ITTO presentation

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ITTO INTERNATIONAL CONFERENCE ON PROMOTION OF
INTRA-AFRICAN TRADE IN TIMBER AND TIMBER PRODUCTS
Accra, 30 June 2 July 2009 Key Issues for
Development of the Intra-African Trade in
Tropical Timber and Timber Products
Markku Simula
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Outline of the Presentation

• Market characteristics
• Competitiveness
• Trade barriers
• Main constraints
• Recommendations

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Market Characteristics

• Import patterns depend on the structure of local
  processing industry overall trend in trade is
  towards further processed products
• Importers are mainly specialized traders, few
  buyers large enough to justify direct purchasing
• High mark-ups of intermediaries (up to 100,
  average 30-50)
• Importance of informal trade no level playing
  field
• Markets are generally highly price sensitive,
  quality comes after in primary products inferior
  grades dominate
• Limited knowledge on African timbers and
  suppliers with few exceptions no preference
  importer perceptions suggest African products are
  of lower quality than alternatives

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Competitiveness of African Suppliers

• Suppliers perception we are competitive
  enough
• Small trade volumes suggest otherwise
• Main competition coming from South-East Asia but
  also competition from US/European temperate
  hardwoods is important (mainly in Northern
  Africa)
• In further processed products the quality of
  African products is inferior not meeting
  international standards
• Limited information on species, products,
  potential uses, suppliers
• Logistics and high cost of transportation by sea
  and road

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Import Tariffs
Product ECOWAS Nigeria SADC South Africa
Logs 5 0
Sawnwood 20 0
Plywood 20 10 0
Builders woodwork 20 15 0
Wooden furniture 20 20 - 13
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Other Trade Barriers and Challenges

• Export regulation
• Import regulation
• Quality standards and grading rules
• Certification and legality

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Main Constraints for Intra-regional Trade
Development

• Lack of knowledge on regional markets
• Poor transportation links high delivery costs
• Weak trade-supporting infrastructure
  (communication, other services
• Bureaucracy in documentation high transaction
  costs
• Limited access to trade finance
• Competition from illegal/informal sector uneven
  playing field
• Limited secondary processing capacity
• Low quality and design competitiveness
• Image and reputation of African suppliers
• Intense competition from outside the region
  (Asia, in the future Brazil)

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Recommendations - ITTO

• 1. Support detailed market studies
• 2. Support research and publication of the
  properties of African timbers
• 3. Promotion of LUS
• 4. Promote trade from legal and sustainable
  sources
• 5. Support specialized fairs and exhibitions and
  other trade promotion
• 6. Support skills development and technology
  transfer
• Specific market monitoring and other market
  intelligence
• Strengthen statistical data on production,
  consumption and trade

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Recommendations - Governments

• 1. Reduce trade barriers (incl. import duties,
  check points)
• 2. Strengthen customs cooperation
• 3. Support organization of trade promotion
• 4. Provide incentives for further processing
• 5. Reconsider forest sector taxes
• 6. Strengthen forest governance
• 7. Support private sector skills development
• 8. Improve communication and physical
  infrastructure
• 9. Improve currency systems

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Recommendations Forest Industry and Trade
Organizations

• 1. Participate in fairs and exhibitions
• 2. Promotion of LUS
• 3. Promote domestic markets as testing ground for
  trade
• 4. Invest in retooling and value added production
• 5. Consider investment in imported raw materials
  production
• 6. Engage in production of legal and sustainable
  TTPs and certification
• 7. Develop networks and strengthen own national
  organizations
• 8. Build capacity in market intelligence
• 9. Improve quality control (sawing, kiln-drying,
  finishing, grading)
• 10. Improve reliability of deliveries and
  customer communication

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Recommendations Regional Organizations

• 1. Promote removal of trade barriers
• 2. Promote cooperation of customs authorities
• 3. Promote timber trade fairs and exhibitions
• 4. Organize meetings on strategies for
  intra-African trade development
• 5. Promote harmonization of national legislations
• 6. Promote trade in legal timber
• 7. Consider establishment of West African Forest
  Commission
• 8. Engage ECOWAS and WAMU in forest sector
  cooperation issues

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Intra-African Trade in TTPs

• A largely lost opportunity in the past
• Stepping stone for the world markets
• Needs a concerted effort by the private sector,
  the governments, regional organizations, ITTO
  and other international bodies
• Accra Action Plan for the Development of Intra-
  
• African Trade in Tropical Timbe and Timber
• Products

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Thank You markku.simula(a)ardot.fi