In this paper the vulnerability of Chile`s forestry trade to environmental threats is explored. The increasing concern for the environment by consumers, together with the life cycle approach to products has created a new context for forest exploitation. The new trend in consumer based voluntary instruments, requiring an increasing use of eco-labels and forestry certification schemes, that can be used as trade barriers, is discussed. In particular the uncertainty related to the definition of sustainable forestry management is examined. The link between this trend and the interests of social and environmental NGO`s, represents a potential threat to forestry sector development. These are not theoretical concerns, as exemplified by Chile`s forestry sector development in recent years: at the production stage, the use of chlorine has been banned increasing production costs; native forest exploitation and plantations have come under increasing scrutiny, based on allegedly, unsustainable forestry practices; forestry development in Magallanes is being put under intense pressure by NGO`s. The result is an abandonment of native forest by forestry firms, and the reduction in new plantations, even though most allegations have a weak base.
Keywords: Environmental and Natural Resources, Forestry Policy, International Trade, Protectionism