RESTRICTEDWORLD TRADE
ORGANIZATIONG/TBT/W/96
9 November 1998
(98-4411)
Committee on Technical Barriers to Trade Original:  English
NOTIFICATION OF THE GOVERNMENT OF THE NETHERLANDS – PROPOSED
LEGISLATION ON THE COMPULSORY LABELLING OF TIMBER AND
TIMBER PRODUCTS (WOOD AND WOODEN PRODUCTS)
Submission by Malaysia
Malaysia has reviewed the World Trade Organization document G/TBT/Notif.98.448 dated
2 September 1998, wherein the Government of the Netherlands proposes to amend the Act on
Environmental Protection (Sustainably Produced Timber).
1. As one of the leading producers of tropical timber in the world, Malaysia would like to
register its concern on the proposed amendment of the Netherlands Government's Environmental
Protection Act which requires, with effect from 1 July 1999, "persons placing a wooden product on
the market for the first time, to keep records concerning the origin of these products" and, with effect
from 1 January 2000, labelling of timber and timber (wood and wooden) products into either "green"or "red".
2. Malaysia believes that the proposed amendment is contrary to various articles and provisions
of a host of multilateral arrangements, agreements and/or conventions such as those under the World
Trade Organization (WTO), the European Commission, the United Nations Intergovernmental Forum
on Forest (IFF) process arising from the UNCSD and the International Tropical Timber Agreement
(ITTA).  The Government of the Netherlands is a member of ITTO and is obliged to follow the
provisions of the International Tropical Agreement (ITTA) 1994 in promoting " the expansion and
diversification of international trade from sustaina ble sources by improving the structural conditions
in international markets and the improvement of market access" as provided under Article 1(e) of the
Agreement.  The proposed legislation is discriminatory and would effectively create an obstacle to
international trade.
3. More specifically, the proposed legislation violates Article 2.2 of the TBT Agreement as it is
not only mandatory but also aimed at addressing perceived
 environmental concerns in the territory of
other WTO members.
4. Any unilateral discriminatory action such as this proposal would have deleterious effect on
the export earnings of developing countries.  Market access would be adversely affected and this
would have negative consequences on their ability to undertake long-term efforts towards sustainableforest management.
5. On its part, Malaysia, also a member of the International Tropical Timber Organization
(ITTO) has taken steps to operationalize the ITTO gu idelines on criteria and indicators on sustainable
forest management and is committed to achieving the ITTO year 2000 Objective whereby all timber
traded will come from sustainable forest by that year.  Malaysia is fully prepared to meet itsinternational obligations and is committed to sustainable forest management (SFM) implementation
towards sustainable development.  The Government of Malaysia has therefore allocatedG/TBT/W/96
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RM1.7 billion (about US dollar 413 million) between 1998-2002 to implement sustainable production
of timber while at the same time providing protection to biological diversity and the environment.
6. In a mid-term review on performance of ITTO members, ITTO has also identified Malaysia
as one of the three tropical producer countries which have a realistic prospect of being able to bring
their entire productive forests under sustainable forest management in line with the ITTO Year 2000Objective.
7. Labelling for timber and timber products should be consumer-driven and market-based.
Participation should also be on a voluntary basis.  If incentives to subscribe to timber labelling are
strong enough, importing countries would not need to introduce unilateral legislation discriminating
against imports of timber from unsustainable sources.
8. In this regard, Malaysia notes that the Intergovernmental Panel on Forests has urged countries
to "consider the mutually supportive relationship between sustainable forest management trade, and
voluntary certification schemes, and endeavour to ensure, as necessary, that such schemes are not
used as a form of disguised protectionism and do not conflict with international obligations."
9. As timber labelling is an attempt to link trade,  particularly international trade to sustainable
forest management, this may give consumers the impression that unlabelled products, including those
that have yet to be assessed have been produced in an environmentally unsustainable way.  Moreover,unless carefully implemented, certification may act as a non-tariff barrier to trade by discriminating
either intentionally or unintentionally against those unable to achieve the required forest management
standards.
10. The proposed draft legislation is a barrier to trade as it would unfairly impede the import of
"red" labelled timber and timber products.  This is not in accordance with the spirit of the WorldTrade Organization (WTO) which aims at reducing barriers to trade and to eliminate discriminatory
treatment in the conduct of international trade.
11. The international community has deemed it fit to work collectively through open dialogues to
achieve the common goals of SFM.  Timber certification has been promoted as a market driven tool to
encourage SFM.  Despite immense financial implications in implementing timber certification,Malaysia is actively pursuing this process to fulfill international commitments and its long-term
objective of sustainable development.  Many developing countries may not be that fortunate to
implement SFM and they need greater market access instead of new conditionalities for timber trade.
It is therefore regrettable that the Parliament of the Netherlands has chosen to pursue a process that
will impose conditions on other trading countries.
12. Presently, there is an ongoing debate on what constitutes SFM.  International understanding
on the subject has yet to be reached.  The draft legislation by the Parliament of the Netherlands istherefore untimely as it represents its own interpretation of the term SFM and it would be
unacceptable for Malaysia if its interpretation of SFM is imposed on Malaysia or any other
WTO Member.  The attempt by the Parliament of the Netherlands to implement its own labelling
scheme can be interpreted as an extra-territorial imposition of its product and process methods which
are essentially aimed at meeting its domestic agenda.  Moreover, the development of criteria andindicators for SFM should take into account the regional characteristics of forest and the diversity of
economic, social and cultural environments.  As such, the forest management plan of a country would
invariably differ from country to country.  Therefore, the requirement that a country's forest
management plan be approved by the Council of Accreditation, presumably established by the
Netherlands cannot be acceptable to another sovereign state.G/TBT/W/96
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13. Compulsory labelling of timber will not help reduce the rate of deforestation, as a recent
study on the nature and cause of deforestation have indicated that external factors such as
demographic pressure, changing consumption patterns, expansion of subsistence agriculture and large
economic development programmes are the main causes for forest loss.  The causes of global
deforestation and the role of labelling timber as to whether it will promote sustainable forestmanagement in the producing countries, have yet to be ascertained, and these issues are still being
deliberated by the United Nations Intergovernmental Forum on Forest (IFF).
14. For the foregoing reasons, Malaysia considers the proposed amendment of the Government of
the Netherland's Act on Environmental Protection (Sustainably Produced Timber) as inappropriate
and therefore urges the Government of the Netherlands to reconsider its proposed amendments, as
notified under the WTO document G/TBT/Notif.98.448 dated 2 September 1998.
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