Effect of Forest Certification on International Trade in Forest Products

Abstract

Forest certification plays an important role in the global trade of legal, sustainably harvested timber. There is no accurate definition of how international forest certification systems impact international trade from a global perspective. This paper is intended to evaluate the influence of forest certification on international trade, so that it can provide a scientific basis for the improvement of the international forest certification systems and for the development of relevant forestry industries in different countries. First, the influence of forest certification on international trade of forest products is explained in the economic model; hence, four hypotheses are put forward. Second, to test these hypotheses, we verify the panel data of bilateral trade and forest certification of all forest products among 67 economies from 2009 to 2018 by incorporating forest certifications into the gravity model. Finally, tests by country groups and product groups were further analyzed, respectively. The results show that: (1) The extended Poisson pseudo maximum likelihood (PPML) estimation solves the problem of the heteroscedasticity and zero trade value problems of the gravity model well in the forest industry. (2) Forest certification has an export competitive effect, a trade barrier effect, as well as common language effect. (3) Forest certification has asymmetric trade effects. The export competitive effect of forest certification in developing countries is greater than that in developed countries. Forest certification has become a trade barrier for developing countries, especially in the process of trade with developed countries. The common language effect is higher during the trade between developed and developing countries. The export competitive effect of wood products is higher than that of furniture products. Forest certification has trade barrier effect on wood products in developing countries, while it has trade barrier effect on furniture products in developed countries.