Chatham House Workshop: A future strategy for VPAs

Chatham House Workshop: A future strategy for VPAs

Date: 5^th February (afternoon) - 6^th February 2013

Context

The FLEGT Action Plan, agreed in 2003, represented a unique approach to improving forest governance, based as it was on the assumption that forest governance could be improved through using market incentives. A key element of the Action Plan has been the Voluntary Partnership Agreements (VPAs) between the EU and producer countries. Six such agreements have now been finalised and negotiations are under way with a further six countries.

The VPAs have yet to be implemented and their long term impact on the forest sector and timber trade remains untested. However, there are a number of developments within the sector that mean it is necessary to begin to reflect on the best strategy for the coming years, namely whether:

-          VPAs should continue to be negotiated in new countries, perhaps with the ultimate aim of establishing regional or global licensing schemes;

-          new approaches should be adopted, but ones that can leverage the particular features of a VPA;

-          the VPA approach should remain targeted at the existing VPA countries and those currently in negotiations, and any relationships with new countries should be through other routes, such as ‘traditional’ development projects.

One of the key developments prompting this debate has been the significant number of timber producing countries that have expressed interest in the VPAs – to date some 15 countries (in addition to those that are negotiating or have agreed VPAs) have been in discussions with the EU to explore this further. These countries have different trade relationships with the EU, with no significant timber trade in some cases, raising the question of whether the VPA model is in fact the most appropriate and so whether a different approach should be adopted.

Further, over the last decade, since the FLEGT Action Plan was launched, there have been significant shifts in the trade of timber, in particular, with the growing importance of a number of countries, most notably China, as processing hubs. All of the VPAs agreed to date cover all timber exports (and not just those to the EU), however the fact that increasing amounts of timber are going via processing countries, rather than direct to Europe, increases the difficulty of monitoring supply chains – as will be necessary under the EU Timber Regulation. Another trend has been the growth in consumption of wood in many producer countries and their neighbours, and domestic and regional markets are now significant in many parts of the world. If the timber supplying these markets is not also better regulated, there is a risk of undermining the achievements being made in legalising the timber trade to Europe. One approach to addressing both of these issues could be through establishing regional or global licensing schemes, an idea that has been considered previously but should now be revisited.

Another change in the last decade has been the rise in prominence of climate change and REDD+ in the political agenda, both internationally and nationally. This is to be welcomed, however there are concerns that these discussions are distracting from FLEGT and further, that the two processes are often completely disconnected. This raises the question of whether there is the potential to link VPAs with REDD, to help coordination of efforts and potentially increase resources for VPAs. Finally, the number of bilateral trade agreements has continued to rise and this trend looks set to continue. This raises the question of whether VPAs or elements of these agreements could be included as part of broader trade agreements, potentially providing a means of building in additional incentives for implementation and enabling additional resources to be leveraged.

Content of the workshop

The workshop will enable discussion of the current and forthcoming challenges to further expansion and/or development of the VPA approach. It will begin with an analysis of the current context before considering options for the future.

Analysis of the current context:

-          What are the unique characteristics of VPAs and what are their strengths & weaknesses?

-          What is the ‘business’ case for increasing the number of VPAs with Europe?

o   Can the EU’s demand for tropical timber be met by those countries that have signed VPAs? If so, will there still be a market incentive for new countries?

o   Will broader engagement increase timber prices so that the costs of legality compliance can be borne by the industry?

-          What are the drivers for both current and potential VPA partner countries in engaging in this approach? Do the drivers for engagement have an impact on outcomes?

-          What are the key characteristics of potential new ‘partner’ countries? (trade relationships with EU; structure of forest sector;…) Given these, what are the opportunities for engaging with them?

Ways forward:

A number of different possible approaches to moving forward with, or further developing VPAs, will be elaborated in advance of the workshop, and these will be described in short background papers to be presented at the workshop. This approach will facilitate in-depth discussion of possible ways forward and consideration of their implications.

For each of the approaches to be developed, the following questions will be considered:

-          What have we learned from our experience with VPAs to date that suggests this is the way forward (technical, political,…?)

-          What do we know about potential new countries that suggest this is the way forward?

-          What might this approach achieve if it were brought to fruition?

-          What are the technical, political, legal challenges to achieving this?

-          What would be the potential risks, including to existing VPAs?

The options to be considered include:

-          regional / global licensing schemes;

-          linking VPAs with other agreements / processes;

-          finance / tenure model.

Workshop format

The workshop would take place at Chatham House. It would be held in roundtable and under the ‘Chatham House Rule’. There would be a maximum of 35 participants, representing the following organisations:

-          EC

-          EU delegations

-          EFI

-          VPA country government / civil society representatives

-          DFID

-          EU civil society (Fern, Global Witness, EIA, Traffic)

-          Think tanks / academia (ODI, IIED, Forest Trends, CIFOR)

-          Other development agencies (FAO, World Bank)

Outputs

A report of the workshop discussions would be published, in the form of a ‘policy brief’, outlining recommendations for next steps.

Outline Agenda

Tuesday February 5^th:

14.00 – 15.30: Introductory session & setting the context

-          Introduction: aims of the workshop

-          Setting the context

o   The characteristics of VPAs

o   The appetite for VPAs in Europe – business case & political realities

o   The drivers for engagement amongst current and potential partner countries

o   Characteristics of potential new partner countries & opportunities for engagement

15.30 – 16.00: Coffee

16.00 – 17.30: Setting the context, continued

Wednesday February 6^th:

9.00 – 10.30 Regional or global licensing schemes

10.30 – 11.00: Coffee

11.00 – 12.30: Linking VPAs with other processes

12.30 – 13.30: Lunch

13.30 – 15.00: Finance / tenure VPA

15.00 – 15.30: Coffee

15.30 – 17.00: Discussion – next steps