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Viewing cable 06LIMA997, Peruvian Export Association Launches Forestry Plan

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Reference ID Created Released Classification Origin
06LIMA997 2006-03-14 15:47 2011-08-25 00:00 UNCLASSIFIED Embassy Lima
VZCZCXYZ0004
RR RUEHWEB

DE RUEHPE #0997/01 0731547
ZNR UUUUU ZZH
R 141547Z MAR 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 9174
INFO RUEHBO/AMEMBASSY BOGOTA 3108
RUEHBR/AMEMBASSY BRASILIA 6570
RUEHCV/AMEMBASSY CARACAS 9169
RUEHLP/AMEMBASSY LA PAZ MAR QUITO 0118
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LIMA 000997 
 
SIPDIS 
 
DEPT FOR WHA/AND,EPSC AND OES/ETC,ENV 
BRASILIA FOR ESTH HUB - J Story 
USAID FOR LAC, EGAT 
USTR FOR B HARMANN, M BURR 
COMMERCE FOR M CAMERON 
USDA/AS/FAA/Bailey and USDA/FAS/ITP/FSTSD/Brehm 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: SENV ETRD EINV EAID ECON PGOV SNAR PE
SUBJECT:  Peruvian Export Association Launches Forestry Plan 
 
 
1. SUMMARY: The Peruvian Association of Exporters, ADEX, 
announced on March 8 its initiative to revolutionize Peru's 
forestry program.  The ADEX plan, which received supporting 
speeches from the Ministry of Production and other 
government representatives, has multiple goals: increase 
forestry exports, create jobs/reduce poverty, reduce illegal 
logging; sustain forest resources and create a new, 
effective corps of forestry inspectors. The GOP natural 
resources agency currently charged with logging supervision 
is, not surprisingly, against the initiative.  With illegal 
logging still rampant in Peru, this is a welcome initiative. 
END SUMMARY. 
 
2. Econoff and USAID environmental officer attended a 
presentation on March 8 by the Peruvian Association of 
Exporters (ADEX) on its plan to create a legal, expanding 
and sustainable forest products industry.  Vice Minister of 
Production Antonio Castillo gave an enthusiastic speech in 
favor of the plan.  Other participants in the presentation 
included representatives of the Regional governments from 
wood-producing areas, the National institute of Natural 
Resources (INRENA, local wood products associations and 
civil society forestry stakeholders.  The presentation, 
which outlined industry actions, also provided a series of 
recommendations for the GOP. 
 
3. ADEX president Luis Vega described how his association 
views the appropriate expansion of forest wood exports given 
Peru's general problems.  He listed the main social ills as 
poverty, lack of jobs, disparity between urban and rural 
wealth and narcotrafficking.  Illegal logging concentrates 
many of these problems, denying income to rightful owners of 
resources, harming rule of law, reducing state revenue and 
taxing capacity of state to regulate the economy.  While 
commercial wood-producing forests comprise around 80 percent 
of Peru's territory, wood production, domestic and exports, 
account for only 1 percent of GDP and represent enormous 
potential for export-driven expansion.  ADEX President Vega 
stressed that improved law enforcement would also lead to a 
decrease in narcotrafficking; he noted aside from the 
deforestation associated with expanded coca production, the 
precursor chemicals used to make coca paste and cocaine are 
soil contaminants that are bad for tree growth.  In 
addition, drugs are increasingly being discovered in wood 
export shipments. 
 
4. Consultant Mauro Rios developed the ADEX plan and 
explained the barriers to wood industry development:  Peru 
lacks tree plantations, which have been successfully 
developed in neighboring countries such as Chile.  The 
mechanization of Peru's forest products industry lags behind 
other counties.  Deforestation is rampant; most of it is 
illegal and motivated by poverty.  Exacerbated by the 
illegal logging for profit, deforestation is facilitated by 
a failure of institutional control over forestry practices. 
 
5. The ADEX plan envisions a Vice Ministry of Forestry 
Production in the Ministry of Production, promoting 
production of forest products while effectively sustaining 
the resource.  INRENA would have authority in forested areas 
over animal life, genetic and water resources, but control 
over forestry concessions, management and law enforcement 
would be moved to a new corps of Forest Guards under the new 
Vice Ministry.  ADEX would lobby for tax incentives to 
promote plantations.  In the medium term, ADEX would work 
with regional and local governments and the Ministry of 
Transportation to help finance paving of road systems to 
bring wood products to market.  ADEX President Vega made an 
impassioned plea to move forward with the Peruvian Trade 
Promotion Act (PTPA), which he described as a vital step for 
stimulating the wood products industry; aside from the 
obvious export benefits, the PTPA would enable ADEX members 
to import affordable logging and sawmill machinery. 
 
6.  INRENA Chief Leoncio Alvarez rejected the ADEX proposal, 
stating that it would cast aside all of the INRENA forestry 
oversight efforts in place.  ESTHoff and USAID have asked 
for a meeting with Alvarez to clarify his position and to 
discuss reports of corruption in forest concession 
oversight. 
 
7. COMMENT: It is unusual for an industry to ask to be 
effectively regulated.  In this case, ADEX has recognized 
that the lack of effective government oversight is hurting 
legitimate producers.  We are aware of problems with the 
forest concession process and the continued prevalence of 
illegal logging.  We will explore how the ADEX plan can fit 
into implementation plans for the PTPA and the accord's 
Environmental Cooperation Agreement (ECA).  ADEX and its 
allies in this initiative are important partners for 
promoting the PTPA, fighting narcotrafficking (especially as 
wood products continue as a media for smuggling cocaine) and 
promoting sustainable growth in Peru.  The prospect of the 
private sector promoting road improvement is intriguing, as 
the GOP and regional governments have largely failed to 
adequately improve market access roads. 
 
STRUBLE