Opinion of the Economic and Social Committee on 'The situation and problems of forestry in the European Union and potential for developing forestry policies` (97/C 206/23)

On 21 December 1995 the Economic and Social Committee, acting under Rule 23(3) of its Rules of Procedure, decided to draw up an opinion on 'The situation and problems of forestry in the European Union and the potential for developing forestry policies`.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 3 April 1997. The rapporteur was Mr Kallio and the co-rapporteur Mr Wilms.

At its 345th plenary session on 23 and 24 April 1997 (meeting of 24 April), the Economic and Social Committee unanimously adopted the following opinion.

1. Aim of the opinion

1.1. The aim of this opinion is to examine the importance of the forestry sector - forestry and the forest industry - as a source of raw materials, economic wealth and employment in the EU. The opinion also considers how forestry policies should be developed so as to secure and enhance the role of the forestry sector as a generator of prosperity. As the commercial use of forests is an essential requirement for the generation of prosperity by the forestry sector, both national forestry policies and the EU's forestry strategy should be geared to promoting commercial use.

1.2. The use and management of forests must also be ecologically and socially sustainable. Special attention is focused on the measures required in the EU. However, the point of departure for the opinion is respect for the subsidiarity principle and its application to forest-related issues. Accordingly, the opinion does not take a stand on current national forestry policies or their development.

1.3. In this opinion the term forest industry refers to the manufacture of sawnwood, wood-based panels, woodpulp, paper and paperboard (FAO's definition).

2. The forestry sector in the Member States: present situation and importance

2.1. Multiple-use forestry

2.1.1. The use of forests in Northern countries and in central and southern Europe is best illustrated by the concept of multiple-use forestry, i.e. the integrated use of forests for a wide variety of purposes. The most important use from the EU's point of view is commercial use, that is, the production of raw wood as a raw material for the forest industry, as a source of energy and for the production of cork and resin. Forests are also an important source of Christmas trees, seeds, berries, wild mushrooms and game. In addition, forests are used for various recreational activities and serve a number of important conservation functions (protection of soil and water systems). They also play a central role in the carbon cycle and the preservation of biodiversity. Moreover, a wide variety of cultural values attaches to forests. Respect for this multiplicity of values is an important consideration as regards the use of forests.

2.1.2. Forests constitute one of the EU's key renewable natural resources. They are the source of raw wood, which is processed by the forest industry into consumer goods of various kinds. For the most part, forestry industry products can only be substituted by products which are manufactured from non-renewable raw materials (e.g. metals, coal, oil). In order to ensure that future generations have a chance of survival, the present generation should, as far as possible, endeavour to use raw materials that are based on renewable rather than non-renewable natural resources. Consequently, it is important that the EU ensure that favourable conditions exist for the effective operation of the forestry sector.

2.1.3. Clearly, the way forests are managed largely depends upon the purpose for which they are used: for example, one part may be managed with the aim of maximizing timber production, another with a view to meeting conservation or recreational goals while another is set aside completely from commercial exploitation. However, even the commercial use of forests requires the application of forest management methods which are sustainable and pay due regard to biological diversity. As a rule, the various uses of forests can be easily reconciled with each other.

2.1.4. Although multiple-use forestry is a good description of the way forests are utilized in the Member States, it should nevertheless be noted that patterns of use may vary greatly from country to country and are largely determined at local or regional level, principally by the owners. Thus, whereas in one country the entire economy may be based on the commercial exploitation of forests, in another the use of forests for recreational purposes may be very important. Owing to the differences in the pattern of forest use and the wide range of values that attaches to the use of forests, it is very difficult to formulate a detailed policy on forest use for the entire EU.

2.2. Economic significance of forests and the forestry sector

2.2.1. The forestry sector is of considerable importance for the EU and the economies of the Member States. The value-added of forest industry production (including printing and publishing) amounts to almost ECU 140 billion for the EU as a whole. In the period 1981-1993, the share of the forest industry in the EU's aggregate gross domestic product averaged about 2,4 %, but the shares for individual countries varied widely from 1 % to 6 %. Similarly, the value-added of forestry production is quite considerable in some Member States. The economies of the new Member States are highly dependent on the forestry sector, so that the EU now has more Member States for whom consideration of the interests of the forestry sector in EU decision-making is of prime importance.

2.2.2. However, the economic significance of forests does not consist only of the value-added generated by the forest industry and other forest-related industries. Forests are also a source of other benefits for which markets do not exist and thus whose market value cannot be quantified in terms of money, but which are nevertheless of vital economic importance. One such example is the protection which forests provide against erosion.

2.2.3. Forest industry products are also important export items for some Member States. In 1993, the total value of EU exports of forest industry products was ECU 25 billion (USD 37 billion) while the corresponding figure for exports of raw wood was ECU 0,7 billion (USD 1 billion). The value of forestry exports varies greatly from country to country. Similarly, the share of forest exports in each country's total exports varies substantially, from 0,4 % to 31,5 %. The new Member States are important exporters, in addition to which forest exports account for a large proportion of their total exports.

2.2.4. EU countries are also major importers of forest industry products. Indeed, at ECU 28 billion (USD 41 billion) the value of imports exceeds the value of exports.

2.2.5. With the accession of the new Member States, the EU's degree of self-sufficiency in forest industry products has risen substantially. Nevertheless, there is still potential within the EU for increasing self-sufficiency. Clearly, the degree of self-sufficiency varies between countries, since a prerequisite for the efficient functioning of the single market is that Member States specialize in fields of production in which they have a comparative advantage. However, Member States still import substantial quantities of forest industry products from outside the EU and so there is still scope for increasing self-sufficiency. Raising the degree of self-sufficiency in forest industry products will make for more efficient use of EU resources and thus help to improve the present poor employment situation.

2.3. Importance of the forestry sector as a source of employment

2.3.1. The forestry sector is an important source of economic wealth and jobs in the EU. Some four million people are employed directly by the forest industry alone. Forestry, as a labour-intensive activity, also provides jobs for large numbers of people in silviculture and logging, both forest owners and skilled labour (independent operators of forestry company employees). In many Member States forest holdings are small and a large part of the work is done by the owners themselves. Altogether, there are some 12 million small forest owners in the EU. In many countries the use of forests for recreation and tourism provides even more jobs than timber production. The indirect employment effects of the forestry sector are also very significant and often greater than the direct effects.

2.3.2. The forestry sector is especially important as a source of employment in rural districts. In particular, forestry (logging/harvesting, transport and silviculture) and small-scale establishments in the mechanical wood industry play a key role in helping to preserve the vitality of the countryside.

2.3.3. Unemployment is a serious problem throughout Europe, with the EU's jobless total currently standing at nearly 20 million. Youth unemployment is a particularly difficult problem, being as high as 30 to 40 % in some Member States. Action should be taken to improve the operating environment of the forestry sector so that more jobs can be created.

2.3.4. In many countries, technical progress has generated a rapid increase in productivity in the forestry sector, with a concomitant rapid fall in the amount of labour needed per unit of production. Thus, for example, the workforce required in forestry and the forest industry has actually declined. However, this development has varied considerably from country to country depending on the relative importance of the forestry sector in the economy. Rising productivity has not been unique to the forestry sector but has characterized development in most sectors of the economy. It should, however, be noted that higher productivity enables the European forestry industry to remain competitive on the global market and hence to better preserve existing jobs in the sector.

2.3.5. There is also scope for job creation in the forestry sector. In particular, there should be more investment in small-scale business activities related to forestry, the wood and paper industries, cork production, manufacture of furniture, recreation and tourism.

3. Social, economic and environmental considerations relating to forests

3.1. Change in the objectives of international forestry policy

3.1.1. The conduct of forestry policy has changed in the 1990s along with increasing international cooperation in the field of forest and environment-related issues (see point 5.1). Compliance with criteria drawn up for sustainable forestry has emerged alongside increased efficiency of timber production as an objective of international forestry policy. The criteria emphasize the importance of the economic, ecological and social sustainability of forests. New forums and groups have taken their place alongside traditional players in the field of international forestry policy and are taking a more active part in the forging of forestry and environmental policies. These new forums and groups include intergovernmental conferences and, in particular, environmental and standards organizations promoting the introduction of forest certification at national and international level. Environmental organizations often maintain that they represent the views of consumers on environmental issues, citing market forces and the like.

3.1.2. One of the most important landmarks as regards international cooperation in the field of the environment and sustainable forestry was the United Nations Conference on Environment and Development (UNCED), which was held in Rio de Janeiro in 1992. This was the first occasion on which forest-related issues were addressed on a global basis. UNCED signalled a reorientation of international forestry policy. The outcome of the conference was the adoption of principles on the management, protection and sustainable use of forests and the Agenda 21 action programme aimed at preventing the destruction of forests. The latest FAO report on forestry estimates that approximately 113 000 sq. kms. are lost annually, chiefly in tropical forests and in the developing countries. In addition, conventions were signed on climate change and biological diversity.

3.1.3. The second Ministerial Conference on the Protection of Forests in Europe, held in Helsinki in 1993, continued the forest debate and adopted a general declaration and four resolutions on forests. The follow-up to the Helsinki Ministerial Conference has, in compliance with the UNCED decisions, focused on developing criteria and indicators for the sustainable management and use of forests at European level. Globally, work to promote the application of these principles in the boreal and temperate forest zones has been carried on within the framework of the Montreal Protocol and in tropical forests under the auspices of the International Tropical Timber Organization (ITTO).

3.1.4. In spring 1995, the UN Commission for Sustainable Development set up the Intergovernmental Panel on Forests (IFP) to promote consensus among the relevant parties and to draw up coordinated proposals for forest-related measures.

3.1.5. Trade and environmental issues are addressed mainly in discussions dealing with forest certification and ecological labelling. In addition, environmental management systems are used to improve the way in which firms treat the environment.

3.1.6. In fact, there has been a shift of emphasis away from the objective of sustainable timber production towards the ecologically sustainable management and use of forests. Biodiversity is an integral part of sustainable forestry. Biodiversity must be maintained and increased, and this should be duly taken into account in forestry policies and legislation.

3.1.7. It is widely recognized that forests fulfil a number of functions (timber, cork and resin production, forest conservation, recreation) and that these functions are equally important. This makes it easier to take economic and social aspects of forests into account. In rural districts, in particular, the cultural heritage and the employment of the local population must be safeguarded, citizens' participation in decision-making must be preserved and research and training must be promoted. However, without belittling the significance of the other purposes for which forests are used, timber production remains the most important function of forests. However, society must be made to recognize that, like timber, the other benefits deriving from forests are to be credited to the forest owner and should be valued as such.

3.1.8. The objective of ecologically sustainable forestry has been or is being integrated into Member States' forestry policies by means of international agreements. As this international process has advanced, it has become apparent that, when properly organized, timber production fosters the use of forests for other purposes. A prerequisite for taking account of social and environmental values in forestry practices is that timber production is commercially profitable.

3.1.9. Forestry strategy and Europe's forests are assuming increasing importance in the EU. In accordance with the new objectives of forest policy, social, economic and environmental considerations are now being integrated into policy with a view to achieving more diversified results.

3.2. Criteria and indicators for sustainable forestry

3.2.1. The criteria drawn up in the follow-up to the Helsinki Ministerial Conference stress the simultaneous maintenance of the different functions of forests and the need to further these functions where appropriate. These criteria are of great significance for Member States' forestry policies. The criteria and indicators for sustainable forestry approved by the EU provide a useful benchmark for national measures, with due attention to the principle of subsidiarity. Forest management and use must be economically, ecologically and socially sustainable.

3.2.2. The criteria and the quantitative indicators for monitoring compliance with them are applicable to all Europe's forests and they have been drawn up in collaboration with environmental organizations. Additional indicators are currently being developed at national level in some Member States so that the special characteristics of countries can be better taken into account. In some Member States, regional projects for monitoring practical implementation of sustainable forestry and testing the indicators of sustainability have been launched.

4. The forestry sector in the Member States: problems and opportunities

4.1. Problems

4.1.1. The most serious problems facing forestry relate to the environment. In some countries, air pollution is one of the most important of these problems. It has damaging effects on both trees and forest soils. In the longer term, the only way to save Europe's forests from the ravages of pollution is to permanently reduce pollution levels by cutting back production and consumption, by changing consumption habits or by switching to cleaner production methods as new technologies become available. For example, sulphur dioxide emissions have already been reduced in line with targets whereas efforts to reduce carbon dioxide emissions have been less successful.

4.1.2. Among the other environmental hazards to which forests are exposed are effluents, erosion, groundwater pollution and depletion, forest fires, damage caused by snow and storms and impoverishment of biodiversity. Many of these environmental problems are related to the growth of population and unsustainable consumption.

4.1.3. Forest fires are a particularly serious problem for the Member States in the south of the European Union and cause heavy costs. In the view of these countries, the assistance provided by the EU for the prevention of forest fires and reafforestation of areas swept by fire is inadequate.

4.1.4. The present fire prevention resources could be used more effectively by focusing on pre-emptive measures because reafforestation of areas swept by fire is always the more costly alternative. In addition, a thorough investigation should be made into the causes of forest fires and more effort should be directed to combating the causes rather than to rectifying the consequences. The EU could examine how existing funds could be better put to use in the prevention of forest fires. Research and exchanges of information between Member States should be stepped up. It is particularly important in areas that are at risk from fire to plant native, fire-resistant tree species that are suited to local conditions instead of readily combustible species.

4.1.5. In enacting and implementing environmental legislation, Member States should give equal weight to the economic, social and ecological sustainability of forests, so as not to hinder the development of forestry and limit the scope for creating new jobs and economic wealth in the sector. In most cases it is rural districts where forestry is of great significance as a source of wealth. As was noted in Chapter 3, the twin goals of sustainable commercial exploitation of forests and preservation of the biodiversity of forests are compatible with each other, so that the use of forests should not be restricted unnecessarily.

4.1.6. A problem from the point of view of protection is international differences in concepts relating to environmental protection. Common concepts should be developed for protection areas and measures in the EU but without any reduction in the wide range of protection area categories applied at national level. There is a good reason for these different categories and they are geared to the socio-economic conditions prevailing in each region. A set of common, internationally comparable concepts has already been established for monitoring defoliation in forests. Hence data describing the state of forest protection could be incorporated in the European Forestry and Communication System (EFICS).

4.1.7. The fragmentation of forest ownership is both a problem and a source of opportunities. In some countries fragmentation has gone so far that it hampers the commercial exploitation of forests. Thus one potential resource is left unexploited. It is not clear whether the fragmentation of forest ownership has really led to timber supply problems in the forest industry or whether it is inhibiting the expansion of capacity in the timber industry. Forest owners have been able to reduce the adverse effects of fragmentation to some extent through cooperation, within the framework of the EU's existing competition rules, in, for example the purchasing and marketing of timber (see point 5.1.4).

4.1.8. However, the advantages of widespread private forest ownership outweigh the disadvantages. Traditionally, private forest owners have managed their holdings on a sustainable basis as the aim has been to pass on forests in a healthy state to the next generation. Small-scale private forest ownership lacks many of the problems that afflict large-scale forestry. In the 1990s, much work has also been done in large-scale forestry to promote the diversity of the forest environment.

4.1.9. Similarly, increasing concentration in the forestry industry entails both problems and opportunities. It causes problems in the timber market because it means a further reduction in the already small number of potential buyers and thus less competition. But on the other hand, with the increasing globalization of the forest industry, the European forest industry needs larger firms if it is to compete successfully on world markets. Thus larger firms are the key to the preservation of a strong and profitable forest industry in Europe and the continued exploitation of Europe's forest resources.

4.1.10. In the post-war period, large areas have been afforested with the aid of public funds, which has led to an increase in both the total forest area and timber production. Although the expansion of the forest area is in itself a positive development, the provision of public support in line with EU policies could have adverse effects on competition in European timber markets. As yet, there is no clear evidence that competition has suffered. Afforestation alters the landscape, which is a problem in areas where there is little open landscape or where people are not used to a closed forest landscape.

4.1.11. Although forests are an important source of economic wealth and an essential part of the environment in which we live, the forestry sector has not been taken into account in a comprehensive manner in political decision-making in the EU. This has perhaps been the major policy problem facing the forestry sector. Many decisions taken in the EU have direct or, more often, indirect effects on the forestry sector. Yet no thought is given in taking these decisions to their repercussions on the forestry sector. This may partly reflect the fact that forestry and the forest industry have traditionally been part of the open (exposed) sector of the economy, so that political decision-making has been of notably less significance for them than it has been for, say, agriculture. It also partly reflects the relatively minor importance of the forestry sector in the economies of the 'older` Member States. The forestry, timber and timer-processing sector have won new importance in the EU; special efforts should therefore be made to guarantee the sector's competitiveness vis-à-vis non-EU countries. The interests of the forestry industry should be taken into account in a more effective way in, for example, EU trade policy.

4.1.12. The preservation of forest biodiversity is also influenced to a significant extent by decisions taken in other policy sectors, for example transport policy. Therefore common policy action is needed so that the interests of the forestry sector can be taken on board in an appropriate manner.

4.1.13. A potentially serious problem for the forestry sector is that legal instruments may be used to artificially favour recyclable fibre at the expense of virgin fibre. Virgin fibre and recyclable fibre represent different stages in the life-cycle of the same fibre, and so they should be treated equally. For example, the imposition of taxes on virgin fibre would improve the competitiveness of products made from non-renewable resources in relation to environmentally-friendly wood fibre. Such an artificial lowering in the competitiveness of virgin fibre would result in underutilization of Europe's renewable resources and weaken the carbon dioxide budget.

4.2. Opportunities

4.2.1. Forests are a key renewable resource in Europe. The low level of fellings in relation to forest growth is an indication that EU forests have been managed on a sustainable basis as far as timber production is concerned. As young forests mature the allowable cut will grow further, thus allowing increasing scope for using forests for conservation, recreation and other purposes.

4.2.2. In fact, fellings could be increased in Member States without endangering sustainable timber production and biodiversity. Indeed, a higher level of felling is necessary if the EU is to increase its forest industry capacity and hence its degree of self-sufficiency in forest products. Forest exports to non-EU countries could also be increased. Higher production in forestry and the forest industry would generate new jobs and add to economic well-being in Member States.

4.2.3. By developing forestry and small-scale operations in the mechanical forest industry new jobs can be created in rural districts, thus helping to satisfy a particularly urgent need. One option is to develop a 'network economy`, for example along the lines of the North Italian model. The adoption of new forms of operation requires much in terms of training and information and new markets have to be found for the products concerned. EU funding could be used for these training and information purposes. Direct assistance should not be provided to the enterprises concerned. Rather, the first priority is to create the prerequisites for such activity, i.e. know-how and markets.

4.2.4. Besides being used for timber production, Europe's renewable forest resources are a potential source of energy. A major problem for timber markets in several Member States is the lack of demand for small-sized timber. A market for this type of timber could evolve if this form of energy is developed. Renewable wood-based energy could be used as a substitute for non-renewable fossil fuels, a large proportion of which are imported from outside the EU. Wood-based energy is an environmentally-friendly form of energy, and making use of it would improve Europe's self-sufficiency in energy. The EU should also develop and promote the use of waste paper as an energy source for the same reasons as those cited for wood.

4.2.5. Both virgin fibre and recyclable fibre are valuable renewable resources, the use of which should be promoted. The utilization of recyclable fibre could be increased by building wastepaper incineration plants, and no legal obstacles should be placed in the way of these environmentally-friendly investments. Not even recyclable fibre can be recycled indefinitely, however; at some point in the manufacture of paper, recyclable fibre has to be replaced by virgin fibre. Wastepaper that is not fit for recycling should be used to generate energy. From the environmental view, it makes no difference whether recyclable fibre is used for manufacturing paper or generating energy, and so the market is the most efficient mechanism for determining how it is used. What is essential is that recyclable fibre is used productively and does not end up being transported to the rubbish tip.

4.2.6. Forest-based products are for the most part environmentally-friendly and so their widespread use would significantly reduce reliance on products manufactured from non-renewable raw materials, particularly in the building, furniture and packaging materials industries. By changing their consumption habits in favour of such products, consumers can help to improve the quality of their environment and at the same time make it possible for Europe's indigenous resources to be used more effectively. Such a shift in consumption patterns would also allow inroads to be made into Europe's heavy unemployment. Raising awareness among consumers would require a major information campaign by the EU. The EU should be guided by a long-term strategy, creating the conditions for replacing non-renewable raw materials with renewable ones. The EU should also use its influence to ensure that all legal impediments to, for example, the use of wood in construction and energy production are removed.

4.2.7. The growth of European forests has many direct positive effects on the environment. Forests are an important carbon dioxide sink - they efficiently fix carbon dioxide released by fossil fuels and thus help to improve Europe's carbon budget. Forests add to overall biodiversity and forest growth offers increased opportunities for felling, conservation and recreation.

5. Current forestry sector instruments in the EU

5.1. Forestry and environmental policy instruments in the Member States

5.1.1. Forestry policy comprises various policy instruments which decision-makers use to achieve the objectives they have set for forestry. This definition contains four basic elements:

1) identification of the decision-maker (policy-maker);

2) definition of policy objectives;

3) distinguishing between policy objectives and instruments;

4) policy implementation.

5.1.2. Policy-makers comprise representatives of government and socio-economic interest groups. Various forestry interest groups and political parties also participate in the decision-making process. The point of departure for formulating policy is the definition of policy objectives, often in the face of conflicting interests. The key issue here is: How should forest resources be exploited and developed? Forestry requires planning and control because, in many parts of Europe, tree-growth is slow, so that measures taken today have repercussions reaching far into the future. Among the forest policy instruments traditionally used to achieve the objectives set for forestry are laws and regulations, institutional means, subsidies and taxation, research, education and training and provision of advice and guidance.

5.1.3. Up to the 1970s, forest policy in the Member States focused largely on increasing timber production and expanding the forest industry. Legal instruments have been used with the aim of maintaining and increasing forest resources, for example by requiring forest owners to regenerate felled areas. In several countries, including France, Ireland and the United Kingdom, subsidies have been used to encourage large-scale afforestation so as to increase self-sufficiency in timber supplies. Some measures, such as silviculture, planting, construction of forest roads and afforestation of farmland, are supported in nearly all EU countries.

5.1.4. Forest ownership in the EU is fragmented. At least in some Member States, small private forest owners are being encouraged to form larger operating units so that forest policy can be implemented more effectively. In the Nordic countries, private forest owners have for many decades participated in various forms of cooperation which have served to promote sustainable forestry practices.

5.1.5. In the implementation of forest policy the aim is to influence the behaviour of a selected target group, for example the way in which forest owners manage and fell their forests. The main target group of national support measures in EU countries are private forest owners. Some Member States also invest heavily in training and information. Experience suggests that voluntary measures are the most effective way of influencing the conduct of forest owners.

5.1.6. Although reference has generally been made in forest legislation to the various functions of forests, it was not until the 1980s that concrete measures first began to be taken to promote the use of forests for purposes other than timber production. However, the integration of environmental policy into forest policy may have made it difficult for some forest owners to accept the fact that environmental authorities, who stress protection and landscape values, now have a say in decisions affecting forests. The use of forests for recreational purposes has for long been a focus of interest in, for example, the Netherlands, no doubt because of its large population.

5.1.7. Mirroring international conventions (UNCED, 1992) and resolutions (Helsinki Ministerial Conference), the focus of interest in forest policy has broadened in the 1990s from a narrow concern for purely economic considerations to include consideration of issues related to nature conservation and biodiversity. From being an integral part of national economic policy, forest policy has moved increasingly in the direction of international environmental policy.

5.1.8. One of the EU's key instruments for the preservation of biodiversity is the Directive on the conservation of natural habitats and the Natura 2000 network of protected areas that is to be created on the basis of it. Natura 2000 is identified as an important means of nature conservation in the progress report on the implementation of the EU's Fifth Environmental Action programme. Implementation of the directive is underway in Member States and the areas that will be included in the network are currently being selected and inventoried. In several Member States forests are an important component of environmental and land-use planning and thus the network will include extensive tracts of forest. In some Member States implementation of the Natura 2000 network has caused concern among landowners who feel that insufficient account has been taken of their views in deciding on the protected areas. Decision-making in this area must remain at national level and all interested parties must be consulted.

5.2. The legal framework

5.2.1. The broad outline of possible Community involvement in forestry policy was laid down at the Forest Conference held in Brussels, under Commission auspices, from 9 to 11 June 1959; this has, ever since, formed the core of international discussion papers and strategy documents. The aim has been to maintain forest levels and quality, to coordinate information, research and training, to market timber and to back up operational structural measures.

5.2.2. However, a number of legal aspects must be considered when applying forest policies:

5.2.2.1. The Treaty establishing the European Community makes no provision for a common forestry policy. Articles 2 and 3 (tasks and activities of the EU) make no mention of responsibilities in this field. The conclusion that the allocation of tasks inevitably confers the authority to carry out those tasks is untenable since it would run counter to the 'restricted authorization` principle derived from Articles 189 and 235 of the EC Treaty.

5.2.2.2. However, the substantial and, in the case of privately owned woodland, often operational link between agriculture and forestry may be of importance here since the Community may accrue responsibilities for an area not expressly covered by the Treaty, such as forestry, where these arise from the need to act in another area; in this case agriculture, in which the Community clearly does have responsibility (implied powers). Justification for action in this case does not relate to objectives, as provided for in Article 235, but rather to existing responsibilities under the terms of the Treaty.

5.2.3. Article 43 of the EC Treaty, which outlines the common agricultural policy makes no provision for large-scale forestry policy. The fact that forestry is omitted from Article 38 paragraph 1 (common market) precludes interpreting Article 43 in this wider sense. It is often claimed that the term 'products of the soil` found in Article 38 also includes timber. That may be true, but the claim remains unsubstantiated since timber is not mentioned in Appendix II of the Treaties of Rome.

5.2.4. Targeted silvicultural measures can however be justified on the basis of Article 43 alone. A number of examples exist: Regulation 269/79 (Promotion of forestry in certain Mediterranean zones), Regulation 2328/91 (Structural aid for forest measures) or the far-reaching Regulation 2080/92 with its arrangements to provide aid for the afforestation of farmland.

5.2.5. The introduction of Article 130s in conjunction with Article 130r (environment policy objectives) removed the need for a number of Regulations to be adopted on the basis of Article 235 in conjunction with Article 43. Regulations 3528/86 and 3529/86 on the protection of forests against air pollution and fire were only vaguely linked to the common agricultural policy. Today, the common environment policy offers a suitable legal basis for forest-related issues of this kind, as demonstrated by the relevant amending Regulations (i.e. 1613/89 and 1614/89).

5.3. The Community Forestry Action Programme

5.3.1. The Forestry Action Programme was proposed in 1988 and adopted by the Council the following year. It was improved and expanded in 1992 to collate the various forestry activities undertaken since 1979 into one coherent framework.

5.3.2. The Forestry Action Programme broadly relates to five areas in which there is scope for action:

1) the afforestation of farmland;

2) the development and status-enhancement of forests in rural areas;

3) the promotion of cork as an 'agricultural` product;

4) the protection of forests against air pollution and fire;

5) advice, information and communication (back-up measures).

6. Need to develop national forest policies and EU forestry strategy

6.0.1. The EU needs a forest strategy comprising a range of Community-level actions which secure and foster the use and management of renewable forest resources in a way which is economically, ecologically and socially sustainable.

6.1. An integrated approach to forest management, the environment and timber production

6.1.1. It is vital for forestry that the EU's forest strategy is as effective as possible and makes the greatest possible contribution to the EU's overall welfare. The creation of an integrated strategy has been hampered by the multiple functions which forests serve. For example, a forest strategy can cover the production of timber or other forest products such as cork and resin, environmental measures or recreational use. There must be separate strategies for each of these functions, but at the same time they must be in harmony with each other. However, the main commercial function of forests, the production of timber, should be guided primarily by market forces. As each country has its own social history and culture regarding the use of forests and the relative importance of the various functions varies from country to country, it is only logical that each Member State should continue to formulate its national forest policy in accordance with its own needs.

6.1.2. EU Member States have long applied the traditional instruments of forest policy to regulate the management and use of forests in an effort to increase forest resources and preserve forests for future generations. Indeed, the concept of sustainable forestry has long been a guiding principle of silviculture in Europe. In most cases, policy has been used to create the framework for forest management and use and timber production has been determined by supply and demand within this framework. In addition to timber production and other commercial uses of forests, forests serve other functions for which no markets exist; the important role played by forests as a carbon sink and producer of oxygen is a case in point. These vital non-commercial functions of forests are largely to do with their environmental effects and so they also fall within the sphere of environmental policy. As a rule, both forestry and environmental policy instruments are used to influence these functions.

6.1.3. Forest certification is one example of how market forces are being used to influence the use and management of forests so that non-commercial forest functions are better taken into account. As international cooperation in the field of forestry and environmental issues intensifies and globalization increases, more parties are seeking to influence decision-making on issues related to the use and management of forests. There is a danger here that the commercial exploitation of forests will be restricted unnecessarily.

6.1.4. The experience of several Member States suggests that timber can be produced efficiently whilst preserving the natural features of the forest and attending to environmental needs. Timber production helps to further the use of forests for other purposes and is currently creating the economic base for such activities. The 'use it - or lose it` notion well illustrates the situation pertaining in forestry.

6.1.5. In Europe, forest ownership is broadly based: the state, other public bodies and large companies own extensive tracts of forests whereas privately-owned family holdings are small. The pattern of European forest ownership, as characterized by a large number of individual owners and decision-makers, has guaranteed that the natural features of the forest have been taken into account in forestry practices. For millions of small private owners the forest means not only a source of employment and livelihood, but also the management of natural wealth and the cultural landscape as well as their preservation for future generations. The right of forest owners to take decisions concerning their own holdings must be preserved in the future. Careful consideration must also be given to how many additional new areas should be withdrawn completely from commercial use. In many cases, the biodiversity of nature and the environment can be taken care of by adopting more environmentally-friendly practices in the exploitation of commercial forests.

6.2. Timber production must be market-based

6.2.1. Forestry and forest-based activities are part of the open sector of the economy, and this has helped to ensure efficient timber production. Indeed, timber production is at its most efficient when it is based on the free interplay of market forces. Price should be determined by supply and demand. The creation of an efficient single market, which is the fundamental goal of European economic integration, also requires that there is no distortion of competition in the timber market.

6.2.2. The EU's forest strategy should seek to create conditions conducive to business initiatives in the forestry sector. This applies to both forestry and the forest industry. A favourable operating environment ensures that there is adequate demand for timber and this, in turn, ensures an adequate price. Adequate demand best ensures that forestry resources are exploited in the most efficient way and guarantees that the profitability of forestry is soundly based, but at the same time, the social demands on forests must be borne in mind.

6.2.3. It is important in securing a favourable operating environment for forestry to make sure that forestry activities are not artificially restricted by laws or other means. Thus, for example, regulations governing the recycling of waste paper and the use of recyclable fibre should be consistent with economic and ecological sustainability. However, the EU should promote the use of, and demand for, forest products that are based on renewable natural resources.

6.3. Exploitation of forests as a renewable natural resource is ecologically sustainable

6.3.1. One of the aims of the EU's forest strategy should be to promote the efficient exploitation of Europe's renewable natural resource, i.e. its forests. New jobs can be created and economic wealth increased by fostering conditions favouring the forestry sector. In terms of their ecological properties, wood-based products and other forest products such as cork and resin are superior to commodities manufactured from non-renewable natural resources. The increased use of wood offers new commercial opportunities for the forestry sector. The EU should therefore take steps to create conditions conducive to the substitution of wood-based products for products based on non-renewable natural resources, e.g. in the manufacture of packaging materials, the building industry and energy production. The increased use of small-sized timber, by-products of sawmills (chips, sawdust) and waste paper in energy production would allow the substitution of a renewable natural resource for fossil fuels. Unlike fossil fuels, the burning of wood-based fuels does not lead to a net increase in carbon dioxide in the atmosphere.

6.3.2. Europe's forests are growing at a substantially faster pace than they are being felled, and thus an increasingly larger proportion of the allowable cut is being left unexploited. The EU still imports considerable quantities of forest industry products of the kind that could be produced within the EU. Moreover, given their level of resources, the Member States could afford to increase their forest exports to countries outside the EU. By exploiting the resources of the forestry sector more effectively, the EU could increase the value-added of production in the forestry sector from the present level of ECU 140 billion and the number of jobs in the forest industry from the present level of 4 million.

6.3.3. As there are some 12 million private forest owners in the EU, the additional wealth deriving from more effective exploitation of all forest resources would be widely dispersed. The exploitation of forest resources is particularly important from the point of view of preserving the vitality of the countryside.

6.4. Respect for the subsidiarity principle

6.4.1. Great differences exist between countries as regards the extent and type of forest, the pattern of forest use, the social history of the use of forests and the role of the forestry sector in the economy. Respect for diversity and a multiplicity of values, together with coordination of national forestry policies, will ensure more effective application of the subsidiarity principle.

6.4.2. The subsidiarity principle should be applied in forest-related issues wherever possible. National policies are more effective than centralized policies because they take account of local circumstances and needs. Decision-making should be transferred to the EU only when EU-level measures generate added value.

6.4.3. Forests in EU countries are so different in terms of their biological and ecological characteristics that, for example, it is not possible to draw up detailed common guidelines on forest practice. However, the EU could adopt general principles governing forest management, such as the principle of sustainable forestry. In fact, as far as timber production is concerned, sustainable forestry has for long been the most widely applied management principle, without this having been agreed upon in the EU. Nevertheless, the EU should embrace common principles of this kind so that it can better promote those principles which it judges to be appropriate in international forestry policy. The use and management of EU forests must be economically, ecologically and socially sustainable.

6.4.4. In some cases, forestry policy measures and public aid for forestry are more effective when they are implemented at national level. Scarce resources are allocated more efficiently at national level because the special needs of the Member State concerned are known and action can be tailored accordingly. Of course, each Member State should be responsible for funding aid granted within the framework of its own forestry policy whilst the EU provides common funding under the programmes in which it has decided to participate.

6.4.5. In order to develop and enhance the EU's forestry strategy, a comprehensive study should be made of the effectiveness of current measures affecting the forestry sector, particularly aid granted by the EU. The study should also examine the effects on forest management and use of EU measures in other sectors. Similarly, it is important to find out how current aid policy could be made more effective.

6.4.6. Another question which needs to be addressed is whether it would be more effective in the long run to use EU resources for promoting the marketing of timber, including its use as an energy source, rather than provide direct assistance for afforestation. In particular, EU funds should be allocated to research, training, information and advice and support for rural areas so as to enable the forestry sector to operate and compete more effectively in the longer term. EU assistance for afforestation should focus on improving the quality of forests through such measures as erosion prevention, conservation of groundwater, protection from fire damage or the reafforestation of areas devastated by fire. Funding provided under the Union's structural and regional policy programmes should be used more widely to support the application of economical and environmentally-friendly practices in forestry and the forest industry.

6.5. Need to develop the EU's forestry strategy

6.5.1. Current EU instruments affecting the forestry sector

6.5.1.1. There is already a large body of EU laws, regulations and measures that affect the forestry sector directly or indirectly. The responsibility for the drawing up and application of key EU laws and regulations affecting forestry is divided between various directorates-general of the European Commission. This makes it difficult to take account of forestry policy objectives in a coherent manner. The Committee would like to see better coordination by the relevant DGs in the preparation of forest related issues.

6.5.2. The interests of the forestry sector should be taken into account in EU decision-making

6.5.2.1. Decisions taken in other sectors can cause problems for forestry because they fail to take account of the potential effects on the forestry sector. Not enough attention is paid to safeguarding the interests of the forestry sector in the EU 's internal decision-making because the EU does not have the kind of forest policy or resources that would enable it to do so.

6.5.2.2 One reason for the lack of a fully developed forest strategy at EU level is that the forestry sector was of notably less significance in the EU before the accession of the three new Member States - Sweden, Finland and Austria. Now the situation has changed fundamentally and the interests of the forestry sector should therefore be given appropriate weight in EU decision-making.

6.5.2.3. The EU's forestry strategy should seek to ensure that matters concerning the forestry sector are given adequate attention in other EU policy areas, including regional, social, agricultural, commercial, competition and environmental policy. EU sectoral policies which have a major bearing on the forestry sector should be coordinated in a more comprehensive way within the relevant DGs. If the interests of the forestry sector are to be handled effectively in the EU, the forestry units of DG III and DG VI and the Standing Forestry Committee of DG VI must have adequate powers and play an active role. The activities of the Standing Forestry Committee should be expanded and its status enhanced. In addition, an advisory committee should be set up consisting primarily of representatives from the forestry sector who are responsible for the sustainable management and use of forests, but also representatives of other parties who are actively involved in this area.

6.5.2.4. No provision is made for forestry in the Treaties of Rome and so timber is not a product subject to the common agricultural policy. Timber production has therefore traditionally been a part of the open sector of the economy and closely linked to the forestry industry and the demand for forest industry products. Naturally, forestry and the forest industry have a major role to play in preserving the vitality of the countryside. In many countries, forestry makes a significant contribution to farm incomes.

6.5.3. EU policy and the generation of added value

6.5.3.1. Common action is required in the EU's forestry sector in areas where such action can generate added value. In particular, this includes ensuring that adequate attention is paid to the general prerequisites for the operation of the forestry sector in, for example, regional, social, agricultural, trade, competition and environmental policies, and in the international forestry policy arising from these. In order to create conditions favouring the operation of the forestry sector, the EU should make fundamental improvements in research, training and information, develop the preconditions for the use of bioenergy, including waste paper, and promote a rational paper-recycling policy and the consumption of environmentally-friendly forest products based on renewable resources.

6.5.3.2. International forestry policy is a key component of the EU's forestry strategy because of the potential synergy gains to be achieved by the EU participating in international forestry policy as a single party as opposed to each Member State participating individually. The Member States should first agree among themselves on the objectives to be pursued at international level and then seek to advance these objectives in international forums. For example, the EU could promote the Rio Conventions, the Resolutions of the Helsinki Ministerial Conference and the conclusion of an international agreement on forests. Decisions taken at EU level on issues related to international forestry policy could serve as common guidelines for national forestry policies.

6.5.3.3. The EU should assist developing countries in forest research and in combating the destruction of forests.

6.5.3.4. The EU should focus special attention on combating transboundary air pollution. The forestry sector should take account of environmental considerations related to forests in its decision-making. Cooperation concerning forests and the environment is needed both nationally and within the EU, for example in issues related to protection of forest biodiversity, climate control, reduction of air pollution, combating forest damage and preventing forest fires and the acidification of forest ecosystems. Concepts relating to protection should be standardized by the EU but actual forest protection objectives should be set at national level.

6.5.3.5. The EU could also help to promote the introduction of a voluntary, internationally approved scheme for forest certification. The scheme could, for example, be developed within the framework of an international forestry agreement or under EU auspices. Certification must also take account of countries' differing ecological, biological and socio-economic characteristics. The EU should nevertheless seek to promote the introduction of credible, internationally approved eco-labelling for forests. Eco-labelling should be voluntary and should not distort competition. As far as certification is concerned, the work of the Commission needs to be better coordinated because at the moment several directorates-general are working in this area. As most of Europe's forests are privately owned, the structure of private ownership should be taken into account in certification. However, certification is just one of the forestry policy instruments that can be used to promote sustainable forestry.

7. Summary of conclusions

7.1. Basic objective of the EU's forestry strategy

In view of the importance of the forestry sector as a source of employment and economic wealth in the EU, the basic objective of the EU's forestry strategy should be to promote the commercial exploitation of forests. This will help to safeguard jobs particularly in structurally weak regions and also create new jobs, despite the fact that technological progress will inevitably mean that jobs will be lost as well. According to the notion of multiple-use forestry, forests serve various functions which can be integrated into a smoothly functioning whole. This means that the commercial exploitation of forests is not incompatible with the use of forests for other purposes. Forest management and use must be economically, socially and ecologically sustainable.

7.2. Respect for the subsidiarity principle: priority to national forestry policies

As forests vary greatly from country to country in terms of their ecological characteristics and socio-economic significance, it is clear that the Member States have different forestry policy objectives. Priority should be given to the subsidiarity principle in forestry issues so as to ensure the continued effectiveness of national forestry policies.

7.3. The forestry sector is an important source of employment

Some four million people are employed directly by the forestry industry in the EU, in addition to which considerable numbers are employed in silviculture, the production of timber and other forest products such as cork and resin and ancillary activities such as leisure-time activities and tourism. In addition, the indirect employment effects of the forestry sector are very significant. The further development of the forestry sector is of fundamental importance for the preservation of jobs in rural districts and should be continued in a consistent manner.

7.4. Promoting the commercial use of forests

The guiding principle of the EU's forestry strategy should be to create operating conditions conducive to the use of economical and environmentally-friendly practices in forestry and to improve rural structures and the economic situation of the forest industry. In addition, adequate provision must be made for the social security of people who gain their livelihood from forests and ancillary activities. The commercial exploitation of forests should be based on the market economy and laws and regulations which incorporate the principles applied in EU competition policy.

7.5. Ensuring a favourable operating environment for the forestry sector

The EU's prime concern should be to see to it that favourable operating conditions exist for forestry, to apply coordinated forestry strategies where necessary and to leave detailed management to Member States in the spirit of the subsidiarity principle. EU laws and regulations should be used to promote the sustainable exploitation of forests, not to restrict it unreasonably. EU funding should be used for the protection of forests, support for rural regions, research and training, and the provision of information and advice.

7.6. Promoting the use of renewable natural resources

Forest products are renewable natural resources and the EU should support and promote their use as environmentally-friendly products and as a source of energy.

7.7. Consideration of the interests of the forestry sector in EU decision-making

Numerous decisions are taken in the EU which affect the forestry sector either directly or indirectly. In order to safeguard the interests of the forestry sector, it is necessary to ensure that these effects are taken into account in EU decision-making. The coordination of forest-related affairs within the EU should be improved.

7.8. Common action by the EU as a source of added value

The transfer of decision-making to the EU would enable added value to be achieved in certain forest-related areas, notably combating air pollution, international forestry and trade policy, protection of forests from damage of various kinds and support for rural regions, as well as research, training and provision of information and advice.

Brussels, 24 April 1997.

The President of the Economic and Social Committee

Tom JENKINS