2. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA European Timber Markets: Developments and Challenges in 2004 Ed Pepke, Ph.D. Forest Products Marketing Specialist Food and Agricultural Organization & UN Economic Commission for Europe Geneva, Switzerland

3. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA UNECE/FAO Timber Branch Timber CommitteeEuropean Forestry Commission

4. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Sources UNECE/FAO TIMBER database on forest products UNECE/FAO Temperate & Boreal Forest Resources Assessment 2000 FAOSTAT Forestry Database website UNECE/FAO Timber Bulletin “Forest products annual market review, 2003-2004

5. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA FPAMR vs. ITTO’s market review Based on Joint UNECE/FAO/ITTO/Eurostat questionnaire Shared information, e.g. tropical timber chapter by ITTO Other FPAMR chapters –Policies influencing forest products markets –Primary product sectors –Value-added wood products –Certified forest products

6. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Subjects of presentation EU enlargement and its effects –Forest products markets –Tropical timber markets in Europe –Forest resources Findings from FPAMR 2004 Key issues in forest products markets and government policies

7. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA EU Enlargement EU15 + new EU10 = EU25 What effect on forest products markets?

8. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA EU 15

9. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA EU 25

10. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Future EU 29

11. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA EU enlargement in general Population –20% increase to 454 million Gross domestic product (GDP) –Almost 5% increase to €9,613 billion Intra EU25 trade accounts for two thirds of total trade of EU25

12. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Currencies in the “single” market Source: International Monetary Fund, 2004 14 currencies all together in EU !

13. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA EU 15 to EU 25: Effects on forest products markets

14. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Annual per capita consumption (m 3 or m.t./person/year) ProductEU 15EU 10 Sawnwood0.230.15 Wood-based panels0.120.11 Paper and paperboard0.200.08

15. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Changes to forest products trade Most changes made prior to 2004 in preparation for accession 80% of forest products exports already to EU (90% in Baltic countries) Higher speed of transport through customs = lower cost Reduced market barriers, including taxes, ending duties

16. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Changes to forest products trade Increased market info Consistent trade regulations Consistent quality standards Freer flow of labour EU economic development funding available

17. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Roundwood (logs)

18. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Total consumption of roundwood

19. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Consumption of tropical roundwood

20. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Consumption of hardwood roundwood (EU 25)

21. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of tropical roundwood

22. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Sawnwood (lumber)

23. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of tropical sawnwood (m 3 )

24. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of tropical sawnwood ($)

25. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of tropical sawnwood: volume vs. value (EU 25)

26. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of temperate vs. tropical sawn hardwood

27. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Consumption of sawn hardwood

28. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Consumption of tropical sawnwood

29. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Sawnwood consumption comparison

30. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of sawn hardwood

31. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Exports of sawn hardwood

32. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Production of sawn hardwood

33. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Beech sawnwood prices

34. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Consumption of sawn softwood vs. sawn hardwood (EU 25)

35. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of sawn softwood

36. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Exports of sawn softwood

37. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Plywood

38. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of plywood

39. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Imports of tropical plywood

40. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Challenges for exporters to the EU CE marking for plywood, soon other products Labeling, including certification Health and safety standards –Phytosanitary standards Quality/grade specifications Packaging specifications Species

41. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Consumption of plywood

42. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Production of plywood

43. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA EU 15 to EU 25 - the effect on forest resources

44. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest area “Forest Available for Wood Supply”

45. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Softwood vs. hardwood forests

46. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest resources in Europe Only 60% of wood grown is harvested Forest volume increases ~2 million m 3 daily Forestland increases by 500,000 hectares per year

47. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA State of Europe’s Forests Resources increasing Forest health and vitality are critical Productive functions maintained Biodiversity is a focus Plantations are only 3% Protective forests are 12% Socio-economic functions important

48. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest resources in Russia Only 16% of wood grown is harvested Forest volume increases ~3 million m 3 daily Forest area 1990 to 2000: no significant change Sources: State of the World’s Forests 2003; Global Forest Resources Assessment 2000; Temperate and Boreal Forest Resources Assessment 2000

49. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest resources: growing stock Source:Temperate and Boreal Forest Resources Assessment 2000.

50. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest resources: NAI vs. fellings Source:Temperate and Boreal Forest Resources Assessment 2000.

51. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest resources: NAI vs. fellings Fellings as % of NAI Europe-4160% EU-1564% Nordic countries72% Baltic countries50% Central & eastern Europe 56% Russia16% North America80% Source:Temperate and Boreal Forest Resources Assessment 2000.

52. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Forest resources summary Removals considerably below growth Wide variance in utilization rates of NAI Growing stock increasing in Europe Oversupply compared to demand for wood Increasing alternative demands on forests

53. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Findings of FPAMR

54. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Policies affecting UNECE region forest products markets Illegal logging –Dominates political discussions –EU regulation to control imports of illegally-sourced timber in preparation Wood energy –Policies expanding biofuel trade –Competition for raw materials Tariffs, duties and regulations

55. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Policies affecting UNECE region forest products markets Promotion of wood –EU-wide promotion on enhanced use of wood –Other regional campaigns successful Need to support research and development –Research has declined markedly –Development composite products

56. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Policies affecting UNECE region forest products markets Forest certification programs expanded worldwide –government purchasing programs –major wood buying groups and retailers in the UNECE region Global carbon trade market growing rapidly

57. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA European construction sector development Source: Euroconstruct, 2004

58. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Central and eastern European construction sector developments Source: Euroconstruct, 2004

59. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Wood raw materials (logs & chips) Record roundwood production in UNECE region Fastest trade development: exports from central and eastern Europe Russian exports = 30% harvest Log prices decreasing with higher supply Wood energy promotion by governments creating new markets

60. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Sawn softwood Globalization of markets continues High demand in USA. Increasing imports from Europe and elsewhere Record European exports to Japan Eastern Europe and Russia redefining global marketplace China’s demand increasingly affecting UNECE region

61. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Sawn hardwood Increasing central and eastern European (CEEC) demand for further processing Consumption increasing in UNECE region: up 9% in western Europe in 2003 Imports increasing, primarily within region Record hardwood flooring demand

62. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Sawn hardwood Growing CEEC production, trade and consumption CIS countries (Ukraine, Russia) exporting hardwood to Asian and European value- added manufacturers Interest in darker, tropical species for flooring

63. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Hardwood sawlog prices

64. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Panels European particleboard, MDF and OSB industries back on track European plywood industry records positive results, but affected by foreign competition CEEC and CIS region enjoy clearly higher growth rates and increased investments Record prices in USA stimulate exports

65. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Certification and certified forest products 170 million hectares worldwide 90% in UNECE region Public procurement policies are newest driving force for certification Problems –Lack of mutual recognition –Lack of demand from final consumers

66. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Certified forest area distribution

67. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Value-added wood products 10% growth in trade in 2002 Continued growth in 2003 and 2004 China’s export power –The US duties on wooden bedroom furniture imported from China Furniture most dynamic sector Outdoor garden furniture from tropical woods Engineered wood products: bright future

68. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA World imports of wooden furniture

69. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Conclusions

70. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Wood supply and demand: Are we growing too much wood? No.

71. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA We are not growing sustainable forest products markets as fast as forests.

72. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA We must grow wood markets through long-term, international cooperation (organizations, industry trade associations, Governments and NGOs). Solution:

73. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA International wood promotion programs UNECE/FAO Forest Communicators Network Wood Promotion Council in North America Roadmap 2010 in Europe National and regional programs, e.g. Nordic Timber Council (NTC)

74. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Summary The single EU market is diverse New EU10 will not increase markets dramatically in the near future Tropical timber shares some challenges with temperate timber –Increasing wood’s market share –Educating consumers about SFM, renewablility, recyclability –Gaining confidence in wood Let’s work together to “grow” the markets!

75. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Questions and discussion

76. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Contact information Ed Pepke Forest Products Marketing Specialist UNECE/FAO Timber Branch 448 Palais des Nations CH-1211 Geneva 10, Switzerland Telephone +41 22 917 2872 Fax +41 22 917 0041 Ed.Pepke@unece.org www.unece.org/trade/timber

77. Diversity in the Single Market – Challenges for Tropical Timber in Europe ITTO Market Discussions, 22 July 2004, Interlaken, Switzerland Photo: APA Presentation prepared with Ulla Kyttälä and Eliisa Ranta Forest Products Marketing Assistants UNECE/FAO Timber Branch Palais des Nations CH-1211 Geneva 10, Switzerland Ulla.Kyttala@unece.org Eliisa.Ranta@unece.org www.unece.org/trade/timber