Forest Law Enforcement & Governance in ASEAN

Table of Contents

Acknowledgements

List of Acronyms

Zusammenfassung

1 Introduction

2 State of the Art
2.1 The Global Governance Perspective
2.2 The Concept of NSMD Governance
2.2.1 Legitimacy
2.2.2 The Potential of ‘Ratcheting Up’ Global Environmental Standards

3 Approach and Methodology
3.1 Location of the Thesis: A Review of NSMD Governance
3.2 Research Questions and Purpose
3.3 Two-Dimensional Approach
3.3.1 Intergovernmental and Private Governance Regimes
3.3.2 Defining Regime Effectiveness
3.4 Structure

4 Analysis Part I: Traditional State-led Governance – FLEG in ASEAN
4.1 What is FLEG?
4.2 The Current ASEAN FLEG-Process
4.3 The “ASEAN Way” of Regional Environmental Governance
4.4 Strengths and Weaknesses
4.5 Concluding Thoughts

5 Analysis Part II: Forest Certification as a Form of NSMD Governance
5.1 What is Forest Certification?
5.1.1 The Forest Stewardship Council (FSC)
5.1.2 The Programme for the Endorsement of Forest Certification Schemes (PEFC)
5.2 Normative and Theoretical Evaluation
5.2.1 Strengths
5.2.2 Weaknesses
5.3 Concluding Thoughts

6 Analysis Part III: Private Transnational Forest Certification – An Effective Governance Tool for ASEAN?
6.1 Forest Certification in ASEAN
6.1.1 The FSC and National Certification Schemes
6.1.2 Regional Forest Certification
6.1.3 Structural Obstacles
6.2 Assessing the Chances and Limits of Private Sector Involvement
6.2.1 Chances: Certification as a Monitoring Tool
6.2.2 Limits: The Risk of a “Race to the Bottom”
6.3 The Role of the State
6.4 Concluding Thoughts

7 Conclusion

8 Annexes

Annex 1: ASEAN Criteria for Legality of Timber

Annex 2: FSC Principles for Forest Management

9 Bibliography

List of Figures

Figure 1: Certified Forests by Region (as of January 2002)

Figure 2: FSC-certified Forests in ASEAN

Figure 3: Outline of the ASEAN Phased-approach to Forest Certification (PACt)

Acknowledgements

I would like to thank all persons who provided me with valuable support in writing this thesis. Many thanks to Prof. Benjamin Cashore for the insightful discussions at the meetings of the ASEAN Regional Knowledge Network on Forest Law Enforcement and Governance (ARKN-FLEG) and the very useful materials. Many thanks also to Daniela Göhler, Technical Advisor of the ASEAN-German Regional Forest Programme (ReFOP), who provided me with a lot of first hand information and encouraged me in writing this paper. It is thanks to her that I was able to gain a profound practical insight in my research field during my internship at ReFOP. I also would like to thank Thang Hooi Chiew, Chairperson of the ARKN-FLEG, and Dr. Alexander Hinrichs, Advisor to the ASEAN Working Group on a Pan-ASEAN Timber Certification Initiative (AWG-C) at the time, for the fruitful collaboration during my time at ReFOP. Finally many thanks to Dr. Andreas Obser, Principal Advisor of ReFOP at the time, who gave me the opportunity to work and network at my field of interest, which laid the foundation of this work.

List of Acronyms

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Zusammenfassung

Die vorliegende Arbeit befasst sich mit der Frage, wie und in welchem Umfang der Privatsektor im Rahmen des ASEAN Forest Law Enforcement and Governance (FLEG)-Prozesses einbezogen werden kann, um das Ziel der nachhaltigen Waldwirtschaft (sustainable forest management, SFM) und der Bekämpfung illegaler Abholzung in ASEAN zu verwirklichen. Die Untersuchung erfolgt vor dem Hintergrund der stetig wachsenden Bedeutung von privaten Akteuren in der Gestaltung globaler Umweltpolitik und konzentriert sich speziell auf non-state market-driven (NSMD) Governance als eine Form privater transnationaler Selbstregulierung im Waldsektor. Das Instrument der Waldzertifizierung gilt als eines der erfolgreichsten NSMD Governance-Regimes, dennoch ist der Forschungsstand in Bezug auf die Effektivität von Waldzertifizierung als Instrument zur Erreichung von SFM in Entwicklungsländern stark begrenzt. Die Arbeit möchte einen Beitrag zur Erschließung dieses Forschungsfeldes leisten.

Ausgangspunkt der Untersuchung ist die in der Literatur vertretene Hypothese, dass Waldzertifizierung ein komplementäres oder gar alternatives Steuerungsinstrument zu staatlicher Regulierung darstellt, welches großes Potential besitzt, effektiver das Ziel der nachhaltigen Waldwirtschaft zu erreichen. Diese Auffassung wird im Verlauf der Arbeit kritisch hinterfragt. Zu diesem Zweck wird ein zweidimensionaler Ansatz verfolgt, welcher sowohl die traditionelle staatliche Steuerung auf regionaler Ebene (top-down-Ansatz), als auch Governance durch internationale Märkte (bottom-up-Ansatz) mit einbezieht. Die Arbeit analysiert welche Auswirkungen private transnationale Waldzertifizierung auf die Rolle des Staates hat und identifiziert strukturelle Faktoren, wie zum Beispiel schwache staatliche Institutionen sowie eine geringe Nachfrage auf nationalen und internationalen Märkten nach zertifizierten Waldprodukten, welche die Effektivität von Waldzertifizierung in ASEAN erheblich einschränken.

Die Effektivität privater als auch staatlicher Steuerungsregime ist in diesem Zusammenhang als Fähigkeit definiert, das Verhalten der Adressaten zugunsten von SFM zu verändern, wobei Legitimität als eine notwendige Bedingung identifiziert wird. Ausgangspunkt der Untersuchung ist die Fähigkeit zum Schutz öffentlicher Güter, die durch Wälder bereit gestellt werden, da dies das grundlegende Ziel von SFM und somit von zentraler Bedeutung für Effektivität ist. Die Arbeit betrachtet eine Reihe von Faktoren, welche die Effektivität privater und staatlicher Regime beeinflussen, wie zum Beispiel strukturelle Charakteristiken, Compliance Mechanismen und Anreize der beteiligten Akteure. Auf diese Weise werden sowohl generelle Grenzen für die Effektivität von NSMD Governance-Regimen (z.B. das Fehlen von Vollstreckungsmechanismen) als auch regionsspezifische Einschränkungen (z.B. die Wahrnehmung von Zertifizierung als ein strategisches Instrument externer Akteure) identifiziert, die aus der zu Grunde liegenden Marktorientierung resultieren.

Daher argumentiert die Arbeit, dass trotz positiver Auswirkungen von Waldzertifizierung, wie zum Beispiel die Förderung der Partizipation verschiedener Interessengruppen, dieses Instrument nicht als Alternative zu staatlicher Regulierung angesehen werden kann und gar die Gefahr besteht das eigentliche Problem der massiven illegalen Abholzung zu vernachlässigen. Die Ursachen von illegalem Holzeinschlag liegen in Korruption und schwacher Gesetzesvollstreckung – Probleme, auf die marktorientierte Instrumente keinen Einfluss haben und deren Lösung die Autorität von Staaten erfordert. Die Arbeit kommt schließlich zu dem Ergebnis, dass private Steuerung in Form von Waldzertifizierung bestenfalls als ein letzter komplementärer Schritt betrachtet werden sollte, da die Effektivität dieses Instruments von institutionellen Bedingungen abhängt, welche in der Region (noch) nicht vorhanden sind.

1 Introduction

“Humanity is cutting down its forests, apparently oblivious to the fact that we may not be able to live without them.”

Isaac Asimov

Isaac Asimov's Book of Science and Nature Quotations, 1988

The problem of deforestation and forest degradation is currently highly prominent on the international agenda. In September 2001, the East Asia Ministerial Conference on Forest Law Enforcement and Governance (FLEG) took place in Bali, Indonesia and adopted the Bali Declaration. The participating countries committed themselves to strengthen their efforts in combating illegal logging and other forest crimes. In June 2010 the Food and Agriculture Organization (FAO) published a review of FLEG progress in Asia and the Pacific, keeping the issue a priority in global environmental governance.^[1]

Although the region of Southeast Asia accommodates only 5% of the world’s forests, it accounts for nearly 25% of the global forest loss over the past decade, whereas illegal logging is the major cause (World Bank 2010).^[2] Therefore this region is closely watched by the international community regarding progress towards sustainable forest management (SFM). The practice of illegal logging leads to an estimated annual loss of US$ 15 billion in developing countries (Robledo, Blaser et al. 2008: 7).

The Association of Southeast Asian Nations (ASEAN)^[3] recognizes the importance of FLEG as a way to hinder these huge economic losses as well as the environmental and social consequences. The improvement of the region’s reputation and competitiveness in the international market is a pivotal goal (Goehler, Liss, and Schwenzien 2009: 1). In 2007, the heads of the ASEAN Member States (AMS) decided in their ‘ASEAN Declaration on Environmental Sustainability’ to “strengthen law enforcement, promote environmentally sustainable practices, and combat illegal logging and its associated illegal trade” (ASEAN 2007a). The commitment was reaffirmed by the ASEAN Ministers on Agriculture and Forestry in the ‘ASEAN Statement on Strengthening Forest Law Enforcement and Governance’^[4] (ASEAN 2007b).

Yet, deforestation and forest degradation remains an intensifying problem in the region. Weak forest governance structures and lack of law compliance in the forest sector result in a lack of incentives for SFM. Traditional forms of state-led global environmental governance seem to fail achieving effective progress in governing the sensitive issue of forestry, where trade, environment as well as social values intersect (Kirton and Trebilcock 2004: 4). In fact, the international community was unable to create a legally binding global forest regime at the United Nations Conference on Environment and Development (UNCED) in Rio in 1992. The negotiations ended in a North-South conflict in which the developing countries, led by Malaysia and India, refused to even discuss a binding global agreement without appropriate financial compensation and favored an approach based on national sovereignty instead.

Due to this inadequate action of states, private forest certification schemes have emerged as a powerful and prominent type of non-state global environmental governance. This development led scholars and practitioners to consider non-state or private governance as a potential alternative solution for global forest governance. Because of the naturally fundamental role of the private sector in trade of timber and other forest products, the adoption of responsible business practices, such as forest certification, can have a great impact on tackling illegal logging. However, active private sector participation in the FLEG process in ASEAN Member States is rare due to the lack of direct business relevance in the discussion that has taken place so far in various forums.^[5]

Based on this observation, the aim of this thesis is to systematically assess the chances and limits of transnational private forest governance in ASEAN. The overall intention in writing this paper is to contribute to our understanding of private and public governance and their collaboration. Therefore the central research question of this paper is whether and under what conditions private sector involvement can increase forest governance in ASEAN. This will be analyzed by reference to transnational forest certification as a form of private governance or, to be more precise, “non-state market-driven (NSMD) governance” as introduced by Cashore et al.^[6].

The conceptual framework of global governance composes the overall frame of reference. This perspective allows taking forms of governance beyond the state into account. In that context private certification schemes are viewed as self-organized “horizontal” networks of non-state actors, which “escape traditional hierarchical or ‘vertical’ chains of responsibility to (inter)governmental political authorities.” (Mason 2008: 14) These schemes are considered to be the most successful type of non-state global environmental governance (Bernstein and Cashore 2007; O'Neill 2009) and aim at developing standards and enforcing compliance.

However, research on the effectiveness of non-state certification schemes in promoting sustainable forest management, especially in developing countries, is highly limited. In tropical countries, where certification could have its greatest impact, support is rather low, which is also the case in ASEAN. What are the reasons for this reluctance, given the huge potential? This is one aspect of the question the thesis addresses because most research on private forest certification has focused on developed countries.^[7]

The paper argues that private forest governance is no alternative to state-led forest governance but at best a complementary governance tool, its successful use depends on certain preconditions. I hypothesize that in general the sensitive issue of SFM implementation cannot be achieved by counting on market-based governance tools without the guidance and the authority^[8] of state regulation. Thus, the paper contributes a two-dimensional approach to the actual global governance debate by drawing a picture of a global governance that challenges the dominant role of nation states as the primary agents of global governance (O'Neill 2009: 6) on the one hand and pointing out the crucial role of state regulation on the other hand. In doing so I aim at adding a new perspective to the debate about the role of private actors, especially business actors, regarding their actual governance potential in global environmental politics without neglecting the power and responsibility of the state, as is often the case in the literature.^[9]

To this end, the paper proceeds in three analytical steps drawing on small case studies, which focus particularly on the strategies of achieving SFM. First, it reviews the government-led FLEG initiatives of ASEAN Member States as a top-down approach to forest governance. Second, it critically discusses the bottom-up approach of “governing through markets” (Cashore, Auld et al. 2004), which considers private forest certification as the key instrument with potential to replace state regulation; thereby identifying its strengths and shortcomings. Third, based on the findings the paper will evaluate the chances and limits of private forest governance in ASEAN, taking both approaches into account. The thesis concludes that the best way for private sector involvement in ASEAN will be a dedicated government-led forest governance, which provides a guiding framework for and oversees private forest governance in the region, thereby creating an adequate balance between control and incentives.

2 State of the Art

Recent trends in international environmental governance, especially forest governance, indicate that there is a shift from traditional intergovernmental governance to less formal forms of governance, which are beyond the scope of states, such as NSMD governance regimes. This development is partly a function of the rise of neoliberalism as the underlying governance ideology (Humphreys 2006; O’Neill 2009) in Northern countries, which lays the foundation to more flexible and voluntary market-based mechanisms, aiming to achieve goals of environmental protection more effectively. This chapter outlines the global governance concept in general and the concept of NSMD governance in particular, which provide the overall theoretical framework.

2.1 The Global Governance Perspective

Over the last 25 years a change in global forest politics regarding law and rule making can be observed. In the early 1980s this policy field could be described as the “elite club model of intergovernmental politics”^[10] (Keohane and Nye 2000, cited in Arts and Buizer 2009: 345). However, since intergovernmental negotiations have failed to agree on a legally binding global forest convention, the area has been opened to concepts like participation, multi-stakeholder dialogue and interactive policy making (ibid.). In addition, global environmental politics is strongly influenced by economic globalization, leading to shifts of power and authority from the public to the private sector.

The Earth System Governance Project^[11] and more specifically the associated Global Governance Project^[12] are concerned with these processes and focus, among others, on the role and influence of transnational private rule-setting organizations in global sustainability politics.

According to the Commission on Global Governance (CGG), governance is “the sum of the many ways that individuals and institutions, both public and private, manage their common affairs.” (CGG 1995, cited in Paterson, Humphreys et al. 2003: 3) However, there is no single definition of governance and its core elements in the literature. According to Biermann (2008) most literature adds to the concept of institutions^[13] a dynamic perspective which focuses on processes of governance. Therefore the global governance perspective looks at “governance systems that integrate research on interlinkages of single institutions” and has a greater emphasis on actors, especially non-state actors (281f.).

The Global Governance Project identifies three characteristics of global governance: 1) increasing participation of non-state actors, such as multinational corporations, non-governmental organizations (NGOs) and scientists; 2) new mechanisms of organization such as public-private and private-private partnerships, alongside the traditional system of intergovernmental regimes; and 3) different levels of rule-making, both, vertically between supranational, international, national and subnational levels of authority ('multilevel governance') and horizontally between different parallel rule-making systems.

The rising theoretical importance of private global governance systems is adding new perspectives to the debate about the role of private actors in terms of their responsibility and accountability in global environmental politics. According to Pattberg, learning from private governance initiatives “not only broadens our theoretical understanding of novel institutional arrangements in global governance but also may contribute to practical steps toward more sustainable institutions” (2005: 372). Therefore the research interest mainly focuses on how these non-state regulatory regimes gain authority and legitimacy (Cashore, Auld et al. 2004), their effectiveness (Espach 2006) as well as the broader political and economic effects they might have (Pattberg 2007). This paper is concerned with the second field of research, focusing on the effectiveness of non-state certification schemes in promoting sustainable forest management in developing countries.

The global governance perspective allows taking forms of such governance beyond the state into account because its underlying assumption is that the subject of global environmental politics is under transformation to the effect that there are different forms of governance outside of hierarchical structures. The emergence of private forest certification schemes as new and experimental governance tools enrich the actual global governance debate and is seen as an innovative approach, given the accountability deficits of state-led global policy making. According to Mason, these deficits are rooted mainly in geopolitical interests of states, which led him to the conclusion that the “principle of state sovereignty limits inter-governmental collective action” (2008: 11).

Thus, the concept of global governance stands out from the rather state-centered concept of international relations (IR)^[14] – which focuses mainly on how nation states can accomplish their own goals and rational self-interests – by focusing instead on the development of private governance systems, which lie beyond the national-international dichotomy and are independent of state actors in terms of gaining authority and legitimacy. Examples of such new non-state sources of authority are private interfirm regimes regulating whole market segments, private standard-setting cooperation, and transnational advocacy networks practicing moral authority in issue areas such as biodiversity (Dingwerth and Pattberg 2006: 193). Hence, the global governance perspective is more likely to cover the reality of global environmental governance as of today, which was accurately described by Rosenau, contrasting governance with government and thereby dissociating governance from the classical concept of power and authority:

“There is no single organizing principle on which global governance rests, no emergent order around which communities and nations are likely to converge. Global governance is the sum of myriad – literally millions of – control mechanisms driven by different histories, goals, structures, and processes.” (1995, cited in Dingwerth and Pattberg 2006: 192)

In sum, the global governance perspective aims at capturing the variety of governance mechanisms of different actors and the emergence of private authority or rule-making power in transnational and global politics. As Fuchs puts it, “(…) the core of the global governance argument concerns the acquisition of authoritative decision-making capacity by non-state and supra-state actors.” (2002: 11) The following paragraphs provide a brief overview of the current state of research and the different fields of attention such as public-private and private-private rule-making processes in global environmental politics.^[15]

Transnational climate partnerships, for example, are considered as a form of new emerging public-private partnerships (PPPs). Bäckstrand describes this process as “complex multilateralism” (2008: 75). Unlike many other global governance literature, she points out the not to be underestimated role of the state, since these climate partnerships operate “in the shadow of hierarchy” and are showing a tendency towards “old” forms of political bargaining or “old governance” (ibid.).

In contrast to this perspective Chan and Pattberg emphasize the “partial retreat of the state” and the “rise of neoliberal economic theories” (2008: 113). They are concerned with institutional change in accountability regimes and deal particularly with private standard setting in global forest governance by analyzing the accountability structure of the Forest Stewardship Council (FSC). The authors concentrate on the political drivers of accountability regime change and their explanatory power regarding legitimacy and ideological shifts. The privatization of global environmental politics is seen as a process that “undermines established, state-centric, models of democratic accountability in global governance” (Falkner 2003: 81) and favors market-oriented measures at the cost of more holistic approaches.

The underlying neoliberal principle in global forest governance focuses on the individual and proceeds on the assumption that the collective common good will be maximized if people and firms are free to seek their interests in the marketplace. State regulation is considered “burdensome” whereas private ownership is viewed as the more efficient way (Humphreys 2006: 11). Thus, neoliberals advocate voluntary private sector codes of conduct for environmental standards. According to Humphreys this process of privatization is attractive to political interests (at least in developed countries) since it releases some of the economic obligations of the state (ibid.). As a result, Chan and Pattberg state that “liberal environmentalism” has become a dominant approach in global environmental politics (2008: 113).

The theory of liberal environmentalism was introduced by Bernstein (2000) and implies that ideas or policies are only chosen if they are in line with liberal norms. Thus, according to Bernstein, the failure of the international community in negotiating and implementing a forests convention stems from the regulatory nature of such a public policy instrument, which contradicts key norms of liberal environmentalism (474).

Cashore and Bernstein (2004) also focus their research on the FSC as one example of voluntary forest certification as a result of the failure of interstate negotiations. They are especially interested in how such non-state initiatives can gain international and domestic legitimacy. The authors note that “governance without government” makes it hard to gain political legitimacy when using traditional notions of political legitimacy^[16] (35). They argue instead for a broad concept of legitimacy based on organizational sociology literature^[17]: “Put simply, in this view a rule or institution is legitimate if relevant audiences accept it as appropriate.” (41)

Meidinger (2003) explores the potential of non-state market-driven governance in a rather rigorous way by viewing private certification programs at least as “strengthening governmental regulation, and possibly even extending the reach of the legal system” and argues further:

“If they manage it, forest certification programs are likely to have truly outstripped the nation states’ legal systems”. (Cited in Cashore 2003: 225)

In contrast, Falkner (2003) is concerned with the rising power of transnational corporations and how they develop rules that govern not only corporations but states and environmental NGOs as well, thus raising the question if there is a risk of usurpation towards corporate needs.

Broadly speaking a vast number of studies have analyzed the emergence of private governance.^[18] They have in common that they all consider these market-based instruments as being in opposition to intergovernmental cooperation (Gulbrandsen 2004: 77). The subsequent paragraph illustrates this by dealing with NSMD governance systems more closely.

2.2 The Concept of NSMD Governance

Non-state market-driven governance systems, such as the Forest Stewardship Council, play an increasingly important role in global forest governance regarding the fostering of sustainable forest management. Actors from civil society and forest industry are collaborating within a self-created governance regime, which performs similar or same functions as intergovernmental regimes, without, however, depending on the authority of states. Thus, the young theoretical concept of NSMD governance as a form of private transnational governance deserves attention because it offers a high standard of regulation and has a great potential to socially embed global markets (Bernstein and Cashore 2007: 347).

“NSMD systems encourage compliance by recognizing and tracking, along the market’s supply chain, responsibly produced goods and services. They aim to establish ‘political legitimacy’ whereby firms, social actors, and stakeholders are united into a community that accepts ‘shared rule as appropriate and justified.’” (Ibid.)

The concept of non-state market-driven governance was introduced by Cashore and colleagues (Cashore 2002; Bernstein and Cashore 2004, 2007; Cashore, Auld et al. 2004). NSMD governance systems can be described as “deliberative and adaptive governance institutions designed to embed social and environmental norms in the global marketplace that derive authority directly from interested audiences, including those they seek to regulate, not from sovereign states.” (Bernstein and Cashore 2007: 348) Thus, the main distinction compared to traditional international governance, any form of shared private or public governance, and businesses self-regulation is the source of authority. According to Bernstein and Cashore, the source of authority is “diffuse and located in the marketplace” (2004: 35).

“Specifically, producers and consumers along the supply chain grant authority as products move through the market from (in the case of forests) extraction to end users. The institutions or governance schemes themselves are empowered ultimately by acceptance by these players, but also by drawing legitimacy from existing webs of authoritative international norms that define and regulate appropriate behaviour and practices in the issue area.” (Ibid.)

In other words, NSMD governance exists when rule-making authority derives from evaluations of firms along the supply chain, so called “external audiences, who are encouraged to accept the NSMD governance system” (Cashore 2002: 511); and the sovereign authority of states is not ceded nor used to enforce compliance. The granting of authority through those external audience evaluations is based on economic benefits, such as market access and price premiums, “moral suasion”, or because it has become a common practice (ibid.). From this follows that at each stage of the production process economic actors can decide whether they are willing to comply. The willingness of compliance results from the already mentioned market incentives and the improvement of reputation and competitiveness on international markets.

Non-state market-driven governance systems claim to be more democratic and transparent than clientelist public policy networks – because of the more participatory and integrated approach – and aim at constituting “hard law” in the private sphere, resulting in value-based decisions made by profit-maximizing firms (Cashore, Auld et al. 2007: 162). In order to gain legitimacy independent verification is vital, which is another key feature of NSMD governance. This distinguishes NSMD governance systems from many forms of business self-regulation such as corporate social responsibility initiatives, which require only limited or no outside monitoring.

As indicated above, NSMD governance systems, especially private forest certification schemes, gain legitimacy from external audiences. This is important for understanding the underlying dynamics of NSMD governance because these audiences (such as the state as actor, firms, customers and environmental groups) are guided by different and a complex interplay of motivations. Because of this, according to Cashore, the market provides the setting in which self-interest motivations (i.e. maximizing profits) interact with moral interests. Thus, the underlying dynamics of such systems are more complex than only material incentives (Cashore 2003: 226).

Based on that the literature tends to view NSMD governance as opposition or alternative to public forest policy-making, since it offers the possibility to, for example, sidestep weak governments in the tropics. Cashore, Gale et al. see “considerable potential to improve forest management in developing countries and countries in transition” (2006: 588), where governments often lack the political will and/or capacity to foster sustainable forest management. Thus, as outlined above, research also focuses on the potentials of private governance to reduce or alter the scope of traditional intergovernmental decision-making.^[19] However, there are certain limits to private rule-making, which have their roots in the combination of market mechanisms and moral authority (Pattberg 2005: 357) as described above.

These potentials and limitations regarding the improvement of forest governance in ASEAN are the object of study. To this end, the paper analyzes the changing roles of governments and the corporate sector in global forest governance. In this regard the following subsections shed light on two major research issues in NSMD governance literature: gaining and maintaining legitimacy and the potential of increasing environmental standards from the bottom upwards.

2.2.1 Legitimacy

In this paragraph I briefly consider the issue of gaining and maintaining legitimacy in non-state market-driven governance regimes, since the paper views legitimacy as a necessary precondition for their effectiveness (see chapter 3).

Legitimacy cannot only be gained and maintained through democratic procedures, but also through a broad range of other methods (Suchman 1995, in Beisheim and Dingwerth 2008: 11), such as NSMD governance regimes. Beisheim and Dingwerth (2008) focus on the concept of “normative procedural legitimacy”, defined in terms of inclusiveness, deliberativeness, transparency, and accountability (deriving from democratic theory) and how gaining and maintaining procedural legitimacy increases the likeliness of a private transnational regime’s effectiveness. They define three social mechanisms, which have to be developed by private governance regimes that link procedural legitimacy to the success of those regimes: “(1) ownership based on inclusive, fair and representative participation; (2) social learning and persuasion based on deliberative process; and (3) social control based on transparency and accountability.” (Beisheim and Dingwerth 2008: 12) Inclusiveness and deliberation are considered to be essential for gaining legitimacy whereas transparency and accountability are crucial factors for maintaining legitimacy (ibid.: 3).

Bernstein and Cashore (2007), on the other hand, focus specifically on “political legitimacy”, which, as mentioned above, is defined as the acceptance of shared rules and standards by all members of a specific NSMD governance regime as adequate.^[20] This concept of legitimacy^[21] deals with the “acceptance of a governance relationship” in which rules and regulations should be obeyed; and requires institutionalized authority, which possesses power resources “to exercise rule as well as shared norms among the community” (ibid.: 351). The degree of achieved legitimacy affects the degree of compliance.

The actual design and scope of a specific NSMD governance regime depends on norms of legitimacy, which provide its justifications and a common understanding (ibid.). Cashore (2002) argues that the legitimacy of NSMD governance systems is measured by their actions. Thus, research is interested in the credibility of certification processes, the reflection of societal values and the ability to encourage participation of a broad range of stakeholders. NSMD governance systems with a wide range of stakeholders and interest groups from the private sector and civil society (environmental and social NGOs), which are equally involved in participation and decision-making, are more likely to gain legitimacy.

2.2.2 The Potential of ‘Ratcheting Up’ Global Environmental Standards

Global governance literature and especially students of non-state market-driven governance consider forest certification a most convenient governance tool to promote responsible commercial forestry and to tackle illegal logging.^[22] Thus, given the deficits of intergovernmental approaches, forest certification has the potential to serve as an alternative “if conceived as working in conjunction with domestic public policy requirements, could have important impacts in curbing some, though not all, global forest challenges.” (Cashore, Auld et al. 2007: 168) According to Cashore (2008), forest certification could be used as an instrument to “spark upwards” environmental protection by creating a global ‘California effect’^[23] in the private sphere.

This phenomenon describes the process in which relatively highly regulated companies support increased environmental standards on their less regulated competitors (Cashore, Auld et al. 2007: 159). The access to profitable markets would thus require a set of certain environmental standards under which firms have to operate. According to Vogel, these regulations are often initiated by strong civil society action, but once in place, would give firms operating under these standards the incentive to support similar regulations on their competitors in collaboration with NGOs (Vogel 1995, in Cashore, Auld et al. 2007: 169). This can lead to strategic coalitions of business and environmental groups, so called ‘bootlegger-Baptist coalitions’^[24] (Cashore 2008). In order to initiate such a phenomenon, active environmental and social NGOs are prerequisite as well as high market integration and “spark initial regulations” (ibid.). This clearly constitutes a long-term approach.

It is argued that a widespread support of NSMD governance systems might potentially lead to globally “ratcheting up” processes, which is naturally the most important issue for students of NSMD governance (Cashore, Egan et al. 2007: 38). As a first step in triggering such a process Cashore (2008) suggests to set a bar that would use existing public policies as the “spark”. Certification of firms in relatively highly regulated regions should merely reflect the existing regulations in order to gain widespread support of those firms. In a second step ‘bootleggers and Baptist’ coalitions emerge, which would use this support to gain traction for a global standard that would address harmful forest management practices and illegal logging elsewhere.

In order to reach comprehensive acceptance and credibility and “to ensure long-term ratcheting up of standards” this strategy must be adopted by a certification system that is not dominated by industry interests, such as the Forest Stewardship Council (Cashore, Auld et al. 2007: 170). This potential will be explored in chapter 6. Regarding the standards within a certification scheme, Bernstein and Cashore (2007) claim that the competition of different NSMD governance regimes will lead to enhanced pressure to “ratchet up” their regulations in order to stay competitive in the market place. This assumption will be critically reviewed in chapter 5.

3 Approach and Methodology

3.1 Location of the Thesis: A Review of NSMD Governance

As pointed out, it is argued in the literature that the problem of deforestation and illegal logging continues because of the inability of public policy-making at the international level. Lack of capacity and political will as well as corrupt institutions prevent strong regulations or, if in place, their empowerment on the national level. These conditions led to the emergence of transnational private standard setting as a way to bypass the inadequate rules and compliance problems. Many authors consider the participation of private actors in global governance as a solution (Biermann, Betsill et al. 2010: 286).

[...]

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^[1] Available online at www.profor.info/profor/sites/profor.info/files/publication/FLEG-ASEAN.pdf (accessed 2010/09/25).

^[2] For more detailed information see www.worldbank.org/eapfleg (accessed 2010/09/25).

^[3] ASEAN was founded in 1967 to promote stable relations among its members (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, the Philippines, Thailand, and Vietnam). In order to do so, ASEAN encouraged economic, social, and cultural cooperation in the spirit of equality and partnership.

^[4] Available online at www.aseansec.org/21032.htm (accessed 2010/12/23).

^[5] For example the ASEAN Regional Knowledge Network on Forest Law Enforcement and Governance (ARKN-FLEG), the ASEAN Forest Clearing House Mechanism (CHM) and the ASEAN Working Group on a Pan-ASEAN Timber Certification Initiative (AWG-C).

^[6] Cashore 2002; Bernstein and Cashore 2004, 2007; and Cashore, Auld et al. 2004.

^[7] Mainly on North America (Hansen, Fletcher et al. 2006; Cashore 2003, 2007), Canada (Bernstein and Cashore 2000; Cashore, Auld et al. 2003; Cashore and Lawson 2003) and Western Europe (Cashore 2003), e.g. Finland (Cashore, Egan et al. 2007).

^[8] The paper draws on the definition from Biermann, Betsill et al., who understand authority as “the legitimacy and capacity to exercise power, while power refers merely to the capacity to influence outcomes, with or without the legitimacy to do so.” (2010:283).

^[9] See for example Cashore 2002; Cashore, Auld et al. 2004; and Meidinger, Elliott et al. 2003.

^[10] Keohane, R. and J. Nye (2000). Introduction. In: Nye, J. and J. Donahue (eds.) Governance in a Globalizing World. Brookings Institution Press. Washington: 1–44.

^[11] For more information visit the website under www.earthsystemgovernance.org (accessed 2010/10/09).

^[12] For more information visit the website under www.glogov.org (accessed 2010/10/09).

^[13] The concept of institutions – at least in the field of global environmental governance – includes formal rules of cooperation but also norms and common ways of framing an issue (Young 2002).

^[14] I will draw on mainstream IR theories in chapter 4 as an explanatory framework for the current status of FLEG in ASEAN, which was initiated by the ASEAN Member States in November 2007.

^[15] This section gives a far from exhaustive survey by exemplarily highlighting some important authors and their work. For a more detailed overview see for example Mason (2008) and O’Neill (2009).

^[16] I will deal with the issue of legitimacy in NSMD governance regimes more closely in section 2.2.1.

^[17] See for instance Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. The Academy of Management Review 20 (3): 571-610. Suchman defines legitimacy as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.”

^[18] In addition to the already mentioned works see also Pattberg (2005, 2006).

^[19] See for example Meidinger 2001 and Cashore 2002.

^[20] For a profound derivation and justification of this definition see Bernstein, S. (2005). “Legitimacy in Global Environmental Governance.4” Journal of International Law and International Relations (1): 139–166.

^[21] This conception is close to that of internal legitimacy, which refers to the “extent to which a regime is viewed as legitimate by its members (O’Neill 2009: 187).

^[22] The following paragraphs benefit from Benjamin Cashore’s presentation “Sustainable Businesses in the Global Era: Can Market Driven Certification Systems Reward Responsible Behaviour?”, held at the inaugural meeting of the ARKN-FLEG on the 15th October 2008, Jakarta, Indonesia; as well as fruitful discussions with Benjamin Cashore at the meetings of the ARKN-FLEG in Jakarta and Manila (15th October 2008 and 10-12th February 2009).

^[23] This phenomenon was labeled by Vogel (1995) referring to the ability of California to increase standards through competition with other jurisdictions, due to its power and market size (in Bernstein and Cashore 2000).

^[24] “Bootleggers and Baptists” coalitions are a model of public choice theory introduced by Bruce Yandle in 1983. This model refers to politics in which opposite moral positions will lead to the same vote.