Analysis of International Wood Products Trade and their administrative Governance in the Region of Central America and Dominican Republic
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1 Analysis of International Wood Products Trade and their administrative Governance in the Region of Central America and Dominican Republic International Wood Product Association, Annual Convention at the Vinoy Renaissance Resort and Golf Club, St. Petersburg, FL; March 5-7, 2014 Guillermo A. Navarro M. Oscar J. Santamaría G. Luis Carlos Vargas B. Víctor Milla Q.
2 CONTENTS 1. Objectives of the Study 1. Some Wood Trade Statistics 2. Administrative governance on Wood Products Trade 1. Main Findings
3 1. OUR OBJECTIVES 1. Provide baseline information on wood product trade dynamics in the region using official statistics: For 8 countries of CA-RD region For Intra-regional and Extra-regional trade (Main markets) For 7 wood products (44 & 94) For a period of 11 years ( ) 1. Analyze wood product trade discrepancies among countries, and understand their administrative procedures. Import and Export procedures for 8 countries
4 1. RELEVANCE Why is this study important for the region and for international buyers? 1. Evaluating potential use of WP trade statistics to improve traceability as part of the legal trade verification system (Credibility). 2. Understanding WP market dynamics and provide strategic commercial guidance (Decision making). 3. Governance: Identify potential barriers to competitiveness of the region regarding administrative procedures on WP trade (transaction costs). 4. Provide a basis of information to exercise Due Care (Lacey Act) and Due Diligence (EUTR) (Information access for traceability)
5 1. OUR HYPOTHESIS Country of Origin Trade Country of Destination Source of information (+) Range of legal or registered trade (-) Registered Not Registered Legal exports Clandestine exports Legal Trade Wood products Laundering Clandestine trade Legal imports Evidences? Clandestine imports Statistics Discrepancies (+) Formality of the Market (-) Statistics 5 Field Work
6 2. STATISTICS What are the main international export markets of wood products of the CA-RD region? TOTAL EXPORTS FROM THE REGION TO THE INTERNATIONAL MARKETS IN 2011: 190 MILLIONS USD
7 2. STATISTICS What are the main import markets of wood products to the CA-DR region? TOTAL IMPORTS FROM THE INTERNATIONAL MARKETS TO THE REGION IN 2011: 589 MILLIONS USD
8 Fuente: UN comtrade 2. STATISTICS Total Wood Products export from the region to Europe in 2011(MILLIONS USD) 1 3 2
9 2. STATISTICS Total Wood Products export from the region to the to USA in 2011(MILLIONS USD) 3 1 2
10 Valor (miles USD) What is the main exporter and importer of wood products in the CA-DR region in timber value in 2011? Total trade in wood products (in items 44 and 94) for AC-DR countries for 2011 in terms of value (thousands USD) Belice Costa Rica El Salvador Guatemala Honduras Nicaragua Panamá República Dominicana Importer Exporter 1 DOM CRI 2 PAN GTM 3 CRI PAN 4 GTM HND Importaciones Exportaciones Fuente: UN comtrade
11 Valor (miles USD) What are the main wood products exported from each country (in value) of the CA-DR region in 2011? X miles usd Major export products CA-DR countries for the year 2011 according to the value (thousands of USD) Embalajes y tarimas (44) (CRI, GTM, HND, NIC) Leña y Carbón (44) (HND, DOM, SLV, GTM) Madera Aserrada (44) (GTM, HND, NIC, PAN) Otras manufacturas de madera (44) (GTM, HND, PAN, CRI) Tableros y paneles (44) (GTM, CRI, PAN, HND) Troncos (44) (CRI, PAN, SLV, HND) 0 Belice Costa Rica El Salvador Guatemala Honduras Nicaragua Panamá República Dominicana Muebles de madera (94) (GTM, SLV, PAN, HND) Fuente: UN comtrade Ranking of countries in parentheses
12 What has been the export performance by Country? X miles usd Export performance of wood products (items 44 and 94) for CA-DR countries in the period according to the value (thousand of USD) Fuente: UN comtrade
13 What has been the export performance by Market? X miles usd Export performance of wood products (items 44 and 94) by market for CA-DR countries in the period according to the value (thousands of USD) Fuente: UN comtrade
14 Possible reasons for discrepancies: The example of panels and plywood between Honduras-El Salvador trade statistics in 2011 Trade discrepancies in panels and plywood between Honduras El Salvador, Year 2011 Volume (m3) Trade discrepancies FOB-CIF (miles USD) CIF-CIF (miles USD) % % % Possible reasons: Classification criteria? Typing errors? Fiscal evasion? Illegal trade? HND reported that exported to SLV: Volumen (m3) FOB-CIF (miles USD) CIF-CIF (miles USD) HND SLV reported that imported from HND: SLV Volume (m3) FOB-CIF (miles USD) CIF-CIF (miles USD) Fuente: UN comtrade
15 Possible reasons for discrepancies: The example of pallets between C.R. and Panama trade statistics in 2011 Trade discrepancies in wood packaging and pallets between Costa Rica -Panama, Year 2011 Volume (m3) Discrepancies FOB-CIF (miles USD) CIF-CIF (miles USD) % % % Costa Rica reported to import Volume (m3) FOB-CIF (miles USD) CIF-CIF (miles USD) Panamá reported to export: Volume (m3) FOB-CIF (miles USD) CIF-CIF (miles USD) CRI Possible reasons: Classification criteria? Tax evasion? Typing errors or incomplete records? Illegal Trade? PAN Fuente: UN comtrade
16 System for Verification of Legality in the International Commerce of Wood Products. 1 Forest Verification System 2. Phytosanitary Verification System 3. Custom Verification System 4 Promotion Trade agencies ADMINISTRATION CONTROL AUDITORIA 5. S.V CITES 6. S. V. OIRSA 7. S. V. Certification? 8. Int. Timber Import Regulations
17 3. ADMINISTRATIVE GOVERNANCE Example: Flowchart for exporting wood products in Nicaragua (CITES SPECIES: MAHOGANY)
18 4. ADMINISTRATIVE GOVERNANCE Administrative Procedures for wood product export in the CA-DR region Type of Process Country BLZ CRI SLV GTM HND NIC PAN DOM No-CITES Forest Species Number of documents Days required Cost(USD)/conta iner Cost (USD)/m Number of documents CITES Forest Species Days required Cost (USD)/container Cost (USD)/m
19 Costs of accessing legal harvest of timber and export of wood products in Nicaragua Activities Direct Cost of Accessing Legality Period for approval Legal Forest Production Roundwood (RAAN, 2009) Wood Product Export Sawnwood (Managua, 2012) $18 to 21/m 3 $10 to 22/m 3 (rwd equivalent 50%Y) 6 to 19 months per plan 5 to 19 days per shipment Procedueres At least 70 At least 14
20 4. CONCLUSIONS 1. Possible sources of statistical discrepancies are: Classification criteria: To avoid CITES and phyto-sanitary procedures Tax evasion (Search Engines) Typing errors or incomplete records Unit Conversion System used 2. There is NO evidence that discrepancies in WP statistics are a direct reflection of illegal trade of wood. However, statistical discrepancies have a similar effect than illegality: They represent a lack of credibility in trade information system 3. High cost of accessing legal timber harvest and cost of legal trade of wood products affect competitiveness of forest sector, and decreases forestland rent creating incentives for illegal logging and deforestation.
21 THANKS! Guillermo A. Navarro M. Forest Economy Specialist Oscar J. Santamaría G. Forest Industry Specialist Luis Carlos Vargas B. International Trade Specialist Víctor Milla Q. Monitoring and Evaluation Specialist NATIONAL CONSULTANTS Carlos Sandoval, Honduras Claudio Cabrera, Guatemala Fátima Calero, Nicaragua Jaime Aguilar, El Salvador Solhanlle Bonilla, Dominican Republic
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