IFC Safeguard Policy Review by RodneySooialo


									                  AMERICAN FOREST & PAPER ASSOCIATION
                  GROWING WITH AMERICA SINCE 1861

                                                           April 29, 2005

Ms. Motoko Aizawa
Corporate Policy Advisor and Program Manager
Environment & Social Development Department
International Finance Corporation
2121 Pennsylvania Avenue, NW, F3P-222
Washington, DC 20433

RE: IFC Safeguard Policy Review

         The American Forest & Paper Association (AF&PA) appreciates this opportunity
to present the U.S. forest and paper products industry’s views regarding the International
Finance Corporation’s (IFC) Safeguard Policy review. AF&PA is the national trade
association of the U.S. forest, pulp, paper, paperboard and wood products industry. The
more than 200 companies and related associations AF&PA represents have a strong
interest in the IFC policy review, especially taking into account that timber and forestry-
related investments are among the top investment priorities of international financial

        The extent to which IFC investments can potentially impact the U.S. as well as
U.S. share in the international marketplaces underscores the importance that this policy
review has for the U.S. forest products sector. The U.S. forest products sector is
committed to conducting sustainable forest practices at the forest management unit level
and believes that all forest enterprises, worldwide should be implementing sustainable
forest management. This requires capturing the value of such sustainable management in
the marketplace through certification. Unsustainable practices such as illegal logging
contribute to the devastation of ecological systems; make products from legally harvested
logs uncompetitive in the marketplace; negatively impact the socio-economics of nearby
communities; discourage legitimate timber producers from investing in sustainable
forestry practices; and undermine public confidence in all forest products.

       At this point in the consultation process, AF&PA would like to submit the
following comments for your consideration, which are specific to forestry practices. We
look forward to the opportunity at a later date to more fully engage in this review and
provide substantive comments on broader elements of the proposed policy.

    1111 Nineteenth Street, NW, Suite 800 ▪ Washington, DC 20036 ▪ 202 463-2700 Fax: 202 463-2785 ▪ www.afandpa.org
                       America’s Forest & Paper People - Improving Tomorrow’s Environment Today
PS1: Social and Environmental Assessment: Assessment Requirements and Third
Party Activity

         AF&PA believes that it is important that the IFC seek to account for third party
activities related to IFC-financed projects, including any transboundary impacts that such
projects might have. This is especially relevant to the forest products sector as many
operations in developing countries have led to unsustainable or illegal practices. In
particular, it is essential that actions of third parties to IFC funded forestry projects that
could lead to or facilitate illegal logging are identified and prevented from proceeding, if
the risks cannot be overcome.

        AF&PA and its member companies are committed to addressing the pervasive
problem that illegal forestry activities present. Illegal logging is a serious issue in many
developing nations where trees are a valuable source of income, but where the basic
tenets of sustainable forestry have not taken hold. The problem is further exacerbated
when countries don’t have the appropriate laws to protect sites of special ecological
importance, and may not have the enforcement means or political will necessary to
identify and punish those who are active in illegal logging.

         A study recently commissioned by AF&PA shows that illegal logging – by
flooding the world market with large amounts of cheap, unsustainable wood – costs U.S.
exporters in the neighborhood of $460 million annually. Illegal practices also depress the
cost of wood on the world market by between seven and sixteen percent. This affects all
forest landowners, big and small, by driving down the value of their legally and
sustainably harvested trees. The presence of illegally procured wood fiber directly
impacts the competitiveness of producers who operate legitimately within national and
international environmental and trade rules. It undercuts legitimate producers and gives
the entire forestry community a bad name. AF&PA strongly supports any measures the
IFC can take that contribute to the elimination of illegal forestry practices.

PS1: Guidance Notes: Supply Chain Management and PS6: Guidance Notes:
Forests (Section 20)

        AF&PA recognizes the commercial leverage that an IFC client can have over a
third party supplier and supports an IFC policy that encourages the client to work with its
suppliers to propose measures and take action to mitigate any risks posed. However, it is
important to keep in mind that policies designed to curb unsustainable and/or illegal
practices, such as illegal logging, if not carefully thought out, can make it more difficult
for legitimate, legal producers to operate, and have little or no impact on the actual
problem. Chain of custody and legality licensing systems, as noted in the Guidelines for
PS6 are certainly one tool that IFC clients can employ to ensure forest products they
purchase are legally sourced and traded. Preferential purchasing policies are also a
means in assisting an IFC client in managing its supply chain.

        Nonetheless, it should be recognized that programs and policies that unduly
increase the cost of operating legitimately merely act as an incentive for the illicit
operators to stay in business. IFC clients should thus be given the flexibility to determine
how best to implement their purchasing policies in order to meet the requirements of the
Performance Standards. The experience of the U.S. forest products industry in
combating unsustainable or illegal practices both domestically and internationally has
been that a flexible, results oriented approach is more effective than prescriptive
measures that many times fail to lead to real improvements. Hence, the IFC should not
require or endorse one particular method or supplier, but work with clients to utilize the
most appropriate approach to ensure a project can make a valuable contribution to
sustainable development.

Performance Standard #6: Conservation of Biodiversity and Sustainable resource
Management and Associated Guidelines

        AF&PA notes that the objectives of Performance Standard 6 derive from the
Convention on Biological Diversity and the recognition of the important role the private
sector can play in protecting and conserving biodiversity in the context of IFC projects.
Conservation of biological diversity, protection of air and water quality, carbon
sequestration, cultural needs and community needs; these are all necessary considerations
within forest management systems. Poverty and a lack of opportunities for economic
advancement are serious concerns in many areas, and can easily overshadow concern for
forests among local populations. However, forests should be advanced as a part of the
solution to these problems. The economic value of forests is significant and the
contribution that production and trade in forests products can make to economic
development is substantial. The commercial utilization of forests by forest enterprises
conducting sustainable forest practices can be an essential means of poverty alleviation.

        AF&PA supports IFC efforts to advance sustainable forest management in
developing countries by promoting forest certification. However, it is imperative the IFC
continues its practice of not singling out any one particular certification system. All
credible certification programs have laudable goals and so it is thus essential that IFC
recognize the fundamental and overarching commonality of the many certification
standards -- to promote sustainable forest management. It is critical to the expansion of
sustainable forest management that the IFC maintain an open and inclusive policy and
support the implementation of the most appropriate certification scheme for any one
particular IFC project.

        It is also important to recognize all credible approaches to chain of custody,
including the certified wood procurement system approach, that have been developed to
ensure sustainable forest management. None of the chain of custody programs in place
today are exactly the same but all of the credible systems do provide assurances that
forests from which products are being made are being managed sustainably.

        AF&PA supports the underlying purpose of the proposed IFC policy and the
commitment to attaining high performance in the social and environmental aspects of its
investment activities. The policy fulfills an important role of bringing together all sectors
that have an impact on forests and assuring that policies for such areas as agriculture,
energy, commerce and others work in concert with the goal of sustainable forest
management. Too often each sector focuses too narrowly on their own sphere of interest,
missing opportunities to create mutually supportive policies and unfortunately, frequently
implementing policies with negative effects on forests.

        AF&PA appreciates the opportunity to participate in this consultative process and
looks forward to submitting additional comments on the proposed consultation draft at a
later date.

                                              American Forest & Paper Association
                                              1111 19th Street NW Suite 800
                                              Washington DC 20036
                                              Contact: Anne Divjak
                                              TEL: 202 463 2721
                                              FAX: 202 463 2772
                                              Email: anne_divjak@afandpa.org


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