Forest Products Trade Policy Highlights


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	FOREST PRODUCTS TRADE POLICY HIGHLIGHTS - MARCH 2003
	U.S. CALLS FOR ELIMINATION OF TARIFFS IN FOREST PRODUCTS SECTOR
	On November 26, 2002, the United States tabled an ambitious proposal in the World Trade Organization calling for the elimination of tariffs on all consumer and industrial products by no later than 2015. Under the U.S. proposal, tariffs on products in the Uruguay Round zero-for-zero sectors (e.g. paper) and in certain other sectors (e.g. wood products) would be eliminated as soon as possible, but no later than 2010. In the negotiations for the Free Trade Area of the Americas (FTAA), the United States has proposed that the tariffs on paper and wood products be eliminated immediately, upon entry of force of the FTAA. The FTAA negotiations are scheduled to be completed by January 1, 2005.

	EU BANS USE OF ARSENIC IN TREATMENT OF WOOD FOR CONSUMER USE
	On January 26, 2003, the European Union (EU) implemented Commission Directive 2003/2/EC banning the use of arsenic in the treatment of wood to increase its service life except in industrial applications. Copper chromated arsenate (CCA) has been one of the world's most widely used wood preservatives. The U.S. Environmental Protection Agency (EPA) has also announced its decision to restrict the use of CCA except in limited applications, beginning December 21, 2003. EPA's decision was based upon the results of a health risk assessment and requests by manufacturers to amend or cancel their registrations for CCA. U.S. exports of all types of treated poles, pilings and lumber (CCA, creosote, etc.) worldwide totaled $56.9 million in 2001, with the EU accounting for less than $2 million of the total.

	POLICY BULLETIN UNDER DEVELOPMENT FOR PRICING AND SALE OF CANADIAN TIMBER
	On February 5, 2003, the Department of Commerce (DOC) provided the Canadian government with a draft of a Policy Bulletin that sets out DOC's standards for a market-based stumpage program (how timber is priced and sold). Upon submission of a request by a provincial government for a changed circumstances review, DOC would use the standards to evaluate the provincial stumpage program to determine whether there have been sufficient reforms to warrant elimination of the countervailing duty. Most Canadian softwood lumber is currently subject to an 18.79 percent countervailing duty. A policy bulletin is intended to complement the applicable statutory and regulatory provisions by providing guidance on issues not explicitly addressed by statute and regulations, in this case, by setting out the standards for a market-based system that charges adequate remuneration.

	JAPAN SAYS IT CANNOT SUPPORT FURTHER TARIFF CUTS IN FOREST PRODUCTS SECTOR
	In a paper submitted to the WTO Committee on Trade and Environment (WT/CTE/W/222, dated 6 February 2003), Japan noted that it was crucial for WTO members to be able to retain flexibility in determining appropriate tariff levels for forest (wood) products, based upon such factors as trends in domestic production and consumption, and international supply and demand. Furthermore, Japan noted it could not support the "call for further sector-specific tariff reductions in the forest products sector, including zero-for-zero and harmonization, in addition to the general tariff reduction formula, since it ignores the conditions and management of forests in each country." This is being viewed by many in the United States as a disguised form of protectionism in light of Japan's willingness to support the elimination of tariffs on paper (TN/MA/W/15, dated 20 November 2002). Furthermore, research has shown that trade liberalization and environmental policies can be mutually supportive in the pursuit of sustainable development.

	PRESIDENT BUSH NOTIFIES CONGRESS OF INTENT TO ENTER INTO FTA WITH CHILE
	On January 29, 2003, President Bush notified Congress of his intent to enter into a Free Trade Agreement (FTA) with the Government of Chile. Under the Trade Act of 2002, the President is required to notify Congress at least 90 days prior to signing the U.S.-Chile FTA. The FTA will result in the elimination of most tariffs either immediately or over four years. Tariffs on wood products in Chile and the United States would be eliminated immediately, upon implementation of the agreement. U.S. exports to Chile, currently dutiable at 7 percent duty, totaled $6 million in 2002; U.S. imports from Chile, which generally enter duty-free, were valued at $182 million in 2002.

	U.S. SUBMITS INDICATIVE LIST OF NTBS TO WTO
	On February 13, 2003, the United States submitted to the World Trade Organization (WTO) an indicative list of non-tariff barriers (NTBs) that U.S. business interests face around the world. The submission was in response to a request form the Chair of the WTO Negotiating Group on Non-Agricultural Market Access. Building codes and product standards were identified as restricting the expansion of structural wood products into some regulated markets. The list can be found at http://www.ustr.gov/Document_Library/Press_Releases/2004/April/USTR_Releases_2004_Inventory_of_Foreign_Trade_Barriers.html?ht=

	ARGENTINA IMPLEMENTS NEW REQUIREMENTS FOR WOOD PACKAGING MATERIAL
	Effective January 29, 2003, Argentina began requiring the declaration of all wood packing and support material (e.g. dunnage) for shipments entering the country. The wood packaging and support material must be free of bark, insects, and signs of insect damage. Failure to declare or improperly declaring the wood packaging will result in fines for the consignee. (Reportedly, Argentina is allowing 90 days for importers to become familiar with the new requirements before imposing fines.) Shipments arriving with wood packaging containing insects or showing signs of insect damage will be treated (fumigated), and will not be released until laboratory tests verify the efficacy of the treatment. All costs will be borne by the importer.