Select Committee on European Union Fortieth Report


Letter from Gareth Thomas MP, Parliamentary Under-Secretary of State, Department for International Development to the Chairman

  Hilary Benn wrote to you in May 2004 to inform you of the Council Decision to open negotiations on the International Timber Trade Agreement, (ITTA). This is the treaty that governs the International Tropical Timber Organisation, (ITTO). ITTO was created in 1983 and aims to conserve tropical forests. ITTA is renegotiated periodically to take into account changes in global forest policies and the world timber trade.

  Hilary's letter outlined the areas of the Agreement identified for review and possible amendment. I am writing to you now, to update you on the negotiations which reached a conclusion in January 2006. The main changes to the Agreement concern its scope and funding.

  The scope of the Agreement remains clearly focused on the tropical timber trade while noting the value of environmental services, the potential for poverty alleviation and the importance of sound governance, law enforcement and control of trade in illegally harvested timber. The contribution of members remains, as for other commodity agreements, a 50/50 split between Consumer and Producer members.

  A supplementary contribution to provide guaranteed funding for policy work will be split 80 per cent for Consumers and 20 per cent for Producers and will not exceed 30 per cent of the overall total contribution;

  A "Thematic Programmes Account" was agreed that will provide opportunity for interested donors to make funding available in ways consistent with current aid practices. It is likely to focus on issues such as governance, poverty and livelihoods.

  The votes allocated to each member remain the same. It consists of two parts: an Initial Vote allocation of 10 and an additional element based on the volume of trade. It was agreed that exclusive competence by the European Commission could be accommodated if agreed by Member States.

  The ITTA 2006 is expected to come into force in 2008 and will operate for 10 years, with the possibility of extensions of up to eight years. ITTO will continue to function under the 1994 ITTA until the new Agreement is ratified.

  Overall, UK interests have been met in the new Agreement. The primary focus remains the international tropical timber trade but with recognition of important issues such as governance, poverty and livelihoods. The contribution for UK in 2006 is US$ 105,480 (£60,548)*. The figure under the new Agreement is estimated at US$ 130,741 (£75,100).

  The estimated increase in contribution for the UK of US $25,000 (£14,360) compares with increases of US $208,000 (£119,479) for Japan and US $211,000 (£121,202) for China, reflecting the importance of the tropical timber trade to these countries.

  Although the new Agreement provides for exclusive competence by.the European Commission, the views on partners' level of competence are not yet clear. Some parts of the Commission and some Member States want exclusive competence while other parts of the Commission and the larger Member States want the mixed competency that currently prevails in practice.

  Exclusive competence would make administration related to the Agreement easier for the Commission. The new Member States, most of whom have little interest in tropical timber or forestry development, all appear to prefer exclusive competence as this would mean that the costs of membership would not be borne out of national budgets. The larger Member States, and Finland, France, Germany, Netherlands, and Spain in particular, are implacably opposed to exclusive competence. They see the new Agreement as a positive instrument for future forestry development in which they want to have a say. This is an argument the UK should support. These Member States are also reluctant, in general to cede exclusive competence to the Commission. DG Environment recognises that this commodity agreement is also concerned with environment and development matters and appears to be in favour of mixed competence.

  The next step is for the Commission to present a decision for signature and ratification by the European Community, together with a proposal for a Declaration stating the nature and extent of Community competence in matters governed by the ITTA. This will then be considered by the European Council. A timetable should be announced by the Commission's Legal Service at a forthcoming meeting of the Council Working Party (Proba). It is possible that discussion of competency could be protracted and I will write to the Committee again once the Commission's Declaration has been made and the Council's initial response is known.

  *FT exchange rate US$ 1 = £0.574 (8 February 2006)

15 February 2006

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