International Seminar in Tokyo for
Tackling Illegal Logging
Michael Virga, Executive Director
American Forest & Paper Association
February 27, 2007

Outline• Japanese governmentguideline• US as a low risk supplier• US as high performancesupplier– certification• Industry efforts• Other Needs to Address
Illegal Logging
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Government Guideline• Significant step to distinguish legal
and sustainable sources• Recognizes all credible forest
certification systems• Accepts verifiable Codes ofConduct• Enables flexibility in the types ofacceptable documentation

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US – Japan Trade••••••

U.S. is a major exporter of forest products.
Last year, the U.S. exported $6.3 billion in woodproducts.
Japan is the 2nd largest customer -- $716 million.
Meeting customer needs is of criticalimportance to U.S. producers.
U.S. is a very low risk supplier with respect
to products produced from illegally
harvested timber.
U.S. is a high performance producer withrespect to the practice of sustainableforestry.

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Profile of U.S. Forest Resources• One-third of US is forested• Area of forest land has
remained stable
350
300
25020015010050195319621977

Timberland*

19871997

2002

Other Forest

Area of US Forest and Timberland

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Profile of U.S. Forest Resources
350
Million Ha

300
250200150
100501953
1962
1977
1987
199720020Timberland

Other Forest

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Growth Exceeds Removals

Billion M3

Net GrowthRemovals

700
600
500
400
300200100

192019331952

19621970

1976

1986

1996

2001

Source: USFS 2002 RPA Database Tables

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US Timber Inventories(Net of Removals)
450400Billion M33503002502001501005001953 1962 1970 1977 1987 1997 2002Softwood

2010 2020 2030 2040 2050Hardwood

Source: USFS 2002 RPA Database Tables and 2002 RPA Timber Assessment

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How Do We Know This?
• Forest Inventory & Analysis System (FIA)– US Forest Service and State Forest Agencies– Fixed Sample Plots Across US (and remotesensing)– One plot every 2400 hectares– Periodic (and now annual) measurements– forest area and location; species, size, and healthof trees; tree growth, mortality, and removals;
wood production and utilization rates by variousproducts; forest land ownership.

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Over 70% of US timberland isprivately-owned
10%

19%
PrivateNational Forests
Other Public

Private71%

Total Area = 204 Million Hectares
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Private lands supply 90% of thetimber produced in the US
National Forests
4%

Other Public
6%

Private90%
Source: Seneca Creek Estimates for 2005
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U.S. Legal Framework• U.S. has no single national“forestry law”
• But several federal laws directly
affect forest practices• States are empowered to regulate
forest practices and many do soin different ways.

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Federal Law• Federal laws that impact forestry
include:– Endangered Species Act (ESA)– Clean Water Act (CWA)– Clean Air Act (CAA)– Federal Insecticide, Fungicide andRodenticide Act (FIFRA)– National Environmental Policy Act (NEPA)– Occupational Safety & Health Act (OSHA)

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State Laws & Regulations••

Laws & regulations vary by stateStates have different processes for monitoring and/orcontrolling forest practices• Some 276 state agencies have some role inoverseeing forestry activities in the 50 states• At least 15 states have specific regulatory programs• All states have programs governing water quality
protection -- 37 have regulatory programs specific to
non-point source water pollution of the kind linked tosome forest practices.
• Federal and state laws are strictly enforced

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Timber Theft:
Not a Significant Issue in the US• Timber theft is not widely considered a major
problem in the United States although it doesoccur• Private ownership tends to minimize
incidences of timber theft and ensures thatculprits are prosecuted• Uniform Commercial Code applies tocontracts• Landowners are always advised to enter into
written contracts so that provisions can be
enforced in a court of law• Landowners can bring lawsuits against
crooksIMPROVING TOMORROW’S ENVIRONMENT TODAY®

Governance Indicators• World Bank Governance indicators are usefultools to compare countries• WB Governance Indicators measure six
components of good governance:– (1) voice and accountability;– (2) political stability and absence of violence;– (3) government effectiveness;– (4) regulatory quality;– (5) the rule of law; and– (6) control of corruption.

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(Chosen comparator also shown for selected countries)

Normalized Rule of Law Index

2HIGH

UNITED STATESWorld Bank Governance Indicators
Rule of Law - 2005

310-1-2

208 Countries-3LOW

Note: Blue dots represent estimates forthe 2005 governance indicators. The thin
vertical lines represent standard errors
around these estimates for each country
in world-wide sample. Black dot
represents the chosen year comparator(if any). To add or delete countries fromthe chart, click on the "Country Selection"tab below.

Source: "Governance Matters V: Governance Indicators for 1996-2005 " by Daniel Kaufmann, Aart Kraay and Massimo Mastruzzi.
Disclaimer: The governance indicators presented here reflect the statistical compilation of responses on the quality of governance given by a large number ofenterprise, citizen and expert survey respondents in industrial and developing countries, as reported by a number of survey institutes, think tanks, nongovernmental organizations, and international organizations. The aggregate indicators in no way reflect the official position of the World Bank, its ExecutiveDirectors, or the countries they represent. As discussed in detail in the accompanying papers, countries' relative positions on these indicators are subject tomargins of error that are clearly indicated. Consequently, precise country rankings should not be inferred from this data.

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US Compared to 200+ Countries
WB Governance Indicators
WB Indicator

US Percentile

Rule of Law

92%

Control of Corruption

92%

Regulatory Quality

93%

Government Effectiveness

92%

Voice & Accountability

89%

Political Stability & Absenceof Violence49%

Source: World Bank
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Certification on a Global Scale
Certified forest area (million hectares)
300250200150
1005001996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
(Jun)

Year (in December unless otherwise stated)
FSCSFIPEFCCSA

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MTCC

Certification in the US• The use of certification systems inthe US is also increasing.
• Participation in SFI is a condition ofAF&PA membership• 60% of all U.S. wood products• 90% of all pulp & paper

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U.S. Government Procurement• Green purchasing increasing being
incorporated into policies• Mostly recycled content for paper• US not requiring proof of legality orsustainability as condition of purchase• US jurisprudence tends to put burden ofproof on authorities claiming legality
problem• US government is certification neutral• But incorporates preferences related to“green” building that indirectly favorcertified products
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US Efforts on Illegal Logging• Support of US Government
Efforts– PIAIL– Indonesia MOU• AF&PA Sponsored Study• AF&PA – CI Partnership• AHEC Project

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Address Causes• Protect protected forests• Tackle corruption• Clarify tenure, jurisdictions andlegal obligations• Improve information• Address land use (conversion toagriculture)

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Policy Pitfalls• Need to be more targeted to besuccessful• Markets can easily shift• May be WTO challengeable• Risk of widening gap between
illegal and legitimate production

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Goal: Reduce the Cost Spread
Legitimate Material

Cost

GOAL

Illegal Material + RISK

Source: Seneca Creek Associates, LLC
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