Sri Lanka -- EFL Position on Proposed Tropical Forest Agreement Under US Tropical Forest Conservation Act

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Proposed Tropical Forest Agreement
Under US Tropical Forest Conservation Act

03, Campbell Terrace, Colombo 10.

EFL Position on
Proposed Tropical Forest Agreement
Under US Tropical Forest Conservation Act

ENVIRONMENTAL FOUNDATION Ltd, as a non-governmental organization working for the conservation of environment is very concern on the Sri Lankan Governments interest on signing an agreement on the tropical rain forest as a debt treatment, under the United States Tropical Forest Conservation act of 1998.

We are aware that as any other developing country, Sri Lanka also receives loans and grants from both Multilateral and bilateral agencies. World Bank, Asian Development Bank, IMF, USAID, JBIC are some of them and we know that the end result is Sri Lanka`s foreign debt is increasing continuously.

We also aware that the repayment of this debt is not an easy task for a third world country. Therefore all third world countries have to exploit their resources unnecessarily to repay the debt. Large scale timber extraction, shrimp culture, cash crops such as Gerkin, Baby-corn, Tobacco cultivation, mineral such as phosphate and mineral sand extraction, water privatizations are the direct activities to witness this exploitation. Not only present generation but also another three to four generation is already under this burden.

However, third world countries have no resources to repay the debt. In this context US Law on Debt Reduction for developing countries with tropical forest could be seen as a very valuable mechanism.

Under this mechanism if a tropical country has at least one globally important tropical forest that country can sign an agreement with the United States to reduce the debt in three ways. Under the option one US will reduce the debt owed to the USA as a result of concessional loans under the foreign assistance act no 1961 or reduction of debt owed to the USA as a result of credits extended under title 1 of the Agriculture Trade Development and Assistance Act of 1954. The main two mechanisms under this Act are DEBT FOR NATURE SWAP and the DEBT BUYBACKS.

DEBT FOR NATURE SWAP According to this provision “notwithstanding any other provisions of law, the President may in accordance with this section, sell to any eligible purchaser described in sub-paragraph (B) any concessional loans described in section 806(a)(1) or any credits described in 807(a)(1) or receipt of payment from an eligible purchaser described in subparagraph (B), reduce or cancel such loans (or credits) or portion thereof, only for the purpose of facilitation a debt-for nature swap to support eligible activities described in section 809(d)”

DEBT BUYBACK. Under this provision “ Notwithstanding any other provisions of law the President May in accordance with this section sell to any eligible country any concessional loans described in section 806(a)(1) or any credits described in section 807(a)(1) or on receipt of payment from eligible country, reduce or cancel such loans (or credits) or portion thereof, only for the purpose of facilitation a debt buyback by an eligible country for its own qualified debt, only if the eligible country uses as additional amount of the local currency of the eligible country, equal to not less than the lesser of 40 percent of the price paid for such debt by such eligible country, or the difference between the price paid for such debt and the face value of such debt, to support eligible activities described in section 809(d).”

According to the US Tropical Forest Conservation Act (TFCA) the findings for this act are: The topical forests are a) the base for developing pharmaceutical products and revitalizing agricultural crops; b) Playing a critical role as carbon sinks in reducing greenhouse gases c) Regulating hydrological cycles.

Also they state, “ the international negotiations and assistance programmes to conserve forest resources have proliferated over the past decade but the rapid rate of tropical deforestation continued unabated.” They also state that without similar approach, forest will never last due to the rapid felling to meet the development.

However, although the US tries to show that they are doing justice to the poor nations who own tropical rain forest, we have serious doubt about the genuineness of this action.

It is well known fact that US betrayed the Kyoto protocol, which was supposed to finalise last year. Kyoto protocol is the negotiation under the climate change convention signed in 1992 at the Rio conference. The US disagreed with the level of reduction of the CO2 for the US and the mechanism to reduce such CO2 levels. The reduction of Co2 level for US is very serious reduction of the life style and this is a very big political question for them.

Under this TFCA mechanism US will not need to reduce their CO2 levels. Therefore is clear that the US will benefit from TFCA without committing their Co2 levels.

We believe that the US would boast that they have protected so much of Tropical forests throughout the world to absorb CO2, which they release to the air. Therefore US will gain lot in climate change politics under this act.

However, it is the question for the developing tropical countries

a) Whether the amount of debt reduction is sufficient to the services provided by the tropical forest to the world;
b) Whether that will harm any future selling of the services of the tropical rain forests under any other mechanism.
c) Whether that will affect the sovereignty rights of the country.
d) Whether that will harm the ownership of the tropical forest resources including the genetic material, intellectual property rights and local rights.
e) Whether the countries have the constitutional rights to enter into such agreement under the present laws.

Our observations revealed that although the TFCA target the tropical forests this is not a sufficient payment to the service provided by the forests in the past and present.

The US TFCA state the following purposes i.e. a) to recognize the values received by United states citizens from protection of tropical forest; b) To facilitate greater protection of tropical forest, thus allowing the use of additional resources to protect these critical resources and reduce economic pressure that have led to deforestation.

However this forest agreement will bind the countries who own the tropical forests for a amount which is very much less than the its real service. When the countries agreed for the real cost of services we will have no chance to go for that market.

Therefore we state that binding our tropical forest under the proposed bilateral agreement will loose the opportunity to sell our forests services for a higher price under another world multilateral agreement.

However there is a caution that when consider the existing forest felling rates our forest will not be available when such world agreement come to affect. Therefore the country has to make a greater policy decision to STOP ILLEGAL AND LEAGL FELLING OF FORESTS immediately.

One activity under the proposed mechanism is research and identification of medicinal uses of tropical forest plant life to treat human diseases, illness and health concerns. We aware that the US pharmaceutical companies are well known for getting patents for plant based pharmaceuticals.

One of the reasons for the TFCA is protecting plant and gene bank, which is only available at the tropical forests. Therefore we state that the US will gain from research finding too.

Under this mechanism an international NGO could be selected as an eligible purchaser with or without a local NGO and there could be a threat due to use of their authority to engage in research etc which may result in bio pirating etc. Even this will allowed local bio-pirating NGOs to use the authority in engage in such research.

Therefore we state that the third party involvement under TFCA can harm the local rights too.

We also state that the US and all other developed countries that emit enormous amount of green house gases already served by the countries that own tropical rainforest. Absorption of CO2, controlling the hydrological cycle, acting as a gene and seed bank is those major functions. The value of these functions is higher than any businesses in the world.

Therefore all developed countries already owe enormous amount of debt to those third world countries. This is normally called ecological debt.

Although US TFCA accepts this principle they are not ready to forget or reduce that debt with regard to the past services. The ACT will be for the future service of the Tropical Forest.

Therefore we state that the Developed countries should reduce the foreign debt of those countries considering the value of such ecological debt without any further agreements.

In conclusion, the government has a very big role and duty when considering this mechanism to reduce the debt. However the government of Sri Lanka should not go for such agreement blindly since this involve US world politics in climate change and biological resource management.

We further state that forests are public assets. Government only acts as the trustee of them. This doctrine is very clearly spelled in Eppawela Phosphate case. Therefore the key issue is whether we loose our rights in the tropical forest sector once enter into such agreement.

Environmental Foundation Ltd.
Press Release.

The Government of Sri Lanka has decided to look into the possibilities of coming into an agreement with the Government of the United States of America to swap our national debts to the Conservation of tropical forests remaining in the country. This had been made possible under the Tropical Forest Conservation Act of 1998 (105 US C 214 of 29.07.1998). This act is an amendment to the Foreign Assistance Act (22 US C2151) and is intended to facilitate the protection of tropical forests thorough debt reduction with developing countries with tropical forests.

Whilst it is true that Sri Lanka has a large national debt and is in the process of obtaining more loans in the future and is therefore useful to seek any possibility of reducing the debts at least by a certain amount, EFL feels that this issue has to be addressed by looking at emerging trends and the future implication to Sri Lanka. In addition, EFL is of the opinion that we have to look at the issue not concentrating on the immediate needs, but about meeting the needs of future generations of our people as well.

Sri Lanka has a high level of bio-diversity and the highest degree of endemism in South Asia. The key to our future development lies in the conservation and rational use of our bio-diversity. This is more important when one considers the fact that Sri Lanka does not have rich deposits of minerals or oil even large amounts of revenue needed to develop the country. Therefore, on the surface, the TFCA looks like a promising thing that could help save our forests and reduce the national debts at the some time.

However, it is seen that the TFCA itself states that tropical forests are important for the people of the USA to be maintained as reservoirs of species important in the field of Pharmaceuticals, wild relatives of crops and as Carbon sinks. The search for pharmaceuticals is a multi million-dollar industry, carried out mainly by US firms. Most of the microbes that have been used to produce antibiotics and other pharmaceuticals have come form tropical countries. Under the Clean Development Mechanisms (CDM`s) proposed under the Kyoto Protocol a country has co either reduce its carbon emission or buy carbon entitlements from other countries. One from of entitlement is forests that absorb carbon dioxide. The entitlement requires the country to pay an annual fee to those countries that have forests in order to continue with the present emission standards. It is believed that third world countries could derive a substantial income every year for keeping their forests. Therefore, it is clear that TFCA is device to device pharmaceuticals and have entitlements cheaply.

This makes it clear that Sri Lanka has nothing to gain from entering into on agreement under TFCA and the EFL earnestly request the government to desist from entering into this kind of debt for nature swaps.

For more Information
Environmental; Foundation Ltd.,
03, Campbell Terrace, Colombo 10, Sri Lanka Tel: 697226

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