– having regard to the proposal for a Council decision (11964/2007),
– having regard to the draft International Tropical Timber Agreement, 2006 (11964/2007),
– having regard to Articles 133, 175 and 300(2), first subparagraph, first sentence of the EC Treaty,
– having regard to Article 300(3), first subparagraph, of the EC Treaty, pursuant to which the Council consulted Parliament (C6-0326/2007),
- having regard to the opinion of the Committee on Legal Affairs on the proposed legal basis,
– having regard to Rules 51, 83(7) and 35 of its Rules of Procedure,
– having regard to the report of the Committee on International Trade and the opinion of the Committee on Development (A6-0313/2008),
1. Approves the proposal for a Council decision as amended and approves conclusion of the agreement;
2. Reserves the right to defend its prerogatives as conferred by the Treaty;
3. Instructs its President to forward its position to the Council and Commission, and the governments and parliaments of the Member States and to the secretariat of the International Tropical Timber Organization (ITTO).
Text proposed by the Council
Amendments by Parliament
Having regard to the Treaty establishing the European Community, and in particular Articles 133 and 175 thereof, read in conjunction with the first sentence of the first subparagraph of Article 300(2) and the first subparagraph of Article 300 (3) thereof,
Having regard to the Treaty establishing the European Community, and in particular Articles 133 and 175 thereof, read in conjunction with the first sentence of the first subparagraph of Article 300(2) and the second subparagraph of Article 300 (3) thereof,
Reflects the advice of the Legal Service and the Committee on Legal Affairs (Mr Gargani’s letter of 20 December 2007) that the agreement establishes a specific institutional framework by organising cooperation procedures and the failure of the Council to provide any rationale for its rejection of this view.
(4) The objectives of the new Agreement are consistent with both the common commercial policy and the environmental policy.
(4) The objectives of the new Agreement should be consistent with both the common commercial policy and environmental and development policies.
As it stands, ITTA, 2006 is not consistent with the EC's environment and development policies. The Agreement's primary objective remains "to promote the expansion and diversification of international trade", with sustainable use only mentioned as secondary. The consistency of ITTA, 2006 with the EC's environment and development policies therefore remains a desideratum that should be realised through the EU's application of the Agreement.
Recital 7 a (new)
(7a) The Commission should submit to the European Parliament and the Council an annual report with an analysis of the implementation of the International Tropical Timber Agreement,2006 and of measures to minimise the negative impact of trade on tropical forests, including bilateral agreements concluded pursuant to the Forest Law Enforcement, Governance and Trade (FLEGT) programme. Article 33 of the International Tropical Timber Agreement, 2006 provides for an evaluation of the implementation of this Agreement five years after its entry into force. In the light of this provision, the Commission should forward to the Parliament and the Council a review of the functioning of the International Tropical Timber Agreement, 2006 by the end of 2010.
The European Commission shall regularly inform the European Parliament about the application of ITTA, 2006. In doing so, it shall check ITTA's implementation against the EC's own forest law enforcement, governance and trade instruments. As the European Commission did originally not foresee to consult the European Parliament on ITTA, 2006, it is important to remind the European Commission about its obligations to inform the European Parliament about the application of the EC's trade and environment and development policies.
Recital 7 b (new)
(7b) When drafting the negotiating mandate for the revision of the International Tropical Timber Agreement, 2006, the Commission should propose that the current text be revised, placing the protection and sustainable management of tropical forests and the restoration of forest areas that have been degraded at the heart of the agreement, stressing the importance of education and information policy in the countries affected by the problem of deforestation in order to enhance public awareness of the negative consequences of exploiting timber resources in an abusive manner. Trade in tropical timber should only be encouraged to the extent compatible with these prior objectives.
The transfer of know-how and sharing experience and good practice in the forests' governance area will promote sustainable use of timber resources and will help to eradicate illegal timber trade.
Recital 7 c (new)
(7c) In particular, this mandate for the revision of the International Tropical Timber Agreement, 2006 should propose a voting mechanism for the International Tropical Timber Council that clearly rewards the conservation and sustainable use of tropical forests.
The actual predominance of trade against conservation and sustainable use is mirrored by ITTO’s voting structure which gives more votes to producer countries that export more timber. Thus, the ITTO’s institutional system gives greatest influence to those who trade most while there are few rewards for conservation and sustainable use. To be consistent with the EC's environment and development policy objectives, the ITTO's voting mechanism should reward countries that give priority to the conservation and sustainable use of forest resources.
Recital 7 d (new)
(7d) The Commission should by mid-2008 at the latest:
(a) propose a comprehensive legislative proposal that prevents the placing of timber and timber products derived from illegal and destructive sources on the market;
(b) present a Communication determining the EU's involvement and support for current and future global funding mechanisms for promoting forest protection and reducing emissions from deforestation under the United Nations Framework Convention on Climate Change (UNFCCC)/Kyoto Protocol. The Communication should outline the EU’s commitment to provide funds to help developing countries protect their forests, finance a network of protected areas and promote economic alternatives to forest destruction. In particular,in order to ensure real benefits for the climate, biodiversity and people, it should outline the minimum principles and criteria that these instruments should adhere to. It should also identify priority actions and priority areas which should receive immediate funding under these incentive mechanisms.
The public consultation of the European Commission on additional options to combat illegal logging(1) showed that a large majority of respondents prefer binding legislation that requires that only legally harvested timber and timber products are placed on the EU market.
The world’s ancient forests house two-thirds of land-based biodiversity although 80% of these forests have already been destroyed or degraded and the remainder is under threat. Deforestation has been estimated to account for around 20% of global carbon emissions.
The International Tropical Timber Agreement of 2006 can, at best, contribute to the broader objective of ensuring sustainable management of the world’s forests. Such management, in turn, has an important role to play in combating climate change, preserving biodiversity, upholding the human rights of indigenous peoples and contributing to sustainable development.
However a tropical timber agreement can only provide part of an overall effective policy framework for the world’s forests. Any agreement would need to form part of a more general approach also covering temperate forests, demand for timber products and traceability all along the supply chain.
Impact of Previous Agreements
Global deforestation continues. According to OECD estimates, each year an area of original forest cover the size of Greece has been lost, threatening irreplaceable biodiversity with extinction and increasing the risk of global warming.
Although it is more than 20 years since the 1st tropical timber agreement was concluded, over-exploitation and illegal logging remain widespread. Almost half of all logging activities in regions such as the Amazon, Congo Basin, South East Asia and Russia are illegal. Currently the FAO estimates that less than 7% of the global forest area is eco-labelled and less than 5% of tropical forests are managed sustainably.
This has not only led to substantial ongoing deforestation, with serious implications for the longer-term economic well-being of those living in these regions as well as for the healthy functioning of forest ecosystems, but also to violations of the rights of indigenous people. Profits from the illegal exploitation of forests have been used to fund and prolong conflicts in a number of central African countries.
Cheap imports of illegal timber and forest products, together with non-compliance with basic social and environmental standards, destabilise international markets, limit producer countries’ tax revenue and threaten higher-quality jobs in both importing and exporting countries. They also undermine the position of those companies that behave responsibly and respect existing standards.
Given the structure of the ITTO, such problems are far from surprising. The article defining the objectives of the previous and 2006 agreements starts “to promote the expansion and diversion of international trade” before moving on to speak about sustainability. Moreover the ITTO’s voting structure gives additional votes to producer countries that export more timber while consumer member countries’ votes are primarily determined by their average net imports of tropical timber. Thus, for all the rhetoric about sustainability, the system is designed to give greatest influence to those who trade the most. There are few rewards for sustainable management or longer-term thinking.
At the same time, the structure of the 2006 agreement is heavily governmental. It offers no explicit role in policy formulation for Parliamentarians or civil society. Whilst there are provisions for biannual reviews, there is a lack of independent audit of the sustainability of members’ forestry management policies, or their impact on indigenous people.
Need for more joined-up policies
Tropical forests are particularly important with regard to combating climate change as, on average, they store around 50% more carbon per hectare than trees in temperate zones. As the Stern report concluded “a substantial body of evidence suggests that action to prevent further deforestation would be relatively cheap compared with other types of mitigation, if the right policies and institutional structures are put in place.”
It is sometimes argued that EU imports account for a relatively small proportion of the total production of tropical timber. However this overlooks the extent to which this timber is processed in third countries before being exported to Europe or the US as furniture.
The EU has sought to respond to concerns about illegal logging through Voluntary Partnership Agreements (VPA) under the Forest Law Enforcement, Governance and Trade programme (FLEGT). Whilst such bilateral agreements present an opportunity within producing countries to drive change in the forest sector with regards to strengthening governance, improving and better implementing forest and environmental laws, as well as enabling dialogue between government and civil society, these agreements alone are insufficient to control the sale of illegal timber and timber products in the EU market. VPAs have shortcomings (risk of circumvention, limited geographical scope, risk of laundering via third countries, etc.) that could undermine, or even contradict the objective of ending illegal timber imports. Their enforceability also remains open to question.
VPAs could play a useful role provided they are underpinned by legally binding minimum standards to ensure that those taking part in VPAs do not fear being undercut by others who are not subject to such constraints. Although a legally-binding system on a global scale remains a long way off, the European Union should begin to adopt legally binding standards internally as well as instruments for sanctioning non-compliance.
In this context, it is disappointing that the Commission has yet to propose comprehensive legislation to ensure that only timber and timber products coming from legal sources and well managed forests are placed on the European market. In the absence of such legislation, reputable producers and traders will always be concerned that their position could be undermined by those only interested in minimising short term costs.
In addition, public procurement policies that require timber and timber products to be derived from legal and sustainable sources have an important role to play in increasing the attractiveness of producing certified timber as well as showing public authorities’ practical commitment to this goal.
Similarly labelling initiatives such as those of the Forest Stewardship Council, which enable consumers to be confident that the timber they are buying is not merely legal but originates from sustainably managed forests, can usefully supplement international agreements, provided the label is underpinned by independent verification. Such certification is also an essential accompaniment to imports of agrofuels, if the climatic benefits of replacing fossil fuels are not to be vastly outweighed by increased CO2 emissions arising from deforestation.
The EU should ensure that nothing in its bilateral or multilateral trade agreements would limit the scope for implementing such policies. This is of particular importance when it comes to the proposed trade agreement with the countries of South East Asia, where a meaningful sustainable development chapter must address the issues of forest preservation and the fight against illegal logging.
Features of a stronger, more effective agreement
It is disappointing that the 2006 ITTA did not represent a more radical change from the 1994 agreement in view of the limited impact this agreement has had. Had the negotiators wished to tackle the core problem, they would have reversed the objectives of the ITTO and started from the need to ensure the protection and sustainable management of tropical forests and the restoration of forest areas that had been degraded. Trade in tropical timber would then only be encouraged to the extent that it was compatible with those prior objectives.
Such a change would clearly have implications for the revenues of producer countries and their inhabitants who should not be expected to bear the costs of preserving what is a global resource. As noted above, tropical forests have a crucial role to play in combating climate change. The international community should therefore be ready to consider appropriate compensation schemes for those countries that decide to give priority to the longer-term objection of promoting sustainable forests rather than maximising short-term income.
This in turn has implications for development assistance and lending from international financial institutions. Both should seek to ensure that local communities have alternatives to logging where this would not be sustainable and that the cost of preserving the “global commons” that tropical forests represent is shared equitably between nations.
The Parliament's approval of the ITTA, 2006 should be understood as a reluctant endorsement of an unsatisfactory agreement. It should be recognised that the outcome falls well short of what is required to address the problem of loss of tropical forests. The Commission should start to prepare for the next round of negotiations with the objective of ensuring a greatly improved successor agreement.
The ITTA regime needs a complete overhaul and the Parliament's assent to any future agreement will depend on a radical change in the underlying objectives of the agreement. The key objective for a revision of ITTA, 2006 should be the protection and sustainable management of tropical forests. Trade in tropical timber should only take place to the extent consistent with that objective. Accordingly, the Commission should propose appropriate financing mechanisms for countries willing to limit their timber exports and a reorganisation of the ITTO’s voting system to reward timber producing countries that give priority to the conservation and sustainable use of forest resources.
In the meantime, the Commission and Member States should significantly increase the financial resources for assistance to enhance the conservation and ecologically responsible use of tropical forests, to support actions aimed at strengthening environmental governance and capacity-building, to promote economically viable alternatives to destructive logging, mining and agricultural practices, and to enhance the capacity of national parliaments and civil society, including local communities and indigenous people, to participate in decision-making regarding the conservation, use and management of natural resources, and to demarcate and defend their land rights.
Moreover, the Commission and Member States should work in the global arena to advance climate change and deforestation discussions so as to reach agreement within the framework of the UN Framework Convention on Climate Change for an international financing mechanism aimed at reducing carbon dioxide emissions from deforestation and forest degradation and at maximising co-benefits with regard to biodiversity protection and sustainable development.
The Commission and Member States should also work to ensure that Export Credit Agencies, the Cotonou Investment Facility and other International Lending Institutions which fund projects with European public money, use the adopted principle of Free, Prior and Informed Consent before financially supporting any projects in forest areas. Environmental impact assessment and screening procedures for these projects should also be carried out, to make sure they do not fuel deforestation, forest degradation or illegal logging activity.
Finally, there should be strong and rapid progress on the implementation of the FLEGT action plan, including the submission, without further delay, by the Commission of a comprehensive legislative proposal that aims to ensure that only legally harvested timber and timber products are placed on the EU market.
The Parliament as well as other interregional assemblies and national parliaments of ITTO should be fully involved in the implementation of ITTA 2006. To that end, we call
·for the consultation of the Parliament at the earliest possible date, whenever the Community intends to make voluntary financial contributions to ITTA's planned actions via the voluntary accounts of the Organisation,
·for the presentation, by the Commission, of an annual report on the implementation of ITTA as well as on measures to minimise the negative impacts from trade on tropical forests, including bilateral agreements under the FLEGT programme. The Parliament should be fully involved and informed of the progress made at every stage of negotiations on FLEGT partnership agreements.
OPINION OF THE COMMITTEE ON LEGAL AFFAIRS ON THE LEGAL BASIS
Mr Helmuth Markov
Committee on International Trade
Subject: Opinion on the legal basis of the proposal for a Council Decision on the conclusion on behalf of the European Community of the International Tropical Timber Agreement, 2006 (11964/2007 – C6-0326/2007 – 2006/0263(CNS))
Dear Mr Chairman,
At its meeting of 19 December 2007 the Committee on Legal Affairs decided on its own initiative, pursuant to Rule 35(3), to consider whether the legal basis of the above Council proposal was valid and appropriate.
The committee considered the above question at its meeting of 19 December 2007.
Given that the Committee on International Trade is due to vote on its report this December, it may be considered advisable, in order to avoid problems with the plenary vote in the event that one of the Members decides to take up the question of the legal basis, for the Committee on Legal Affairs to take up the question of the legal basis of the proposal for a Council decision on its own initiative pursuant to Rule 35(3) of the Rules of Procedure.
The legal basis proposed is Articles 133 and 175, read in conjunction with the first sentence of the first subparagraph of Article 300(2) and the first subparagraph of Article 300 (3) of the EC Treaty.
It has been suggested that the legal basis ought to be amended so as to refer to the second subparagraph of Article 300(3) rather than the first subparagraph of that provision. This change in the legal basis would give Parliament the benefit of the assent procedure rather than mere consultation.
The lead committee has sought the opinion of the Legal Service, which supports this change in the legal basis.
Pertinent provisions of the EC Treaty
3. The Council shall conclude agreements after consulting the European Parliament, except for the agreements referred to in Article 133(3), including cases where the agreement covers a field for which the procedure referred to in Article 251 or that referred to in Article 252 is required for the adoption of internal rules. The European Parliament shall deliver its opinion within a time-limit which the Council may lay down according to the urgency of the matter. In the absence of an opinion within that time-limit, the Council may act.
By way of derogation from the previous subparagraph, agreements referred to in Article 310, other agreements establishing a specific institutional framework by organising cooperation procedures, agreements having important budgetary implications for the Community and agreements entailing amendment of an act adopted under the procedure referred to in Article 251 shall be concluded after the assent of the European Parliament has been obtained.
The question to be determined is whether the agreement in question establishes a specific institutional framework by organising cooperation procedures.
It is noted, in limine, that it is settled case-law of the Court of Justice(1) that the choice of legal basis of Community acts is to be determined solely by reference to objective criteria that are amenable to judicial review, and in particular the aim and content of the act being proposed.
The content of proposal under consideration consists in seven recitals and two articles approving the conclusion of the International Tropical Timber Agreement, 2006.
Recital 4 states that the goals of the Agreement are consistent with both the common commercial policy and the environmental policy.
The main objectives of the Agreement are addressed in Article 1 of the Agreement as follows: "to promote the expansion and diversification of international trade in tropical timber from sustainable managed and legally harvested forest and to promote the sustainable management of tropical timber producing forests". The Agreement is organised in chapters as follows: objectives, definitions, organisation and administration, International Tropical Timber Council, privileges and immunities, finance, operational activities, statistics, studies and information, miscellaneous, and final provisions.
It is noted that, in its draft report of 7 November 2007, the Committee responsible qualifies its approval of the International Trade Timber Agreement "as a reluctant endorsement of an unsatisfactory agreement". The Rapporteur complains that the outcome of the Agreement "falls well short of what is required to address the problem of loss of tropical forest".
As far as the concept of a "specific institutional framework" within the meaning of the second subparagraph of Article 300(3) is concerned, it is observed the Court of Justice has yet to cast any light on how is it to be interpreted.
In view of this, it is considered worthwhile setting out some general considerations about the rationale for providing for the use of the assent procedure in the second subparagraph of Article300(2) as opposed to the consultation procedure laid down in the first subparagraph of that provision.
The assent provision is provided for four types of acts:
-agreements having important budgetary implications for the Community;
-agreements entailing amendment of an act adopted under the codecision procedure;
-agreements establishing an association involving reciprocal rights and obligations, common action and special procedures;
-agreements establishing a specific institutional framework by organising cooperation procedures.
It may be argued that provision is made for the assent procedure on the following grounds. The first two cases reflect Parliament's role in the budgetary procedure and in the codecision procedure, respectively.
For their part, the agreements covered by the third and fourth indents above have one aspect in common, namely the intention of setting up a complex permanent structure having a certain autonomy from the parties under which rules binding on the parties other than those contained in the agreement itself may be adopted. Where an association is established, the structure is likely to be more sophisticated than it is where a specific institutional framework is established by organising cooperation procedures. It may be argued that the assent of Parliament is required because the agreement in question is "incomplete" in the sense that the attainment of its objectives does not depend only on the rules expressly laid down in the text of the agreement itself. The parties will be not bound only by the rules set out in the agreement but also by rules which will be established as the result of the procedures set up in it. The resulting degree of uncertainty as to what actual duties will arise out of the Agreement requires the guarantee of parliamentary assent.
The question to be answered, therefore, is whether or not the agreement under consideration falls within the category of "agreements establishing a specific institutional framework by organising cooperation procedures".
The essential elements which have to be present if the second subparagraph of Article 300(3) is to apply are functionally linked: namely "cooperation procedures" have to be organised and there has to be a "specific institutional framework".
The main objective of the agreement is "to promote the expansion and diversification of international trade in tropical timber from sustainable managed and legally harvested forest and to promote the sustainable management of tropical timber producing forests" (Article 1). To achieve this, the Agreement provides for some elaborate tools.
First, Article 3 provides that "The International Tropical Timber Organisation (...) shall continue in being for the purposes of administering the provisions and supervising the operation of this Agreement".
The functioning of the organisation is to be assured by the Council (Article 6), the committees and other subsidiary bodies (Article 26), the Executive Director and the staff (Article 14).
The Council is stated to be the "highest authority of the Organization" and is to consist of representatives of each member.
One of the Council's most important powers is to "take such decisions as are necessary to ensure the effective and efficient functioning and operation of the Organisation" (Article 7, point (b)). To this end, Articles 10, 11 and 12 set out the rules governing the decision-making process and the voting procedure. The distribution of votes depends on whether the member is a producer or a consumer, In the case of producers, regard is had to "respective shares of the total tropical forest resources" and "respective net exports of tropical timber" (Art. 10, para. 2). Votes are assigned to the consumers having regard to the "average volume of their respective net imports of tropical timber" Art. 10, para. 4).
It is important to note that decisions are not only to be taken by consensus. Even though it is provided that "the Council shall endeavour to take all decisions and to make all recommendations by consensus", the second paragraph of Article 12 provides that "if consensus cannot be reached, the Council shall take all decisions and make all recommendations by a simple distributed majority vote, unless this Agreement provides for a special vote". Another relevant rule is set out in Article 13 concerning the quorum for the meeting of the Council, since it appears that it is not necessary for all representatives to be present in order for decisions to be adopted.
The importance of those provisions becomes manifest when they are read in conjunction with Article 29, para. 2, which provides that: "Members undertake to accept and carry out the decisions of the Council under the provisions of this Agreement and shall refrain from implementing measures that would have the effect of limiting or running counter to them". In other words, decisions of the Council will be binding even on those parties whose representatives did not agree with the adoption of the act or who were not present at the meeting.
Furthermore, Article 17 confers legal personality to the Organisation and the "capacity to contract, to acquire and dispose of movable and immovable property, and to institute legal proceedings".
Finally, account must be taken of the establishment of "the Administrative Account, which is an assessed contribution account", "the Special Account and The Bali Partnership Fund, which are voluntary contribution accounts", and "other accounts that the Council might consider appropriate and necessary" (Article 18) and of the Council's major functions relating to membership of the Organization and the existence of the agreement (arts 30, 31, 32, 37, 40, 42, 44 and 47).
In the light of the analysis carried out above, it is considered that the agreement establishes a "specific institutional framework".
At its meeting of 19 December 2007 the Committee on Legal Affairs accordingly decided, unanimously(2), to recommend that the legal basis should be changed so as to refer to the second paragraph of Article 300(3) of the EC Treaty, which requires the assent and not merely consultation of Parliament.