Forest Products Trade Policy Highlights


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	FOREST PRODUCTS TRADE POLICY HIGHLIGHTS - APRIL 2000
	December Storms Fell 165 Million m³ of Timber in Europe
	Three storms packing hurricane force winds struck Europe in December. Hardest hit was France where an estimated 115 million m³ of timber was blown over, representing more than 268 percent of France's annual harvest. Germany and Switzerland also sustained substantial damage affecting 27 million m³ and 10 million m³, respectively. One of the hardest hit areas in Germany was the Black Forest where approximately 25 million m³ was downed in an area of 40,000 hectares.

	Brazil Implements Solid Wood Packing Material Regulations
	On January 5, 2000, Brazil implemented new entry requirements for solid wood packing material (SWPM) originating in China, Hong Kong, Japan, North Korea, South Korea, or the United States to prevent the introduction of the Asian longhorned beetle. Brazil is requiring that SWPM from these countries be fumigated and accompanied by a phytosanitary certificate attesting to the fumigation. In the case of the United States, as a matter of policy, APHIS does not issue phytosanitary certificates for SWPM; consequently, SWPM originating in the U.S. will have to be fumigated (or incinerated) upon arrival in Brazil. Plywood, particle boards, wood resin materials, and other processed wood materials are not considered as solid wood packing material and are not subject to the new requirements. A U.S. request for an exemption from the requirements is pending based upon the fact that the U.S. has a stringent control program in place for the Asian longhorned beetle.

	U.S. & Japan Meet to Discuss Housing
	The Housing Experts Group, one of five sectoral groups under the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy, met February 24, 2000, in Tokyo to discuss a wide-range of housing-related items of interest to the United States and Japan. Progress on these items will be reported in the Third Joint Status Report which is expected to come out in early April. Discussions over the past several years in this forum and its predecessor, the Wood Products Subcommittee, have led to a number of significant changes in Japan, including the amendment of the Building Standard Law (BSL) to make it performance-based, introduction of procedures for the expeditious approval of three-story, multi-family wood-frame construction in urban areas, recognition of US grademarked lumber, and the adoption of Public Comment Procedures in the formulation and implementation of revisions to the BSL. Discussions this year have focused upon the laws, policies, and procedures that inhibit the development of quality rental housing and the resale and renovation markets, and provisions relating to the use of wood interior finishes and the construction of four-story, multi-family and mixed-use wood-frame buildings.

	Cartagena Protocol on Biosafety Adopted
	After five years of negotiations, an agreement was reached on a biosafety protocol to ensure that trade in products of biotechnology does not cause harm to the environment. The Cartagena Protocol on Biosafety to the Convention on Biological Diversity was adopted by more than 130 countries on January 29, 2000, in Montreal, Canada. The protocol, among other things, requires an exporting country to seek the consent of an importing country prior to the first shipment of a living genetically modified organism intended for release into the environment (such as seeds for planting). According to Office of the U.S. Trade Representative, "the Protocol emphasizes that trade and environment policies should be mutually supportive and preserves rights under other international agreements, such as the World Trade Organization, to ensure that it's implementation will not be misused for trade protectionists ends."

	USTR Requests Public Comments on Canadian Softwood Lumber Practices/Trade
	On March 2, 2000, the Office of the U.S. Trade Representative announced in the Federal Register that it was soliciting public comments concerning softwood lumber trade between the United States and Canada, in light of the pending expiration of the U.S.-Canada Softwood Lumber Agreement in April 2001. Under the terms of the current agreement, 14.7 billion board feet of softwood lumber (and related products) from the provinces of British Columbia, Alberta, Ontario and Quebec can be exported annually to the United States tax-free. Volumes in excess of this amount are subject to an export tax. Saskatchewan, Manitoba, and the maritime provinces are exempt from the export tax.

	WTO Rules Against U.S. in Dispute Involving FSC Provisions
	On February 24, 2000, the World Trade Organization's Appellate Body ruled against the United States in its dispute with the European Union over provisions of U.S. tax law relating to Foreign Sales Corporations (FSC). FSCs are allowed to exempt a portion of their income generated outside of the territorial limits of the United States from U.S. income tax. To qualify for the exemption, the FSC must have a foreign presence, and meet certain management requirements and economic process requirements. The FSC was introduced in the early 1980s after the GATT ruled that its predecessor, the Domestic International Sales Corporation, constituted a prohibited export subsidy.

	Indonesia Reduces Export Tariffs on Selected Wood Products
	Effective January 1, 2000, the Government of Indonesia reduced the export tax on selected rattan and wood products (e.g. agathis lumber) from 20% to 15%. This action was in line with Indonesia's commitment to the International Monetary Fund to reduce export taxes on wood products to 5% by the end of 2001. Indonesia has indicated that it will substitute a resource rent tax or a forestry resource fee in lieu of the export tax at the end of 2001.

	China Ends Operational Flexibility for Solid Wood Packing Material
	Operational flexibility shown by China in the enforcement of its new rule on solid wood packing material has come to an end. The new rule was effective January 1, 2000, but China has been providing a period of operational flexibility in recognition of the potential for unintentional non-compliance. The last shipments that could avail themselves of this proviso left U.S. ports on March 1, 2000. Exporters must now comply with all of the requirements of the new rule or risk having their shipment destroyed or returned to the U.S. If the shipment contains coniferous solid wood packing material, the exporter must certify on PPQ Form 553 that the solid wood packing material has been heat treated to a core temperature of 56 degrees Celsius for 30 minutes, and have it endorsed by USDA's Animal and Plant Health Inspection Service (APHIS). If the shipment contains non-coniferous solid wood packing material or no solid wood packing material, the exporter can so certify (self-certify) on the bill of lading or invoice.

	ITC Releases Report on Investigation of Forest Products Trade
	On January 10, 2000, the U.S. International Trade Commission (ITC), released its report on the competitive factors affecting the U.S. forest products industry. This report done at the request of the Senate Committee on Finance validated generally-held views that U.S. industry is coming under increasing competitive pressure from a number of fronts, not least of which are exchange rates. The study reported that most major currencies have depreciated (in real terms) relative to the dollar in recent years. The study notes that the yen depreciated by 66% in the period between June 1995 and August 1998. Not surprisingly, U.S. forest products exports to Japan fell by almost 50% over roughly the same period. The full study is available on ITC's web site http://www.usitc.gov.