IDENTIFICATION

LEGAL CLUSTERS

GEOGRAPHIC CLUSTERS

TRADE CLUSTERS

ENVIRONMENT CLUSTERS

OTHER FACTORS

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Identification

1. The Issue

In recent years, ginseng, otherwise known as Panax, has acquired a new niche in the international market. This herbaceous perennial has been traded for the last 5,000 years. So why the sudden interest? In Eastern cultures, this slow-growing plant is famous for its ability to assist the body in battling stress and disease. Ginseng is used to treat anemia, diabetes, gastritis and other conditions, including anti-aging. It's no wonder then that this medicinal plant should gain popularity in Western countries, particularly in the health food industry. The quandary of ginseng trade lies in current and perspective management and monitoring of ginseng exports. Due to the altering of habitat and introducing foreign plants to well-balanced ecosystems there has been a decline of the plant species and its global population. Higher demand for the medicinal plant leads to increase conservation issues. If the plant is not properly regulated, there is a chance that ginseng could become extinct due to cultivation of the root before it reaches reproductive maturity and excessive collecting for export, mostly to Asian countries.

2. Description

The ginseng root comes from the botanical Araliaceae family, which includes the plants known as Panax ginseng (native to China, and cultivated in Russia, Korea, and Japan) and Panax quinquefolius ginseng (from North America). Similar plants in appearance and attributes, which have been referred to as 'ginseng', are the Siberian ginseng (Eleutherococcus senticosus or eleuthero), the Brazilian ginseng (Pfaffia pniculata), women's ginseng (Angelica sinensis) and Acanthopanax sessiliflorus.

Ginseng is commonly classified as panax quinquefolium (Linnaeaus). Panax, which comes from the Greek word, essentially means heal-all, and the Latin word, quinquefolium, numbers the plants five leaves. Since ginseng has such a wide range of effects on human physiology, Western pharmacists have created a new term, adaptogen, in order to describe the normalizing effect the active ingredients of Panax were formerly classified under. One can identify the ginseng plant by five leaflets and small, green-white flowers centered at the base of the leaves and its rhizome stem that is connected to a parsnip-like root. The herb produces shiny red berries and stands at 8 to 27 inches tall. Hence, ginseng is classified under Magnoliopsida-Dicotyledonous angiosperms or flowering plant (Dicotyledonous refers to its seedling with two embryonic leaves).

This herbaceous perennial has acquired several names, such as San, Redberry, five fingers, Root of life, and divine root. Another name for herb comes from the word ginseng, or Fin-chen of Schin-seg, which means man root or likeness to man, since the strange root is similar to the human figure.

The root is the part of the plant that is utilized for medicinal and culinary purposes. Although Panax has been characterized as a "cure-all", this herb does not demonstrate such powerful properties. However, Ginseng has proven itself as a powerful remedy in terms of possible therapeutic uses, such as its stimulating properties for individuals lacking physical strength. Dr. Breckhman (USSR) stated that "ginseng stimulates both physical and mental activity and strengthens and protects the human organism when undergoing severe and/or physical strain" . As a result of his research, ginseng has been implemented in the Russian space program. Other uses of ginseng include the treatment of bronchitis, asthma, TB, poor circulation, digestive irritations, diabetes, influenza and more! For specific ginseng attributes, see theHerbs for Health site.

There is evidence that ginseng stimulates carbohydrate metabolism in the liver, increases/decreases blood pressure, improves memory and brain functions, assists sleep disorders, and stimulates cell growth. The most common use of ginseng is to get an energy boost and avoid sleepiness. Word to the wise; do not take ginseng with coffee since the effects may induce gastrointestinal upset. Some Western doctors have begun to prescribe ginseng base on its medicinal properties. Panax contains six glycosides called panaxosides and six sapogenins, which are connected to the glycosides. Sapogenins increase endocrine and metabolic activities, and stimulate the circulatory system and digestive processes. Ginseng contents also include many minerals and nutrients, which are absorbed from the soil during growth stages. Some examples are iron, copper, calcium, magnesium, phosphorus, pottasium, sulphur, mangenese, silica, and sodium. In addition to the above, the root also contains vitamins B-1 and B-12. The root is usually masticated. Otherwise, combining 1/2 teaspoon of the powered root with a hot cup of water can induce ginseng effects . Due to the herb's medicinal attributes, exotic recipes that have either incorporated the herb with original ingredients, or introduced the herb into the recipe, ginseng has gained popularity in the culinary arena. Beyond ginseng tea, panax now adds flavor to chewing gum, chicken soup, porridge, seven-up/sprite, jelly, honey and even wine. For a delicious Korean recipe of chicken soup, see the Herbs for Health site.

While the discovery of ginseng in North America didn't occur until 1716 AD, herbalism and the inherent properties of Panax highly influenced the Chinese culture. In order to understand the ginseng industry today, a brief overview of its historical roots will shed some light on its current demand. The precipitous of herbal remedies dates back perhaps more than 15,000 to 40,000 years ago with the migration of travelers over the Bering Strait. Both Native Americans and Chinese acknowledged the benefits and properties of herbs, the Native Americans by oral tradition and the Chinese by written alphabet. There are discrepancies as to whether or not the Native Americans brought the traditional use of herbs with them as they crossed the Strait, or if they developed the usage of herb, and ginseng in particular, independently of the Chinese culture. Since there is more documentation about Chinese herbalism, the focus of this section will pertain to its cultural and historical connection to the Chinese people.

In traditional Chinese medicine, there are six external-causing factors of illness- wind, cold, heat, moisture, dryness, and internal heat. These interact with the seven emotions of happiness, anger, anxiety, pensive state, grief, fear, and surprise. Together, these ailments form the foundations of Chinese disease pathology. The goal then is to concentrate on the human as a whole and target any imbalances that may have transpired in an individual. Upon re-establishing equilibrium, Chinese medicine is thought to have ascertained the inner flow of the physical body . The Chinese combine their philosophies passed on through the centuries to explain human illnesses. The most influential of these philosophies was perhaps Taoism, which taught that nature is in constant flux. Good health can be attributed to a natural flow (tao) and disease is a direct result of going against that flow. Nature's flow is categorized into five elements- metal, fire, wood, water and earth. When these elements interact with yin (dark, cold, female, negative) and yang (light, hot, male, positive), the combination creates interrelationships that manage human ailments and illness.

According the myth, Chinese herablism, which is the base of Chinese traditional medicine, began approximately 5000 years ago. An agricultural clan leader, Shen Nung, who lived around 3494 BC, conducted experiments on himself in order to understand medicinal properties of different herbs. It is said that Shen had a crystal belly which he could watch the reactions of the herbs and save himself from a poison induced terminal fate. Legend has it that he recorded his experiments in a book called "Shen Nung Benchau Jing" (The Medicine Book of Shen Nung). Ginseng was among Shen's contributions in his wisdom on herbalism.

Around 100 AD, the first herbal pharmacology book was published by the naturalist, Sheng Neng Pen-T'sao. In his writings, he introduces an interesting technique to test the authenticity of the ginseng root:

"In order to test for the true ginseng, two persons walk together, one with a piece of ginseng root in his mouth, and the other with his mouth empty. If at the end of three to five li (about a mile and a quarter) the one with ginseng in his mouth does not feel himself tired, while the other is out of breath, the ginseng is genuine root."

Herbalism (and hence the use of ginseng) remained an essential aspect of Chinese culture and tradition, focusing on the importance of maintaining the human inner balance and monitoring environment and climate changes as the instigators of illness. Eastern herbalism finally met Western culture in 1716 AD when Father Petrus Jartoux, a Jesuit missionary, visited Northern China. For the first time, he published a Western documentation of Panax ginseng. He noted that ginseng could possibly grow in the mountains and woods of Canada, since they mimic the environment of the Chinese ginseng. This observation describes the North American ginseng, and would later be discovered as the "cooling" ginseng, or the yin ginseng, completing the "warming" yang ginseng, native to China.

Ginseng was an important part of Native American culture. Although there is no formal documentation of ginseng usage in Native American herbal remedies, there is evidence of its influence in the Northeast Culture Area tribes. These inhabitants covered the Atlantic coastal area, across the Appalachians to the Mississippi, from the Great Lakes to the Cumberland River in Tennessee. The tribes of this area were not only hunter and fishermen, but also farmers and herb-gatherers. They utilized herbs for ritualistic ceremonies and for practical purposes, such as prevention and cure of illnesses, wound dressing, treatment of female ailments, increase elderly strength, promote fertility, enhance mental activity, stomach upset, and the treatment of ear and eye disorders.

In 1716 AD, Father Lafitau read Father Jartoux's writings about the possibility of the existence of ginseng in Canada. Father Lafitau took advantage of the economic opportunity for France and the Jesuit Order upon discovering wild American ginseng near Montreal (Quebec) and exporting it to the Chinese. Hence, the international industry for trade took off. As a result, farmers began to utilize artificial shade to continue supplying to ginseng consumers.

Today, any local grocery store's vitamin aisle will carry a wide variety of ginseng. The Chinese and Native Americans never would have imagined such a profitable industry would transpire from their medicinal insight. Unfortunately, due to exploitation of the root, American ginseng is now on the CITES (for reference to the Convention on International Trade in Endangered Species, see their web site) list of endangered species. A brief discussion of the cultivation of ginseng will provide an understanding of why this has occurred. There are five methods for the propagation of ginseng :

Photo by Karen Shelton at Alternative Nature

1. Wild ginseng- which grows naturally,

2. Wild simulated ginseng- seeds are scattered in areas prone to growth of ginseng,

3. Woods grown- trees are used for shade,

4. Cultivated- plants are attended to by humans (majority of American ginseng),

5. Organic- residue free.

Ginseng plants cannot be harvested too early if they are to reach reproductive age. Since the plant does not propagate asexually, it must be allowed to reach a sustainable maturity level, which allows the plant to produce seeds prior to harvest. Usually, the ginseng plant will produce seeds when it has grown 2 prongs (or leaves), at age 3 to 4 years. The plant will add a third prong at age 5 to 9 years old. According to the Office of Scientific Authority, which has in accordance with CITES, requires at least two seasons of producing seeds (or at least 5 years old).

Environmental repercussions of harvesting ginseng prematurely are beginning to surface as the demand for the root increases. Over cultivation of wild roots roots (in Canada these populations are mostly found in Ontario and Quebec and are now classified as "imperiled to uncommon")and deforestation have also accelerated the endangerment of the ginseng species. Canada, which was once the number one exporter of American ginseng, now prohibits the collection of wild roots for exportation due to the decrease in the population of the plant, largely as a result of habitat loss (due to logging and sub-urbanization, for example). In the late 19th century, Canada began to propagate the herb by artificial shade. This was implemented in Ontario and British Columbia (in addition to the small quantities propagated in essentially all provinces), in attempt to cease reduction of the wild herb populations. In order to keep ginseng on the market, producers of the plant and public management agencies must improve their practices. In addition to the aforementioned, not only is there a strong demand for the root in Asia, but there is an increase in herbal products in Western markets that employ the plants properties.

Do environmentalists merit consumer attention? According to the USDA, the US Fish and Wildlife Service, and several state agencies, there is a trend in harvesting younger and smaller roots over the past 15 years. This trend has occurred even after the implementation of the Endangered Species Act and the CITES treaty in February, 1977, which enlisted American ginseng under Appendix II species, or those species that are "not necessarily currently threatened with extinction (however) may become so unless trade is subject to strict regulation". This is not to demean the efforts of CITES inclusion of the herb in its Appendix II. Due to this action, several nation-states have implemented or enforced stricter measures of preserving the plant. For example, Canada, the United States, and Australia have employed a regulatory agency to withhold the act's provisions by requiring permits on the trade of ginseng. The goal of CITES is not to provide a solution to preserving species, but to require trade controls in attempt to protect the species.

In 1994, the world ginseng community collaborated for the first time at an international ginseng conference (Proctor and Bailey 1987). Hence, the concern for the future of the plant was acknowledge on an international level and many issues were assessed, especially those focusing on the challenges that the industry faces in the next decade. With larger production, new methods are being introduced in order to increase efficiency. Environmentalist concerned about fertilizers and pesticides are questioning the cultivation process and changes in production methods.

Recent developments in Asia have suggested eastern countries take action to preserve the Panax ginseng as formerly implemented with such intentions for the American ginseng. Russia has proposed that wild Asian ginseng be listed in the Appendix II of CITES at the Eleventh Conference of the Parties to CITES, to occur in Nairobi, Kenya, April 10 through 20, 2000. Many imports of wild ginseng to Hong Kong are in fact illegally harvested in Russia and may be traded via China and Singapore. Interestingly, wild ginseng in China is protected and near extinction and Singapore has no wild ginseng.

Finally, due to the Asian economic turmoil, US ginseng farmers are experiencing a blow to ginseng prices. Compared to $125 a pound in 1994, comprising over $100 million in export trade of American Ginseng, today the price has dropped to about $10 a pound. Many ginseng farmers in the US have turned to the domestic market to compensate for their loss abroad.

Future ginseng production will take a dramatic turn. The following are possible trends in ginseng trade:

-North Americans may grow Oriental ginseng and export it to Europe.

-In order to boost consumer confidence in the consistency of ginseng products ("pure" American ginseng verses a melange of Siberian, American and Asian ginseng, etc.), better labeling and policing will be implemented, along with scientific product analyses.

-The shortening of the stratification period of American ginseng seed will allow spring planting and reduce disease from occurring.

-Global collaboration against diseases has already developed new strategies via research.

-Replant disease remains an unresolved problem and needs to be investigated further, including new approaches to management of cultivation.

3. Related Cases

4. Draft Author:

Jennifer Gehr (April 18, 2000)

II. Legal Clusters

5. Discourse and Status:

Agreement and Complete.

Trade of American ginseng is regulated by the CITES of Wild Fauna and Flora in Appendix II. The federal government allows states to enforce CITES, however, exprts of ginseng must be approved by the USFWS.

6. Forum and Scope:

CITES and Multilateral

7. Decision Breadth:

Over 100 member states
Although trade implications regarding ginseng and the like have not been formally introduced into the WTO appellate reviews and doctrines, under CITES, member countries must fulfill obligations to the Convention, including management and control governing trade of wildlife and wildlife products. Each member state owns responsibility of enforcement and may elect individual measures of enforcement. Russia has proposed that wild ginseng be banned from trading at the Eleventh Conference of the Parties to CITES, to occur in Nairobi, Kenya, April 10 through 20, 2000, in order to ensure its future survival. CITES is governed by GATT, therefore any future disputes in question are to be resolved by the WTO.

8. Legal Standing:

Treaty

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: North America and Asia

b. Geographic Site: Eastern North America and Asia

c. Geographic Impact: Canada, USA and China

10. Sub-National Factors:

No

11. Type of Habitat:

Temperate, mountainous, wooded, dry area

IV. Trade Clusters

12. Type of Measure:

BACKGROUND

According to Daoist philosophy, there are two forces that must maintain equilibrium to achieve complete human well being. There is yin, the cooling force, and yang, the strong, hot force. Asian people culturally recognize ginseng as a regulator of the two forces (due to their incorporation of the herb into their disease pathology practice, see Traditional Chinese Medicine); Asian ginseng representing the yang (invigorating blood flows) and North American ginseng representing yin (for the immune system and over all health). In economic terms, Asian (Yang) and North American (Yin) versions of the root are complements, or commodities that tend to be consumed together.


MARKET CONSIDERATIONS

Consumer demand for the most part stems from Hong Kong, Singapore, China, Taiwan, Canada and the United States. The United States enjoys a variety of ginseng products, imported largely from China, Hong Kong, Korea and Canada. There is an increasing demand for North American ginseng in Singapore, Taiwan, Malaysia and other ASEAN countries, along with Japan. Also, Europe and Latin America tend towards the Asian ginseng, perceiving it as holding higher quality. This may be due to Siberian ginseng properties that are believed to be more effective and stable since it doesn't usually over stimulate, and is more effective in the summer. Obviously, consumers in these markets should be informed about the complementary properties of the two different roots.

It's no wonder then that the major exporters of the root are China, Canada and the United States, supplying 97% of ginseng to the world . Of North American ginseng, Canada leads the USA in production by 30%, and holds the second largest market share.


Ginseng roots are sold at higher prices if the root is larger, older, shaped like a man, wild (verses cultivated), woods-grown (verses artificial shade and field grown). Beyond any qualities of the root itself, the industry influences profits greatly. Since supply has been increased by Canada and China along with the global demand, prices have somewhat stabilized. Hence, importers/exporters determine how much to supply according to demand and have an enormous impact on price, depending if they choose to restrict/expand inventories.

REGULATION

In Canada, the Health Protection Branch of Health Canada approves any herb or spice for use as food or drug. Ginseng is accepted as safe for food consumption by Canada and the USA (FDA). However, the herb has not received a drug identification number (DIN) due to lack of medical research . Also, since the wild American ginseng is an endangered species, Canada requires that the applicant of sale and shipping of ginseng submit "An Application for Permit to Export Endangered Species" of the CITES forms. This must be approved by the Agriculture and Agri-food Canada agency.

The United States has implemented similar regulatory procedures, enforced by its regulatory body, the Office of Scientific Authority and the Office of Management Authority. Also, the US Fish and Wildlife Service (USFWS) has implemented the first export restriction from the United States on the sale of wild ginseng. Effective for the 1999 harvest, export permits are to be issued only for mature wild and wild-simulated ginseng roots.

In China, any local import/export company is able to import North American ginseng. However, the company must ascertain two certificates, issued by the National Medicine Administration and Ministry of Public Health, and a business license from the Industrial and Commercial Administration Bureau. The official import tax of ginseng is 40% plus 13-17% VAT. Such high rates have encouraged the black market from Hong Kong to China. The Chinese Health Bureau and National Medical Authorities in Beijing attempted to regulate the smuggling, in order to protect domestic production, however, poor implementation and enforcement has not deterred such occurrences . Chinese patents have increased in the United States. However, many of them contain undeclared western drugs, toxic metals, and undeclared toxic plant matter. As a result, companies are adopting GMP's (Good Manufacturing Practices) in order to produce quality and safe commodities.

13. Direct v. Indirect Impacts:

Direct

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: Yes (Ginseng)

b. Indirectly Related to Product: No

c. Not Related to Product: No

d. Related to Process: Yes (Species Loss- Land SPLL)

15. Trade Product Identification:

Wildlife Ginseng

16. Economic Data

Farm gate value of ginseng in Canada was approximately $3 million in 1980 and reached over $50 million in 1997 (Canadian Ginseng Profile).

Canada Export Data (Source: Agriculture and Agri-Food Canada)



17. Impact of Trade Restriction:

Medium

CITES is a limited signatory that doesn't carry a lot of weight in the international community. Since the black market of ginseng still thrives, elimination of illegal ginseng trade is slight.

18. Industry Sector:

Food

19. Exporters and Importers:

Majority importer of American ginseng is Asia, especially China (Hong Kong). Major exporters are Asia, Canada and North America. The trend for ginseng products is growing in the United States, increasing the demand for Panax imports.

V. Environment Clusters

20. Environmental Problem Type:

Species Loss- Land (SPLL)

21. Name, Type, and Diversity of Species

Name: Panax ginseng

Most common, Panax ginseng (native to China, and cultivated in Russia, Korea, and Japan) and Panax quinquefolius ginseng (from North America). Also known as San, Redberry, five fingers, Root of life, and divine root. The word ginseng, or Fin-chen of Schin-seg, gives yet another name to the root, which means man root or likeness to man.

Type: Herb

Diversity: Siberian, Brazilian and Korean

22. Resource Impact and Effect:

High and Product

23. Urgency and Lifetime:

Medium

24. Substitutes:

Popular herbs (such as ginko biloba, goldenseal, etc.)

VI. Other Factors