Impact of Border Carbon Adjustment and Restrictions on Non-certified Timber on International Commerce in Wood Products

Climate change mitigation measures may soon begin to impact trade in wood products in two important ways. There is a possibility of introduction of Border Carbon Adjustment (BCA) by some developed countries on imports from developing countries to discourage the shift of their industrial production to territories with lower emission reduction requirements to avoid possible carbon leakages. It is usually assumed that Article III of UNFCCC prohibits mitigation measures that may affect international trade but Article II of the Kyoto Protocol appears to have moderated the seeming prohibition in the framework convention to a less demanding requirement of minimizing adverse effects on international trade, and also opened opportunities of future amendments.

Specific situations under which BCA could be compatible with both WTO and UNFCCC have been analyzed and it is inferred that its effect on global wood product trade would be limited as these are not energy intensive and the resulting carbon adjustment at the borders is unlikely to be prohibitively high. Also, since illegal logging of timber for consumption in the world’s fast expanding wood product markets is a major cause of forest degradation that contributes towards global warming, trade restrictions that may be placed against wood products sourced from unverified timber by USA and EU under their domestic laws may not be inconsistent with the provisions of REDD under Cancun Agreement.

The paper presents analysis of current trends of import of illegal timber into India and China and measures already taken to regulate it and suggests ways to address the core issues.

August, 2011. Promode Kant & Li Meng. Paper presented at the Second Northeast Asia International Ecology Conference held at Yichun, China, on Aug 27-28, 2011. 13 pages

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