Trade agreements don’t cover industry concerns

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Kip Howlett, president of the Decorative Hardwoods Association, testified before the International Trade Commission on Oct. 6 about how U.S. trade agreements have affected the hardwood plywood, flooring, and wood products industries.

He made four main points, which I’ll summarize here from his testimony.

First, they were not developed to address large non-market economies, such as China.

“China’s mix of state-ownership and capitalism makes it almost impossible for U.S. manufacturers to compete with Chinese exports,” he testified.

“Chinese producers are often able to buy logs from abroad, transport them to China, process them into finished products and export them to the United States, and sell them here, all for less than the cost of U.S. production. The U.S. government has repeatedly found that U.S. producers are harmed by such trade distortive practices. Since 2004, the government has imposed antidumping or countervailing duty orders on a host of wood products, including wooden bedroom furniture, multilayered wood flooring, hardwood and decorative plywood, and wooden cabinets and vanities and has preliminarily imposed duties on wood moldings and millwork products.

“Our current international trade framework fails to fully address aggressive non-market economies. The result has been disastrous for domestic manufacturing industries, with entire supply chains moving from the United States to China.”

Second, our trade agreements do not properly address trade circumvention issues.

“Without changes, U.S. producers face constantly changing sources of imports. Just when we catch unfair trading practices and bring successful antidumping and countervailing duty cases on one set of products and countries, they move somewhere else.

Third, U.S. trade laws and agreements fail to properly account for illegal logging and other environmental considerations.

“Between 15 and 30 percent of globally traded timber has been illegally harvested. China, the world’s largest wood importer and exporter of wood products, is the largest illegal wood consumer, effectively exporting deforestation around the world.

“Not only does the use of illegally harvested logs facilitate deforestation and loss of ecological diversity in sensitive ecosystems in Southeast Asia, Latin America, and Africa, but it distorts global trade in wood products. As a result, producers that use cheaper, illegally harvested wood are at an economic advantage to responsible producers that use sustainably and legally sourced logs.

Fourth, the treatment of different wood species under our current trade laws invites evasion.

“For instance, imports of Chinese and other birch faces of hardwood plywood and multilayered wood flooring products are subject to a 0 percent duty rate while all other species are subject to an 8 percent rate. This discrepancy incentivizes producers to find any way that they can to ship their product as birch.

“Chinese exporters will ship in product with one birch face, while the other face is another more expensive species, and pay 0 percent duty rather than the duty that is actually owed. Not only does such treatment harm U.S. birch products but it disadvantages other species that are otherwise substitutes, such as maple.”

The full testimony is available at decorativehardwoods.org.

This article was originally published in the November 2020 issue.

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