregoing objectives, coupled with the provision of specific
goals towards sustainable utilisation and conservation of tropical forests and their genetic resources as
well as maintaining the ecological balance (objective (h)) and the development of forest management(objectives (c) and (f)) underline clearly the recognition given at the very beginning to the need for the
trade-related objectives to be pursued in harmony with those pertaining to sustainable forest
management, conservation and the environment.  Indeed, the ITTA stands as one of the earliest
attempts on the multilateral front at fostering a mutually supportive relationship between development
and trade in tropical timber, on the one hand, and su stainable forest management and conservation, on
the other, preceding, inter alia , the Brundtland Report, 1987 and the historic United Nations
Conference on Environment and Development (UNCED) held in Rio de Janeiro in 1992.
Following the entry into force of the ITTA, 1994 on 1 January 1997, the ITTO’s mandate on
trade has been updated and refined in direct response to the rapid developments that have taken place
within and beyond the realm of ITTO including, in particular, the watershed agreements adopted at
UNCED 1992.  This is reflected in six trade-rela ted objectives of the agreement as follows:
(b) To provide a forum for consultation to promote non-discriminatory timber trade
practices;
(d) To enhance the capacity of members to implement a strategy for achieving exports of
tropical timber and timber products from sustainably managed sources by the year
2000;
(e) To promote the expansion and diversification of international trade in tropical timber
from sustainable sources  by improving the structural conditions in international
markets, by taking into account, on the one hand, a long-term increase in
consumption and continuity of supplies, and, on the other, prices which reflect
the costs of sustainable forest management  and which are remunerative and
equitable for members, and the improvement of market access;
(h) To improve market intelligence with a view to ensuring greater transparency in the
international timber market , including the gathering, compilation, and
dissemination of trade related data, including data related to species being
traded ;
(k) To improve marketing and distribution of tropical timber exports from sustainably
managed sources ;
(m) To encourage information-sharing on the international timber market.Objectives (b), (d) and (m) are new provisions aimed respectively at addressing members’
concern over perceived discriminatory tendencies against tropical timber, formalising the pivotalITTO Year 2000 Objective and facilitating inform ation-sharing involving tropical and non-tropical
timbers.  Objective (e), (h), and (k) are revised versions of objectives (b), (d), and (g) under the ITTA,
1983 respectively.  In objectives (e) and (h), the qualification ‘from sustainable sources’ is attached to
the terms ‘international trade in tropical timber’ and ‘tropical timber exports’ while, under objective
(h), market transparency and trade-related data apply to all types of timbers.
Similar updating and refinement have been made to the other objectives of the ITTA
including those related to sustainable forest management, conservation and the environment.  As a
result of these comprehensive changes, the linkage between trade and environment has been given aWT/CTE/W/89
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clearer perspective within the purview of the I TTA, 1994.  Indeed, the ITTA is an example of an
agreement that integrates trade and environment.
IV. TRADE-RELATED DEVELOPMENTS IN THE ITTA
The ITTA was negotiated in the midst of the global concern over the fate of tropical forests.
Since the establishment of ITTO, pressure has been mounting for urgent and definitive measures to be
taken to save this invaluable resource.  Much of th e pressure has come in the form of threats of bans
and boycotts as well as unilateral actions to restrict or prohibit the use of tropical timber.  These have
had a profound influence in shaping the environment in which ITTO operates and in determining the
trade-related agenda of the organization.
Added to the foregoing was the outcome of one of the earliest studies to be commissioned by
ITTO, the Study on the Status of Sust ainable Forest Management  leading to the publication of the
book No Timber Without Trees  which found that very little of the world’s tropical forests was
managed on a sustainable basis.  It spurred ITTO to embark on its pioneering mission of bringing
tropical forests under sustainable management.  This involves, inter alia , the development of a series
of guidelines covering the sustainable management of natural tropical forests (1990), the sustainablemanagement of planted tropical forests (1991), the conservation of biological diversity in tropical
production forests (1992) and the protection of trop ical forests against fire (1997).  Work on the
development of a definition of sustainable forest management and a set of criteria for measuring
sustainable forest management was also initiated at the early stage of ITTO’s establishment (1991),
well before the launching of the Helsinki and Montreal processes for non-tropical forests afterUNCED 1992.  Since then, a revised version of the ITTO Criteria and Indicators has been approved in
May 1998.  Independent ITTO missions were despatched to Sarawak (1989) and Bolivia (1995) to
assess forest management and offer recommendations for improvement while several projects have
been approved for implementation in member countries with the view to enhancing capacity in
managing tropical forests on a sustainable basis.
A. T
HE ITTO Y EAR 2000  OBJECTIVE
The culmination of the foregoing efforts was the adoption of the ITTO Year 2000 Objective.
Originating from a proposal for the ITTO Action Plan, it emerged in the form of a commitment of all
members made in Bali in 1990 to achieve exports of tropical timber products from sustainably
managed sources by the year 2000 .  It is, indeed, a courageous and challenging goal to be achieved
within a short period of 10 years, given the stark reality of the complexities in bringing tropical forestsunder sustainable forest management.  For ITTO, however, the commitment constitutes an important
and timely shift from mere debate to real action.
Following the adoption of the ITTO Year 2000, further work was undertaken towards
operationalizing the goal.  This included the formulation of a strategy adopted in 1991 by whichmembers would progress towards achieving sustainable forest management and trade in tropical
timber from sustainably managed resources by the year 2000.  The strategy has since been
incorporated as one of the operative objectives of the ITTA, 1994.  Other important efforts in this
regard were the task of estimating the resources required to attain the objective and the development
of a format for the sharing of information pertaini ng to the progress achieved towards the realization
of the goal.  Voluntary progress reporting was subsequently made by members leading to the conduct
of the Mid-Term Review in Manila in 1996.
The outcome of the Mid-Term Review has indicated the prospect for a number of the
producing members to make good progress towards the attainment of the ITTO Year 2000 Objective.For the other producing members, the way ahead lies in making progress in five key identified areas
on the basis of prioritised action.WT/CTE/W/89
Page 5
The costs of bringing tropical forests under sustainable management are substantial and
increasing.  Recognizing the need to develop and contribute towards mechanisms for the provision of
new and additional financial resources and expertise needed to enhance the capacity of producing
members to attain the objectives of the agreement (objective (g)), the ITTA, 1994 provides for theestablishment of the Bali Partnership Fund  for the sustainable management of tropical timber
producing forests.  The fund is exclusively reserved for producing members to achieve objective (d)
of the agreement and is additional to the Special Account which remains in existence.  Following the
entry into force of the ITTA, 1994, work on finalizing the operation of the Bali Partnership Fund is
almost completed.  Members and the international donor community are being asked to make pledges
to the fund which has received some initial contributions notably from the Government of Japan.
With the year 2000 fast approaching, the attainment of the ITTO Year 2000 Objective will
depend on the full commitment of members as well as the adequate provision of resources and
expertise.  As its name suggests, the objective is not to be viewed as a guillotine or deadline for the
application of sanctions against tropical timber exports from unsustainably managed sources, but as
an indicative and guiding goal to facilitate the achievement of sustainable forest management.
B. T
IMBER CERTIFICATION AND LABELLING
Timber certification and labelling is closely related to the issue of sustainable forest
management and has similarly emerged with an initial focus on tropical forest and timber.  While the
objective of timber certification and labelling in distinguishing products from sustainably managedsources has been generally accepted, there remain several concerns regarding the proliferation of
initiatives, the credibility factor and the possibility of it being used as a non-tariff barrier and a means
to discriminate against a particular product.
ITTO’s work on timber certification and labelling began with the commissioning of a report
on The Economic Linkages between International Trade in Tropical Timber and Sustainable
Management of Tropical Forests  in 1993 leading to the convening of the Working Party on
Certification and Labelling of All Timber and Timber Products  in Cartagena, Colombia in 1994.  This
was followed by a detailed study on Market and Market Segments for Certified Timber  in 1995 and a
comprehensive update of the study on Certification of All Internationally Traded Timber and Timber
Products  in 1996.
The issue of timber certification and labelling is still evolving and will continue to be
ventilated at appropriate fora particularly in the context of the UNCED follow-up under the
Intergovernmental Forum on Forests (IFF).  For its part, ITTO has made significant contributions to
the development of principles, criteria and indicators of sustainable management of tropical forests.
Although ITTO has not assigned itself a role in the development and practice of timber certification aswell as in the accreditation of timber certification bodies, it has nevertheless commissioned relevant
studies on the subject and approved projects aimed , inter alia , at improving the marketing of tropical
timber from sustainably managed sources and training of human resources towards this end.  Indeed,
timber certification and labelling remains very much on the ITTO agenda.
C. M
ARKET ACCESS AND NON-DISCRIMINATION
The threats of bans and boycotts on tropical timber as well as unilateral actions to prohibit or
restrict the use of tropical timber taken at the local level of government have generated much concern
and anxiety among producing members.  It is felt that such actions could frustrate efforts to improve
forest management in producing members which need the revenues from tropical timber exports tofinance national development and the sustainable mana gement of their forest resources.  On the other
hand, consuming members view export restricti ons imposed by producing members to promoteWT/CTE/W/89
Page 6
domestic processing as having a significant impact on the free flow of international trade in tropical
timber products.  From a more global perspective, the Intergovernmental Panel on Forests (IPF) noted
that while tangible progress had been achieved in the reduction in tariff barriers to forest products
within the context of the Uruguay Round, it was a matte r of concern that barriers to international trade
in forest products, particularly non-tariff barriers, could still impede access of forest products to theinternational market.  In this connection, the concern was particularly over the use of eco-labelling
and green certification as import barriers.
The issue of market access was raised within the ITTO in 1993 with a call for the assessment
of international market trends, market share and conditions of market access.  A reiteration of the
importance of market access was made in 1996 which subsequently led to the decision in 1997 for the
conduct of a study on The Impediments to Market Access for Tropical Timber .  The study is currently
being implemented.
In the run-up to the adoption of the ITTA, 1994, the proposal for the broadening of the scope
of the ITTA to cover all timbers was advanced by producing members in order to address the
problems of discrimination and double-standards faced by tropical forest and timber.  Although theITTA, 1994 is still an agreement on tropical timber, it does provide for a broader coverage in some
respects including the framework for consultation, international cooperation, and policy development;
the forum for consultation to promote non-discriminatory timber practices; the reference to structural
conditions in international markets; development of national producing forests; information sharing
on the international timber market; and provisions for statistics, studies, information, annual reviewand reporting of progress towards sustainable forest management.  It is significant to note that in
conjunction with the adoption of the ITTA, 1994, a formal statement by consumers was circulated
concerning their commitment to achieve sustainable management of their forests by the year 2000.
The formal statement was made outside the ambit of the ITTA, 1994 but is attached to the UNCTAD
document TD/Timber.2/16 regarding the agreement.   Consequently, consuming members of the
ITTA, 1994 are also required to report and share information on their progress towards sustainable
management of their respective forests.
In relation to objective (b) of the ITTA, 1994 concerning the promotion of non-discriminatory
timber trade practices, the agreement contains an important provision for non-discrimination in
Article 36 which states that nothing in the Agreement authorises the use of measures to restrict
or ban international trade in, an in particular as they concern imports of and utilisation of
timber and timber products .  While it is generally understood that the appropriate international
forum to deal with the issue of trade discrimination remains in the WTO, the provision of Article 36
of the ITTA, 1994 is meant to prevent the use of the Agreement as a basis for discrimination
particularly against tropical forest and timber.
D. P
ROPOSED LISTING OF INTERNATIONALLY TRADED TROPICAL TIMBER SPECIES IN THE
APPENDICES OF THE CONVENTION ON INTERNATIONAL TRADE IN ENDANGERED SPECIES OF
WILD FAUNA AND FLORA (CITES)
The proposed listing of some internationally tr aded tropical timber species in the appendices
of CITES in the early 1990s by proponents which were Parties to both CITES and the ITTA but werenot range states of the species concerned brought to question the issue of communication and
coordination between CITES and the ITTA.  Queries were raised as to the appropriateness of, and the
motive behind the listing proposals.  The real concern was that CITES might be used as a means to
undermine international trade in tropical timber products.
Several decisions on this issue were taken by the International Tropical Timber Council
(ITTC).  In 1992, it called for improved cooperation with CITES following the clash of dates between
the session of the ITTC and the CITES Conference of Parties.  In 1994, ITTC registered the need forWT/CTE/W/89
Page 7
coordinated action between the two agreements besides proposing a study to examine methodological
bases for regulating trade in endangered species.   Following the establishment of the CITES Timber
Working Group (TWG) in 1995 to study implementation problems resulting from the inclusion of
several timber species in the appendices of CITES, ITTC approved the participation of ITTO in the
TWG, thus paving the way for greater cooperati on between the two parties.  ITTO is now to be
officially consulted by the CITES Secretariat regarding proposals to list timber species in its
appendices.  This is to ensure that detailed resource and trade information which ITTO can draw on
will be available to assist CITES in its decision-making process.
E. ECONOMIC INFORMATION AND MARKET INTELLIGENCE CAPACITY
Following its establishment, ITTO embarked on building its capacity in market intelligence
through the conduct of studies on export market structures and end-uses.  In-house statistical workwas also launched at an early stage as a step towards market transparency.  Subsequent to the setting-
up of the Committee on Economic Information and Market Intelligence in 1987, the Annual Review
and Assessment of the World Tropical Timber Situation  and the Annual Market Discussion  began to
be conducted in 1989.  These were followed by the launching of the Market News Service  (MNS) in
collaboration with the International Trade Centre (ITC) in 1990, which was replaced by the Tropical
Timber Market Information Service  (TTMIS) since 1995.  The Tropical Forest Update  (TFU) began
to be published in 1991 while regional workshops for training staff from producer countries in the
design and management of effective statistical information system have been conducted.
In the context of the ITTA, 1994, the Annual Review and Assessment of the World Timber
Situation  will be conducted on the basis of all timbers.  ITTO has also initiated consultations with
FAO, UN/ECE, and Eurostat to explore the feasibility of developing a joint forest statistical
questionnaire that could reduce overlapping of efforts in the collection of data and the burden of
countries in submitting data to different international organizations.  The Annual Market Discussion  is
now conducted in close collaboration with representatives from the trade to ensure that the interestsand concerns of the trade are taken into account.
F. C
ONTRIBUTION TO THE INTERGOVERNMENTAL FORUM ON FORESTS (IFF)
In the context of the follow-up to UNCED 1992, ITTO has been actively involved in major
post-UNCED initiatives and has contributed significantly to the on-going global forest debate through
the United Nations Commission on Sustainabl e Development (UNCSD), the IPF and the
Inter-Agency Task Force on Forests (ITFF).  Following the establishment of IFF as a successor toIPF, ITTO is continuing its contribution in terms of staff secondment and as the lead agency for
Category IIb of the IFF Programme Element entitled ‘Trade and Environment’ for which a paper has
been commissioned for substantive consideration by the IFF at its second session to be held in Geneva
from 24 August to 4 September 1998.
V. CONCLUSION
Developments within the ITTA have revolved around some of the germane issues related to
trade and environment.  Several aspects of these issues may be contentious in nature, but to-date work
within the ITTA has not resulted in any trade m easures being directed to any particular party.
Developments in the years ahead may be determined in some measure by the out-come of theon-going work at the IFF and the UNCSD.
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