Summary report, 7–12 May 2007

The forty-second session of the International Tropical Timber Council (ITTC-42) took place from 7-12 May 2007, in Port Moresby, Papua New Guinea. Delegates discussed issues concerning operational, project and policy work, including, inter alia: the selection of a new Executive Director; forest law enforcement and governance (FLEG) in the context of sustainable timber production and trade; CITES listing proposals, ITTO Objective 2000; ITTO guidelines for the restoration, management and rehabilitation of degraded and secondary tropical forests; civil society - private sector partnerships for sustainable forest management (SFM); and developments in the UN Framework Convention on Climate Change (UNFCCC) regarding forests.

Delegates also convened in the fortieth sessions of the Committees on Economic Information and Market Intelligence, Forest Industry, and Reforestation and Forest Management to approve projects, pre-projects, ex-post evaluations, and to conduct policy work. The twenty-first session of the Committee on Finance and Administration also met to discuss the appointment of an auditor, contributions to ITTO accounts, and the relief of Liberia's debt to ITTO, on account of its civil conflict.

By all accounts, this session was dominated by heated debate over the selection of the new Executive Director of the ITTO, which divided Consumer and Producer groups, and caused regional rifts within the latter. In a dramatic turn of events during a late-night session on Friday, Malaysia and several other Asian producer countries left the meeting in protest of the decision to take a special vote on the matter, after it became clear that consensus was not forthcoming.

There were many interesting initiatives on the table that were overshadowed by this political wrangling. For example, one of these, concerning the link between deforestation and climate change, is designed to expand the scope of the organization's activities, make a link with the UNFCCC, and attract related funding. While the Council was presented with a report on this issue, there was little discussion or direction forward, due in no small part to the Executive Director selection process.

At the eleventh hour, a gracious withdrawal by the Consumer-backed Swiss candidate allowed for consensus in support of the Producer-backed Cameroonian candidate. All would agree that the new Executive Director is well qualified and a good fit for the job. Nevertheless, he has a formidable task ahead of him in mending the relationships that have been damaged during the course of the selection process – relationships upon which this organization is built.

A BRIEF HISTORY OF THE ITTC

The International Tropical Timber Agreement (ITTA) was negotiated under the auspices of the United Nations Conference on Trade and Development (UNCTAD) to: provide an effective framework for cooperation and consultation between countries producing and consuming tropical timber; promote the expansion and diversification of international trade in tropical timber and the improvement of structural conditions in the tropical timber market; promote and support research and development to improve forest management and wood utilization; and encourage development of national policies for the sustainable utilization and conservation of tropical forests and their genetic resources and for maintaining the ecological balance in the regions concerned.

The ITTA was adopted on 18 November 1983, and entered into force on 1 April 1985. It remained in force for an initial period of five years and was extended twice for three-year periods. The Agreement was renegotiated during 1993-1994. The successor agreement, the ITTA, 1994, was adopted on 26 January 1994, and entered into force on 1 January 1997. It contains broader provisions for information sharing, including non-tropical timber trade data; allows for consideration of non-tropical timber issues as they relate to tropical timber; and includes the ITTO Objective 2000 for achieving exports of tropical timber and timber products from sustainably managed sources by the year 2000. The ITTA, 1994 also established the Bali Partnership Fund to assist producing members in achieving the Year 2000 Objective. Initially concluded for three years, the ITTA, 1994 was extended twice for three-year periods.

In 2003 negotiations began on a successor agreement to the ITTA, 1994. On 27 January 2006, the ITTA 2006 was adopted by the UN Conference for the Negotiation of a Successor Agreement to ITTA, 1994 in Geneva. The ITTA, 2006 builds on the foundations of the previous agreements, focusing on the world tropical timber economy and the sustainable management of the resource base, simultaneously encouraging the timber trade and improved management of the forests. In addition, it contains provisions for information sharing, including non-tropical timber trade data, and allows for the consideration of non-tropical timber issues as they relate to tropical timber.

The ITTA established the International Tropical Timber Organization (ITTO), headquartered in Yokohama, Japan, which provides a framework for tropical timber producer and consumer countries to discuss and develop policies on issues relating to international trade in, and utilization of, tropical timber and the sustainable management of its resource base. The ITTO also administers assistance for related projects. The ITTO has 60 members including the European Community (EC), which are divided into two caucuses: producer countries (33 members) and consumer countries (27 members). The ITTO's membership represents 90% of world trade in tropical timber and 80% of the world's tropical forests.

The governing body of the ITTO is the International Tropical Timber Council (ITTC), which includes all members. Annual contributions and votes are distributed equally between the producers and consumers. The Council is supported by four committees, which are open to all members and provide advice and assistance to the Council on issues for consideration and decision: Economic Information and Market Intelligence; Reforestation and Forest Management; Forest Industry; and Finance and Administration. The ITTC performs, or arranges for the performance of, all functions necessary to carry out the provisions of the ITTA, 1994.

ITTC-38: The 38th session of the ITTC convened in Brazzaville, Congo, from 19-21 June 2005. Participants deliberated on, inter alia: ITTO missions to Liberia and Gabon; ex-post evaluations of project work, including on transboundary protected areas; phased approaches to certification; and the State of Tropical Forest Management report. Participants also discussed ITTO's support to the Conference of Ministers in Charge of Forests in Central Africa, and approved US$7.6 million in project funding.

ITTC-39: The 39th session of the ITTC met from 7-12 November 2005, in Yokohama, Japan. During the session, delegates discussed a range of issues, including: the ITTO Objective 2000; negotiating a successor agreement to the ITTA, 1994; and phased approaches to certification. Delegates approved 11 projects, one pre-project, pledged US$5.2 million in project financing, and adopted a decision requesting the ITTO Executive Director to implement a list of thirty Biennial Work Programme activities and to seek voluntary contributions to finance these.

ITTC-40: The 40th session of the ITTC met from 29 May to 2 June 2006, in Mérida, Mexico. Delegates proposed the formation of a committee on wildlife trafficking, and received a report on the status of tropical forest management. The Council approved 18 projects, three pre-projects and allocated US$3.9 million in project funding. The Council also decided to allocate US$200,000 to help fund the First Parliamentarians Meeting on the Management of Central African Forests in Yaoundé, Cameroon.

ITTC-41: The 41st session of the ITTC met from 6-11 November 2006, in Yokohama, Japan. The Council approved 13 new projects, and granted funding for 11 projects and seven pre-projects. Additional funding from the European Commission was allocated to support capacity building in ITTO member states for the implementation of CITES listings of timber species. The Council adopted the terms of reference for selecting a new Executive Director, but postponed a decision on whether to agree to waive all of Liberia's arrears to the ITTO until ITTC-42.

ITTC-42 REPORT

Pastor Moresby Tunge, Bible Church of Papua New Guinea (PNG), welcomed the Council on Monday, 7 May 2007. Upon his request, the room observed a moment of silence to commemorate the victims of a recent plane crash in Cameroon.

ITTC-42 Chair Amb. Luis Macchiavello Amoroz (Peru) stated that major issues to be discussed at this session included: the selection of a new Executive Director (ED); the ratification of ITTA, 2006 by all relevant governments; and matters relating to deforestation, sustainable forest management (SFM) and illegal logging and trade. Highlighting the 2005 Status of Tropical Forest Management report, which indicated that less than 10% of the world's forests are sustainably managed and certified, he lamented that areas with net loss of forest cover continue to be found in tropical countries. He explained that forest management is financially less attractive than other land uses in many tropical countries. Drawing attention to the United Nations Forum on Forests (UNFF), he said that the effectiveness of the Forum will be judged according to the progress it makes with respect to tropical forest management and conservation at the global level. He proposed that the UNFF focus on a concrete strategy and an adequately funded programme to combat deforestation in the tropics, giving priority to countries with the highest rate of forest loss.

ITTO Executive Director Manoel Sobral Filho, expressed thanks to PNG for hosting ITTC-42. He noted the release of a new report highlighting the Organization's achievements over the last 20 years, including: financing projects to assist implementation of policies; strengthening locally-based industries; and improving forest management. He stressed that many countries still need continued support and that a core priority of the ITTO should be to help countries develop sustainably and benefit from their natural resources. He highlighted the Council's agenda for the week, including the selection of a new Executive Director as well as the establishment of thematic programmes..

The Right Honorable Grand Chief Michael Somare, Prime Minister of Papua New Guinea, noted that his country has received considerable technical and financial assistance from donors through ITTO for its capacity building in forest management, research and marketing. He urged parties to the ITTA, 1994 to ratify the ITTA, 2006. He observed that PNG is leading a coalition of developing countries that wish to gain recognition for reducing carbon emissions via avoided deforestation. Highlighting the importance of SFM for continued socioeconomic development, he warned that illegal logging would undermine these efforts. He urged countries to become aware of the new SFM policy and legal framework that PNG has instituted. He then declared the ITTC-42 officially open.

H.E. Emile Doumba, Minister of Forest Economy, Water and Fisheries of Gabon, highlighted the Yaoundé Declaration and the Central African Forest Ministers' Commission (COMIFAC) Convergence Plan, which merit the financial support of the ITTO. He highlighted the importance of: combating illegal logging; climate change; and the Thematic Programmes of the ITTA, 2006. He also urged support for the African candidate for ITTO Executive Director, Emmanuel Ze Meka, a long-time member of the ITTO Secretariat.

Dato Vijayaratnam S. Seevaratnam, Parliamentary Secretary, Ministry of Plantation Industries and Commodities of Malaysia, expressed hope that the ITTA, 2006 Thematic Programmes Sub-account will encourage increased project funding. He urged selection of the new ED by consensus from among the three Producer country candidates. He bemoaned the lack of a green premium for countries developing third-party certification programmes for SFM and called for enhanced cooperation between producer and consumer countries, civil society, industry groups, and all stakeholders on how SFM may be made remunerative. He also lamented the European Community's current temporary ban on imports of ramin from Malaysia and commented that Malaysia has started negotiations with the EU for a Voluntary Partnership Agreement under the European Union Forest Law Enforcement, Governance, and Trade Action Plan, which will be legally binding once completed.

ORGANIZATIONAL MATTERS: Sobral noted that quorum had been attained. Delegates then adopted the agenda and organization of work (ITTC(XLII)/1) without amendment. He reported that Poland had recently joined ITTO and that the total membership now is 60, with 27 consuming and 33 producing members. Chair Macchiavello introduced, and delegates adopted without amendment, the proposed distribution of votes for 2007 and admission of observers, as outlined in the agenda. Macchiavello presented the report of the Informal Advisory Group, highlighting the list of possible decisions to be considered at ITTC-42, including decisions on assistance to Papua New Guinea to undertake a forest inventory; financial arrangements related to hosting Council sessions outside the Headquarters of the Organization; relief from financial obligations for Liberia; and appointment of the new Executive Director.

The Officers presiding at ITTC-42, in addition to Chair Macchiavello, were Vice-Chair Katharina Kuehmayer (Austria) and the committee officers: Committee on Economic Information and Market Intelligence (CEM) Chair Chantel Adingra (Côte d'Ivoire); Committee on Reforestation and Forest Management (CRF) Chair Flip van Helden (the Netherlands); CRF Vice-Chair Alfredo Valdivieso, (Ecuador) was unable to attend; Committee on Forest Industry (CFI) Chair Dani Pitoyo (Indonesia) and Vice-Chair Jürgen Blaser (Switzerland); and Committee on Finance and Administration (CFA) Chair James Singh (Guyana) and Vice-Chair Marcel Vernooij (the Netherlands). The Producer Caucus Spokesperson was B.C.Y. Freezailah, (Malaysia) and the Consumer Caucus Spokesperson was Charlotte Cudby (New Zealand).

REPORT OF THE INFORMAL ADVISORY GROUP: On Monday, Macchiavello presented the Report of the Informal Advisory Group (IAG) (ITTC(XLII)/2), that had met on Sunday, 6 May 2007. He highlighted that the IAG had recommended that the matter of the frequency, duration and financing of Council sessions be taken up by Council at its next session when more information on financing will be available.

COUNCIL SESSIONS

The Council met throughout the week to discuss, inter alia; the annual review and assessment of the international tropical timber situation; new listing proposals under the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), and forest law enforcement and governance in the context of sustainable timber production and trade, and the selection of the new Executive Director..

CITES LISTING PROPOSALS: On Thursday, the Secretariat provided an overview of its work concerning CITES listings, highlighting workshops and forest inventories that had been held as well as a collaborative work programme with CITES. He noted that a number of species had been proposed for listing with CITES but that member states had not consulted with the ITTO as required. He also highlighted that the US is expected to table a draft proposal at the CITES 14th Conference of the Parties (COP 14) in June 2007 on further collaboration between ITTO and CITES. The Netherlands said it was hosting a ministerial roundtable before the meeting to increase political awareness of CITES and its role within the broader political agenda.

Switzerland, supported by Japan, expressed support for strengthening information sharing between ITTO and CITES. Switzerland said the ministerial roundtable at the upcoming CITES COP would help increase its political profile. Noting that Cedrela odorata is an introduced species harvested in plantations and used in several economic sectors of his country, Ghana, supported by Côte d'Ivoire and Mexico, expressed concern at its listing in Appendix II of CITES..

FLEG IN THE CONTEXT OF SUSTAINABLE TIMBER PRODUCTION AND TRADE: This issue was addressed by the Council on Tuesday, Wednesday and Thursday. Kwame Asumadu, consultant, presented the outcome of a multi-stakeholder workshop on forest law enforcement and governance (FLEG) held in Port Moresby, PNG, in October 2006 (ITTC XLII/6). It was explained that the objective of the workshop was to gain an understanding of the cause and extent of illegal logging. Outcomes of the workshop included a greater understanding of how illegal logging is defined and how legality can be demonstrated. Recommendations included that government should further engage with NGOs in increasing awareness of forest laws. The EC stated that FLEG is a priority issue for the G8, noting the voluntary partnership agreement between Malaysia and the EU. He announced that the EC is commencing discussions with Ghana and Indonesia that are focused on defining legality, and added that PNG could benefit from similar work.

On Thursday, Brazil reported to the Council on a workshop held in August 2006 in São Paulo, Brazil, on the implementation of forestry legislation in the Amazonian region (ITTC(XLII)/5). They noted that working groups convened to enable intensive debate on matters relating to the integration of information technology systems, improvement of the effectiveness mechanisms needed for participation and the application of forestry legislation in Brazil. They noted that many improvements had been made as a result, including: increased capacity to police and control illegal logging; real-time information systems; and satellite tracking systems for monitoring and registering trucks transporting timber. They also highlighted that many of these were implemented with the aim of achieving ITTO Objective 2000.

ITTO OBJECTIVE 2000: Hosny El Lakany, ITTO consultant, presented findings from an ITTO-commissioned study that identified barriers and constraints to implementing Objective 2000 in PNG, and SFM in general. He emphasized that all the necessary components for a functioning and sustainable forest sector are present, and that what is needed is a commitment to improve implementation and to balance social and environmental sustainability with economic development. Recommendations included: updating PNG's forest inventory; developing a land use plan; enhancing working relationships between forestry and environment ministries; and engaging landowners and civil society in decision making.

ITTO GUIDELINES FOR THE RESTORATION, MANAGEMENT AND REHABILITATION OF DEGRADED AND SECONDARY TROPICAL FORESTS: Stephen Kelleher, World Conservation Union (IUCN), presented on Phase 2 of the ITTO Guidelines for the Restoration, Management and Rehabilitation of Degraded and Secondary Tropical Forests, which involved nine workshops in as many tropical countries, and the development of a manual on forest restoration. Noting the need for effective approaches, he emphasized that restoration is more than just planting trees, and that there is a need to restore ecological functions. He said that the workshops had resulted in greater awareness and understanding of forest landscape restoration, and that eight of the countries had developed action plans in response to the workshop.

CIVIL SOCIETY/ PRIVATE SECTOR PARTNERSHIPS FOR SFM: Hugh Blacket, Tropical Forest Trust, reported on a civil society partnership case study in Indonesia that seeks to link business with responsible and low-impact forest management. He highlighted mechanisms and activities of the Tropical Forest Trust and explained how it helps forest managers, end-buyers and manufacturers. He identified challenges of the partnership, such as ineffective controls on production methods and levels, the continued high demand for logs, and illegal logging. He underlined that it is easier to tell industrial forestry companies to stop using illegally sourced logs than to eliminate illegal logging at the ground level. He concluded by stressing the importance of conveying to forest managers the less tangible benefits associated with SFM and reduced-impact logging, as they are often focused on maximizing wood production.

On Thursday, Yati A. Bun, Foundation for People and Community Development (FPCD), PNG, reported on a successful civil society - private sector partnership, sponsored by ITTO, between FPCD and Madang Forest Owners and Timber Producers, which resulted in FSC certification. He emphasized that this project shows that community-based forest management can meet international SFM standards, but that government support is needed to build capacity.

MATTERS RELATED TO ARTICLE 16 OF ITTA, 1994: Delegates were provided with the Report of the Panel on Matters Related to Article 16 of the ITTA, 1994 (ITTC(XLII)/8) on selecting an Executive Director. On Tuesday, 8 May 2007, the Council heard presentations from the six candidates.

Efransjah Efransjah (Indonesia) advocated that ITTO focus on improved forest governance, further linkages with other international organizations and civil society as well as improved communication between policy, practice and the scientific knowledge base, in order to build its track record and foster more effective fundraising. He recommended considering ways to tap new resources, including from Producer countries, such as through cost-sharing partnerships and addressing non-payment of annual contributions via dialogue with non-paying members.

Juan Sève (United States), highlighted a number of issues that the forestry sector faces, including: deforestation; climate change; slow progress in forestry management; and the remaining information weaknesses in forestry data. He stressed that in order for ITTO to successfully meet these challenges, ongoing and additional collaboration with other international organizations as well as the private sector was necessary.

Emmanuel Ze Meka (Cameroon) identified four priorities: greater social responsibility, including greater equity in benefit sharing and good governance; poverty alleviation and global partnership for development; increased industrial competitiveness through value-adding, technological advances, capacity building, and overcoming tariffs and non-tariff barriers; and reducing deforestation and increasing forest cover to combat climate change. He advocated, inter alia: dialogue with donor members, the private sector, and members in arrears in order to mobilize funds; definition and implementation of strategic priority actions through thematic programmes; improvement of monitoring and evaluation; intensification of training; and increased public relations and fundraising; and strengthening of the Secretariat through evaluation and increased efficiency.

Jürgen Blaser (Switzerland) described the challenges of implementing ITTA, 2006, such as changes in forest ownership, access to forest resources, forest policy, and valuation of forest products and ecosystem services. Noting the unique niche of the ITTO as a global actor in forestry, Blaser underscored the importance of its intergovernmental structure and its contribution to global forest stewardship by promoting SFM and trade. He also enumerated challenges that lie ahead for an ED such as coping with: the multiple dimensions of forests; concerns of sovereignty; the global goods approach; and reconciling different and contradictory interests. He concluded by stressing the importance of a smooth transition from ITTA, 1994 to ITTA, 2006.

Ursula Horn, Federal Ministry of Economics and Technology, Germany, informed the Council that ED candidate Joachim Müller (Germany) was not able to attend the Council session to deliver his presentation in person, but that hard copies of it would be circulated.

Ricardo M. Umali (Philippines) presented his vision for a stable yet dynamic ITTO, centered around a variety of action themes that would build upon the achievements of ITTA, 1994. He encouraged prioritization of the objectives contained in ITTA, 2006 in order to optimize the use of limited resources, starting with the promotion of trade of legally harvested and sustainably managed sources of tropical timber. He commented that the ITTA, 2006 allows for a new financial framework that is more flexible and recommended broadening the donor base beyond the current primary donors (Japan, Switzerland and the US), noting that the Thematic Sub-accounts might encourage this.

The Consumer and Producer caucuses met to consider their choice for ED following the presentations.

On Wednesday, the Council resumed its deliberations on the ED. Australia, with Switzerland but opposed by the Producers, proposed taking an informal poll on the ED candidates. Switzerland noted its long financial support of ITTO and, with the US, the need for a transparent process. Brazil and Cameroon asked about the details of such a process. Australia, with Switzerland but opposed by Malaysia, for Producers, suggested putting a proposal in writing for a small group to consider. Brazil proposed a discussion to elaborate the aim of the small group discussion. Norway, supported by Cameroon, proposed that an informal small group draft a proposal for the small group. Indonesia said this should be discussed in the caucuses first, but this did not receive any support. Brazil called for any small group to be open-ended. A number of delegates then met in a small group to draft a proposal to establish a small group discussion on the proposal for holding an informal poll that would ascertain general preferences regarding the ED selection. This was intended to move the Council closer to consensus, without having to go to a formal vote.

On Thursday, following overnight discussions, Cameroon reported the findings of the open-ended small group. It reported that the informal group, composed of 15 countries, had concluded that: the political aspects of the election should not be ignored, and discussions should be intensified; the ED should not be classified as a "producer" or "consumer" but as leader of the ITTO; the timing for a "straw poll" was not right but the idea was agreeable; and lastly, choosing a consensus candidate for ED in PNG was desirable. Brazil, with Mexico, indicated that it would prefer an ED candidate to be elected during the current Council session, even if a special vote was necessary. Japan stressed that the process must be transparent and credible.

When the plenary resumed Thursday afternoon, Brazil, reiterating that the election of the ED should be concluded by the end of this session, suggested that an extra meeting of the Council be held on Friday night. Cameroon, with Japan and PNG, supported the Brazilian proposal. The Council decided to hold an extra meeting on Friday at 9:00 pm, following the field trips sponsored by the Government of PNG.

On Friday evening, Brazil tabled a motion to hold a special vote for electing the ED. Following this, the Producer caucus met. When the Council resumed, Malaysia, for Producers, announced that they had reached consensus, supporting Emmanuel Ze Meka. However, he stated that the consensus was contingent on the Consumer caucus reaching agreement on only one candidate. New Zealand, for Consumers, reiterated their strong preference to hold the vote on all six candidates. General debate ensued on whether reaching consensus among the caucuses was possible, or whether a vote for ED would be necessary. As no consensus was reached, the Secretariat noted that in accordance with ITTA, 1994, the Council should vote on whether to vote. New Zealand, on a point of order, noted that since ITTA, 1994 instructions are clear and it is a legally binding agreement, the Council should directly proceed to a special vote. Nevertheless, the Council proceeded to vote on whether to hold a special vote.

After voting had finished, the Secretariat stated that a majority had been attained for a special vote to proceed. In protest, Malaysia, Indonesia, PNG, Philippines and Thailand announced that they were withdrawing from the meeting. Australia inquired whether this should mean that they have to leave the room, and the Chair confirmed this. Subsequently, they left the room. A number of members then expressed tremendous disappointment at the situation, and hoped that it could be resolved. The meeting was suspended until Saturday morning.

On Saturday, the Council resumed the previous night's meeting at PNG's Parliament building to vote for the ED. Ramon Carrillo Arellano (Mexico) verified that the Credentials Committee had accepted the credentials of 47 countries plus the EC as participants at ITTC-42, and the Secretariat explained the voting procedure. Indonesia, on a point of order, sought clarification on whether a quorum existed for voting. The Secretariat responded affirmatively. Malaysia took the floor but was interrupted by the Chair because his intervention was not on a point of order. Malaysia then exited, followed by Indonesia and Thailand.

After the first voting round, the Secretariat announced that for Producer countries, Emmanuel Ze Meka had received 100% of twelve countries voting, with 567 votes. Malaysia, Indonesia and Thailand abstained through their absence. For Consumers, he stated that Jürgen Blaser had received 606 votes from seven countries, representing 67.8% of the votes cast and 31.8% of the countries. Joachim Müller received 288 votes from 15 countries, totaling 32.2% of the votes and 68.2% of the countries. The Republic of Korea abstained.

In the second round of voting, those Producer countries present again united in supporting Ze Meka. Among the Consumers, Blaser received 614 votes from 20 countries, representing 64.7 of the votes cast and 90.9% of Consumer countries. France abstained while China and the Republic of Korea voted for Ze Meka.

After a break for consultations, Jürgen Blaser announced the withdrawal of his candidacy and received a lengthy standing ovation from all delegates. The US, supported by the EC, China, Brazil, Mexico, Norway and Japan, paid tribute to Blaser. The US noted the transparency of the process, and the EC highlighted Blaser's contribution to ITTO. China noted that the selection of Ze Meka was done by consensus. Brazil, supported by Mexico, noted the lessons learned on adjustments needed in the Organization, including on making Producer-Consumer relations less confrontational. Japan noted that as ITTO's host country, it aspires to make it a great institution, and asked for Blaser's continued support. He beseeched Malaysia and Indonesia, through the Chair, to be more cooperative and supportive.

With that, delegates approved the election of Emmanuel Ze Meka by acclamation with a standing ovation.

Emmanuel Ze Meka thanked the body for its confidence in him, noting the enormity of the task but the strength of ITTO's assets. He paid tribute to Jürgen Blaser's generous gesture and to outgoing ED Sobral as an outstanding manager who built a strong and globally recognized institution.

The Council adopted the decision to appoint Ze Meka as ED (ITTC(XLII)/19).

DEVELOPMENTS IN THE UNFCCC REGARDING FORESTS: Carmenza Robledo (Switzerland) reported on developments in United Nations Framework Convention on Climate Change/Intergovernmental Panel on Climate Change (UNFCCC/IPCC) discussions regarding reducing emissions from deforestation and forest degradation (REDD) (ITTC (XLII)/9). Robledo noted that 20% of GHG-emissions originate from deforestation, and emphasized that forests can play a role in mitigation and adaptation. Citing the Stern Report on the Economics of Climate Change, she said that the opportunity cost of forest conversion, accounting for 70% of global emissions from land conversion, could be US$5 billion annually. She described proposals on funding mechanisms for avoided deforestation such as India's compensated conservation and Costa Rica and PNG's basket option. She noted that REDD negotiations could be translated into policy instruments under the Kyoto Protocol, as eligible activities under the Clean Development Mechanism (CDM) or a new flexible mechanism or under the UNFCCC via a new Protocol. She said that ITTO could help make SFM a realistic approach in REDD discussions while the UNFCCC could provide additional funds for SFM. She concluded by urging ITTO members to help shape the tropical forest agenda in the UNFCCC.

In the ensuing discussion, Switzerland said the possibility of developing an international incentive scheme through UNFCCC on reducing GHG emissions from forest degradation and deforestation should be of primary concern for ITTO. He urged ITTO to contribute to the REDD debate within the UNFCCC by providing concrete advice. The Netherlands said there should be a proper division of labor between UNFCCC and ITTO on REDD. Noting that tropical forests are the world's largest carbon reservoirs, Malaysia said that reducing GHG emissions by preventing deforestation is much cheaper than via sequestration. Papua New Guinea commended the recommendations in the report as well as the work of the Coalition of Rainforest Countries.

Michael Kleine, International Union of Forest Research Organizations (IUFRO), reported on ITTO participation and contribution to the IUFRO-led Collaborative Partnership on Forests Initiative on the Global Forest Information Service (GFIS) (Decision 2/XXXIX), a single entry-point database of information to help partners organize forestry information and make it available globally. Kleine said that the GFIS Training Workshop included 25 information managers from nine countries and stimulated them to start submitting information to GFIS. He noted that development of GFIS requires expanding the network, training in information management and GFIS applications, broadening capacity building to include public relations and communication methods and mobilizing additional project support.

PROMOTION OF TRADE IN SUSTAINABLE PRODUCED TIMBER: On Thursday, James Singh, Guyana Forestry Commission, reported on Guyana's experience in developing systems to demonstrate the legality of timber exports, focusing on a project for log tracking and tagging (Decision 10/XXXIV and 2/XXXIX). Singh explained that the main target areas of the project consisted of performing an audit of the existing tracking system, development of a database and training in log tagging. He indicated that Guyana's national log tracking system is currently applied to all forestry operations. He said that the log tagging system must have, inter alia, a valid concession, removal permit and review of the production register. He recommended, inter alia, periodic audits of log tracking and strengthened chain of custody during log processing.

ITTO FELLOWSHIP PROGRAMME: The Secretariat presented a progress report to the Council on the ITTO Fellowship Programme (ITTC(XLII)/11). He noted that of the 364 fellowships awarded, 32% are still in progress. The Chair of the Fellowship Selection Panel, Katharina Kuehmayer (Austria) reported that the Panel met once during the Council session, and recommended to the Council that 28 of the 143 applications be accepted (ITTC(XLII)/12). She noted that of the 28 selected, 32% were female, 78% were in reforestation and forest management, 18% were in forest industry and 4% were in economics and market intelligence.

ANNUAL REPORT FOR 2006: The Secretariat presented the draft Annual Report to the Council (ITTC(XLII)/4). He highlighted that the decision to adopt ITTA, 2006 took place on 27 January 2006, and that seven countries signed the agreement in 2006. He noted that nine projects and one pre-project were funded at ITTC-40, and that 13 projects and seven pre-projects were funded at ITTC-41. He said the Council had adopted measures to strengthen and improve the project cycle, and continued to enhance its collaboration with CITES. He observed that two technical missions had been sent to Thailand and India during 2006, and that the Freezailah Fellowship Fund had awarded grants totaling approximately US$300,000.

ANNUAL MARKET DISCUSSION: The Council listened to presentations on "Trade in Secondary Processed Wood Products (SPWP): Trends and Perspectives." Bob Tate, PNG Forest Industries Association, gave a brief overview of the PNG forest sector. He explained that log value exports had decreased, but due to investment in veneer and plywood, the value of SPWPs had increased three fold. He identified the major export markets for PNG, namely China for logs and Australia for SPWPs.

Bruce Teller, Système Général de Surveillance (SGS), gave an overview of SGS's work in log monitoring for the PNG Forest Authority. He explained that although the real value of log exports had decreased, verification of exports had increased revenues to government and landowners. He noted that additional monitoring of secondary processed goods may be necessary.

Jairo Castaño, ITTO Secretariat, presented an overview of the trade in SPWPs. He described how ITTO producers have been increasingly switching from exports of primary products to exports of SPWPs. He noted that Asia-Pacific (69%) and Latin America (31%) account for the bulk of SPWP exports while the US (45%), EU (29%) and Japan (10%) are the main importers. He also drew attention to China's rapidly increasing share of these main markets over the last decade.

Shi Kunshan, Chinese Academy of Forestry, reported on China's trade in SPWPs and the role of US hardwoods. Noting the low per capita forest resource consumption in China relative to other countries, he explained the high increase in volume of log imports in China in the past decade. He cited the example of the near 50-fold increase of China's plywood exports from 1996-2006. He said the main supplier of logs (68%) and sawnwood (23%) to China was Russia in 2006 but that US hardwoods imports are increasing.

Huynh Van Hanh, Handicraft and Wood Industry Association, Vietnam, spoke on Vietnam's growth into a major furniture exporter with 1600 factories and exports to 120 markets. He attributed the growth to three external factors: expensive production costs in developed countries, improved quality and flexible pricing of furniture products from developing countries, and the deliberate aim of putting new developing country products in the market. He said internal factors include stable politics and policies, security, and a low starting point for increasing exports.

Richard McCarthy, McCarthy and Associates, moderated a Panel on Regional Perspectives for SPWPs. Alhassan Attah, Ghana Forestry Commission, spoke on perspectives and trends for SPWP in Africa, which are influenced by policy measures such as log export bans, resource allocations to further domestic processing, and export taxes. Constraints include problems in securing the supply of raw materials, gaps in political and legal frameworks, competition from imported SPWPs, lack of appropriate production technologies, and weak domestic markets for SPWPs.

Jairo Castaño, ITTO Secretariat, noted that Latin America's SPWP exports had increased to 31% of the global market by 2005, with Brazil being the largest exporter. He identified furniture as the primary export.

McCarthy noted that the SPWP market in the Asia Pacific was highly competitive and innovative. He lamented that the primary problem was the inability of domestic markets to purchase locally-produced products.

In the ensuing discussion, Malaysia raised the issue of illegalities in SPWPs, commenting that the chain of custody was easily broken and legality seldom questioned. Teller responded that once there is a standard definition of illegality, the problem will be easier to address. Malaysia also asked whether exports of tropical timber products to China would continue to decrease. Kunshan confirmed that this should continue.

CIVIL SOCIETY ADVISORY GROUP SIDE EVENT

Chen Hin Keong, TRAFFIC International, gave a presentation on the potential for the Merbau tree species to spur growth in Indonesia, PNG, Malaysia and China, and highlighted the need for more research.

Lynette Boratai-Pokas, Center for Environmental Law and Community Rights (CELCOR), described threats to sustainability posed by industrial logging and exploitation of other natural resources in PNG, and called for ITTO to support awareness raising within communities of their customary landownership rights.

Bazakie Baput, Foundation for People and Community Development (FPCD), described the approach of a community forestry programme that builds landowner skills and technological capacity to implement SFM, emphasizing a transition to self-reliance and improving quality of life. He highlighted lessons learned, including that community forestry improves local wealth retention and reduces forest impacts. He recommended that ITTC support community forestry initiatives and forest certification as a way to promote SFM.

In the ensuing discussion, participants raised questions pertaining to the rationale behind the narrow focus on the Merbau species, and its potential inclusion under CITES Appendixes. Participants also suggested that the Civil Society Advisory Group should be part of ITTC's regular agenda, and should inform the draft decision on support for performing a PNG forest inventory.

JOINT COMMITTEE SESSIONS

On Monday, Joint Committee Chair Chantal Adingra, Côte d'Ivoire, introduced the provisional agendas of the Committees on Economic Information and Market Intelligence, Forest Industry and Reforestation and Forest Management (CEM-CFI(XL)/1 and CRF(XL)/1). The agendas were adopted without amendment. Chair Adingra proposed, and the Council agreed, to adopt the list of candidates applying for observer status (ITTC(XLII)Info.3). Joint Committee sessions were held on Tuesday and Wednesday,

REPORT OF THE 33RD EXPERT PANEL FOR TECHNICAL APPRAISAL OF PROJECT APPRAISALS: Expert Panel Chair Hideaki Takai (Japan) presented the Report of the 33rd Expert Panel for Technical Appraisal of Project Appraisals (CEM,CRF,CFI,CFA(XL)/1). He stated that 32 project and five pre-project proposals were submitted and that the Expert Panel (EP) had found a number of common weaknesses in the proposals, including: weak long-term sustainability; lack of discussion regarding specific objectives; missing budget items and terms of reference; and lack of clear and comprehensive analysis.

In response to a question from Brazil regarding comments on a project proposal, EP Chair Takai informed the group about the EP's new project proposal evaluation system, noting that it applies only to newly submitted proposals and does not include procedures for evaluating pre-project proposals. China added that the EP is using the new evaluation system on a trial basis only.

The Secretariat stated that under the ITTA, 1994, there is no clear guidance for submission of new projects that are not country-led. He said that revision of the manual on project submissions will be completed by November 2007 and will facilitate project preparation as well as evaluation.

The EP Chair noted the need for some fine-tuning of the new system, particularly on scoring project proposals, and for more trial testing with the manual.

Brazil expressed dissatisfaction with the way the manual has been formulated. The Secretariat said the manual will be tabled for Council consideration after improvements are made.

The Expert Panel Report was adopted.

EX-POST EVALUATION PRESENTATIONS: On Wednesday, the joint committee heard a report from Florence Soriano, consultant, on ex-post evaluations of two projects in Thailand on promoting bamboo from sustainable sources and sustainable utilization of rattan, respectively. She recommended, inter alia, that future projects: use the project framework matrix; ensure balanced multi-stakeholder participation; select duration, scope, and pilot sites carefully; formulate sustainability plans early in the process; and involve business development and marketing experts as well as researchers with basic entrepreneurial skills. She also called for updating manuals, establishing gene banks and resource databases, and building awareness.

The Secretariat reported on ongoing work to select consultants to perform five additional ex-post evaluations agreed at ITTC-41.

Brazil suggested that terms of reference for consultants need to be more rigorous in order to guarantee that ex-post evaluations are based on a logical framework and said Brazilian agencies should participate in drafting terms of reference for evaluations of Brazilian projects.

COMMITTEE ON ECONOMIC INFORMATION AND MARKET INTELLIGENCE AND COMMITTEE ON FOREST INDUSTRY

The Committee on Economic Information and Market Intelligence (CEM), chaired by Chantal Adingra (Côte d'Ivoire) and the Committee on Forest Industry (CFI), chaired by Dani Pitoyo (Indonesia) met from Monday to Friday to consider, inter alia: completed projects and pre-projects; ex-post evaluations; project and pre-project proposals; policy work and other business.

COMPLETED PROJECTS AND PRE-PROJECTS: On Monday, the CEM/CFI considered completed projects and pre-projects (CEM-CFI(XL)/2). Delegates heard reports on completed projects and pre-projects, on:

• community forest products processing in Brazil

• establishing a database of tropical industrial lesser-used wood species in Japan;

• sustainable management and utilization of sympodial bamboo in South China;

• improvement of rubberwood utilization and marketing in Thailand;

• capacity strengthening of forestry stakeholders to support the implementation of the national code of practice for forest harvesting in China; and

• improving the utilization efficiency in wood industries in PNG and Vanuatu.

EX-POST EVALUATIONS: On Monday, the CEM/CFI considered ex-post evaluations. Three projects were recommended for ex-post evaluation:

• community forest products processing in Brazil;

• sustainable management and utilization of sympodial bamboo in South China; and

• improvement of rubberwood utilization and marketing in Thailand.

The Republic of Korea opposed the ex-post evaluation of a project for the creation of a database of less-used tropical wood species in Japan, and this was not recommended to the Council.

CONSIDERATION OF PROJECT AND PRE-PROJECT PROPOSALS: On Tuesday, the CEM/CFI discussed project and pre-project proposals (CEM-CFI(XL)/4) and noted the recommendations of the Expert Panel for Technical Appraisal of Project Proposals (CEM,CRF,CFI,CFA(XL)/1). The Committees recommended that the Council approve projects on:

• the improvement and prevention of illegal logging and illegalities in the timber trade in Guyana;

• strengthening forestry statistics in Honduras;

• the promotion and marketing of lesser-used timber species in Indonesia;

• the impact of integrating forest-based medicinal plant production with SFM on the forest ecosystem and timber supply in the Philippines;

• optimizing wood residue utilization and investments in Ghana;

• training needs analysis for the builders' woodworks industry in the Philippines;

• applying nanotechnology to tropical timber products in Brazil;

• holding an international workshop on innovations in tropical forestry and forest product industry in Côte d'Ivoire; and

• reducing timber wastes in logging and mechanical processing in the Republic of the Congo.

The Committees recommended delaying examination of the following projects:

• establishing voluntary and independent monitoring systems for forest concessions in the Central African Republic; and

• capacity building for environmental and forestry training institutions in the Central African Republic.

The Committees recommended that a project for increasing capacity and collaboration among governments and civil society in Ghana and Cameroon not be considered further by the Council.

POLICY WORK: On Tuesday, the CEM/CFI considered strategic policy activities and issues. Delegates shared information on germane policy issues, inter alia: the Doha round of WTO talks; pilot programmes to assess the feasibility of timber tracking schemes; collaborative statistical activities and workshops; and plans for conferences on economic evaluation of the forest sector in the Amazon Basin, promoting wood-based bio-energy, facilitating information exchange on tropical forest investment opportunities, development of non-timber forest products and forest services; and transportation of timber products. Consideration of subsidies affecting tropical timber products was deferred to ITTC-43.

Håkan Ekström (US), presented the findings of the review of the US timber market (CEM-CFI(XL)/5), that included, inter alia, the size of the market, demand drivers within the market, source of imports and recommendations for future trade with the US. In the ensuing discussion, delegates bemoaned the lack of future market projections in the study.

On Wednesday, the Committee also heard a report on the analytical study commissioned following the discussion at ITTC-41 on whether to hold an international conference on the transportation of timber products. Jean-Jacques Landrot, consultant, highlighted aspects of the international timber trade including types of cargo, the role of transportation and export services, and current mechanisms to address the illegal international timber trade. Discussion of whether to hold a conference was deferred until Thursday.

Following the presentation, the US noted that it did not focus on emerging issues that contribute to the transparency of the shipping trade. It also expressed concern that the study did not take cognizance of existing bilateral and other trade agreements. The US, supported by the Netherlands, suggested that the discussion be taken up at ITTC-43 to coincide with discussions concerning the biennial programme of work. Brazil expressed concern that the presentation did not focus on the international level as was indicated by its title. The consultants indicated that many of the problems arise when timber is loaded for export.

DATES AND VENUES OF FUTURE MEETINGS: Delegates agreed that the dates and venues of the forty-first, forty-second and forty-third sessions of the Committees would be held in conjunction with ITTC-43, ITTC-44 and ITTC-45, respectively.

ADOPTION OF REPORT: The Committee decided to recommend that the Council adopt the draft report (CEM-CFI(XL)/6) with minor amendments. The Council adopted the report on Saturday.

COMMITTEE ON RESTORATION AND FOREST MANAGEMENT

The Committee on Restoration and Forest Management (CRF) was chaired by Flip Van Helden (the Netherlands). The CRF met from Monday to Thursday to consider: completed projects and pre-projects; ex-post evaluations; approval of project and pre-project proposals; policy work; and dates and venues of future committee meetings.

COMPLETED PROJECTS AND PRE-PROJECTS: The Committee met on Monday to discuss completed projects and pre-projects (CRF(XL)/3 Rev. 1). Projects completed with financial audit included those on:

• Management of the Tapajós National Forest for Sustainable Production of Industrial Timber in Brazil;

• Pilot Plan for the Sustainable Management of Secondary Forest in San Lorenzo in Ecuador;

• Conservation and Development in the Natural Protected Areas System of Peru and Bolivia;

• Sustainable Collaborative Forest Management in the Bulungan Model Forest in Indonesia;

• Phase II of the Community-based Transboundary Management Plan for the Betung Kerihun National Park in Indonesia;

• Adoption and Implementation of an Appropriate System of Criteria and Indicators for the Philippines; and

• Development and installation of a forest resource monitoring system in the Philippines.

Projects completed pending financial audit included:

• Mangrove conservation and management in Honduras;

• Teak tree cloning and plantations in Côte d'Ivoire; and

• Model forest management in PNG.

Pre-Projects completed with financial audit included SFM of mangroves in China.

Pre-Projects completed pending financial audit included those on model forest management in PNG; SFM in Colombia; and forest rehabilitation in Cameroon.

Japan requested clarification regarding the outputs of the executing agency of Bolivia concerning its project on national forest inventory before it can be considered complete. The decision on this project was deferred to the next CRF session.

Although the project on secondary forest in San Lorenzo, Ecuador, was eventually accepted as complete, Japan expressed disappointment that some of the secondary forests were cleared for the establishment of palm oil plantations. Japan also recommended that the executive agencies of the project on Collaborative Forest Management in the Bulungan in Indonesia describe how they mitigated the risks of decentralization. Switzerland recommended greater use of indicators in future CRF completed projects to better assess and capture the full array of their outputs.

CONSIDERATION OF PROJECT AND PRE-PROJECT PROPOSALS: The Committee discussed this item (CRF(XL)/2) on Tuesday. The Committee recommended that Council approve project proposals on:

• Peruvian mangrove restoration and SFM;

• increasing area under SFM in Panama;

• developing SFM criteria and indicators in the Philippines;

• marketing products from Peruvian concessions;

• training on use of the ITTO manual on restoration in China;

• conservation and utilization of medicinal plants in Ghana;

• rehabilitation and use of bamboo forests in Peru;

• SFM in Northern Colombia;

• transboundary biodiversity conservation in Malaysia;

• building the capacity of Central African forestry training institutions regarding SFM;

• estoration of forest landscape in local communities in Ghana;

• guidelines for the restoration of mangroves damaged by tsunamis in the Asia-Pacific region;

• indigenous management of Peruvian secondary and degraded forests;

• forest promotion and development by native communities in Peru; and

• low-impact harvesting in the Congo Basin.

The Chair noted that the Expert Panel did not approve a pre-project on forest governance and implementation of a national forest strategy in Peru.

Japan objected that the monitoring costs for projects on forestry partnership in Pinhão Manso and strengthening of a forest seed laboratory and nursery in Brazil be covered solely by ITTO and not by the executing agencies. Switzerland suggested that the donors and the executing agencies further coordinate on improving the logical framework with respect to the means of implementation in the regional project on low-impact harvesting in the Congo Basin. One project, on Peruvian forest governance and the implementation of a national forest strategy, was not approved.

On Wednesday, Brazil accepted Japan's suggestion to have the costs of the monitoring system of its two projects on forest seeds and forestry partnership covered by its executing agency.

EX-POST EVALUATION: On Tuesday, the Secretariat gave a progress report on an ex-post evaluation of a project on biodiversity management and conservation in a forest concession adjacent to a national park in the Republic of the Congo.

The Secretariat recommended for ex-post evaluation a completed project submitted by the Common Fund for Commodities on sustainable use and reforestation in the Amazon by indigenous communities.

POLICY WORK: On Tuesday, upon request by Guyana, the Secretariat announced that ITTO is finalizing a memorandum of understanding to assist Guyana in developing a national forest fire management and prevention strategy. The Secretariat also reported that an international conference on managing forests for poverty reduction was successfully held in Ho Chi Minh City, Vietnam, in October 2006. The Secretariat also informed the CRF of current regional workshops on the implementation of SFM through ITTO projects that will be scheduled in Togo, Indonesia and Colombia in May, June and July 2007, respectively. Following Brazil's inquiry as to why Guatemala was not selected to host the workshop in Latin America, the Secretariat explained that Colombia was chosen instead due to cost-effectiveness and the number of ITTO projects in the country.

The Secretariat also informed the CRF of the status of a report on assessing the environmental, social and economic costs and benefits of forest plantation development.

DATES AND VENUES FOR FUTURE SESSIONS: Delegates agreed that the forty-first, forty-second and forty-third sessions of the Committee would be held in conjunction with ITTC-43, ITTC-44 and ITTC-45, respectively.

OTHER BUSINESS: The Committee reviewed the status of several projects. Regarding a project on Fijian landowner SFM training, the Secretariat reported that project performance had been unsatisfactory and recommended terminating funding. Noting that the executing agency had not been able to obtain the required forest land, Fiji agreed to terminate its project.

Regarding a project on the rehabilitation of mangroves in Ecuador, the Secretariat suggested suspension of the project pending a progress review, noting that this would be revisited at ITTC-43.

The Secretariat also reported that the suspension of two projects on community forests in Colombia will be re-considered, since the requested documentation had recently been received and will be reviewed prior to ITTC-43. Regarding a project on Malaysian Model Forest Management, the Secretariat reported that extension of its timeframe and funds was no longer necessary.

DRAFT DECISIONS: On Monday, at the request of Chair Van Helden, Switzerland, Japan and the US volunteered to form an informal working group to assist Papua New Guinea in developing the terms of reference and budget for the activity proposed on undertaking a forest inventory for PNG, in draft decision 3 (XLII).

On Wednesday, Patrick Hardcastle (UK) reported on the outcomes of the informal working group in the draft decision and noted that that the scope of the original draft decision had been widened to include the multi-purposes of forest resources. Following the Philippines' call for a clearer forest inventory design, Hardcastle responded that the scope of the inventory was framed around the allocated budget of the decision. Switzerland inquired whether presenting a report on PNG's forest inventory by ITTC-43 was realistic. Finland recommended that the draft decision should make explicit reference to the proposal of the UNFCCC on reducing greenhouse gases through avoided deforestation in developing countries. The US cautioned that referencing the UNFCCC in the draft decision could exclude funds available outside that Convention.

On Thursday, delegates considered the revised draft decision and forwarded it to the Council with minor amendments.

ADOPTION OF REPORT: On Saturday, the Council adopted the report of the Committee (CRF(XL)/4) without amendments.

COMMITTEE ON FINANCE AND ADMINISTRATION

The Committee on Finance and Administration (CFA), chaired by James Singh (Guyana) and co-chaired by Marcel Vernooij (the Netherlands), met on Tuesday and Thursday afternoon to discuss the Administrative Budget for 2007, the Special Account and Bali Partnership Fund (BPF), the Auditor's Report for 2006, the appointment of an auditor and debt relief for Liberia.

On Tuesday, the CFA agreed to defer to ITTC-43 any discussion of prospective amendments to the rules of the Organization following from the entry into force of the ITTA, 2006 (CFA(XXI)/7 and CFA(XXI)/8) and approved the rest of the agenda (CFA(XXI)/1/Rev.1).

ADMINISTRATIVE BUDGET FOR 2007: On Tuesday, under review of contributions to the administrative budget for 2007 (CFA(XXI)/3/Rev.1), the Secretariat noted that discounted assessed contributions total US$5,475,409, of which US$1,708,529.31 is outstanding. The Secretariat noted that estimated expenditure for the Financial Year 2007 is 90% of the Administrative Budget (CFA(XXI)/4/Rev.1), as the ED put restrictions on allocated spending. The Secretariat underscored the estimated deficit of US$243,193, but stressed that that there would be no need to ask the Council to use additional resources from the Working Capital Account (WCA). He cautioned that the balance of the WCA is US$2,111,731, noting that the Council must be informed if it falls below US$2 million.

RESOURCES OF THE SPECIAL ACCOUNT AND THE BALI PARTNERSHIP FUND: On Tuesday, the Secretariat presented a report (CFA(XXI)/5) that detailed the resources of the two sub-accounts of the Special Account and the BPF. He noted that total BPF receipts to date are US$17,330,000, of which US$14,330,000 is from interest earned. The Committee noted the report.

AUDITOR'S REPORT FOR THE FINANCIAL YEAR 2006: The Secretariat introduced the Auditor's Report for the Financial Year 2006 (CFA(XXI)/2). The Committee took note of the report and agreed to recommend approval to the Council.

APPOINTMENT OF AUDITOR: The Secretariat outlined the procedure for adopting an auditor (CFA(XXI)/6) and highlighted the unusual situation in Japan regarding auditing firms that resulted in receiving only one proposal. Responding to concern from delegates, the Committee decided to recommend appointing the auditor for one year only, for review by the CFA next year.

LIBERIA DEBT RELIEF: On the request for debt relief made by Liberia at ITTC-41, the Secretariat reported on ongoing activities to implement previous CFA recommendations for: Liberian participation in the ITTC; an update on policy and development work since a 2005 ITTO Liberian mission; consideration of the possible need for another mission; and active Liberian participation in the ITTA, 1994 and ratification of the ITTA, 2006. Liberia presented a detailed proposal and rationale for debt waiver, including their desire to use their resources to develop SFM rather than to repay debt. Delegates agreed to report that the CFA's recommendations had been implemented. Japan, supported by the EU but opposed by Switzerland and Liberia, cautioned that other countries such as the Central African Republic are in similar situations. After lengthy discussion, a small informal group was formed to draft a CFA recommendation to Council regarding Liberia's request.

On Thursday, delegates discussed the draft recommendation as part of the draft CFA Report to the Council. Liberia noted that the misuse of its forest resources led to conviction of its former president, Charles Taylor, and to its recent war, which cost 250,000 Liberian lives. Ghana commented that only two members of the ITTO are eligible for a possible waiver of obligations due to civil war. Delegates decided to recommend that Liberia should settle its 2007 contribution "as soon as possible" with no date specified. All delegates agreed on waiving the interest on Liberia's arrears from 1986 to 1996, but Liberia opposed removing brackets from this recommendation, preferring to include it in continued discussions on a larger debt relief package.

Japan, Germany, for the EU, and the US supported requesting Liberia to develop a plan to reschedule its arrears of US$896,343 incurred between 1989 and 2005, while Switzerland, with Ghana, preferred waiving both Liberia's obligations to the ITTO between 1997 and 2003 and, assuming it settles its contributions for 2002 and 2007 as soon as possible, its obligations between 2003 and 2005. All delegates agreed to allow Liberia to propose projects and pre-projects to the Council provided that it settles its contribution for 2007 and following years. Delegates accepted the Vice-Chair's proposal for a small group to try to reach consensus on a recommendation to the Council on this item. During the closing plenary, Liberia stated it was prepared to settle its debt for 2002 and 2007 as soon as possible and would make a new request for debt relief for 2003 to 2005 at ITTC-43. A final decision on this was left to ITTC-43.

RECOMMENDATIONS TO THE COUNCIL: The CFA recommended, inter alia, that the Council: conclude that provisions under the ITTA, 2006 on "Relief from obligations" are applicable to Liberia; waive the interest charged to its contributions in arrears between 1986 to 1996; request the ED to help Liberia develop a proposal to reschedule its outstanding arrears between 1989 and 2005; adopt a rescheduling plan at ITTC-43 on the basis of that proposal; and make Liberia eligible for project and pre-project funding, provided its contributions are not in arrears from 2007 onwards (CFA(XXI)/7).

REPORT OF THE SESSION: On Thursday afternoon, the CFA reviewed the draft report of the 21st session of the CFA to the ITTC (CFA(XXI)/7). All items in the report were approved without comment except those relating to Liberia's request for debt relief. Delegates also agreed on a decision regarding the appointment of an auditor and accepted the CFA draft report with brackets around the recommendations on Liberia's request for debt relief.

CLOSING PLENARY

REPORTS OF THE ASSOCIATED SESSIONS OF THE COMMITTEES: The reports of the Committees were presented to the Council on Saturday. Chair Macchiavello presented, and the Council adopted, the report of the Committee on Economic Information and Market Intelligence and the Committee on Forest Industry (CEM-CFI (XL)/6); the report of the Committee on Reforestation and Forest Management (CRF(XL)/4); and the report of the Committee on Finance and Administration (CFA(XXI)/7).

DATES AND VENUES OF FUTURE SESSIONS: ITTC-43 was confirmed for Yokohama, from 5-10 November 2007. Ghana, supported by the Producers, offered to host ITTC-44, in Accra. Japan, supported by Switzerland, suggested deferring this decision until funding is secured, recalling that Japan is no longer funding sessions outside of Yokohama. Malaysia noted that the ITTA, 1994 is still in effect and calls for two meetings per year, and asked Japan to reconsider this decision. The Chair proposed, and Council agreed, to postpone this decision until ITTC-43 in November 2007.

DECISIONS AND REPORT OF THE SESSION: On Saturday, Chair Macchiavello presented the Council with five draft decisions, and all were adopted without discussion.

• Decision 1 (ITTC(XLII)/15) approves 17 new projects, 5 new pre-projects, funding for 22 projects and 5 pre-projects, as well as funding the development of a multipurpose forest inventory as a tool for SFM.

• Decision 2 (ITTC(XLII)/16) appoints an independent auditing firm, Kansa Houjin (PWC Arata), for the financial year 2007.

• Decision 3 (ITTC(XLII)/17) requests a review and synthesis of international experience on latest practices for multi-purpose forest inventory using PNG as a case study.

• Decision 4 (ITTC(XLII)/18) confirms that Japan will bear the costs of one Council session per year, to be held at the Headquarters of the ITTO; Council sessions held outside of Headquarters will only be confirmed once adequate funding has been secured.

• Decision 5 (ITTC(XLII)/19) appoints Emmanuel Ze Meka as ED of ITTO.

CLOSING STATEMENTS: Cameroon thanked the Government of Papua New Guinea for hosting the session and underscored ITTO's spirit of international cooperation. Switzerland congratulated the new ED and submitted his closing statement in writing due to lack of time. Outgoing ITTO ED Sobral congratulated the incoming ED, Ze Meka. He emphasized that ITTO's ability to put policy into practice defines its institutional character, noting that when it was first created no other forest policy existed at the international level. PNG thanked delegates for attending, and wished them a safe journey home. New Zealand thanked PNG for its generous hospitality, highlighted ITTO's global character, and added that there is much work to be done to transition to ITTA, 2006.

Chair Macchiavello declared the session closed at 12:48 pm.

A BRIEF ANALYSIS OF ITTC-42

THE VOLCANO AND THE DAMAGE DONE

During this session, some delegates went on a field trip to Papua New Guinea's Mount Tuvurvur, a volcano that erupted in 1994 with devastating consequences and continues to pose a hazard. This may have been an omen of what lay ahead for the forty-second meeting of the International Tropical Timber Council (ITTC-42), which was hoped to be one of the last under the 1994 International Tropical Timber Agreement, prior to the ITTA, 2006's entry into force. This analysis will consider the events surrounding the eruption of tempers that took place on the penultimate evening of ITTC-42 and assess the damage. It will also consider some of the more prosaic successes achieved at ITTC-42 – in particular with regard to the hopes and aims of the host country – which are the real measure of the effectiveness of the organization.

DAMAGE DONE?

This ITTC session had numerous agenda items to consider in addition to project and pre-project funding, including forest-related issues arising under the UN Framework Convention on Climate Change; discussions on holding a conference on international transport of timber; the impact of civil war on SFM and on Liberia's financial obligations to the ITTO; and CITES listing proposals. The most contentious by far, however, was the selection of a new Executive Director (ED), which overshadowed the other issues and prevented their in-depth discussion. Eight years prior, this selection process had proceeded smoothly with the election of the current ED, Manoel Sobral Filho, by unanimous agreement. This time there was a field of six to choose from: three from Producer countries and three from Consumers. Given that the qualifications of the candidates were not disputed, it was clear that this would lead to a political battle rather than a technical decision.

The six months between ITTC-41, where it became clear that there was no frontrunner and the decision was taken to open the field to six candidates, and ITTC-42, which had to narrow the field back down to one, saw positions harden and become polarized. The underlying question was whether the ED position would in effect "rotate" to the third Producer region, as per the implicit agreement surrounding the alternating ITTC meetings that have taken place in Producer countries up till now. After having been held first by an Asian and then, currently, a Latin American, many felt the ED position was due to be held by an African. Because of divisions within Africa, however, including between Francophone and Anglophone countries, no one candidate emerged. This gave an opening to other regions to nominate their own, including the Swiss, the EU and the US.

In the end, three candidates appeared to have the best chance of being selected: a Swiss, a Cameroonian, and an Indonesian, with other candidates coming from the EU, the US and the Philippines. On Wednesday, Consumers were pushing for an informal "poll" as a way of attempting to narrow the field, but Producers resisted this, wary that this would be construed as a formal vote, and the debate moved to a small group. As delegates weary from the PNG-sponsored field trips gathered for an extra plenary session at 9:00 pm on Friday, a vote was proposed. Now the roles were switched as Producers coalesced around the Cameroonian candidate contingent upon Consumers rallying behind one Consumer candidate. This idea was not accepted, as the EU had never agreed to give up its own candidate. After the outcome of a vote indicated that a special vote would be held, the meeting erupted as a number of Producer delegations announced that they were withdrawing from the meeting. This act of protest was presumably aimed at preventing quorum from being maintained. Subsequently, Australia asked whether these parties were still allowed to stay in the room, and when the Chair indicated that they would have to leave, they did, much to the dismay of all who remained. At 12:30 a.m., the meeting was adjourned until the next morning.

On Saturday morning, after a few hours' sleep, it was time to salvage the meeting. The Chair proceeded to the vote, as per Brazil's motion, and Malaysia, Indonesia and Thailand again withdrew. After two rounds of voting, which saw Producers and Consumers coalesce around two candidates, the threat of having to postpone the decision until November was ultimately removed by the withdrawal of the Consumer's candidate. The delegates remaining in Papua New Guinea's Parliament Hall were then able to select the remaining candidate by standing ovation. The Africans clearly won the principle of regional rotation, but who were the other winners and losers? Jürgen Blaser of Switzerland won the hearts of all for his gracious gesture, and perhaps a step toward closer cooperation within the Council was also taken with calls from two Producers for less confrontation between Producers and Consumers in the aftermath of the eruption.

Consumers perhaps lost an opportunity to push hard for their own candidate of outstanding technical expertise to provide the necessary leadership for a successful transition to the ITTA, 2006. On the other hand, many Consumers expressed satisfaction at the outcome and the fact that the process was indeed completed.

The ITTO gained a new ED who is well respected and well liked within the Organization. The Organization may stand to lose some credibility if the voting procedures that were used are brought under UNCTAD legal scrutiny, but the fact that several Producer delegations withdrew from the vote may have been outweighed by the three Producer proxy votes that were secured at the last-minute. If questions are raised, the delegates who left the meeting may save some face but it remains to be seen how the episode in its entirety may affect them and the Organization as a whole.

ADJACENT SEISMIC ACTIVITY

Meanwhile, much closer to the ground on which the meeting was taking place, a number of developments were taking place, starting with a giant Greenpeace banner unfurled against the windows of the conference hotel, urging ITTO to "Stop forest destruction," as the President of Papua New Guinea opened the Council session on Monday. With what has been claimed as a 90% rate of illegally harvested logs coming out of PNG's forests and into the international market, both PNG and the ITTO were under some pressure to address this issue. Holding ITTC-42 in PNG temporarily cast a spotlight on PNG's true forest situation, bringing it squarely before the international forest community. The ITTO is already working with PNG, which was evidenced in reports on forest law and governance in PNG and on the recent diagnostic ITTO mission to PNG, which were officially presented at ITTC-42. Indeed, the report of the diagnostic mission was welcomed by members of the PNG civil society, one of whom noted that its recommendation fully bolstered what civil society groups in PNG have been saying for years regarding rampant forest destruction, and the fact that the ITTO has backed them up means the government is now listening. There was also unanimous support for a decision to fund a national forest inventory in PNG, strengthened to include the multiple purposes of forest resources. Through these, delegates were made aware of the numerous barriers to achieving SFM that PNG faces and were motivated to provide even greater support to PNG, including capacity building and forest inventory work.

PNG's extraordinary hospitality to everyone participating at the ITTC session, coupled with fascinating fieldtrips to the four corners of the country, generously sponsored by PNG's government, further enthralled delegates and increased political will for further ITTO action to help PNG tackle the numerous challenges before it. It is hoped that many more projects will follow suit, building on those that have sought to improve forest management and build capacity. Indeed, there is no more opportune time than now for ITTO members to take action.

CONCLUSION: EMERGING FROM THE VOLCANIC HAZE

Ironically, the formerly straightforward task of choosing an ED became the one over which a divide grew that produced one of the worst crises in the Organization's history, while formerly heavily contentious issues surrounding PNG were addressed amicably and constructively. The success of this meeting in grappling with both issues highlights the usefulness of ITTO as an organization and emphasizes the importance of having a functional organization. The fact that delegates at ITTC-42 appear to have overcome the volcanic eruption in PNG augurs well for the Organization's continued upward trajectory in effectiveness in carrying out worthwhile tasks. Like forests themselves that can spring from volcanic ash, the ITTO has sufficiently evolved to take advantage of even the most devastating events.

UPCOMING MEETINGS

2007 FOREST LEADERSHIP CONFERENCE: This conference will be held from 8-10 May 2007, in Vancouver, Canada. It will address critical sustainability challenges faced by the forest and paper sector in North America, and will feature plenary sessions and workshops, as well as an exhibit area. It is aimed at forest and paper sector decision makers, professionals and stakeholders. For more information, contact: ForestLeadership, Montréal, Canada; tel: +1-514-274-4344; fax: +1-514-277-6663; e-mail: conference2007@forestleadership.com; internet: http://www.forestleadership.com

INTERNATIONAL CONFERENCE ON FOREST LANDSCAPE RESTORATION: This conference will take place from 14-19 May 2007, in Seoul, Republic of Korea. It will examine the scientific basis for forest landscape restoration and its linkages to practice and policy. For more information, contact: John Stanturf, Conference Chair; tel: +82-2-726-5555/5556; fax: +82-2-778-2514; e-mail: jstanturf@fs.fed.us; internet: http://www.srs.fs.usda.gov/korea/

WORLD TRADE FAIR FOR FORESTRY AND WOOD INDUSTRIES: The LIGNA+ Hannover 2007: World Trade Fair for the Forestry and Wood Industries will take place from 14-18 May 2007, in Hannover, Germany. This exhibition provides a marketplace for wood and timber processing innovations, particularly for medium and small industries. For more information, contact: Anja Brokjans, tel: +49-511-89-31602; fax: +49-511-89-32631; e-mail: anja.brokjans@messe.de; internet: http://www.ligna.de

INTERNATIONAL CONFERENCE ON WOOD-BASED BIOENERGY: This conference will be held from 17-19 May 2007, in Hannover, Germany, and aims to raise decision makers' awareness of the technical and economic potential of utilizing logging residues and wood-processing wastes for energy generation, thereby increasing energy efficiency in tropical countries. For more information, contact: ITTO Secretariat, Forest Industry Division; tel: +81-45-223-1110; fax: +81-45-223-1111; e-mail: fi@itto.or.jp; internet: http://www.itto.or.jp

CBD AD HOC TECHNICAL EXPERT GROUP ON THE REVIEW AND IMPLEMENTATION OF THE PROGRAMME OF WORK ON FOREST BIODIVERSITY: The UN Convention on Biological Diversity Ad Hoc Technical Expert Group will meet from 28 May - 11 June 2007, at FAO Headquarters in Rome, Italy. The Expert Group is expected to consider the content of the Review of Implementation of the Programme of Work on Forest Biological Diversity prior to the twelfth meeting of the Subsidiary Body on Scientific, Technical and Technological Advice in Paris. For more information, contact: CBD Secretariat; tel: +1-514-288-2220; fax:+1-514-288-6588; e-mail: secretariat@biodiv.org; internet: http://www.biodiv.org/doc/meeting.aspx?mtg=TEGFOR-04

THE ROLE OF NON-TIMBER FOREST PRODUCTS (NTFPs) IN POVERTY ALLEVIATION AND BIODIVERSITY CONSERVATION: Hosted by the Viet Nam NTFP Project Phase II, the Ministry of Agriculture and Rural Development and the World Conservation Union (IUCN), this meeting will run from 11-15 June 2007, in Hanoi, Viet Nam. It will address the following questions: Under what conditions can NTFPs result in improved biodiversity conservation? Does commercialization of NTFPs result in over-harvesting? What is needed for markets to be pro-poor? Are attempts to develop NTFPs for poverty alleviation really reaching the poorest of the poor? And to what extent are these attempts impacting biodiversity conservation? For more information, contact: Sarah Webster, IUCN; tel: +84-4-7261-575/6 Ext. 133; fax: +84-4-7261-561; e-mail: sarahweb@iucn.org.vn; internet: http://www.cifor.cgiar.org/Events/hanoi_ntfp.htm

COMMUNITY FOREST MANAGEMENT AND ENTERPRISES: GLOBAL ISSUES AND OPPORTUNITIES: This conference, organized by the International Tropical Timber Organization and Rights and Resources Group, will be held from 16-20 July 2007, in Rio Branco, Brazil. It aims to bring together about 250 leaders of forest communities, public forest agencies, forest industry and conservation groups to share experiences in community forest management and enterprises from around the world. It will explore case studies from over a dozen community forests and debate the best ways of assisting the sustainable development of community-based operations. For more information, contact: Patricia Hanashiro, ITTO; tel: +81-45-223-1110; fax: +81-45-223-1111; e-mail: hanashiro@itto.or.jp; internet: http://www.itto.or.jp/live/PageDisplayHandler?pageId=223&id=3191

SCIENTIFIC FRAMEWORK OF ENVIRONMENTAL AND FOREST GOVERNANCE – THE ROLE OF DISCOURSE AND EXPERTISE: Convened by the International Union of Forest Research Organizations (IUFRO) and others, this conference will be held in Göttingen, Germany from 27-28 August 2007. It will focus on how information, influences governance processes, trying to combine a general discussion on theoretical aspects of discourse and expertise in governance research with applied governance research in the fields of forestry and the environment. For more information, contact: Daniela Kleinschmit; e-mail: dkrumla@gwdg.de; internet: http://www.iufro.org/science/divisions/division-6/60000/61200/61202/activities/

EIGHTH SESSION OF THE CONFERENCE OF THE PARTIES TO THE UN CONVENTION TO COMBAT DESERTIFICATION (COP-8): UNCCD COP-8 will be held from 3-14 September 2007, in Madrid, Spain. The Committee for the Review of the Implementation of the Convention and the Committee on Science and Technology will also convene during the COP. For more information, contact: CCD Secretariat; tel: +49-228-825-2800; fax: +49-228-815-2898; e-mail: secretariat@unccd.int; internet: http://www.unccd.int

FORESTS AND FORESTRY IN THE CONTEXT OF RURAL DEVELOPMENT: IUFRO EUROPEAN CONGRESS 2007: The IUFRO European Congress will take place from 6-7 September 2007, in Warsaw, Poland. It aims to take a comprehensive and integrated view of the key issues that shape and influence the role of forests and forestry as a means of rural development. It will focus on four main themes: policies supporting rural development; forests and rural development in light of global change; social aspects of forests and forestry in the rural landscape; and the economic role of forests in rural development. For more information, contact: Piotr Paschalis-Jakubowicz; tel: +48-22-59-38120; e-mail: Piotr.Paschalis@wl.sggw.pl; internet: http://conference2007.wl.sggw.pl/

INTERNATIONAL CONFERENCE TO PROMOTE THE DEVELOPMENT OF NON-TIMBER FOREST PRODUCTS AND SERVICES: This conference, convened by ITTO, will be held from 19-21 September 2007, in Beijing, China. It aims to bring producers, traders and consumers together to share experiences as well as study opportunities and make recommendations on policy and other measures to promote NTFPs. For more information, contact: ITTO Secretariat; tel: +81-45-223-1110; fax: +81-45-223-1111; e-mail: fi@itto.or.jp; internet: http://www.itto.or.jp/live/PageDisplayHandler?pageId=223&id=3206

GLOBAL VISION OF FORESTRY IN THE 21ST CENTURY: This Congress will meet from 30 September - 3 October 2007, in Toronto, Canada. It will be organized under the themes of global challenges, responsibilities and leadership in forestry, frontiers of science and a healthy and diverse forest environment, and cultures, markets and sustainable societies. For more information, contact: Shashi Kant, University of Toronto; tel: +1-416-978-6196; fax: +1-416-978-3834; e-mail: shashi.kant@utoronto.ca internet: http://www.forestry.utoronto.ca/centennial/int_congress.htm

THIRD FOREST ENGINEERING CONFERENCE: The Third Forest Engineering Conference will be held in Mont Tremblant, Canada from 1-4 October 2007. Convening under the title "Sustainable Forest Operations: The Future is Now," it aims to provide a forum for forest engineers to share experiences, knowledge and viewpoints. For more information, contact: Jean-François Gingras; tel: +1-514-694-1140; fax: +1-514-694-4351; e-mail: jfg@mtl.feric.ca; internet: https://www.feric.ca/index.cfm?objectid=9D89028D-BC8C-A58C-9CFCBD334D266708

INTERNATIONAL CONFERENCE ON THE FUTURE OF FORESTS IN ASIA AND THE PACIFIC: OUTLOOK FOR 2020: This conference is being held from 16-18 October 2007, in Chiang Mai, Thailand. It aims to bring together diverse stakeholders and expertise to provide broader perspectives on emerging changes, probable scenarios and their implications for forests and forestry in the region. For more information, contact: Patrick Durst; tel: +66-2-697-4139; fax: +66-2-697-4445; e-mail: Patrick.durst@fao.org; internet: http://www.fao.org/forestry/site/33592/en/

ITTC-43: The forty-third session of the International Tropical Timber Council and Associated Sessions of the Committees will be held from 5-10 November 2007, in Yokohama, Japan. For more information, contact: ITTO Secretariat; tel: +81-45-223-1110; fax: +81-45-223-1111; e-mail: itto@itto.or.jp; internet: http://www.itto.or.jp