International Trade Commission reviewing allegations
By Peter A. Buxbaum, AJOT
Politics and business have once again combined in an effort to limit Chinese forest products imports, this time in the area of hardwood plywood products. Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, requested a review earlier this year by the Commerce Department’s International Trade Commission of reports of subsidies by the government of China of hardwood exports. Sen. Ron Wyden (D-OR) has called upon the Department of Homeland Security, the US Trade Representative, and the Department of Commerce to start similar investigations. The US Trade Representative also has filed a World Trade Organization case over hardwood plywood subsidies against China.
These moves were applauded by officials in the US hardwood industry, who are wary of the weakness of the domestic industry and of the strong growth in Chinese hardwood imports.
The APA-The Engineered Wood Association, a quality testing and inspection organization based in Tacoma, WA, applauded review by the International Trade Commission. ‘An ITC review would demonstrate that imported Chinese plywood often is improperly, and in many cases even fraudulently, labeled. That poses serious potential product performance problems,’ said Dennis Hardman, the APA president. ‘Also at stake are US jobs since illegal subsidies give unfair advantage to importing countries and thereby damage the ability of domestic producers to compete.’
Fears expressed by domestic industry over the growth of Chinese hardwood imports are borne out by a report recently released by Forest Trends, a Washington, DC-based international non-profit organization that promotes sustainable and environmentally sound forestry practices. The report found that the US, Japan, and the European Union are the leading importers of Chinese manufactured wood products. About 70% of all timber that is imported into China is converted into furniture, plywood and other processed products, and then exported, according to Forest Trends.
The report indicated that imports of forest products from China bound for the US and the EU have increased almost 900% since 1998. The US now accounts for almost 40% of all forest product imports, by far the largest export market for Chinese products. US demand for all wood products manufactured in China grew by 24% between July 2004 and July 2005 alone. According to US Census Bureau statistics, China accounted for 10% of all non-tropical hardwood plywood imports into the United States in 2002. That figure grew to 54% by the first quarter of 2007.
‘The dramatic growth in the Chinese industry—at the apparent expense of US industry—is extremely troubling because it may be based on a number of illegal trade practices,’ Wyden wrote, in letters to the three federal agencies.
For domestic producers, unfair trade practices and environmental discrepancies give Chinese hardwood plywood manufacturers an unfair advantage. ‘The domestic hardwood plywood industry is facing an onslaught of unfairly traded imports from China,’ said Joseph Gonyea, chief operating officer of Timber Products Company of Medford, Oregon.
Timber Products operates nine manufacturing facilities, most of them in Southern Oregon. Its largest product line is hardwood plywood, from which it produces panel products used to manufacture cabinets, furniture, store fixtures, and decorative millwork products. The company also imports wood products from South America, Africa, Russia, and, China to complement domestic production. Imported products account for 12% of the company’s annual sales.
Uneven playing field
When it comes to the hardwood plywood business and China, ‘the playing field is far from level and the competition is far from fair,’ Gonyea complained. ‘The Chinese government provides direct subsidies to hardwood plywood manufacturers which export their products to the United States. Many of these products are sold at below our cost. Chinese hardwood plywood import