FOREST PRODUCTS TRADE POLICY HIGHLIGHTS - SEPTEMBER 1998
Asian Long-Horned Beetle Poses Threat to U.S.
There have been two confirmed outbreaks of the Asian Long-Horned Beetle in recent months in Illinois. The Asian Long-Horned Beetle is an extremely destructive pest that can only be controlled by felling, chipping and burning trees infested with the beetle. The beetle has also been detected at 26 other sites in 14 states, mainly in and around warehouses. Infestations have been traced to solid wood packing material imported from China. Consequently, on September 18, 1998, Agriculture Secretary Glickman announced new measures in the form of an interim rule to halt further infestations (see USDA press release on Page 12). As of December 17, 1998, all solid wood packing materials associated with cargo from China must be accompanied by official certification from the Chinese government stating that the material was heat treated, fumigated or treated with preservatives prior to arrival in the United States. All cargo arriving in untreated solid wood packing materials or showing signs of infestations will be prohibited entry into the United States. In 1997, the United States imported $63 billion worth of products from China; much of which utilized some form of wood packing material.
Bill Introduced to Reform Jones Act
Senators Jesse Helms and Sam Brownback have introduced legislation to change the provisions of the Merchant Marine Act of 1920 (the Jones Act) to allow U.S. companies to operate foreign-built ships between U.S. ports. Ships would still have to be U.S.-owned, operated and flagged. It is expected that the change would lead to an increase in the number of ships operating between U.S. deep water ports, and, consequently, lower shipping rates.
APEC Senior Officials and Trade Experts Meet
APEC trade experts, including FFPD's Michael Hicks, and senior officials met in Kuantan, Malaysia, from September 11-15, 1998, to continue work on the development of modalities and time tables for the early voluntary liberalization of trade in fifteen sectors (EVSL), including the forest products sector. Discussions at the meeting focused on product coverage and the timetable for tariff elimination, particularly as it regards sensitive products. Some progress was made in reducing the number of product reservations in most of the sectors, but much work remains if a consensus is going to be reached prior to the November Leaders Meeting in Kuala Lumpur. Several APEC economies continued to insist upon exclusions in the forest products sector, even though APEC trade ministers reaffirmed in June that longer staging generally was to be used to address sensitivities. Japan has requested exclusions on all of Chapter 44 (wood products) and Korea has requested exclusions on a wide-range of panel products. Several economies, most notably Malaysia, have also asked for excessively long staging in eliminating tariffs.
Canada Requests Consultations with EU under WTO
On June 17, 1998, Canada requested consultations with the European Union (EU) under the World Trade Organization on the EU's requirements for the importation of coniferous wood (softwood) from Canada. (Shipments of coniferous wood from the United States are also subject to the same requirements.) Canada alleges that the current requirements, including kiln drying to a core temperature of 56 degrees centigrade for 30 minutes, adversely affect the importation of Canadian coniferous wood into the EU, and are a violation of Articles I, III and XI of the General Agreement on Tariffs and Trade 1994, Articles 2, 3, 4, 5 and 6 of the Agreement on the Application of Sanitary and Phytosanitary Measures, and Article 2 of the Agreement on Technical Barriers to Trade. Canada can ask the Dispute Settlement Body to establish a panel to examine the case after 60 days if the two sides are unable to reach an agreement. Reportedly, Canadian exporters have lost $400 million annually in sales since 1993, when the requirements took effect. U.S. exports of softwood lumber to the EU totaled $177 million in 1997, down significantly from their peak of $291 million in 1991.
APHIS Proposes Amendment to Wood Import Regulations
On July 28, 1998, APHIS proposed in the Federal Register that the regulations covering the importation of logs, lumber and other unmanufactured wood articles into the United States be amended to allow the importation of radiata pine chips from Chile treated with a specified pesticide mixture. APHIS' decision is based upon the success of the treatment in trial shipments over the past three years. In addition to the surface pesticide treatment, the chips would have to meet certain other conditions, including being derived from logs from live, healthy, plantation-grown trees and consigned to a facility in the United States operating under a compliance agreement with APHIS. Shipments would have to be accompanied by a certificate, issued by an authorized Chilean official, stating that all the requirements have been met, before entry into the United States would be allowed. The regulations currently require that chips be fumigated with methyl bromide, heat treated, or heat treated with moisture reduction. The comment period for the proposed rule expires on September 28, 1998.
BEC and JAS Committees to Meet
The Building Experts Committee (BEC) and the Japanese Agricultural Standards (JAS) Technical Committee are scheduled to meet in Tokyo, Japan, December 11-12, 1998. These committees were originally set up under the terms of the 1990 U.S.-Japan Wood Products Agreement to oversee the implementation of the standards-related portions of the agreement, and are comprised of representatives from government, industry and academia from the United States, Japan, and Canada. In recent years, the BEC in particular has evolved to address issues not expressly covered in the Agreement. This year, it is expected that discussions at the BEC will center on the Building Standard Law of Japan, which was revised in June of this year.
Intergovernmental Forum on Forests Meets
The ad-hoc open-ended Intergovernmental Forum on Forests (IFF) met in Geneva, August 24 - September 4, 1998 (the report on this meeting was not available at time of this writing). The IFF was tasked by the 19th Special Session of the UN General Assembly with promoting and facilitating implementation of proposals for action put forth by the Intergovernmental Panel on Forests (IPF); reviewing, monitoring and reporting on progress in the management, conservation and sustainable development of forests; and considering matters left pending by the IPF in the areas of trade and environment, transfer of technology and the need for additional financial resources. The IFF also has been tasked with identifying and working toward a consensus on the elements of possible international arrangements and mechanisms to cover forests, and with reporting its findings to the U.N. Commission on Sustainable Development in the year 2000.
U.S. Requests Arbitration of Softwood Lumber Dispute
On July 27, 1998, the United States requested arbitration under the terms of the U.S.-Canada Softwood Lumber Agreement over British Columbia's decision to lower stumpage rates (the price for standing timber) by an average of C$8.10 per cubic meter on the coast and C$3.50 in the interior. The request came after Canada rejected a U.S. proposal to make the current quota in British Columbia, which is allocated to individual exporters, a BC-wide quota and then reduce the quota to compensate for the reduction in stumpage rates. A three-person panel will hear the case and is expected to make a decision by early November. In related actions, Canada, on July 6, requested consultations on U.S. Customs' decision to reverse an earlier ruling and reclassify lumber with pre-drilled holes into the same tariff category as other lumber products, making Canadian exports of these products subject to the terms of the agreement. On August 17, American Bayridge Corporation filed a complaint in the Court of International Trade after Customs classified a shipment of its pre-drilled studs as lumber. Finally, earlier this month Canada asked the World Customs Organizations to decide whether Customs' decision to classify pre-drilled lumber as lumber was correct.
U.S. to Support Chinese Housing Development
On July 2, 1998, in Shanghai, President Clinton and Premier Zhu Rongji announced a bilateral initiative to support Chinese housing development, investment, and modernization. The initiative aims to provide assistance to help China commercialize its urban housing market, which was 80 percent publicly-owned at the beginning of this year. As envisioned, the initiative will include the creation of an official bilateral forum on housing, the U.S.-China Residential Building Council, demonstration projects, and several other programs designed to facilitate the development of a market-oriented housing and credit system, and to introduce the benefits and techniques of multi-story wood-frame construction. Preparatory meetings to discuss the schedule for this initiative are currently underway in China.