[Senate Hearing 110-119]
[From the U.S. Government Publishing Office]
S. Hrg. 110-119
IMPACTS OF THE CHINESE HARDWOOD PLYWOOD TRADE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON PUBLIC LANDS AND FORESTS
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE IMPACTS OF THE CHINESE HARDWOOD PLYWOOD TRADE
ON THE NATIONAL FOREST SYSTEM AND OTHER PUBLIC LANDS, AND THE
COMMUNITIES THAT DEPEND ON THEM
__________
MEDFORD, OR, MAY 30, 2007
Printed for the use of the
Committee on Energy and Natural Resources
------
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37-274 PDF WASHINGTON DC: 2007
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon CRAIG THOMAS, Wyoming
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana RICHARD BURR, North Carolina
MARIA CANTWELL, Washington JIM DeMINT, South Carolina
KEN SALAZAR, Colorado BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
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Subcommittee on Public Lands and Forests
RON WYDEN, Oregon, Chairman
DANIEL K. AKAKA, Hawaii RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota LARRY E. CRAIG, Idaho
MARY L. LANDRIEU, Louisiana CRAIG THOMAS, Wyoming
MARIA CANTWELL, Washington LISA MURKOWSKI, Alaska
KEN SALAZAR, Colorado JIM DeMINT, South Carolina
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
Jeff Bingaman and Pete V. Domenici are Ex Officio Members of the
Subcommittee
C O N T E N T S
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STATEMENTS
Page
Adams, Vera, Executive Director, Commercial Targeting and
Enforcement, Office of International Trade, Department of
Homeland Security, Customs and Border Protection............... 35
Chamberlain, Tom, President, Oregon AFL-CIO, Salem, OR........... 12
Daly, Edward J., Chief Operating Officer, Forest Stewardship
Council--US.................................................... 16
Gonyea, Joseph J., III, Chief Operating Officer, Timber Products
Company, Springfield, OR....................................... 3
Guay, Phill, Vice-President of Corporate Strategy and Marketing,
Columbia Forest Products, Portland, OR......................... 8
Wineland, Tim, Senior Director, Office of China Affairs, Office
of the United States Trade Representative...................... 38
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 1
APPENDIX
Additional material submitted for the record..................... 49
IMPACTS OF THE CHINESE HARDWOOD PLYWOOD TRADE
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WEDNESDAY, MAY 30, 2007
U.S. Senate,
Subcommittee on Public Lands and Forests,
Committee on Energy and Natural Resources,
Medford, OR.
The subcommittee met, pursuant to notice, at 12 p.m., in
Medford City Council Chambers, Medford, Oregon, Hon. Ron Wyden
presiding.
OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR
FROM OREGON
Senator Wyden. The Subcommittee on Public Lands and Forests
will come to order. Today we are going to consider the impacts
of the Chinese hardwood plywood trade on the National Forest
System and other public lands, and the communities that depend
on them.
As chairman of this subcommittee, it is especially
important for me to hold this hearing in Oregon because it is
an issue of particular importance to many of our communities
here at home.
Last fall, a group of Oregon hardwood plywood manufacturers
asked to meet with me to discuss problems concerning hardwood
plywood imports that they felt were threatening their
businesses. Some of those folks are here today.
The numbers struck me as shocking. Over the past few years,
U.S. hardwood plywood sector has experienced a dramatic
downturn. Since at least 2003, U.S. production shipment volume,
production capacity, and market share have all declined. At the
same time, the Chinese hardwood plywood sector has clearly been
surging. In fact, from 2004 to 2006, Chinese hardwood plywood
exports to our country increased from $463 million to $1.02
billion.
Even more troubling were allegations made by a number of
people in the industry suggesting that this dramatic growth in
the Chinese hardwood plywood export area was coming at the
expense of our key industries and was based on a number of
unfair and illegal practices, including illegal dumping,
illegal subsidies, tariff misclassification, fraudulent
stamping, and illegal logging.
Here in Oregon, hardwood plywood employs about 2,000
persons directly and many more indirectly. Those jobs are here
in southern Oregon, Medford, and Grants Pass, and Klamath
Falls, and Roseburg, Eugene, and across the southern part of
our State. They are good paying family wage jobs. They are jobs
I am not going to let go by the boards, and we are going to
examine today what needs to be done to protect those good
paying jobs that are the foundation of the well-being of Oregon
families. These jobs are obviously jobs that Oregon wants to
protect, and the kind of jobs that we need more of.
The surge of low priced Chinese hardwood and plywood
imports is a threat to long term health of the U.S. hardwood
plywood industry. That, in turn, can have serious consequences
for communities in southern Oregon and the families that rely
on these good paying jobs.
The Chinese hardwood plywood imports could also hurt
Federal hardwood and softwood timber receipts. In manufacturing
plywood, hardwoods are used for the face and the backs.
Softwoods are used for the inner plies. The Chinese hardwood
plywood imports can adversely affect both Federal hardwood and
softwood timber receipts. Were the domestic hardwood plywood
industry to continue to contract in response to the Chinese
hardwood plywood surge, so would those receipts, and those
receipts are of great importance to our State.
The decline of the domestic hardwood plywood industry
caused by the unfair and illegal Chinese hardwood plywood trade
practice can also adversely impact Oregon and the Nation's
salvage capacity, and this has great implications for forest
health and for safety in our forest.
So when the timber folks brought these serious hardwood
plywood concerns to me, it was clear to me that something had
to be done. Not tomorrow, not next week, but quickly. Since
that time I have been working to investigate the troubling
allegations and take steps to address them.
As many of you know, I was the author of the original
county payments legislation. That law brought to our State more
than $1.5 billion and it has expired this year.
For a number of years now, I have been working on a regular
basis to get the law reauthorized because I realize how
important these funds are to Oregon communities and in
particular our rural sector. We were able to get a short-term
extension, but it is absolutely key that Congress continue to
work on this issue until there is a multi-year long-term county
payments program.
I am pleased to be able to report to folks here at home
that your Congressman, Congressman Walden, has been very
helpful to me in working for the multi-year reauthorization. In
fact, he tried to offer the legislation that would have brought
5 years of relief to southern Oregon, the measure that I was
able to get 74 votes for in the Senate, Congressman Walden
tried to offer it in the House of Representatives and was
denied that opportunity.
But in my view, county payments and Chinese hardwood
plywood are interconnected--both involve the role and
responsibility of the Federal Government to ensure that the
timber dependent communities have the opportunity to thrive and
to prosper in the years ahead.
Today's hearing will give us an opportunity to get an
update from folks affected by Chinese hardwood plywood imports,
and to get a sense of the progress that is being made in
investigating and addressing these unfair and illegal trade
practices.
We have a number of witnesses and folks from the public
here. I also want to thank the Mayor and the Medford City
Council for hosting us.
So let us go to our first panel, Mr. Joe Gonyea, Chief
Operating Officer at Timber Products in Springfield, Oregon;
Phill Guay, Vice-President of Marketing and Strategic Planning
for Columbia Forest Products in Portland; Tom Chamberlain,
President of the Oregon AFL-CIO in Salem, Oregon; and Ned Daly,
Vice President of Operations of the Forest Stewardship Council
in Washington, DC.
Gentleman, we welcome you. We thank you for coming and
appreciate the chance to work with you. We will make your
prepared remarks a part of our hearing record in their
entirety. Why don't you just hold forth with your comments this
afternoon.
Mr. Gonyea, welcome.
STATEMENT OF JOSEPH J. GONYEA, III, CHIEF OPERATING OFFICER,
TIMBER PRODUCTS COMPANY, SPRINGFIELD, OR
Mr. Gonyea. Thank you, Senator. We appreciate you holding
these hearings today.
I am representing Timber Products Company in my capacity as
Chief Operating Officer, which is owned by my family. I am the
fourth generation of my family to work in the wood products
industry. I am testifying to represent the views of our
ownership, our management and 1,400 team members, some of whom
are here today.
We have nine manufacturing facilities located around the
Nation, most of which are right here in Southern Oregon. We
operate an International Division that imports wood products
from around the globe, including China, to complement our
domestic production. Imported products account for
approximately 12 percent of our annual sales. We are proud
owners and stewards of 118,000 acres of forestland that are
third-party certified under the standards of the Sustainable
Forestry Initiative. In Oregon alone we have 834 employees and
an annual payroll of $38 million. Our largest product line, as
you know, is hardwood plywood, which is used in the
manufacturing of fine cabinets and furniture alike.
Senator, I want to thank you. Thank you for your leadership
in Congress and thank you for being our champion for free trade
that is fair trade. I also want to thank you, your colleagues
for their assistance in moving this investigation forward and
their interest, Senator Baucus, Senator Bingaman, and Senator
Gordon Smith.
As you know, this is not a red or blue state issue. This is
a red, white and blue issue for our industry and for our
country. We hope your ongoing investigation will address these
unfair trade practices and environmental discrepancies that
give the Chinese hardwood plywood manufactures an advantage
today.
The domestic hardwood plywood industry, like others in
North America wood products industry such as furniture,
cabinets and flooring, is facing an onslaught of unfairly trade
imports from China. The continued survival of our industry is
at risk. It does not have to be so.
As you know, our corporate headquarters are in Springfield.
My family has lived in the Eugene/Springfield area for years.
Our community is proudly known as Track Capital, USA. Hayward
Field at the University of Oregon is the center of activity. A
group of elite runners is now preparing for 2008 Olympics in
Beijing. When they get to China, there is one thing they can be
assured of--a level playing field. For all the competitors, the
track surface will be the same, the weather will be the same,
and given a fair set of rules for each sport, history has shown
that hard-working American athletes can compete with the best
of the best from around the world, including the Chinese.
When it comes to hardwood plywood business and China, the
playing field is far from fair. The field is, is far from level
and the competition is far from fair. Official U.S. Government
import statistics from the Commerce Department, as seen on the
charts* behind us.
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* Charts have been retained in subcommittee files.
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Senator Wyden. I had a feeling those weren't protestors.
[Laughter.]
Mr. Gonyea. Thank goodness, not.
These charts offer a glaring evidence of these inequities.
Between 2002 and 2006, the dollar valve of U.S. imports of non-
tropical hardwood plywood from China rose by more than 1,000
percent. That trend continues, as a value of such imports in
the first quarter of 2007 was 35 percent higher than the first
quarter of 2006. In 2002, China accounted for roughly 10
percent of non-tropical hardwood plywood imports into the
United States. In the first quarter of 2007, China accounted
for a staggering 54 percent of all such imports into the United
States.
How has this happened? Let's look at the facts. The Chinese
government provides direct subsidies to hardwood plywood
manufacturers which export their products to the United States.
We have learned that the Chinese hardwood plywood importers
have been trying to avoid tariffs by misclassifying their
hardwood plywood and we appreciate your work with Customs to
look into this. We have also learned that the Chinese hardwood
plywood is fraudulently labeled or stamped and we appreciate
your investigation of this problem as well. At the end of the
day, all these unfair practices lower the price of Chinese
hardwood plywood, making it harder for companies like ours,
Timber Products Company, to compete.
Then there are the environmental issues. Independent
studies state that some 30 to 50 percent of all the birch logs
coming into China has either been stolen or are the result of
illegal logging. Chinese manufacturers are not held to the
environmental standards in their wood sourcing or in the
manufacturing processes. Add up each of these factors, and it's
no wonder the Chinese can sell products at below cost of a
vertically integrated, highly efficient company like ours.
These activities find the face of international trade rules--
rules that China agreed to accept and abide by when they joined
the WTO. You have not heard us discuss today anything about
currency valuations or labor conditions, but these, too, are
factors.
How does all of this impact the health and well-being of
our local economy, Federal, State and BLM forests? As part of
my testimony, I am providing you with data on the potential
impacts of Chinese imports on public forestlands based solely
on the impact to hardwood plywood manufacturers based in
Oregon. As you know, 70 percent of all hardwood plywood
manufactured in North America is headquartered right here in
Oregon. These companies employ over 2,600 Oregonians and have
six manufacturing facilities, which have the potential to
produce and process 165 million feet of logs a year, a portion
of which comes from Federal forests. Over the last 5 years, our
company, Timber Products Company, has paid $6 million to
purchase 38 million feet of standing timber from U.S. Forestry
Region 5 and BLM from sales that required thinning and salvage
logging. Additionally, during 2005 and 2006, Timber Products
Michigan operations purchased 650,000 board feet of hardwood
logs from USFS Region 9. All of this was done in compliance
with the law of the land in the strictest of environmental
standards.
In this past year alone, two North American manufacturers
of hardwood plywood closed, displacing 460 employees. If China
is allowed to continue importing subsidized products made from
illegally harvested logs, as they are today, it will
undoubtedly lead to more mill closures in the United States,
thereby making the job of thinning the forest health in
National Forests even more difficult.
What's at stake here is significant. On the line are
literally thousands of American jobs, closed mills, a further
decline of local economies, and the degradation of forest
health on public and private forestlands. The impact of Chinese
hardwood plywood imports has the potential to exacerbate the
situation.
I want to touch just a moment on what's happening on
private forestlands in America. For four generations our family
has owned and managed forestlands. I can assure you this
forestry today is not my great-grandfather's forestry. Today we
have laws which govern management of private forestlands. Hard
science, technology, and good old fashioned experience have
taught us a lot. Timber Products forestlands are certified
under the Sustainable Forest Initiative Program. We manage
every aspect of the ecosystem. American forestry should be the
poster child for forest health and good practices. Instead, we
allow countries like China unfettered access to America's wood
products demand. By virtue of this, we condone their illegal
and environmentally unsound practices while American managed
public and private forestlands continue to be an underutilized
asset.
As you know, in 1994, President Clinton proposed the
Northwest Forest Plan for U.S. Forest Service Regions 5 and 6
and BLM lands to preserve and protect the Northern Spotted Owl.
The plan was to reduce the annual harvest an estimated 75
percent from 4.5 billion feet to 1.1 billion feet. Going on its
14th year, however, the Northwest Forest Plan has not met its
goal. The cumulative harvest has only produced a woeful 24
percent of targeted harvest.
Let's utilize our Federal forests as they were intended!
When it comes to buying wood products, we must work together to
educate the consumer to buy American to encourage those who
supply their wood to purchase sustainable wood products, like
we produce.
In summary, Senator, I want to thank you for taking the
time to come to Medford, to investigate this issue. We
appreciate your leadership on this so important trade issue.
In closing, my primary message is that free trade must be
fair trade. As you watch the American Olympians compete in
Beijing, remember, each athlete can be assured the rules of
sport will be applied equally to all. The best athletes will
win. We at Timber Products Company can compete on a global
scale. Help us ensure it's a fair competition.
[The prepared statement of Mr. Gonyea follows:]
Prepared Statement of Joseph J. Gonyea, III, Chief Operating Officer,
Timber Products Company
Thank you for the opportunity to be a part of the field hearing in
Medford, Oregon. I am the Chief Operating Officer/Partner of Timber
Products Company, which is owned by my family. I am the fourth
generation of my family to work in the wood products industry. I am
testifying to represent the views of our ownership, our management and
our one thousand four hundred team members. Timber Products Company is
in the manufacturing, sales and marketing, transportation, and
timberland management business. We have nine manufacturing facilities
located around the nation, most of which are here in Southern Oregon.
We operate an International Division that imports wood products from
around the globe including South America, Africa, Russia, and, yes,
China to complement our domestic production. Imported products from all
of these countries account for approximately 12% of our annual sales.
Further, it may be of interest and somewhat ironic to note that, in
years past, we exported a greater percentage of our overall company
sales to countries throughout Europe and the Far East than we now
import. We are proud owners and stewards of 118,000 acres of
forestlands that are third-party certified under the standards of the
Sustainable Forestry Initiative. In Oregon alone we have 834 employees
and an annual payroll of $38,000,000 (gross pay, not including
benefits). Our largest product line is hardwood plywood, from which we
produce panel products used in the manufacturing of fine cabinets,
furniture, retail store fixtures, and decorative millwork products.
I want to thank you for your leadership in Congress and for being
our champion for free trade that is fair trade! Thank you for advancing
this investigation. I would also like to thank Senator Max Baucus of
Montana, Senator Jeff Bingaman of New Mexico and Oregon Senator Gordon
Smith for their roles in bringing these important issues to light. This
is not a red or blue state issue but a red, white, and blue issue for
our industry and country. It is our time to act. We hope your ongoing
investigation will address these unfair trade practices and
environmental discrepancies that give the Chinese hardwood plywood
manufacturers an advantage. The domestic hardwood plywood industry,
like other North America wood products industries including furniture,
cabinets, and flooring, is facing an onslaught of unfairly traded
imports from China. The continued survival of our industry is at risk.
It doesn't have to be so!
Our corporate headquarters are in Springfield and our family has
been long-time residents of the Eugene-Springfield area. As you may
know, we are proudly known as the Track Capital, USA and my family has
been track fans for generations. Hayward Field at the University of
Oregon is the center of this activity. A group of elite runners is here
to prepare for the 2008 Olympics in Beijing and some are part of the U
of O Pac 10 Championship team. When they get to China, there is one
thing they can be assured of--a level playing field. For all
competitors, the track surface will be the same and the weather will be
the same. Given a fair set of rules for each sport, history has shown
that hard-working American athletes can compete with the best of the
best from around the world, including the Chinese.
When it comes to the hardwood plywood business and China, the
playing field is far from level and the competition is far from fair.
Official U.S. Government import statistics from the Commerce Department
offer glaring evidence of these inequities. Between 2002 and 2006, the
dollar value of U.S. imports of non-tropical hardwood plywood from
China rose by more than one-thousand percent, an increase of more than
ten-fold. And that trend continues, as the value of such imports in the
first quarter of 2007 was 35 percent higher than the value of such
imports during the first quarter of 2006. In 2002, China accounted for
roughly 10 percent of all non-tropical hardwood plywood imports into
the United States. In the first quarter of 2007, China accounted for
roughly 54 percent of all such imports into the United States.\1\
---------------------------------------------------------------------------
\1\ U.S. Census Bureau IM-145 (Document has been retained in
subcommittee files).
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How did this happen? Once again, look at the available facts. 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, despite the distance they
must travel. We have learned that Chinese hardwood plywood importers
have been trying to avoid tariffs by misclassifying their hardwood
plywood and we appreciate your work with Customs to look into this. We
have also learned that some Chinese hardwood plywood is fraudulently
labeled or stamped and we appreciate your investigation of this problem
as well. At the end of the day, all of these practices lower the price
of Chinese hardwood plywood, making it harder for companies, like
Timber Products Company, that play by the rules to compete.
And then there are the environmental issues. Independent studies
state that some 30-50% of the birch logs coming into China have either
been stolen or are the result of illegal logging. Chinese manufacturers
are not held to environmental standards in their wood sourcing or in
the manufacturing process with use of resins and lack of controls on
air and water emissions. Add up each of these factors and it is no
wonder the Chinese can sell products at below the cost of a vertically-
integrated, highly efficient company like Timber Products Company.
These activities fly in the face of international trade rules--rules
that China agreed to accept and abide by when it joined the World Trade
Organization. As a result, private hardwood plywood producers in this
country are competing not only with Chinese companies but also with the
Chinese government and its distortive economic policies. Furthermore,
in our statement, you have not heard us discuss currency valuation or
labor conditions, but these, too, are factors.
How does this impact the health and well being of our local economy
and federal, state, and BLM forests? As part of my written testimony, I
am providing you with data on the potential impacts of Chinese imports
on public forestlands based solely on the impact to hardwood plywood
manufacturers based in Oregon. These companies employ over 2,600
Oregonians. In addition to Timber Products Company's two mills, the
other hardwood plywood manufacturers are: Columbia Forest Products,
States Industries, Murphy Plywood, and Roseburg Forest Products. 70% of
all hardwood plywood manufactured in North America is headquartered in
Oregon with this group of companies. These six manufacturing facilities
have the potential to process approximately 165,000 MBF of logs or on
average 28,000 MBF +/- per mill, a portion of which comes from federal
forests. Over the last five years, Timber Products Company has paid
$6MM to purchase 38,000 MBF of standing timber from the U.S. Forest
Service and BLM from sales that required thinning and salvage logging.
Additionally, during 2005 and 2006, Timber Products Michigan operations
purchased 650 MBF of hardwood logs from USFS Region Nine. All of this
is done under strict U.S. environmental guidelines, both federal and
state laws.
In this past year alone, two North American manufacturers of
hardwood plywood* closed, displacing 460 employees. If China is allowed
to continue importing subsidized and illegally harvested logs as they
are today, it will lead to more mill closures in the United States
thereby making the job of thinning and forest health in National
Forests even more difficult. An example of what can take place when we
lose the balance of management of federal lands is USFS Region Three in
Arizona and New Mexico. There, the U.S. Forest Service and
environmental groups are finding it far more difficult to attract
businesses needed to carry out important forest health projects back to
the region, now that the infrastructure is gone. Obviously, this has
had a large negative effect on the local rural communities which are
surrounded by National Forests and BLM lands. We do not want to repeat
the same mistakes in Oregon.
---------------------------------------------------------------------------
* Longlac and GP Savannah.
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The decline of domestic hardwood plywood manufacturing could also
lead to a further reduction of U.S. thinning and salvage capacity on
government lands. The financial impact would be substantial, but even
more serious would be impacts on forest health and public safety.
What's at stake here is significant. On the line are literally
thousands of American jobs, closed mills, a further decline of local
economies, and the degradation of forest health on public and private
forestlands. The impact of Chinese hardwood plywood imports has the
potential to exacerbate this situation.
I would like to touch on what is happening on private forestlands
in America. For four generations, our family has owned and managed
forestlands. I've been doing it for over twenty years. I can assure you
this--forestry today is not my great-grandfather's forestry. Today we
have laws which govern management of public and private forestlands.
Hard science, technology, and good old experience have taught us a lot.
At Timber Products Company we are active participants in the
Sustainable Forestry Initiative program, or SFI. We manage every aspect
of the eco system on our lands. We are not the only ones. Over 150
million acres of forestland in America have been audited by independent
third parties to meet the SFI standards. American forestry should be
the poster child for forest health and good practices. Instead, we
allow countries like China unfettered access to America's wood demand.
By virtue of this, we condone their illegal and environmentally-unsound
practices while American managed public and private forestlands
continue to be an underutilized asset.
As you know, Senator, in 1994, in an effort to preserve and protect
the Northern Spotted Owl, President Clinton and his administration
proposed the Northwest Forest Plan for U.S. Forest Service Regions 5 &
6 and BLM lands which was to reduce the annual harvest an estimated 75%
in this area from 4.5 billion board feet to 1.1 billion board feet.
This figure is an achievable harvest. In its 14th year, however, the
Northwest Forest Plan has not met its goal. The cumulative harvest has
only produced 3.5 billion board feet versus a plan of 14.3 billion
board feet--a woeful 24% of the targeted harvest.\2\
---------------------------------------------------------------------------
\2\ AFRC, ``Actual Sawtimber Harvested From Sales Sold Under the
Northwest Forest Plan'', 2006.
---------------------------------------------------------------------------
Those who are concerned about the environment need to come to the
table to help achieve the Northwest Forest Plan and produce a stable,
reliable harvest from federal lands, and to stop the demand for
imported wood products from countries that do not have good forest
practices or environmental and product quality laws. Let's utilize the
federal forests as they were intended. When it comes to buying wood
products, let's work to educate the consumer to buy American and to
encourage those who supply the wood to the consumer--the ``big box
stores''--to purchase sustainable wood products as they have advocated
doing, but have failed to do at times with their purchasing practices.
In summary, I want to again thank you for your leadership on this
trade issue which is so very important to my company and to our state.
Thank you also to everyone on the panel. In closing, my primary message
is that free trade must be fair trade. As you watch American Olympians
compete in Beijing next year, remember each athlete can be assured the
rules of the sport will be applied equally to all, and that the best
athlete will win. We at Timber Products can compete on a global scale.
Just help us ensure that it is fair competition!
Senator Wyden. Thank you very much. We'll have some
questions in a minute.
Phill, Mr. Guay.
STATEMENT OF PHILL GUAY, VICE PRESIDENT OF CORPORATE STRATEGY
AND MARKETING, COLUMBIA FOREST PRODUCTS, PORTLAND, OR
Mr. Guay. First I'd like to thank Senator Wyden and his
staff for the opportunity to be a part of this important
hearing. The issues that we're discussing here today are truly
crucial to the survival of our domestic industry.
Columbia Forest Products is one of the largest
manufacturers of hardwood products in North America. Our four
divisions; hardwood plywood, hardwood veneer, hardwood
flooring, and international division, amount to over $1 billion
in sales annually. We have more than 3,300 employee-owners in
the United States. We have 11 domestic hardwood plywood and
veneer manufacturing facilities. We are also a major importer,
using offshore resources to complement our domestic product
line. We are North America's largest Russian Birch importer,
and we contract-manufacture with suppliers in China, South
America, and throughout the world. We are also the Nation's
second largest hardwood flooring manufacturer, with five plants
in North America.
As a major manufacturer and importer, we recognize ours is
a global industry. In fact, we have seized the opportunity to
be global, both in sales and manufacturing. We have two
flooring plants in Malaysia and sell plywood manufactured in
China, not only here in the United States but in the European
Union as well. We sell flooring here as well as the in the
E.U., the Middle East, and Australia.
As a global company, we see the need for balance across all
global regions. Balance is essential for the industry and
consumers everywhere. Just as important, perhaps more so, is
the global enforcement of logging rules. Such a practice would
have an unbelievable impact on the environment by containing
illegal logging, promoting sustainable practices, and curbing
related pollution. So what we seek is not an advantage for any
region but fairness across all regions, across all business
functions, in raw materials, tax incentives, labor, and
numerous others. What we seek is fair trade, and we believe
free trade is fair.
Joe just got done spending some time talking about China,
and I cannot emphasize enough that we agree with everything
that Joe has said. Let me give you our perspective on China
with a bit more emphasis on the global logging trends. Speaking
from a Columbia perspective, green initiatives and
sustainability are most important to us. For 10 years, Columbia
Forest Products has maintained a Forest Stewardship Council
chain of custody certification and was one of the first in our
industry to do so with Certificate Number 65 out of 828 granted
in the United States today.
We recently introduced a revolutionary, urea formaldehyde-
free adhesive system we call PureBond, for the manufacture of
hardwood plywood flooring. Recently the California Air
Resources Board, or CARB, concluded that the United States is a
toxic dumping ground for excess urea-formaldehyde products
manufactured worldwide. CARB took bold steps to eliminate that
practice by passing new regulations that are the most stringent
in the world. Similarly, and just as importantly, we have an
opportunity here to stop the United States from becoming the
world's biggest consumer of illegal logging. In doing so, we
can help the environment, our industries, domestic employment,
and tax receipts simultaneously.
Although there are several programs which certify that wood
is being harvested sustainably, we use FSC. Joe recently
mentioned SFI, which timber uses. Of the 84.3 million hectors
of forest land that is certified worldwide by the Forest
Stewardship Council, 49 percent is located in Europe, 31
percent in North America, 3 percent in Africa, and 2 percent in
Asia.
Certification is a clear indication of sustainable forestry
practices. Since it is nearly impossible to log illegally on
certified land, you can see how easily it would be to log
illegally in Asia and Africa where under 5 percent of their
forest land is certified. While we believe certification and
legally controlled logging are both good business and social
practices, they are not free. North American industries'
commitment to these sustainable practices is expensive but the
right thing to do. However, it puts us at a significant cost,
and at times availability, disadvantage to most other areas of
the world.
I'll give you some numbers to complement Joe's. Let's
examine hardwood plywood first. When you look at the plywood
imports in 2002, 2.2 million cubic meters of hardwood plywood
was imported. In 2006 that number was 4.4 million cubic meters,
or up 93 percent. At the same time, as you well know, domestic
production actually declined. During that same period from 2002
to 2006, China's share of imports increased from less than 10
percent to 54 percent, as Joe has just mentioned. Imports from
other countries actually declined over that period as China
entirely dominated growth. That trend has continued unabated.
Despite a significant slowdown in the domestic housing
industry, 2007 has seen an increase over 2006 with regard to
imports, almost all again from China. Imports are up 33 percent
on a value basis and 6 percent on a volume basis, first quarter
2007 over first quarter 2006. All of that, despite the housing
slump, a slump that has caused domestic production to decline
in that same period.
Although I know this hearing is on hardwood plywood, I'd
like to mention hardwood flooring. The same logging and
business practices that hurt domestic hardwood plywood are
present in flooring as well.
Hardwood flooring imports have soared from 75 million cubic
meters in 2001 to 325 million cubic meters in 2006. The
domestic hardwood flooring industry is carrying the same unfair
burden as plywood.
How does this affect our economy as well as Federal, State,
BLM, and private landowners? The data in our submission
provides a snapshot. Our plant in Klamath Falls, Oregon, 1 of
11, consumed 46 million board feet of timber in 2003; by 2006
that declined 35 million board feet. Admittedly, much of that
timber is from private sources, but that decline clearly
indicates a loss of revenue to various government entities, and
landowners, and most importantly to us, job cuts at our Klamath
Falls plant.
The story of log purchases and job loss at our Klamath
Falls plant is no different from our other plants nationwide.
Our two largest plants are on the east coast, they consume
about 80 million board feet per year. Once again, that volume
is falling dramatically.
So what do we want? Free and fair trade. Thanks to the
effort of you, Senator Wyden, and your staff, an ITC 332
investigation is now underway for both hardwood plywood and
hardwood flooring. That will address the unfair business
practices negatively affecting our industry, tax receipts, and
employment.
Senator Wyden. Might get another initiative or two out of
the Administration on the next panel.
Mr. Guay. That's good. We're looking forward to that.
Just as important, perhaps more so, is that we develop and
enforce measures so that all wood products imported into the
United States are legally logged and, ultimately, sustainable
logged. It is the key, not just to a healthy environment, but
to free and fair trade, tax receipts, and employment and truly
the survival of our domestic industry.
Global enforcement at the log level is the key to success.
Clearly, most wood product manufacturing occurs in China, but
most of the illegal logging undoubtedly occurs in Russia,
elsewhere in Asia and Africa. While free and fair trade is
essential, if logging practices are not controlled in the
forest, we may improve our relationship between ourselves and
China, but manufacturing will simply move somewhere else.
Hence, neither our tax receipts, nor our industry, nor the
environment will really be improved.
So in summary, what we believe is that what is best for tax
receipts is best for our industry. Free trade, fair trade, and
legal logging everywhere.
I'd like to thank you, your staff, for everything you're
doing on behalf of our industry.
[The prepared statement of Mr. Guay follows:]
Prepared Statement of Phill Guay, Vice President of Corporate Strategy
and Marketing, Columbia Forest Products
My name is Phill Guay and I'm the Vice President of Corporate
Strategy and Marketing at Columbia Forest Products. I would like to
thank you for the opportunity to be a part of this important hearing,
and in turn, thank everyone who made it possible.
Columbia Forest Products is one of the largest manufacturers of
hardwood products in North America. Our four divisions: hardwood
plywood, hardwood veneer, hardwood flooring and international division
amount to $1 billion in sales, and we have more than 3,300 employee-
owners. We are one of the largest Employee Stock Ownership Programs
(ESOP) in the United States. We have 11 hardwood plywood and veneer
manufacturing facilities and are the largest manufacturer in that
industry. We are also a major importer, using offshore resources to
complement our domestic product line. We are North America's largest
Russian Birch importer, and we contract-manufacture with suppliers in
China, South America and throughout the world. We are also the nation's
second-largest hardwood flooring manufacturer, with five plants in
North America.
As a major manufacturer and importer we recognize ours is a global
industry. In fact we have seized the opportunity to be global, both in
sales and manufacturing. We have two flooring plants in Malaysia and
sell plywood manufactured in China, not only in the United States but
in the European Union also. We sell flooring here as well as the
European Union, the Middle East and Australia.
As a global company we see the need for balance across all global
regions. Balance is essential for the industry and consumers
everywhere. Just as important, perhaps more so, is the global
enforcement of logging rules. Such a practice would have an
unbelievable impact on the environment by containing illegal logging,
promoting sustainable practices and curbing related pollution. So what
we seek is not an advantage for any region but fairness across all
regions, across all business functions, in raw materials, tax
incentives, labor and numerous others. What we seek is fair trade, and
we believe free trade is fair.
Joe Gonyea has spent/will spend some time focusing on the issues in
China. We agree with Joe. Let me give you our perspective not only on
China but the overall global trends as well. Speaking from a Columbia
perspective green initiatives and sustainability are most important to
us. For 10 years, Columbia Forest Products has maintained a Forest
Stewardship Council (FSC) chain of custody certification and was on of
the first in our industry to do so with certificate number 65 out of
828 granted to date in the United States.
We recently introduced a revolutionary, urea formaldehyde-free
adhesive system, PureBondTM, for the manufacture of hardwood
plywood and flooring. Recently the California Air Resources Board
(CARB) concluded that the United States is a toxic dumping ground for
excess urea-formaldehyde products manufactured worldwide. CARB took
bold steps to eliminate that practice by passing new regulations that
are the most stringent in the world. Similarly we have an opportunity
here to stop the United States from being the world's biggest consumer
of illegal logging. In doing so we can help the environment, our
industries, domestic employment and tax receipts simultaneously.
Although there are several programs which certify that wood is
being harvested sustainably, we use FSC; others use Sustainable
Forestry Initiative (SFI) as well as additional programs available. Of
the 84.3 million hectors of forest land certified world wide by the
Forest Stewardship council 49.7% is located in Europe, 31.5% in North
America, 3.0% in Africa and 2.0% in Asia.
Certification is a clear indication of sustainable forestry
practices. Since it is nearly impossible to log illegally on certified
land, you can see how easily it would be to log illegally in Asia and
Africa where under 5% of their forest land is certified by the Forest
Stewardship Council. While we believe certification and legally
controlled logging are both good business and social practices, they
are not free. North American industries' commitment to these
sustainable practices is expensive but the right thing to do. However,
it puts us at a significant cost--and at times availability--
disadvantage to most other areas in the world.
Let's examine hardwood plywood alone. When you look at plywood
imports in 2002, 2.2 million cubic meters of hardwood plywood was
imported. In 2006 that number was 4.4 million cubic meters, up 93%. At
the same time, domestic production declined. During that same period
from 2002 to 2006 China's share of imports increased from less than 10%
to 50%. Imports from other countries actually declined over the period
as China dominated growth. That trend has continued unabated. Despite a
significant slowdown in the domestic housing industry (the primary
consumer of hardwood plywood) generally every month, 2007 has seen an
increase over 2006 with regard to imports. Imports are up 33% on a
value basis and 6% on a volume basis first quarter 2007 over 2006
despite the housing slump. Absolutely at this point we believe imports
have done far more damage to our industry than the current housing
slump. And many of those imports are subsidized by illegal logging as
well as unfair trade practices.
Although I know this is a hearing on hardwood plywood, I'd like to
mention hardwood flooring as well. In part because some hardwood
plywood is converted into hardwood flooring, and flooring is a much
bigger industry. But also because the same logging and business
practices that hurt domestic hardwood plywood manufacturing are present
in flooring too.
Hardwood flooring imports have soared from 75 million cubic meters
in 2001 to 325 million cubic meters in 2006. The domestic hardwood
flooring industry is carrying the same unfair burden.
How does this affect our economy as well as federal, state, BLM and
private land owners? The data in our submission provides a snapshot.
Our plant in Klamath Falls, Oregon, one of 11, consumed about 46
million board feet of timber in 2003; by 2006 that declined to 35
million board feet. Admittedly, much of that timber is from private
sources, but the decline clearly indicates a loss of revenue to the
various government entities and land owners, as well as job cuts at our
Klamath Falls plant. The Northwest Forest Plan for United States Forest
Service Regions 5 and 6 and BLM lands are running at under 25% of the
allowable harvest for many reasons. But had the allowable targets been
achieved it would have had a significant positive affect on forest
health, revenue as well as our global competitiveness.
The story of log purchases and job loss at our Klamath Falls plant
is no different at our other plants nationwide. Our two largest plants
on the east coast consume about 80 million board feet per year. Once
again that volume is falling and 98% of it comes from private land.
So what do we want? Free and fair trade. Thanks to the effort of
Senator Wyden and his staff, an ITC 332 investigation is now underway
for both hardwood plywood and hardwood flooring industries. That will
identify the unfair business practices negatively affecting our
industry, tax receipts and employment.
Just as important, perhaps more so, is that we develop and enforce
measures so that all wood products imported into the United States are,
first and foremost, legally logged and, ultimately, sustainably logged.
It is the key, not just to a healthy environment, but to free and fair
trade, healthy tax receipts, employment and the survival of our
domestic industries.
Global enforcement at the log level is the key to success. Clearly,
most wood product manufacturing occurs in China, but most of the
illegal logging undoubtedly occurs in Russia and Africa. While free and
fair trade is essential, if logging practices are not controlled in the
forest, we may improve the relationship between ourselves and China,
but manufacturing will simply move elsewhere. Hence, neither our tax
receipts, nor our industry, nor the environment will really be
improved.
So, in summary, what is best for tax receipts is best for our
industry, free trade, fair trade and legal logging everywhere.
Senator Wyden. Thank you very much. Tom, welcome.
Mr. Chamberlain.
STATEMENT OF TOM CHAMBERLAIN, PRESIDENT, OREGON AFL-CIO, SALEM,
OR
Mr. Chamberlain. Mr. Chair, I'd like to thank you for your
leadership in addressing an issue that negatively impacts
Oregon working families.
For the record, my name is Tom Chamberlain. I'm the
president of the Oregon AFL-CIO, and I have been such since
2005.
The AFL-CIO represents 135,000 union members, supporting
tens of thousand spouses and children, giving them a middle
class lifestyle, which is the core of America. There are
approximately 20,000 union members in the wood forest products
industry. The value of these 20,000 jobs impact our economy
three ways.
One, these are job creators. Depending on which economic
setting you read, somewhere between four and six jobs are
created for each manufacturing job in the woods product
industry. So what we're talking about is 80 to 100,000 jobs in
the Oregon economy, primarily in rural areas of the State where
forest products is the backbone of their individual economies.
Second, these are manufacturing jobs. As I said earlier,
they are the backbone of the middle class. They provide family
wage jobs, health care, retirement benefits, and more
importantly, an opportunity to achieve the American dream,
which is that each generation is better than the last. We're
not doing very well right now. A recent story in the New York
Times reported last week that the average 30 year old earns 12
percent less than the parents, 12 percent less. This is a
reversal of a 40-year trend which each generation has out-
earned the preceding generation. One of the causes noted was
the loss of manufacturing jobs. We also have to maintain an
increase, our local tax base, by maintaining these family wage
job providing vital services like fire and education and
police.
Finally, the wood products industry is the key economic
driver of rural Oregon, and keep many communities financially
afloat.
As stated earlier, 70 percent of all the companies in the
hardwood industry, or hardwood plywood industry, are
headquartered here in Oregon. The future of the hardwood
plywood industry has a significant impact on Oregon's economy.
The timing of this hearing is very important. Last week's
Strategic Economic Dialogue talks in Washington, DC, addressed
Chinese huge trade surpluses, unwillingness to float its
currency, unwillingness or inability to protect America's
intellectual property. These topics seem to be the primary
focus of those discussions, but China's undermining of the
forest products industry are just beginning to draw attention.
That's why these hearings are so important.
Thanks to your efforts and a few of your congressional
colleagues and a few news outlets, government and non-
government organizations, its become very apparent that China
are now, are not playing by the rules and will do whatever it
takes to gain world domination, especially forest products
industry. This, this strategy has been at play for years in
Oregon, for years.
It's worrisome the length China will go to lure away well
paying, highly skilled, unionized manufacturing jobs from
Oregon and other places in the United States to China. China's
hardwood plywood industry threatens to destroy large portions
of the global ecosystem in Asia, Africa, South America, in
order to keep its mills running at full capacity. They are in
search of low costs, illegally logged supplies of fiber. This
is a short run, this is a short run strategy because in the
long run, it's going to damage our bio-systems.
Rather than focus on recapping problems, I'd like to talk
about other activities that they are engaged in, and what the
consequences of those activities are.
Illegal subsidies: Several studies have been documented
that China spends over $2 billion a year, excuse me, $2 billion
in the last 5 years in subsidizing their wood products
industry. With the subsidies, China has constructed state-of-
the-art mills while American workers are trying to compete in
outdated mills that the industry can't update to maintain their
competitiveness.
Now I'm not an economics major. I was a firefighter for 27
years, but even I can see where this is headed. We're not going
to like it. We're not going to like the impacts it's going to
have on the middle class and rural families in Oregon.
China's practice of mislabeling exports to avoid duties is
making it harder for American firms to compete. This practice
makes it easier for U.S. resellers to choose Chinese products
based on unfair advantage. It is impossible, impossible to buy
American, if you can't find American made products in stores.
Fraudulent stamping and illegal logging: You know, we
believe in sustainable yields in our forests in Oregon, but not
so in China. They have over-harvested their forest land and
this was revealed in the Washington Post article, Chicago
Tribune article and a Popular Mechanics article. Not only have
they over-harvested, now they are purchasing illegal logs from
Indonesia, Burma, Russia, or any other company that will sell
to them and then falsifying their certification papers. This
undermines the certification systems that are designed to
protect our global ecosystems. According to the OECD illegal
logging results, illegal logging results in an annual loss of
global economy of $15 billion a year, $1 billion in the United
States. Just think about what those dollars would bring to
Oregon, to the rural communities in education and health care
and so on. But we're losing those.
The lack of access to markets. There's a misconception that
organized labor is against trade agreements. We're not against
trade agreements. What we are against are trade agreements that
do not include international laboring organization standards or
environmental standards, and don't allow for access to other
markets. Without that access, we cannot grow middle class or
maintain it.
What can we do? Well, first, we have to put U.S. Government
feet to the fire to pressure the Chinese forest products
industry to reform its tactics. These strategies have had some
success. Last year, U.S. Government filed an unfair subsidies
case against the Chinese hardwood plywood industry at the World
Trade Organization. Earlier this year, was, WTO finally was
willing to fine duties on Chinese coated paper imports due to
the subsidies. This action shouldn't be the last step. It
should be the first step.
The Bush administration seems to have forgotten that the
trade laws are only as good as they are enforced. Mr. Chairman,
the steps that you and other Members of Congress are just the
first steps you must take to find the solution. The U.S.
International Trade Commission needs to complete its current
investigation. We need to see action from the Bush
administration. We need more congressional hearings and focus
on this issue. We need Congress to revise, revise the Lacey
Act, and with the input of labor, industry and environmental to
curb illegal logging in the world.
Finally, we need to promote the fact that American wood
products are legally harvested. This can be done in two ways.
First, the wood product industry can promote their work so that
Americans concerned about illegal logging know that made in the
USA label means that products are harvested legally. Second,
Congress can encourage made in the USA as a way to say that we
do not condone illegal logging. These just are initial steps;
much more is needed to be done. The Oregon AFL-CIO looks
forward to working with you in the future to define solutions
to these very pressing problems.
[The prepared statement of Mr. Chamberlain follows:]
Prepared Statement of Tom Chamberlain, President, Oregon AFL-CIO
Mr. Chairman. Thank you for taking the lead on this very important
issue to workers in Oregon and for giving me the opportunity to
testify. My name is Tom Chamberlain and I have had the honor of serving
as the President of the Oregon AFL-CIO since 2005. My organization
represents more than 135,000 union members in Oregon, and our members
support hundreds of thousands of spouses and children. There are
approximately 20,000 union members, both in the AFL-CIO and in other
unions, who work in the Oregon forest products industry. The value
these 20,000 workers add to the economy is very important in three
ways.
First, this industry has a high job multiplier. Depending on the
economic analysis you read, it is somewhere between four and six. This
means that for every one person employed by the forest products
industry, there are somewhere between four and six other Americans
employed in support industries--such as logging, transportation,
utility and retail--who rely on this industry for their jobs.
Second, these are the good manufacturing jobs that we should be
striving to keep in the United States--they are highly skilled
manufacturing jobs that pay high hourly wages and often come with full
benefits. They keep up the local tax base that maintains necessary
services such as police, fire and education. They are not low paying,
no benefit ``McJobs.''
Finally, these Oregon workers and their families make up the
backbone of many rural communities in our state and elsewhere in the
United States. It is these well paying, highly skilled jobs that keep
many of these communities financially afloat.
As you mentioned in your opening statement, more than 70 percent of
the companies in the hardwood plywood industry are headquartered in
this state. There is no doubt that the future of this industry is of
significant importance to Oregon.
The timing of this hearing is very important, as it comes on the
heels of last week's Strategic Economic Dialogue talks in Washington.
While issues such as China's huge trade surplus with the United States,
the Chinese government's unwillingness to float its currency and the
country's seeming inability to protect American intellectual property
have garnered much of the attention, the corrosive effects of practices
of the Chinese forest products industry are only beginning to receive
much public attention.
But this is quickly changing. Thanks to your efforts along with a
few other Members of Congress, the reporting of a few news outlets and
the attention of a handful of governmental and nongovernmental
organizations, the country and the world are beginning to realize what
the hardwood plywood industry and its workers have known for many
years--the Chinese do not play by the rules and will do whatever is
necessary to establish global dominance.
What makes Chinese actions even more worrisome is that they go to
such great lengths to lure well paying, highly skilled manufacturing
jobs that were formerly held by unionized workers in Oregon and other
parts of the United States to China. What we are seeing is an industry
that threatens to destroy large portions of the global ecosystem--be it
in Asia, Africa or even South America--in order to keep its mills
running at capacity with low cost, largely illegally logged supplies of
fiber in the short run. In the long run, as biosystems are destroyed,
everyone loses--even the Chinese.
Rather than recapping what the problems are, I would like to spend
a few minutes of the Committee's time talking about some of the
consequences of this activity.
Illegal subsidies.--Several studies have documented that the
Chinese government has subsidized its forest products industry to the
tune of nearly two billion dollars over a five-year period. Chinese
mills are quickly becoming some of the most modern and efficient in the
world, while American workers are forced to compete in older mills
since the industry can no longer fund necessary improvements to keep
them competitive. It doesn't take a MBA from Yale to understand the
long term consequences.
Customs issues.--By mislabeling exports to avoid duties, the
Chinese make it harder for U.S. firms to compete as this deception
makes it easier for U.S. resellers to choose Chinese products based on
their unfair price advantage. It is impossible to ``Buy American'' if
you cannot find American made forest products in the stores.
Fraudulent stamping and illegal logging.--In recent years, American
companies and consumers have become increasingly aware of the
importance of sustainably harvested wood products. However, as the
Washington Post, Chicago Tribune and Popular Mechanics have reported,
the Chinese forest products industry, having seen the negative effect
over-harvesting domestically, has been importing illegally harvested
logs from Indonesia, Burma, Russia and any number of other countries
and accepting obviously false certification papers. These activities
also undermine the certification systems that have been set up to
protect global ecosystems. According to the OECD, illegal logging
results in an annual loss to the global economy of $15 billion a year;
the U.S. economy alone takes a $1 billion hit. Imagine what an
additional billion dollars could for our industry or for rural school
districts and counties in Oregon.
Lack of reciprocal market access.--While it remains fashionable for
proponents of so-called ``free trade'' to claim that labor is opposed
to trade, that is, of course, false. Organized labor supports trade as
long as it is fair and the country we are trading with gives us
reciprocal market access. When we lose access to such a quickly growing
market, we lose access to one of the ways to grow our industry outside
of North America.
So what are the next steps? We need to adopt the tactics of other
groups that have begun to show some success in getting the Chinese
government to act on issues such as Darfur. We need to shine a
spotlight on Chinese practices and embarrass them into action. We need
to garner support on all fronts from multiple allies. Here are some
examples.
First, we need to put the U.S. government's feet to the fire to
pressure the Chinese forest products industry to reform its tactics. So
far, we have seen some successes--the U.S. government last year filed
an unfair subsidies case against the Chinese hardwood plywood industry
at the World Trade Organization and earlier this year was finally
willing to apply duties on Chinese coated paper imports due to
subsidies they receive. But these should not be the last steps--they
should be the first. We need to remind the Bush administration that
trade laws are only good if they are enforced.
Moreover, steps that you and other Members of Congress have taken
are just the first steps. Not only do we need to see the U.S.
International Trade Commission complete its current investigation, but
we need to see action from the Administration. Not only do we need more
hearings on the Chinese forest products industry, but we also need
Congress to revise the Lacey Act with the input of industry, labor and
the environmental movement in order to help curb illegal logging.
Finally, we need to promote the fact that American wood products
are harvested legally. This can happen in two ways. First, the wood
products industry can promote their work so that Americans concerned
about illegal logging know that the ``Made in the USA'' label means
that the product was harvested legally. Second, Congress can encourage
``Made in the USA'' as a way to say that we do not condone illegal
logging.
These are just the first steps. Much more needs to be done. The
Oregon AFL-CIO looks forward to working with you in the future to find
solutions to this problem.
Senator Wyden. Mr. Chamberlain, thanks very much. All three
of you have been very helpful. We'll have some questions in a
moment.
Mr. Daly.
STATEMENT OF EDWARD J. DALY, CHIEF OPERATING OFFICER, FOREST
STEWARDSHIP COUNCIL--US
Mr. Daly. Thank you, Senator Wyden. Thank you to the
subcommittee for inviting me here today. I appreciate being on
this esteemed panel.
My name is Ned Daly. I'm Chief Operating Officer for the
Forest Stewardship Council here in the United States.
As a way of introduction, the Forest Stewardship Council is
a tool that creates a marketplace for sustainable wood produced
and wood and paper products. It rewards the best companies and
cooperatives for the best practices. More importantly for this
hearing, it is a way to measure the worst practices out of the
marketplace.
We are having an impact in China and across the globe with
a very simple business motto. FSC is able to provide good
producers and manufacturers, like the over 70 Oregon based FSC
certified companies, a way to distinguish themselves in some
environmentally and socially sustained operations in the global
marketplace. FSC also allows consumers to identify sustainable
wood products in the marketplace, and support companies with
the best practices. It also allows environmentally social
advocates to partner with sustainable companies and promote
positive alternatives in the marketplace that support
communities and the environment.
FSC believes that working forests are an integral and
necessary component to forest conservation. The business model
has allowed us to help the global timber industry become an
ally in conservation of forest worldwide.
FSC standards have been applied to more than 225 million
acres of actively managed forests in more than 70 countries,
and it's growing steadily. These standards ensure the legal
sustainable origin of FSC certified products.
FSC chain-of-custody certification require from
manufacturers and distributors track certified products through
the chain and has certified over 5,600 manufacturers and
distributors in 73 countries.
Evidence of FSC success in our ability to impact markets in
China are the numerous companies that have FSC procurement
policies, including Home Depot, Lowe's, Crate and Barrel, Pier
1, Williams-Sonoma, Pottery Barn, JP Morgan, Bank of America,
PNC Bank, Random House, Scholastic Publishing, Ikea, Nike,
Starbucks, Staples, Office Depot, Wal-Mart, Patagonia, and the
U.S. Green Building Council.
FSC has just started the process of establishing an office
in China. The working group members represent a broad cross
section of forest stakeholders, including the International
Network for Bamboo and Rattan, WWF China, Beijing Forestry
Society, IKEA and many others.
The FSC working group will focus on the development of
national standards for timber harvesting in China, but due to
serious flooding in 1998, when over 2,500 people lost their
lives, the Chinese government banned commercial logging in 17
provinces. While the ban was intended to conserve landscapes,
the most immediate impact has been the sharp increase of wood
and pulp imported from Southeast Asia and Siberia.
Timber imports into China has tripled in volume and doubled
in value between 1997 and 2003. It is estimated that nearly
half of all tropical timber trees harvested worldwide are
consumed in the Chinese goods producing sector. The majority of
imports come from Indonesia, Malaysia, and Russia. FSC partner,
the Environmental Investigation Agency has shown illegally
logged timber imports from Russia (50 percent of all export
trade in the Russian Far East is considered illegal) as well as
Burma, Cameroon, Gabon, Indonesia, Liberia, Papua New Guinea
and Thailand. Thailand in turn imports illegal timber from
neighboring Burma, Cambodia, and Laos for export to China.
Some more important than developing standards for
harvesting within China, is the application of FSC chain-of-
custody standards to provide oversight on every step in the
commercial production of wood and paper products from the stump
to the retailer.
As in any country, there are a number of goods sustainable
producers and manufacturers throughout China and many Chinese
companies that have already achieved FSC certification. But
issues such as corruption, lack of management plans, lack of
safety measures for workers, the inability to document or trace
products create a large gap between much of the Chinese
industry today and where they would need to be to become FSC
certified.
Fortunately, FSC has quite a bit of experience working in
sectors of the timber industry that face similar challenges,
most notably the garden furniture industry in Viet Nam, the
charcoal industry in South Africa, and the general wood
products industry in central Africa and the Amazon Basin where
Brazilian government estimates 25,000 people in the timber and
cattle industry.
We are already seeing how market managed for sustainable
products in the U.S. and Europe is affecting the Chinese export
market. FSC accredited auditors have issued five forest
management certificates in over 200 chain-of-custody
certificates in China. But the challenges of operating in China
remain significant.
China has a number of requirements that make it very
difficult to establish FSC audits in an FSC general office in
China, such as significant registered capital, over $3 million,
at least 10 full-time employees, and the requirement for
conformity to government regulations that have not yet been
promulgated. It has been a very difficult process to establish
an FSC office in China and perform audits in China, but there
are signs that the government is willing to accommodate FSC in
the country.
The misappropriation of the FSC label is also an issue. We
are all ready seeing misuse of labels by companies in China,
including the use of the FSC logo by non-FSC certified
companies on non-FSC certified hardwood plywood. FSC has
addressed these issues. It has a very robust trademark
infringement procedure. With the help of the over 5,000
certified companies we are trying to protect their legitimate
use of the label, we've done a good job to date, but the growth
in China will definitely test our ability to protect the FSC
trademark.
Obviously the change will not happen overnight, but in
tandem with our environmental partners such as WWF,
Environmental Investigation Agency, FSC certified companies in
support of governments in producing, manufacturing, and import
countries, we can go a long way in the world, a long way in
cleaning up international timber trade in China and around the
world.
In conclusion, I'd like to say that while there are a
number of issues and problems that make the Chinese economy
unique, in many ways China is nothing more than a fork in the
mill. There are underlying problems with the global timber
industry, illegal logging, ecologically destructive practices,
violation of human rights that must be addressed alone with the
global economy that seems blissfully ignorant to these terrible
practices. I believe FSC is one tool that can help us address
these issues in China and across the world.
[The prepared statement of Mr. Daly follows:]
Prepared Statement of Edward J. Daly, Chief Operating Officer, Forest
Stewardship Council--US
Thank you for the opportunity to testify before the subcommittee
today.
My testimony will cover how the Forest Stewardship Council supports
and promotes companies with exemplary practices like the over 70
Oregon-based companies certified by FSC, what FSC is doing in China to
reduce the impact of illegal and unsustainable wood and paper products
on the global marketplace, and the challenges we see moving forward in
China. I will address these issues in general, but they all apply to
the market for hardwood plywood in the U.S. and globally.
FSC certification is a complicated system of standards, policies,
principles, criteria and indicators necessary to implement and oversee
a global standard for environmentally and socially responsible timber
production. As a way of introduction, there is an easier way to think
about FSC certification--Ebay for sustainable timber.
There are companies like Collins Pine, Warm Springs Forest Products
and Columbia Forest products who have quite literally some of the best
forest management and manufacturing practices in the world and they
would like to be able to articulate to consumers that commitment to
sustainability.
At the same time there are consumers, both institutional and
individual who would like to buy products that are sustainably
produced, or more importantly, not from illegal or destructive
practices.
There are also advocates for conservation, sustainable forest
management and healthy rural communities that would like to have
positive alternatives in the marketplace that they can direct consumers
to.
Like Ebay, through a set of policies that legitimize the
transactions in that marketplace and the establishment of a network of
buyers and sellers, FSC is able to provide good producers and
manufacturers a way to distinguish themselves in the marketplace,
allows consumers to identify sustainable wood products and allows
advocates to partner with sustainable companies to promote wood and
paper products that support communities and the environment.
FSC believes that working forests are an integral and necessary
component to forest conservation. With the growing impacts of
conversion from sources like agricultural expansion and development,
working forest a essential to provide value to standing forests and
keep the forests standing.
what is fsc?
Since its inception in 1993, the Forest Stewardship Council has
emerged as a globally influential system for transforming forestry
around the world by reaching areas where other conservation strategies
or government policies have fallen short. The Forest Stewardship
Council is an independent, nonprofit organization that promotes the
responsible management of the world's working forests through the
development of forest management standards, a voluntary certification
system, and trademarks that provide recognition and value to products
bearing the FSC label in the marketplace.
FSC standards have been applied on more than 225 million acres of
actively managed forests in more than 70 countries, and growing
steadily. In 1994, FSC's members approved an international set of
Principles and Criteria that define FSC's threshold for responsible
forestry practices worldwide. These standards support biodiversity,
reduce chemical use, protect streams and aquatic communities, conserve
old growth, ensure protection of high conservation value forests, give
stakeholders a voice, and ensure long-term timber supplies. Specific
regional standards are developed in countries to interpret and
operationalize the original Principles and Criteria in order to manage
specific, local forest compositions. The regional standards were
developed through a unique consensus process that allows for and
actively seeks participation from all interested parties.
Manufacturers and distributors of wood and paper products are
required to have a ``chain-of-custody'' certification in order to label
and sell FSC-certified products. Chain-of-custody certification is the
process through which wood and fiber are tracked from their original
point of harvest through the manufacturing process. FSC is a credible
system because consumers can be confident that their purchase of wood
or paper is truly linked directly back to the practice of certified
forestry on the ground. FSC has 5,646 certified chain-of-custody
companies in 73 countries.
With 37 national offices and representation in every major forest
producing country, FSC and its partners are creating a marketplace that
demands well-managed forestry practices. Moreover, NGOs, businesses,
government agencies, financial institutions, and landowners
increasingly use FSC standards as an important land conservation tool,
a vehicle to implement corporate social responsibility practices, and a
strategy for product differentiation in the marketplace. Through use of
the FSC certification system, institutions of all kinds can ensure
their commitments to high standards of forest management.
Demand for certified products is ``pulling'' acres into the FSC
system. As certification gains recognition as the screen through which
individual and commercial customers view their purchases, the most
egregious forest practices are denied a place in the market. In short,
the investment made to develop and apply FSC standards over the past
decade is paying off in conservation benefits, such as protection of
wildlife habitats, improved water quality, sustained availability of
timber resources, and increased recognition that forestry can be
practiced sustainably. With illegal logging still rampant in many parts
of the world and wood and paper demands expected to grow over the next
50 years, the need for FSC standards as a conservation tool is greater
than ever before.
Evidence of such demand pull are the numerous companies that have
FSC procurement policies including Home Depot, Lowes, Crate and Barrel,
Pier 1, Williams-Sonoma, Pottery Barn, JP Morgan, Bank of America, PNC
Bank, Random House, Scholastic Publishing, Ikea, Nike, Starbucks
(flooring), Staples, Office Depot, Wal-Mart, Patagonia, and the U.S.
Green Building Council's LEED program.
certification
FSC accredited, independent, ``third-party'' certification bodies
or ``certifiers'' certify forests. They assess forest management using
the FSC principles, criteria, and standards, each certifier uses their
own evaluative process. This allows FSC to remain outside of the
assessment process, and supports the integrity of the standard, and of
the FSC system. Certifiers evaluate both forest management activities
(forest certification) and tracking of forest products (chain-of-
custody certification).
Forest landowners or managers can contact an accredited FSC
certifier if they are interested in becoming certified. Certifiers
engage in a contractual relationship with the landowner/manager to
assess forest management against the FSC standard approved for the
region where the forest is located. The general public is notified
about certification assessments before they take place so that the
certifiers, helping assure the integrity of the process, can hear a
full range of voices. At the close, an assessment summary report is
made public, while at the same time keeping the company's proprietary
information confidential. If the forest management operations assessed
quality for certification, the landowner can choose to sign a
certification contract. This event results in their being ``certified''
and brings with it the landowner's commitment to continue to practice
forestry in a certifiable fashion. This same process is applied in
every country, including China, in which FSC operates.
The contract's duration is five years, at which point a full
assessment will be conducted again if the landowner wishes to continue
being certified. These five-year audits are supplemented by annual
audits to verify that the terms of the contract are being followed, and
facilitate regular contact between the certificate holder and
certifier.
For those companies who manufacture or trade certified products, a
different form of certification applies. Again, to assure the
credibility of claims on products, it is important to track materials
as they leave the forest and become products down stream. This ``chain
of custody'' (COC) certification process is quite simple. Like any
inventory control system, COC allows products to be segregated and
identified as having come from a particular source--in this case, an
FSC-certified forest.
FSC's model of certification allows products that flow from
certified forests to enter the marketplace with a credential that is
unique. Any FSC labeled product can be traced back to a certified
source. This aspect of the system is the basis for any credible
certification system and is the link between consumer preference and
responsible, on the ground forest management.
fsc in china
FSC is in the process of establishing an office in China which is
being led by the former director of accreditation for FSC
International. A national working has been established to develop
forest management standards for China. Since July 2005 the formative
FSC working group in China has met seven times. Working group members
represent a broad cross section of forest stakeholders including the
International Network for Bamboo and Rattan (INBAR), WWF China, Beijing
Forestry Society (BFS), IKEA and others. Because of China's importance
and the difficulty of establishing an office there, the FSC
International board will hold its next meeting in Beijing.
The FSC working group will focus on the development of national
standards for timber harvesting in China, but due to serious flooding
in 1998, in which over 2,500 people lost their lives, the Chinese
government banned commercial logging in 17 provinces. While the ban was
intended to conserve landscapes, its most immediate impact has been the
sharp increase of wood and pulp imported from Southeast Asia and
Siberia.
Timber product imports into China have tripled in volume and
doubled in value 1997-2003 and it is estimated that nearly half of all
tropical trees harvested worldwide are consumed in Chinese goods
producing sector. The majority of imports come from Indonesia,
Malaysia, and Russia. FSC partner, the Environmental Investigation
Agency has shown illegally logged timber imports from Russia (50 per
cent of all export trade in the Russian Far East is considered
illegal), Burma, Cameroon, Gabon, Indonesia, Liberia, Papua New Guinea
and Thailand (Thailand in turn imports illegal timber from neighbouring
Burma, Cambodia and Laos for export to China.)
So more important than developing standards for harvesting within
China, is the application of FSC chain-of-custody standards to provide
oversight on every step in the commercial production of wood and paper
products from the stump to the retailer. The Chain of Custody standards
that govern the processing of wood products--mills, secondary
manufacturers, brokers and merchants--are internationally established
and provide oversight for products made in China often from imported
wood and exported globally.
Since FSC sets a global standard for exemplary forestry, there are
many operations across the globe that cannot meet the FSC standard.
This presents a challenge: how do you create market incentives for
operations that cannot meet the FSC standard, that encourage those
operations to move in the right direction.
As in any country there are a number of good sustainable producers
and manufacturers throughout China and many Chinese companies have
already achieved FSC certification. But issues such as corruption, lack
of management plans, lack of safety measures for workers, and the
inability to document or trace products create a large gap between
where much of the Chinese industry is today and where they need to be
to become FSC certified.
Fortunately, FSC does have some experience working with sectors of
the timber industry that have faced similar challenges, most notably
the garden furniture industry in Viet Nam and the charcoal industry in
South Africa. Through partner organizations such as the Tropical Forest
Trust, producers can receive selective recognition in certain markets
if the commit to incremental improvement over 5 years and agree to
become FSC certified at the end of the 5 year period.
Obviously change will not happen overnight, but in tandem with our
environmental partners such as WWF, Environmental Investigation Agency,
and others, FSC certified companies and the support of governments in
producing, manufacturing and import countries we can go along way in
cleaning up the international timber trade in China and around the
world.
establishing fsc certification in china
It has been a very difficult to establish an FSC office in China
and to perform audits in China, but there are signs that the government
is willing to accommodate FSC certification in country.
For an FSC accredited certifier to legally operate in China, it
must adhere to the following regulations:
Article 10 A certification body to be established shall meet
the following requirements:
(1) having fixed premises and necessary facilities;
(2) having management system that meets the
requirements for certification and accreditation;
(3) having a registered capital of not less than
3,000,000 yuan; and
(4) having not less than ten full-time certification
personnel in relevant fields.
A certification body to engage in product certification
activities is additionally required to have technical
competence in testing or inspection commensurate with relevant
product certification activities.
Article 15 Any certification personnel, when practicing
certification activities, shall practice in one certification
body only and shall not practice in two or more certification
bodies simultaneously.
Article 76 Structural fee charts for certification and
accreditation shall be in conformity with the provisions of
relevant laws and administrative regulations of the State on
pricing.
For social issues certification (e.g. SA 8000) the
Certification and Accreditation Administration of the People's
Republic of China is operating on a `case by case' basis both
the certification organization and the enterprise involved must
submit an application to CNCA in advance, explain the reasons
for certification, and cannot start the certification process
until approved.
The requirements for a physical presence, staff and investment in
China make it difficult for many certification bodies to operate there.
The fact that the Chinese government has not established guidelines for
accreditation and certification in the forestry sector makes it
difficult for FSC accredited auditors to establish management systems
for operating in China.
But the government is moving forward on a number of initiatives
that would help establish FSC certification in China. The State Forest
Administration's (SFA) commissioned the Chinese Academy of Forestry
(CAF) to develop a set of criteria and indicators suitable for national
forest units. (The Chinese Academy of Forestry and the World Wide Fund
for Nature (WWF) China were appointed for the task of establishing the
FSC Working Group and develop a FSC National Standard in line with the
regulations required by the FSC.)
Since November 2003, all certification bodies issuing certificates
in China need to be approved by the Certification and Accreditation
Administration of the People's Republic of China (CNCA). CNCA does not
seem to have a major problem with the concept of `International
Accreditation' and certification bodies other than CNAB (CNAS)
operating in China. Another positive sign is China is active in ENA-
FLEG (Forest Law Enforcement and Governance Europe/North Asia) and
shown a commitment to oppose illegal logging and associated trade.
Despite these difficulties, FSC has begun to make some inroads in
China. FSC accredited auditors have issued five forest management
certificates and over 200 chain of custody certificates in China.
looking toward the future
There are rarely simple solutions to complex problems like those
related to creating transparency and oversight for the international
timber trade. In most cases it is a number of tools, such as
legislation, diplomacy or market pressure that help resolve such
issues. I believe FSC is a tool that can help remove the worst players
from the international timber market and reward the sustainable
producers in the marketplace. FSC also plays a very important role for
wood and paper products more generally. As this industry and many other
industries have seen before, a few bad actors can tarnish the whole
industry's reputation. FSC establishes sustainably produced wood and
paper products as the green, environmentally and socially beneficial
products that they are. FSC can uniquely play that role because it is
the only internationally recognized forest certification program that
recognizes the importance of social issues--community involvement,
indigenous and labor rights--in forest management.
Still there is a very difficult road ahead. There is little
question that China will be FSC's toughest challenge to date. Along
with the challenges aforementioned, trying to regulate misappropriation
of the FSC logo and certification is a huge challenge. We are already
seeing the misuse of labels by companies in China (including the use of
the FSC logo by a non-FSC certified company on non-FSC certified
hardwood plywood). FSC has a very robust trademark infringement
procedure and with the help of the over 5,000 certified companies who
are trying to protect their legitimate use of the label, we have done a
good job to date, but growth in China will definitely test our ability
to protect the FSC trademark.
I have included for the committee the FSC's Principles and Criteria
which guide FSC certification and a list of the FSC certified companies
in Oregon who use FSC as a way to highlight their sustainable practices
and allows those companies to compete in the global marketplace based
on good practices and good prices.
introduction to fsc's principles & criteria for forest management
certification
It is widely accepted that forest resources and associated lands
should be managed to meet the social, economic, ecological, cultural
and spiritual needs of present and future generations. Furthermore,
growing public awareness of forest destruction and degradation has led
consumers to demand that their purchases of wood and other forest
products will not contribute to this destruction but rather help to
secure forest resources for the future. In response to these demands,
certification and self-certification programs of wood products have
proliferated in the marketplace.
The Forest Stewardship Council (FSC) is an international body which
accredits certification organizations in order to guarantee the
authenticity of their claims. In all cases the process of certification
will be initiated voluntarily by forest owners and managers who request
the services of a certification organization. The goal of FSC is to
promote environmentally responsible, socially beneficial and
economically viable management of the world's forests, by establishing
a worldwide standard of recognized and respected Principles of Forest
Stewardship.
The FSC's Principles and Criteria (P&C) apply to all tropical,
temperate and boreal forests, as addressed in Principle #9 and the
accompanying glossary. Many of these P&C apply also to plantations and
partially replanted forests. More detailed standards for these and
other vegetation types may be prepared at national and local levels.
The P&C are to be incorporated into the evaluation systems and
standards of all certification organizations seeking accreditation by
FSC. While the P&C are mainly designed for forests managed for the
production of wood products, they are also relevant, to varying
degrees, to forests managed for non-timber products and other services.
The P&C are a complete package to be considered as a whole, and their
sequence does not represent an ordering of priority. This document
shall be used in conjunction with the FSC's Statutes, Procedures for
Accreditation and Guidelines for Certifiers.
FSC and FSC-accredited certification organizations will not insist
on perfection in satisfying the P&C. However, major failures in any
individual Principles will normally disqualify a candidate from
certification, or will lead to decertification. These decisions will be
taken by individual certifiers, and guided by the extent to which each
Criterion is satisfied, and by the importance and consequences of
failures. Some flexibility will be allowed to cope with local
circumstances.
The scale and intensity of forest management operations, the
uniqueness of the affected resources, and the relative ecological
fragility of the forest will be considered in all certification
assessments. Differences and difficulties of interpretation of the P&C
will be addressed in national and local forest stewardship standards.
These standards are to be developed in each country or region involved,
and will be evaluated for purposes of certification, by certifiers and
other involved and affected parties on a case by case basis. If
necessary, FSC dispute resolution mechanisms may also be called upon
during the course of assessment. More information and guidance about
the certification and accreditation process is included in the FSC
Statutes, Accreditation Procedures, and Guidelines for Certifiers.
The FSC P&C should be used in conjunction with national and
international laws and regulations. FSC intends to complement, not
supplant, other initiatives that support responsible forest management
worldwide.
The FSC will conduct educational activities to increase public
awareness of the importance of the following:
--improving forest management;
--incorporating the full costs of management and production into
the price of forest products;
--promoting the highest and best use of forest resources;
--reducing damage and waste; and
--avoiding over-consumption and over-harvesting.
FSC will also provide guidance to policy makers on these issues,
including improving forest management legislation and policies.
Principle 1: Compliance with Laws and FSC Principles
Forest management shall respect all applicable laws of the country
in which they occur, and international treaties and agreements to which
the country is a signatory, and comply with all FSC Principles and
Criteria.
Criteria
1.1 Forest management shall respect all national and local laws and
administrative requirements.
1.2 All applicable and legally prescribed fees, royalties, taxes
and other charges shall be paid.
1.3 In signatory countries, the provisions of all binding
international agreements such as CITES, ILO Conventions, ITTA, and
Convention on Biological Diversity, shall be respected.
1.4 Conflicts between laws, regulations and the FSC Principles and
Criteria shall be evaluated for the purposes of certification, on a
case by case basis, by the certifiers and the involved or affected
parties.
1.5 Forest management areas should be protected from illegal
harvesting, settlement and other unauthorized activities.
1.6 Forest managers shall demonstrate a long-term commitment to
adhere to the FSC Principles and Criteria.
Principle 2: Tenure and Use Rights and Responsibilities
Long-term tenure and use rights to the land and forest resources
shall be clearly defined, documented and legally established.
Criteria
2.1 Clear evidence of long-term forest use rights to the land (e.g.
land title, customary rights, or lease agreements) shall be
demonstrated.
2.2 Local communities with legal or customary tenure or use rights
shall maintain control, to the extent necessary to protect their rights
or resources, over forest operations unless they delegate control with
free and informed consent to other agencies.
2.3 Appropriate mechanisms shall be employed to resolve disputes
over tenure claims and use rights. The circumstances and status of any
outstanding disputes will be explicitly considered in the certification
evaluation. Disputes of substantial magnitude involving a significant
number of interests will normally disqualify an operation from being
certified.
Principle 3: Indigenous People's Rights
The legal and customary rights of indigenous peoples to own, use
and manage their lands, territories, and resources shall be recognized
and respected.
Criteria
3.1 Indigenous peoples shall control forest management on their
lands and territories unless they delegate control with free and
informed consent to other agencies.
3.2 Forest management shall not threaten or diminish, either
directly or indirectly, the resources or tenure rights of indigenous
peoples.
3.3 Sites of special cultural, ecological, economic or religious
significance to indigenous peoples shall be clearly identified in
cooperation with such peoples, and recognized and protected by forest
managers.
3.4 Indigenous peoples shall be compensated for the application of
their traditional knowledge regarding the use of forest species or
management systems in forest operations. This compensation shall be
formally agreed upon with their free and informed consent before forest
operations commence.
Principle 4: Community Relations and Workers' Rights
Forest management operations shall maintain or enhance the long-
term social and economic well-being of forest workers and local
communities.
Criteria
4.1 The communities within, or adjacent to, the forest management
area should be given opportunities for employment, training, and other
services.
4.2 Forest management should meet or exceed all applicable laws
and/or regulations covering health and safety of employees and their
families.
4.3 The rights of workers to organize and voluntarily negotiate
with their employers shall be guaranteed as outlined in Conventions 87
and 98 of the International Labour Organisation (ILO).
4.4 Management planning and operations shall incorporate the
results of evaluations of social impact. Consultations shall be
maintained with people and groups (both men and women) directly
affected by management operations.
4.5 Appropriate mechanisms shall be employed for resolving
grievances and for providing fair compensation in the case of loss or
damage affecting the legal or customary rights, property, resources, or
livelihoods of local peoples. Measures shall be taken to avoid such
loss or damage.
Principle 5: Benefits from the Forest
Forest management operations shall encourage the efficient use of
the forest's multiple products and services to ensure economic
viability and a wide range of environmental and social benefits.
Criteria
5.1 Forest management should strive toward economic viability,
while taking into account the full environmental, social, and
operational costs of production, and ensuring the investments necessary
to maintain the ecological productivity of the forest.
5.2 Forest management and marketing operations should encourage the
optimal use and local processing of the forest's diversity of products.
5.3 Forest management should minimize waste associated with
harvesting and on-site processing operations and avoid damage to other
forest resources.
5.4 Forest management should strive to strengthen and diversify the
local economy, avoiding dependence on a single forest product.
5.5 Forest management operations shall recognize, maintain, and,
where appropriate, enhance the value of forest services and resources
such as watersheds and fisheries.
5.6 The rate of harvest of forest products shall not exceed levels
which can be permanently sustained.
Principle 6: Environmental Impact
Forest management shall conserve biological diversity and its
associated values, water resources, soils, and unique and fragile
ecosystems and landscapes, and, by so doing, maintain the ecological
functions and the integrity of the forest.
Criteria
6.1 Assessment of environmental impacts shall be completed--
appropriate to the scale, intensity of forest management and the
uniqueness of the affected resources--and adequately integrated into
management systems. Assessments shall include landscape level
considerations as well as the impacts of on-site processing facilities.
Environmental impacts shall be assessed prior to commencement of site-
disturbing operations.
6.2 Safeguards shall exist which protect rare, threatened and
endangered species and their habitats (e.g., nesting and feeding
areas). Conservation zones and protection areas shall be established,
appropriate to the scale and intensity of forest management and the
uniqueness of the affected resources. Inappropriate hunting, fishing,
trapping and collecting shall be controlled.
6.3 Ecological functions and values shall be maintained intact,
enhanced, or restored, including: a) Forest regeneration and
succession. b) Genetic, species, and ecosystem diversity. c) Natural
cycles that affect the productivity of the forest ecosystem.
6.4 Representative samples of existing ecosystems within the
landscape shall be protected in their natural state and recorded on
maps, appropriate to the scale and intensity of operations and the
uniqueness of the affected resources.
6.5 Written guidelines shall be prepared and implemented to:
control erosion; minimize forest damage during harvesting, road
construction, and all other mechanical disturbances; and protect water
resources.
6.6 Management systems shall promote the development and adoption
of environmentally friendly non-chemical methods of pest management and
strive to avoid the use of chemical pesticides. World Health
Organization Type 1A and 1B and chlorinated hydrocarbon pesticides;
pesticides that are persistent, toxic or whose derivatives remain
biologically active and accumulate in the food chain beyond their
intended use; as well as any pesticides banned by international
agreement, shall be prohibited. If chemicals are used, proper equipment
and training shall be provided to minimize health and environmental
risks.
6.7 Chemicals, containers, liquid and solid non-organic wastes
including fuel and oil shall be disposed of in an environmentally
appropriate manner at off-site locations.
6.8 Use of biological control agents shall be documented,
minimized, monitored and strictly controlled in accordance with
national laws and internationally accepted scientific protocols. Use of
genetically modified organisms shall be prohibited.
6.9 The use of exotic species shall be carefully controlled and
actively monitored to avoid adverse ecological impacts.
6.10 Forest conversion to plantations or non-forest land uses shall
not occur, except in circumstances where conversion: a) entails a very
limited portion of the forest management unit; and b) does not occur on
high conservation value forest areas; and c) will enable clear,
substantial, additional, secure, long term conservation benefits across
the forest management unit.
Principle 7: Management Plan
A management plan--appropriate to the scale and intensity of the
operations--shall be written, implemented, and kept up to date. The
long term objectives of management, and the means of achieving them,
shall be clearly stated.
Criteria
7.1 The management plan and supporting documents shall provide: a)
Management objectives. b) Description of the forest resources to be
managed, environmental limitations, land use and ownership status,
socio-economic conditions, and a profile of adjacent lands. c)
Description of silvicultural and/or other management system, based on
the ecology of the forest in question and information gathered through
resource inventories. d) Rationale for rate of annual harvest and
species selection. e) Provisions for monitoring of forest growth and
dynamics. f) Environmental safeguards based on environmental
assessments. g) Plans for the identification and protection of rare,
threatened and endangered species. h) Maps describing the forest
resource base including protected areas, planned management activities
and land ownership. i) Description and justification of harvesting
techniques and equipment to be used.
7.2 The management plan shall be periodically revised to
incorporate the results of monitoring or new scientific and technical
information, as well as to respond to changing environmental, social
and economic circumstances.
7.3 Forest workers shall receive adequate training and supervision
to ensure proper implementation of the management plan.
7.4 While respecting the confidentiality of information, forest
managers shall make publicly available a summary of the primary
elements of the management plan, including those listed in Criterion
7.1.
Principle 8: Monitoring and Assessment
Monitoring shall be conducted--appropriate to the scale and
intensity of forest management--to assess the condition of the forest,
yields of forest products, chain of custody, management activities and
their social and environmental impacts.
Criteria
8.1 The frequency and intensity of monitoring should be determined
by the scale and intensity of forest management operations as well as
the relative complexity and fragility of the affected environment.
Monitoring procedures should be consistent and replicable over time to
allow comparison of results and assessment of change.
8.2 Forest management should include the research and data
collection needed to monitor, at a minimum, the following indicators:
a) Yield of all forest products harvested. b) Growth rates,
regeneration and condition of the forest. c) Composition and observed
changes in the flora and fauna. d) Environmental and social impacts of
harvesting and other operations. e) Costs, productivity, and efficiency
of forest management.
8.3 Documentation shall be provided by the forest manager to enable
monitoring and certifying organizations to trace each forest product
from its origin, a process known as the ``chain of custody.''
8.4 The results of monitoring shall be incorporated into the
implementation and revision of the management plan.
8.5 While respecting the confidentiality of information, forest
managers shall make publicly available a summary of the results of
monitoring indicators, including those listed in Criterion 8.2.
Principle 9: Maintenance of High Conservation Value Forests
Management activities in high conservation value forests shall
maintain or enhance the attributes which define such forests. Decisions
regarding high conservation value forests shall always be considered in
the context of a precautionary approach.
Criteria
9.1 Assessment to determine the presence of the attributes
consistent with High Conservation Value Forests will be completed,
appropriate to scale and intensity of forest management.
9.2 The consultative portion of the certification process must
place emphasis on the identified conservation attributes, and options
for the maintenance thereof.
9.3 The management plan shall include and implement specific
measures that ensure the maintenance and/or enhancement of the
applicable conservation attributes consistent with the precautionary
approach. These measures shall be specifically included in the publicly
available management plan summary.
9.4 Annual monitoring shall be conducted to assess the
effectiveness of the measures employed to maintain or enhance the
applicable conservation attributes.
Principle 10: Plantations
Plantations shall be planned and managed in accordance with
Principles and Criteria 1--9, and Principle 10 and its Criteria. While
plantations can provide an array of social and economic benefits, and
can contribute to satisfying the world's needs for forest products,
they should complement the management of, reduce pressures on, and
promote the restoration and conservation of natural forests.
Criteria
10.1 The management objectives of the plantation, including natural
forest conservation and restoration objectives, shall be explicitly
stated in the management plan, and clearly demonstrated in the
implementation of the plan.
10.2 The design and layout of plantations should promote the
protection, restoration and conservation of natural forests, and not
increase pressures on natural forests. Wildlife corridors, streamside
zones and a mosaic of stands of different ages and rotation periods,
shall be used in the layout of the plantation, consistent with the
scale of the operation. The scale and layout of plantation blocks shall
be consistent with the patterns of forest stands found within the
natural landscape.
10.3 Diversity in the composition of plantations is preferred, so
as to enhance economic, ecological and social stability. Such diversity
may include the size and spatial distribution of management units
within the landscape, number and genetic composition of species, age
classes and structures.
10.4 The selection of species for planting shall be based on their
overall suitability for the site and their appropriateness to the
management objectives. In order to enhance the conservation of
biological diversity, native species are preferred over exotic species
in the establishment of plantations and the restoration of degraded
ecosystems. Exotic species, which shall be used only when their
performance is greater than that of native species, shall be carefully
monitored to detect unusual mortality, disease, or insect outbreaks and
adverse ecological impacts.
10.5 A proportion of the overall forest management area,
appropriate to the scale of the plantation and to be determined in
regional standards, shall be managed so as to restore the site to a
natural forest cover.
10.6 Measures shall be taken to maintain or improve soil structure,
fertility, and biological activity. The techniques and rate of
harvesting, road and trail construction and maintenance, and the choice
of species shall not result in long term soil degradation or adverse
impacts on water quality, quantity or substantial deviation from stream
course drainage patterns.
10.7 Measures shall be taken to prevent and minimize outbreaks of
pests, diseases, fire and invasive plant introductions. Integrated pest
management shall form an essential part of the management plan, with
primary reliance on prevention and biological control methods rather
than chemical pesticides and fertilizers. Plantation management should
make every effort to move away from chemical pesticides and
fertilizers, including their use in nurseries. The use of chemicals is
also covered in Criteria 6.6 and 6.7.
10.8 Appropriate to the scale and diversity of the operation,
monitoring of plantations shall include regular assessment of potential
on-site and off-site ecological and social impacts, (e.g. natural
regeneration, effects on water resources and soil fertility, and
impacts on local welfare and social well-being), in addition to those
elements addressed in principles 8, 6 and 4. No species should be
planted on a large scale until local trials and/or experience have
shown that they are ecologically well-adapted to the site, are not
invasive, and do not have significant negative ecological impacts on
other ecosystems. Special attention will be paid to social issues of
land acquisition for plantations, especially the protection of local
rights of ownership, use or access.
10.9 Plantations established in areas converted from natural
forests after November 1994 normally shall not qualify for
certification. Certification may be allowed in circumstances where
sufficient evidence is submitted to the certification body that the
manager/owner is not responsible directly or indirectly of such
conversion.
Senator Wyden. Very good. Thanks, thanks to all of you.
This has been very helpful. Let's take a minute or two and talk
about where forestry is going in the State of Oregon, and then
how hardwood plywood fits into it.
I spend a lot of time in Washington, DC, trying to point
out to people in the U.S. Senate that the Federal Government
owns most of our land. Essentially for 100 years now, we would
get money for essential services through timber receipts. We
have a cut, we get money for the receipts, we get those funds
for schools and roads and we go about our business, that was
how we paid for central services. It was different than the way
it was done throughout the country.
When environmental values changed, that money dried up. I
was able to get a law passed in 2000 to essentially pick up the
slack. Once again, we're in the same boat. It seems to me,
Oregon is really at a crossroads.
I'm going to push and push and push until we get another
multi-year reauthorization to county payments for legislation.
We would have gotten 81 percent, about $1.1 billion, had what I
got passed through the Senate become law. So now when I go back
next week, we're going to pick up that fight again and stay
with it until we get it done.
But it's very clear to me that we have to find other
economic opportunities for resource dependent communities. Once
I get the county payments legislation done, I'm going to go on
to a thinning program, so we can get some of the dead material
off the forest floor and get it to the mills. Bring together
people like yourselves in industry and scientists and labor
folks, environmentalists and do something that promotes the
health of the forest. We're going to promote biomass programs
because that's going to help clean energy, again, something
that could put people to work.
But it seems to me what you're giving us today is an
opportunity for a third leg, and that is additional
opportunities in manufacturing that are value added. In other
words, they take the resource, you add value to it, and it's an
opportunity for us to have markets here and around the world in
hardwood plywood. My sense is that unless we get fair rules and
fair treatment with respect to the Chinese, we'll lose the very
kind of value added manufacturing industry that we need as we
try to make this transition that the Federal Government is
pushing us toward in this county payments debate.
Do you all share that view? Why don't we just go right down
the row, particularly for the--Mr. Daly, we'll spare you and
just get the Oregonians into this debate.
Mr. Gonyea, Mr. Guay, Mr. Chamberlain, isn't this exactly
the kind of industry we ought to be promoting as the Federal
Government says look, you're not going to get all the money
that you originally had in the county payments?
Mr. Gonyea. Absolutely, Senator. Many of those, that type
jobs are represented here today. We'd be a sad community if we
didn't offer employment and opportunity to make products like
we do here in the Southern Rogue Valley.
Senator, part of the solution has to be at the tenable
Federal programs. It seems to me that at minimum level we
should strive for and work together would be the Northwest
Plan. We've talked about it for 14 years and we can't even get
close. At 1.1 billion feet is not unattainable. It should be a
fair minimum and environmentalists should be working with us to
achieve that for forest health, for jobs in our community. It
seems to me that needs to be part of the solution going
forward.
Mr. Guay. We would absolutely agree with Joe. If we could
get back to the sustainable cut that was allowed, it would
lower the cost of wood for us.
Senator Wyden. We'll make the stool four legs.
Mr. Gonyea. Exactly. But I would, actually, in terms of the
value added jobs, I would take it a step further, because I
think it's either a far more bigger issue than just hardwood
plywood. Plywood is an intermediate product. It's made into
something else. When you stop making plywood in North America,
you stop making furniture in North America. When you stop
making hardwood planks in North America, you stop making
engineered flooring in North America.
So, I just happened to be in Bend this past weekend and one
of the articles in the Bend Bulletin, the local newspaper, was
another small custom furniture manufacturer had closed that
weekend. He hadn't--he wasn't small. He had 40 or 50 employees.
His reason was he simply can't compete with offshore
manufacturers. A big reason why he can't compete with those
offshore manufacturers is because we cannot produce
competitively priced panel 120 miles south of Klamath Falls to
supply him. That is a lot about the illegal activities we've
been talking about.
So, I think when you look forward at Oregon or our entire
country, the absence of a competitive intermedial product with
panels has put furniture manufacturers and other sorts of wood
panel users offshore, compounding the value added job situation
from that.
Senator Wyden. Important point. Mr. Chamberlain.
Mr. Chamberlain. Senator Wyden, I couldn't agree with you
more. You know, manufacturing jobs are so important to our
community because they are an economic driver. When we lose a
manufacturing job, it's like dropping a pebble into a brook or
into a lake, rather. It has a ripple effect. It washes across
the supplier, it washes across those folks employed by our
school systems, public employees, folks in the building trades,
everybody loses when we lose jobs like this.
The other way I look at this is, our State can't be driven
by high tech alone. High tech is pretty much in the Portland
Metro area. We have to think of Oregon as Oregon, not Portland
center. These are rural Oregon's economic drivers. They are so
important to the State. To lose these type of manufacturing
jobs, that provides opportunity to working families across the
State, is absolutely going in the wrong direction.
Senator Wyden. Of course, it's of benefit to the whole
State. What happens in rural Oregon creates jobs from the
forest all the way to the boardrooms in downtown Portland.
There's no question that there's a rural/urban connection that
eats up what you described.
I'm going to get into some of the nuts and bolts issues of
this question of how the Chinese engage in these practices, but
I wanted to spend a minute on that first question because I
think these debates always kind of strike people as ``well, why
are we bringing that up right now?'' I want people to know that
given the challenges we're going to have with county payments,
and I'm going to get that law renewed, I'm going to get it
renewed for a multi-year basis and multi-year program. The
Congressmen from this area, on the other side of the aisle, has
done a lot of good work in assisting me on this. But we're also
going to have to find good paying additional industries in
fields to strengthen the Oregon economy.
Frankly, I'm going to use your testimony. If somebody is
trying to ratchet down our county payments program, I'm going
to say you'd better help us in terms of these other areas, the
question of the Northwest Forest Plan, biomass programs,
thinning programs, and yes, this question of fair treatment in
the trade area with respect to China. So you have put it in the
right kind of context. I'm going to get into this, some of the
nuts and bolts question of how these unfair practices go
forward.
Tell me a little bit, for the record, what the HP-1
standard is. Because I understand this is one of the areas in
which the Chinese hardwood people have engaged in questionable
activity. Can you all enlighten me on that? I understand that
you have heard that Chinese hardwood plywood manufacturers
improperly labeling their product, as meeting this ANSI HP-1
standard. Is that right? I'm sorry, HPDA. I read an initial
wrong. HPVA, yes.
Mr. Guay. Definitely. We see that with plants that work
over there, products are being labeled with HPVA grade levels
that are not correct. It's a wide range.
Senator Wyden. What does this mean for consumer?
Mr. Guay. What it means to a consumer is they think, put
most basically, they are buying a beautiful piece of plywood
and they are not. They are buying a piece of plywood with
certain structural characteristics, and they are not.
Senator Wyden. Are there any dangers to people or----
Mr. Guay. It isn't in that standard as probably the glues
that are used. None of us import what we have to call dangerous
formaldehyde levels in the United States, consciously. But
China sends dangerous formaldehyde levels into the United
States. We find that when the customer opens the container.
That's quite dangerous.
Senator Wyden. So China is sending products with dangerous
formaldehydes in them? What's happening to those products now?
They just go out across the land?
Mr. Guay. You know, unless it's caught in Customs, which is
a very low likelihood because of the volume versus the
resources, it's in your kitchen cabinet.
Senator Wyden. Mr. Gonyea, you've got something, a
sustainable forest initiative certificate process, which
strikes me as something where American industry is trying to go
the extra mile to show that its products are of high quality.
How does that work?
Mr. Gonyea. Senator, whether SFI, which we chose to kind of
follow in our company, or FSC, what we can say is we initiated
a third party certification of our forest lands, and quite a
process to go through and audit on a regular basis to make sure
that we're complying with the standards as set forth, and
either as a buyer, FSC, and ensure that we're practicing
sustainable forestry, which we are proud to do today.
Senator Wyden. But yet I gather some of the people we're
dealing with around the world are not exactly tripping over
themselves to meet the same standards?
Mr. Gonyea. Besides SFI, obviously we comply to rigorous
standards, both State and Federal, Senator. What we've done is
take good forest practices here in this country. With foreign
products, Chinese, we've exported demand to countries that have
virtually no forest practices. I say let's bring back good
forest practices and use our forest as intended.
Senator Wyden. Now, both of you also, as I understood it,
given the crunch you're in, have to import some Chinese
hardwood plywood as well. So, you have to bring some in. But
you're also trying to make sure that the public is aware that
there needs to be better protection in this area. Tell me a
little bit about how you deal with the kind of meshing of these
two concerns, Mr. Gonyea and Mr. Guay.
Mr. Gonyea. Senator, as I referenced in, yes, we do import
products, about 12 percent of our total annual sales are
imported products from around the globe. Yes, a small portion
of that would be from China. It may be ironic to note that in
not many years past, we exported products around the globe at a
greater percentage of our overall sales.
Today, we import products because, not because we choose to
do so, it's because our customers, the consumers have dictated
their desires for price point advantageous products from around
the globe. We would like to change those habits. We would like
the consumers in our country to buy American made products that
are sustainably produced and that we can ensure that they are
sustainably produced because we comply with SFI or FSC.
Senator Wyden. Mr. Guay.
Mr. Guay. I think my answer is very similar to Joe's. We
got into the import business by following our customers there,
not by leading our customers to China. A big part of our
customer base is very large original equipment manufacturers,
OEM, furniture manufacturers, cabinet manufacturers that have
moved their factories to China. They became used to sourcing
from there and ultimately decided to use Chinese products here
in the United States, the one that's left open. So they were
going to import with or without us.
Our thought was by being the importer, we could make a
profit for our shareholders, but perhaps more importantly, stay
in contact with those customers because they were going to
import, with or without us. If we didn't stay in contact with
them, when initiatives like this took place, we would have no
entree to say here's what's happening and here's what can be
done better.
Senator Wyden. I would gather that if you didn't have even
a small amount of imports, folks in Oregon might not even have
all the jobs they've got; is that right?
Mr. Gonyea. We think that imports do complement our product
line and we hope to sell more domestic produced products with a
smaller percentage. So, in that regard, I think that would be
correct, Senator.
Senator Wyden. You both, all three of you from Oregon, are
in favor of new rules regulating the import of timber that
occur illegally?
Mr. Gonyea. Absolutely.
Mr. Guay. Absolutely.
Mr. Chamberlain. Yes.
Senator Wyden. Tell me about the situation with Russia.
Now, our understanding is a lot of the illegal timber coming
into China, the manufacturer hardwood plywood comes in from
Russia. You indicated that you were doing business in Russia.
What has that experience been like and what is the connection,
for the record, between China and Russia?
Mr. Guay. When I say we import, the largest importer of
Russian birch, the Russian birch we're bringing in is coming
from the western side of Russia where we know it is legally
logged. When you are talking about the logs going into China,
they are coming, as Ned said, from Siberia and eastern Russia
where, you know, frankly, I don't know that there is legal
logging up there. It's so rampant and uncontrolled.
Relationship is really pretty simple. As Ned mentioned, in
2000 China began limiting their own timber harvest. During that
same cycle, the numbers that Joe and I talked about saw an
astronomical increase in consumption of wood in China for re-
export to the United States. A vast majority of that is Russian
birch. It's the cheapest wood in the world and it's adjacent to
the plywood manufacturing centers of China. So it became the
obvious source of wood, but it is an utterly uncontrolled
environment.
Senator Wyden. You describe the United States as being a
dumping ground, Mr. Guay, that's pretty strong language.
Somebody calls our country a dumping ground for unsafe wood,
what do you mean by that?
Mr. Guay. We are the world's largest, second largest
consumer of wood. Almost all of that wood comes from sources
offshore. Most of that is southeast Asia, Russia, and Africa.
The logic there is simply those three parts of our globe have
no control over logging. We are the second largest consumer of
that wood on the planet. The E.U. being one of the other
largest consumer, actually has regulations. There are entire
species that are harvested in Russia, or excuse me, in Africa,
that you cannot import to Europe, period. You can import it
here. We lack control as a country.
Senator Wyden. Mr. Chamberlain, a question for you, with
respect to the value-added issue. I think one of the biggest
challenges for our congressional delegation is a sensible trade
policy. Mr. Gonyea often talked about free and fair trade. I
often describe it as a need for smart trade, where you protect
your interests, you have the freest possible market, but you're
also a smart trading partner in the world.
One of the areas that I think there's the biggest consensus
on, as it relates to the foundation of a new trade policy, is
that we do everything we can to get a level playing field for
value-added products, and the kind of products that we're
talking about here today. Do you think that's the beginning of
a new consensus between labor and business on this trade issue?
Mr. Chamberlain. I hope so. I hope so. The AFL-CIO National
when I was in contact with them yesterday, prior to this
meeting about trade, is they feel that they have made some
progress on trade agreements with the International Laboring
Organization Standards being adopted in two trade agreements.
But there has to be a consensus on maintaining, maintaining
manufacturing jobs in this country and creating a level playing
field for workers and business if it weren't in these trade
agreements. I think it's essential.
Senator Wyden. Mr. Daly, a couple questions for you. What
does it mean when you say that the Chinese are misappropriating
our logos? In other words, Mr. Gonyea, Mr. Guay are talking
about this certification process, I guess the technical name
for it is the FSC certification. So, we've got, our companies
go through all this trouble to get everything certified and
adhere to high standards. Then you say that the Chinese are
misappropriating our logos. What does that mean? What are the
real world implications of that?
Mr. Daly. It's very similar to what Joe and Phill said
about the HPVA standard, or very similar to what you see with
the Underwriters Laboratory standard on our electronic
products. It is just used by a number of companies
inappropriately without authorization to try to access these
growing markets in the United States and Europe.
Clearly, we're having an impact. People feel like they have
got to take these initiatives in order to access those markets.
But it's, it's creating a lot of problems in terms of the
legitimacy of the label.
So to date we haven't had any major problems. We've been
able to address all the issues. We found the chain-of- custody
seems to work very well. But our assumption is that this will
be continuing to be a problem and something that we have to
monitor.
We appreciate the work of the organization, a company like
Columbia Forest Products, who probably, like a few other
companies, spend a lot of time in China, make sure that what
they are buying is legal and from sustainable sources. With
partners like that, I think we can address this issue.
Senator Wyden. How is Chinese law enforcement been in this
issue? Are they being helpful?
Mr. Daly. Well, to date they have not had a very big
impact. I think that----
Senator Wyden. Is it because they are not trying or----
Mr. Daly. Not clear, but there's not been a lot of effort.
The problem seems to be overwhelming in a lot of ways. And the
imports from the far east of Russia, there is no oversight, no
control whatsoever. Nothing at the border, no documentation.
Clearly they could step up efforts.
Senator Wyden. When you say the problem is overwhelming to
Chinese law enforcement, that can't make people in Oregon, the
people here feel particularly good. In other words, it suggests
to me that there's a problem now and it's going to get bigger,
unless we take steps to turn it around; is that right?
Mr. Daly. Definitely. Certainly in the Russian far east,
and the illegal, like in southeast Asia, more often you're
seeing mislabeled and misrepresented species, poor work, just
logs coming in through ships in fairly remote ports where
there's just either not a lot of oversight, where all the
oversight is corrupt.
Senator Wyden. I think that ought to be a wake-up call for
everybody in the U.S. Congress and a good one to put this panel
on.
We always like to give our witnesses the last word. Anybody
on the panel want to add anything, or we'll excuse you at this
time?
Mr. Gonyea. Senator, I just add thank you. I thank you for
being an advocate for free, fair and hopefully smart trade.
Let's keep moving forward.
Senator Wyden. We are on it.
Mr. Guay. I add one comment. I think, Senator, that you're
absolutely right. We are at a cusp of change in our industry
right now. First quarter of this year saw 6 percent increase in
volume at 33 percent increase in value. Chinese are now
bringing in a high valued, especially designed products that
are now what remains of our bread and butter in this industry.
If we lose those specialty products, we're going to lose this
industry, period.
I thank you for the opportunity to be here, and most
especially for you and your staff the efforts that you're doing
here through 332, I think will have an enormous impact.
Senator Wyden. Thank you all. Mr. Chamberlain, do you want
to add anything?
Mr. Chamberlain. Yes, I do.
Senator Wyden. Good.
Mr. Chamberlain. I really want to thank you for chairing.
Oftentimes I have to fight to be on a panel. It's rare that I'm
asked to join a panel. It's commendable if you want a working
family's perspective into this problem because it is a working
family problem. Thank you.
Senator Wyden. You and working families are what it's all
about. I particularly appreciate the fact that there's an
effort, a labor business effort to reach out in this State. Mr.
Daly, you'll always be welcome here in the Pacific Northwest.
Thank you for coming.
Mr. Daly. Thank you very much.
Senator Wyden. All right. You're excused.
Our next panel can come forward. Ms. Vera Adams, Executive
Director of Trade and Enforcement Facilitation, United States
Department of Homeland Security, Customs Bureau, and Mr. Tim
Wineland, Senior Director of China Affairs, Office of China
Affairs, U.S. Trade Representative.
Let us begin with you, Ms. Adams, Mr. Wineland, both of
you, we thank you very much for coming. I also want to begin
this panel, express my appreciation to the Trade
Representatives Office. I have been meeting with the Trade
Representative, Ambassador Schwab. At our first meeting I urged
the ambassador to send a letter to the Chinese raising these
hardwood plywood issues to determine whether the subsidies
could be pursued in a World Trade Organization case.
After that meeting, U.S. Trade Representatives did file
with the World Trade Organization subsidy cases, specifically
targeted subsidy benefiting the Chinese hardwood plywood
industry. We've had a number of follow-up meetings. Ambassador
Schwab has been meeting with a number of our Senate Finance
Committee on which I serve. So please express my appreciation
to the Ambassador. It's an instance where you all really
followed up and we appreciate and we welcome both of you.
Ms. Adams, we're glad that you all are involved in this as
well, and pleased to make a part of the hearing record, your
full remarks. If you can summarize your major concerns, that
would be good.
STATEMENT OF VERA ADAMS, EXECUTIVE DIRECTOR, COMMERCIAL
TARGETING AND ENFORCEMENT, OFFICE OF INTERNATIONAL TRADE,
DEPARTMENT OF HOMELAND SECURITY, CUSTOMS AND BORDER PROTECTION
Ms. Adams. Thank you. Good afternoon, Chairman Wyden. It's
a privilege and an honor to appear before you today to discuss
importing Chinese plywood. We appreciate the support that
Congress provides to the Department of Homeland Security as
U.S. Customs and Border Protection performs its important
security and trade enforcement mission, while simultaneously
facilitating the flow of legitimate trade and travel that is so
important to our nation's economy. As the guardian of our
Nation's border, CBP recognizes the importance of enforcing
trade laws that help protect the forest product industry and
the communities that depend on it.
I want to first express my gratitude to you and the
committee and to the Hardwood Plywood Veneer Association, the
Hardwood Federation and other associations that have played a
role in bringing to our attention certain enforcement concerns
that pertain to import of plywood into the United States.
As the volume of trade increases, information from domestic
associations place an ever more important role in assisting CBP
in identifying illicit activity to ensure successful
enforcement of our Nation's trade laws, CBP has developed
`Priority Trade Issues' or `PTI's' to help facilitate
legitimate trade while protecting the American economy from
unfair trade practices and illicit commercial enterprises. The
PTI's are specific commodities or other trade topics upon which
CBP has decided to focus its resources. These PTI's are:
Antidumping and Countervailing Duty, Intellectual Property
Rights, Textiles and Wearing Apparel, Revenue, Agriculture, and
Penalties. The concerns that have been raised with respect to
plywood importations into the United States, cross over many of
these PTI's.
As you are aware, CBP has been examining certain issues
related to plywood importations since you first brought this to
our attention in November 2006. As was stated in your letter to
Commissioner Basham, it is alleged that the plywood is being
misclassified as duty free under the tariff for birch-faced
plywood instead of, for example, oak-faced plywood with an 8
percent duty rate.
CBP is quite familiar with the subject of tariff
misclassification and we have initiated other enforcement
actions with similar types of merchandise. For instance, in
August 2005, CBP worked with the Hardwood Federation to
investigate misclassified imports of hardwood flooring from
China, Brazil, and Canada. CBP conducted a national operation
targeting all imports entering under specific tariff
classifications from the three target countries and found
widespread misclassification. As of today's date, CBP has
discovered more than 120 importers misclassifying the hardwood
flooring, using a duty free or lower duty rate provision than
is appropriate. Approximately $30 million in potential lost
revenue has been identified so far. We are entering the penalty
phase for those violations.
Regarding plywood, in recent months, CBP has conducted
several meetings with industry associations and representatives
from the Hardwood Plywood & Veneer Association, the Hardwood
Federation, and the Industry Trade Advisory Committee on Forest
Products to gather information to assist us in our enforcement
actions. Based on the allegations raised in your letter to CBP
and upon information provided by these industry
representatives, CBP initiated a nationwide operation to verify
the allegation of misclassification and misdescription. We
learned from the hardwood flooring operation that
misclassification and misdescription in this industry is
rampant.
Senator Wyden. I want to make sure I'm on that. So, you all
have begun the process. You've already made some official
assessments of it. You would say misclassification and the
concerns that the industry, those practices are rampant, is
that how you characterize it?
Ms. Adams. According to many of our domestic industry
partners, yeah, they believe and we believe that in the end,
the outcome will be determined there is also rampant
misclassification coming in.
Senator Wyden. That's, that's your assessment, that's the
government's assessment, your Agency's assessment today?
Ms. Adams. We believe that there is going to be significant
amount of misclassification. We have to wait for the end
results, power enforcement operation in our laboratory to----
Senator Wyden. It's just I was interested and I've been
less clear about where we were with Customs. I wanted to get a
sense on the record of what you all have done and picked up at
this point, and that's very helpful.
Ms. Adams. OK. Shall I?
Senator Wyden. Yes, please.
Ms. Adams. A significant number of shipments have already
been targeted for intensive examination. As part of the
operation, sections of plywood are cut from the arriving
shipments and sent to our Laboratory and Scientific Services
Division for analysis to determine whether the plywood face
consists of ply birch or is composed of some other species,
which would cause it to be in a different classification. Once
the lab analysis is complete, our import specialists at ports
of entry will determine the proper tariff classification and
the amount of duty owed. At this point in time, our lab
analyses are ongoing and the results of our enforcement actions
are pending.
CBP recognizes that finding violations is only part of an
enforcement picture. Follow-up to ensure continued compliance
is essential to any enforcement action and is standard
practice. Through data and trend analysis, document reviews,
and examinations of merchandise, CBP continues to monitor
hardwood flooring shipments and will monitor plywood imports
after this current operation is complete and the results are
in.
Mr. Chairman and members present, as CBP moves forward in
addressing the subject of misclassified plywood imports, we
look forward to working in partnership with Congress and
industry stakeholders to build on our accomplishments to date
and focus on achieving the desired results. I thank you for
this opportunity to testify.
[The prepared statement of Ms. Adams follows:]
Prepared Statement of Vera Adams, Executive Director, Commercial
Targeting and Enforcement, Office of International Trade, Department of
Homeland Security, Customs and Border Protection
Good Afternoon Chairman Wyden, and members of the committee, it is
a privilege and an honor to appear before you today to discuss imported
Chinese plywood. We appreciate the support that Congress provides to
the Department of Homeland Security as U.S. Customs and Border
Protection (CBP) performs its important security and trade enforcement
mission while simultaneously facilitating the flow of legitimate trade
and travel that is so important to our nation's economy. As the
guardian of our nation's borders, CBP recognizes the importance of
enforcing trade laws that help protect the forest product industry and
the communities that depend on it.
I want to first express my gratitude to you and the committee and
to the Hardwood Plywood & Veneer Association, the Hardwood Federation
and other associations that have played a role in bringing to our
attention certain enforcement concerns that pertain to the import of
plywood into the United States. As the volume of trade increases,
information from domestic associations plays an ever more important
role in assisting CBP in identifying illicit activity.
background
To ensure successful enforcement of our nation's trade laws, CBP
has developed `Priority Trade Issues' or `PTI's' to help facilitate
legitimate trade while protecting the American economy from unfair
trade practices and illicit commercial enterprises. The PTI's are
specific commodities or other trade topics upon which CBP has decided
to focus its resources. These PTI's are: Antidumping and Countervailing
Duty, Intellectual Property Rights, Textiles and Wearing Apparel,
Revenue, Agriculture, and Penalties. The concerns that have been raised
with respect to plywood importations into the United States, which are
within the authority of CBP to address, cross over many of the PTI's.
As you are aware, CBP has been examining certain issues related to
plywood importations since you first brought this to our attention in
November of 2006. As was stated in your letter to Commissioner Basham,
it is alleged that the plywood is being misclassified as duty free
under the tariff for birch-faced plywood instead of, for example, oak-
faced plywood with an 8% duty rate.
CBP is quite familiar with the subject of tariff misclassification
and we have initiated other enforcement actions with similar types of
merchandise. For instance, in August of 2005, CBP worked with the
Hardwood Federation to investigate misclassified imports of hardwood
flooring from China, Brazil, and Canada. CBP conducted a national
operation targeting all imports entering under specific tariff
classifications from the three target countries and found widespread
misclassification. As of today's date, CBP has discovered more than 120
importers misclassifying the hardwood flooring, using a duty free or
lower duty rate provision. Approximately $30 million in potential lost
revenue has been identified.
current enforcement
Regarding plywood, in recent months, CBP has conducted several
meetings with industry associations and representatives such as the
Hardwood Plywood & Veneer Association, the Hardwood Federation, and the
Industry Trade Advisory Committee on Forest Products (ITAC 7) to gather
information to assist us in our enforcement actions. Based on the
allegations raised in your letter to CBP and upon information provided
by these industry representatives, CBP initiated a nationwide operation
to verify the allegation of misclassification and misdescription. We
learned from the hardwood flooring operation that misclassification and
misdescription in this industry is rampant. We are able to use what we
learned in hardwood flooring and apply it to our current operation.
A significant number of shipments have already been targeted for
intensive examination. As part of the operation, sections of plywood
are cut from the arriving shipments and sent to CBP's Laboratory and
Scientific Services (LSS) Division for analysis to determine whether
the plywood face consists of ply birch or other species. Once the lab
analysis is complete, our import specialists at ports of entry will
determine the proper tariff classification and amount of duty owed. At
this point in time our lab analyses are ongoing and the results of our
enforcement actions are pending.
CBP recognizes that finding violations is only part of an
enforcement picture. Follow up to ensure continued compliance is
essential to any enforcement action and is standard practice. Through
data and trend analysis, document reviews and examinations of
merchandise, CBP continues to monitor hardwood flooring shipments and
will monitor plywood imports after this current operation is complete.
conclusion
Mr. Chairman and members of the committee, as CBP moves forward in
addressing the subject of misclassified plywood imports, we look
forward to working in partnership with the Congress and industry
stakeholders to build on our accomplishments to date and focus on
achieving the desired results. I thank you for this opportunity to
testify.
I will be happy to answer any of your questions.
Senator Wyden. Very good.
Mr. Wineland.
STATEMENT OF TIM WINELAND, SENIOR DIRECTOR, OFFICE OF CHINA
AFFAIRS, OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Mr. Wineland. Thank you, Chairman Wyden. I am pleased to
participate in today's hearing. The office of U.S. Trade
Representative is responsible for the developing and
coordinating U.S. international trade policy and working to
secure a level playing field for American workers, farmers, and
businesses in overseas markets, as well as in the U.S. market.
USTR oversees negotiations with other countries on
international trade matters. We seek to resolve trade problems
with other countries, plus giving a brief overview of USTR's
engagement with China, touching on some of the tools that we
use to address key trade concerns, including hardwood plywood
sector.
Since joining the WTO 5 years ago, China has taken
significant steps to bring its trading system into basic WTO
compliance. These steps have helped to deepen and strengthen
economic reforms that China had begun more than two decades
ago. U.S. businesses, workers, farmers, service, providers and
consumers have all benefited significantly from these steps.
Last year, U.S. goods exports to China climbed from 32
percent, while China's exports to the United States increased
by 18 percent. Today, China is our fourth largest export
market.
China's record in implementing its WTO obligations is
decidedly mixed. While China has implemented many of its
obligations, but there are a number of areas where it has a
great deal of work to do.
In our engagement with China, we pursue trade problems
through a dual-track approach--bilateral dialog where possible
to try to achieve practical solutions to trade issues, together
with a full willingness to use WTO dispute settlement process
when necessary.
We are committed to seeking some cooperative resolutions
through bilateral dialog with China and we've achieved some
important successes that I have outlined in my written
testimony. Many of those successes were derived through the
Annual U.S.--China Joint Commission on Commerce and Trade or
``JCCT''. The meeting is held annually to resolve a number of
important trade issues in the JCCT.
However, in other areas, we've been unable to resolve
important issues through bilateral dialog. In those cases, we
have turned to formal WTO dispute settlements in five
instances, including cases on China's value-added tax policies,
its policies on imported auto parts, its illegal regime for
protecting intellectual properties, certain barriers to market
access for U.S. copyright-intensive industries. I do mention
several of China's subsidies programs, which do have an impact
on hardwood plywood sector.
I'd like to spend a little more time talking about that,
the issue of subsidies. It is an area of priority concern for
USTR, the Chinese Government's role in directing the Chinese
economy through subsidy and other measures. We are confronting
this serious challenge using both enforcement levers as well as
dialog.
As you mentioned, in February 2007, we initiated WTO
consultations with China over what we contend is China's
persistent use of prohibited subsidies. Basically we believe
that China uses its tax laws and other tools to encourage
exports and to discriminate against imports on a variety of
manufactured goods. The subsidies at issue in this case are
offered across a broad spectrum of industry sectors, including
wood products, steel, information technology, and others.
It's an important case, important because it challenges
policies that are tilting the playing field against our workers
and companies, but most important because it will help impel
China to maintain a process of economic reform and to redirect
its economy toward a model of consumption rather than export
growth.
Victory for the United States in this WTO dispute should
have a positive impact on the hardwood plywood sector. The case
targets a number of very harmful subsidies, including export-
related tax breaks offered to foreign-invested firms in China's
plywood sector and other industry sectors.
While we have filed this WTO case, we continue to engage in
dialog on China on their use of subsidies more broadly.
The hardwood plywood industry and other industries have
expressed to us concerns about the problems that many other
Chinese Government incentives create for them. Supporting
industry's efforts to obtain more information about the various
types of financial support that China provides to its domestic
industries and taking effective action on that information is a
priority for USTR.
Finally, although it does not fall within USTR's purview, I
should note that the Department of Commerce continues to apply
U.S. trade remedy laws to ensure unfair trade practices do not
distort the playing field against U.S. companies.
Turning to other hardwood plywood issues, the
administration has aggressively worked to ensure a level
playing field for U.S. hardwood plywood manufacturers, as well
as the entire forest and paper industry sector. China's
hardwood plywood industry has emerged as a chief competitor to
our industry.
In the forest product sector, the growth in China's wood
processing industry and strong Chinese demand for imported wood
have provided opportunities for U.S. exporters. Our exports of
hardwood lumber have shown strong growth in recent years,
meeting some of China's demand for forest products and raw
materials. At the same time, in some sectors of our forest
industry, like wood panel products and hardwood plywood, we are
aware that Chinese exports of these products to the United
States are climbing.
In late January, as you mentioned after meeting with you,
Ambassador Schwab wrote to Chinese Congressman, Minister Bo
Xilai, specifically on the issue of hardwood plywood. She asked
if we can begin talks to address this issue at a higher level.
A first meeting on the issue of hardwood plywood was held in
February in Beijing. We anticipate continuing a dialog on that
issue.
We have been pressing China to help work with us to stem
the problem of illegal logging timber that may be a source of
raw material for Chinese producers. Specifically, this spring
we asked China to agree to engage in a dialog on illegal
logging effort after hearing about the concerns of industry and
you to explore ways to cooperate through a bilateral agreement.
We are pleased that as of last week's Strategic Economic dialog
held in Washington, DC, Chinese Vice Premier Wu Yi agreed to
our request to establish a cooperative dialog on the issue of
illegal logging with the potential for a bilateral agreement at
some point in the future. In coming weeks and months, we will
open this dialog.
This effort builds on other initiatives we are taking on
illegal logging, including a MOU with Indonesia on illegal
logging and other regional efforts to accommodate Singapore and
Malaysia.
We're also working to address other issues related to
hardwood plywood. For example, we have raised with China the
issue of their border trade policies, where wood and other
products imported from Russia may be coming in without paying
value-added taxes, disadvantaging our hardwood plywood
industry.
Additionally, we continue to press China on the issue of
``reference pricing,'' where Customs authorities in China, in
some cases inappropriately use ``reference pricing'' and not
the actual price of imports when calculating product valuation
at the border, a practice that can in some cases lead to a
higher Chinese tariff than appropriate. We have indicated to
the U.S. hardwood plywood industry, our desire to work together
on this and have sought specific examples, including specific
shipments where reference pricing is being used by Chinese
Customs.
In summary, USTR is committed to ensuring that we are using
the most effective tools at our disposal to pursue an open and
fair trade relationship with China.
Thanks for the opportunity to testify. I'll be happy to
answer questions.
[The prepared statement of Mr. Wineland follows:]
Prepared Statement of Tim Wineland, Senior Director, Office of China
Affairs, Office of the United States Trade Representative
introduction
Chairman Wyden and distinguished members of the Energy and Natural
Resources Subcommittee on Public Lands and Forests, I am pleased to
participate in today's hearing.
I understand that today's hearing is focused principally on issues
related to the impact of Chinese hardwood plywood trade on the National
Forest System and other public lands, and our communities that depend
on them. The Office of the U.S. Trade Representative (USTR) is
responsible for developing and coordinating U.S. international trade
policy. The work of USTR aims at increasing exports by developing and
coordinating U.S. international trade, commodity, and direct investment
policy, and overseeing negotiations with other countries . In working
with other U.S. Government agencies we hope to expand market access for
American goods and services abroad and secure a level playing field for
American workers, farmers and businesses in markets around the world,
including the U.S. market. USTR accordingly oversees negotiations with
other countries on a wide range of international trade matters. In
addition, we seek to resolve trade problems using a wide variety of
tools, including bilateral discussions, negotiations, and formal
dispute settlement proceedings.
To provide more concrete perspective on our work, I will give you a
brief overview of USTR's recent engagement with China, touching on the
mechanisms USTR uses to address key trade concerns including concerns
in the hardwood plywood sector.
key china trade efforts
China's accession to the WTO marked a critical step forward toward
China's integration into the international rules based system. Since
acceding to the WTO five years ago, China has taken significant steps
in an effort to bring its trading system into basic compliance with WTO
rules. These steps have helped to deepen and strengthen economic
reforms that China had begun more than two decades ago. U.S.
businesses, workers, farmers, service providers and consumers have
benefited significantly from these steps and continue to do so as U.S.-
China trade grows. Indeed, last year, U.S. goods exports to China
climbed by 32 percent (while China's exports to the United States
increased by 18 percent). These data suggest that the Chinese market is
becoming more accessible for American companies, and that Chinese
consumers are developing an appetite for America's highly competitive
goods and services. China today has become our fourth largest export
market, and the fastest growing major export market for the United
States in the world. It is helping to support thousands of American
jobs today and will support even more in the future.
Despite this progress, China's record in implementing its WTO
obligations is mixed. While China has fully implemented many of its WTO
obligations, there are a number of areas where it still has work to do,
as it continues to transition from a centrally planned economy toward a
free-market economy governed by rule of law.
In our engagement with China, the United States follows a dual-
track approach to resolving its WTO concerns--bilateral dialogue to try
to achieve practical solutions where possible, together with a full
willingness to use WTO dispute settlement where appropriate to resolve
problems that have evaded resolution through dialogue.
The United States remains committed to seeking cooperative and
pragmatic resolutions through bilateral dialogue with China, and the
United States has achieved some important successes. For example,
through our bilateral dialogues in the past year, primarily conducted
through the U.S.--China Joint Commission on Commerce and Trade or
``JCCT'', China made several commitments related to IPR protection and
enforcement. It also committed to eliminate duplicative testing and
certification requirements applicable to imported medical devices, to
make adjustments to its registered capital requirements for
telecommunications service providers, and to finalize a protocol
allowing the resumption of trade in U.S. beef and beef products. China
also reaffirmed past commitments to technology neutrality for 3G
telecommunications standards and to ensuring that new rules in the
postal area would not negatively affect foreign express couriers. In
addition, China committed to commence, by no later than December 31,
2007, formal negotiations to join the WTO's Government Procurement
Agreement. The United States has been working with China to make sure
that it implements all of these commitments.
However, we have been unable to resolve other important issues
through bilateral discussions, despite extensive effort, and we have
turned to formal WTO dispute settlement in five instances:
--In March 2004, we commenced a WTO dispute against China's
discriminatory value-added tax on integrated circuits. We
were able to work successfully with China to resolve this
issue during the consultation phase, and China repealed the
discriminatory treatment.
--In March 2006, the United States, acting in coordination with the
European Communities and Canada, commenced a WTO dispute
settlement case challenging Chinese discriminatory charges
on imported auto parts. We are now pursuing this case in
front of a WTO arbitral panel.
--In February 2007, the United States, later joined by Mexico,
filed a WTO consultation request in a case challenging
several subsidy programs that appear to be prohibited under
WTO rules, either because they are contingent upon
exportation or contingent upon the use of domestic over
imported goods. The parties held a first round of
consultations in March 2006.
--In April 2007, the United States requested WTO consultations
regarding certain deficiencies in China's legal regime for
protecting and enforcing intellectual property rights
related to copyrights and trademarks that affect a wide
range of products. The problems identified include high
thresholds for criminal prosecution that create a
substantial ``safe harbor'' for wholesalers and retailers
who distribute or sell pirated and counterfeit products in
China. Under WTO rules, formal consultations will take
place in this case before mid-June.
--In April 2007, on the same day as the filing of the IPR case, the
United States requested WTO consultations regarding certain
barriers to market access for U.S. copyright-intensive
industries, including books, music, home videos and movies.
Consultations in this case also are due before mid-June.
USTR provides a detailed discussion of the efforts the United
States has made to address these and other areas of concern, using
bilateral dialogue and WTO dispute settlement, in the ``2006 USTR
Report to Congress on China's WTO Compliance,'' issued on December 11,
2006. The report is available on the USTR website (www.ustr.gov).
subsidies
An area of priority concern for USTR is the Chinese Government's
role in directing the Chinese economy, including through the use of
subsidies. We are confronting this serious challenge using both
enforcement levers as well as dialogue.
As you know, and as I described earlier in my testimony, in
February 2007 we announced that the United States has requested
consultations at the WTO over what we contend is China's persistent use
of prohibited subsidies. Basically, the United States believes that
China uses its tax laws and other tools to encourage exports and to
discriminate against imports of a variety of manufactured goods. The
subsidies at issue in this case are offered across a broad array of
industry sectors in China--including wood products, steel, information
technology, and others.
It is an important case--important because it challenges policies
that are tilting the playing field against our workers and companies,
important because it makes clear that we will use WTO dispute
settlement procedures to hold China to its commitments where dialogue
does not resolve our concerns, and--perhaps most of all--important
because it will help impel China to maintain a process of reform and to
redirect its economy towards a model of consumption-led, rather than
export-led, growth. A victory for the United States in this WTO dispute
should have a positive impact on the hardwood plywood sector. The case
targets a number of very harmful subsidies, including export-related
tax breaks offered to foreign-invested firms in China's plywood sector
and other industry sectors.
While we have filed this WTO case, we continue to engage in
dialogue with the Chinese on their use of subsidies. These discussions
are happening both at the sector-specific level--for example, our
recently created ``Steel Dialogue'' under the JCCT is enabling a
conversation among governments and industries of both sides--as well as
in connection with our broader economic dialogues, including the
Strategic Economic Dialogue. Industrial policies that limit market
access for non-Chinese origin goods and that provide substantial
government resources to support Chinese industries also remain a
concern.
The hardwood plywood industry and other industries have expressed
concerns to us about the problems that many Chinese government
incentives create for them. Supporting industry's efforts to obtain
comprehensive information about the various types of financial support
that China provides to its domestic industries and taking effective
action on that information is a priority for USTR.
Finally, although it does not fall within USTR's statutory purview,
I should note that the Department of Commerce continues to apply U.S.
trade remedy laws to ensure that unfair trade practices, whether
undertaken by the Chinese or others, do not distort the playing field
against U.S. companies.
china hardwood plywood issues
The Administration has aggressively worked to ensure a level
playing field for U.S. hardwood plywood manufacturers as well as the
entire forest and paper industry sector. China's hardwood plywood
industry has emerged as a chief competitor to our industry.
In the forest products sector, the growth in China's wood
processing industries and strong Chinese demand for imported wood have
provided opportunities for U.S. exporters. Our exports of hardwood
lumber have shown strong growth in recent years, meeting some of
China's demand for forest products and raw material. At the same time,
in some sectors of our forest industry, like wood panel products and
hardwood plywood, we are aware that Chinese exports of these products
to the United States are climbing.
In late January, Ambassador Susan Schwab wrote the Commerce
Minister of China specifically on the issue of hardwood plywood, asking
Minister Bo Xilai to begin talks to address this at a high-level. In
response, Minister Bo agreed to our request, and a first meeting on the
issue of hardwood plywood was held in February in Beijing between the
Assistant US Trade Representative for China Affairs and Commerce
Ministry officials.
Additionally, in the past few months we have been pressing China to
help work with us to stem the problem of illegal logging of timber that
may be a source of raw material for Chinese producers. In the context
of both the President's Initiative to Address Illegal Logging and the
Strategic Economic Dialogue (SED), we asked China to agree to engage in
dialogue and consultation on illegal logging in order to increase
mutual understanding and communication, and explore ways of
cooperation, including through a bilateral agreement.. We are pleased
that at last week's SED, Chinese Vice Premier Wu Yi agreed to our
request. In coming weeks and months, we will open this dialogue with
China.
This effort builds on other initiatives we are taking. The United
States recently concluded a first-of-its-kind Memorandum of
Understanding with Indonesia on combating illegal logging. We are also
working to address the problem regionally, for example by getting
Singapore and Malaysia more involved in efforts to stem illegal logging
and associated trade.
We are also working to address other issues related to hardwood
plywood. For example, we have raised with China the issue of their
border trade policies, where wood and other products imported from
Russia may be coming in without paying value-added taxes,
disadvantaging our hardwood plywood industry. We remain committed to
working with our industry to address these problems.
Additionally, we continue to press the Chinese government on the
issue of ``reference pricing,'' where Chinese Customs authorities in
some cases inappropriately use ``reference pricing,'' and not the
actual price of imports, when calculating product valuation for the
purpose of imposing Customs duties--a practice that can in some cases
can lead to a higher tariff than appropriate. We have indicated to the
U.S. hardwood plywood industry our desire to work together on this
issue, and have sought specific examples, including specific ports, and
specific shipments where reference pricing is being used by Chinese
Customs.
In summary, USTR is committed to ensuring that we are using the
most effective tools at our disposal to pursue an open and fair trade
relationship with China. This effort ties into broader Administration
engagement on international economic issues, including work by Treasury
and Commerce, and work with Members of Congress to achieve our common
goals: a level playing field for American businesses, workers, and
farmers.
Thank you for the opportunity to testify. I will be happy to take
your questions.
Senator Wyden. Thank you both and thank you for making the
trek to the most wonderful part of the United States for this
hearing.
Let me begin with you, Mr. Wineland. I'm sure people would
be interested in knowing what it means to initiate a World
Trade Organization case. I mean this had to be something of a
wake-up call for the Chinese because there they are, and I was
not happy with my initial kind of conversation with them and
others. I kind of got the sense that they didn't think that the
American Government was going to take this very seriously, and
some guy from a place that they hadn't ever heard of called
Oregon. All of a sudden there was going to be a case filed
against them in terms of, in terms of these subsidies.
What was, what was the reaction after that case was filed,
and particularly how has that affected the discussions that
you've begun more recently? Have you found they are taking it
more seriously now?
Mr. Wineland. Well, legally we filed the WTF settlement
case in February. Shortly thereafter, in March we targeted in
that case nine specific subsidies that we could identify.
Certainly the U.S. Government and industry believe that there
are many more subsidies out there that we need to address. But
these are the nine that we could identify on short order, and
pursue it as potential trade violations.
Shortly after we filed that targeted case, looking at nine
Chinese subsidy practices, the Chinese, in fact, revoked one of
the nine. So, we are hopeful that that suggests a recognition
on China's part this is an important issue. That they have WTO
obligation.
The filing with the WTO case essentially means that we have
identified areas where China has promised to live by WTO rules.
Filing WTO cases says that we have identified some problem
areas, where China does not appear to be living by WTO rules.
We have tried to resolve the issues of bilateral dialog and
failed. So we have chosen the route of the WTO case where an
independent panel of the WTO will rule on the case, make a
decision and require China to change its policies.
Senator Wyden. Now you also said that last week the Chinese
agreed to work on illegal logging issues with the United
States. What does that mean and specifically how are you going
to hold their feet to the fire?
Mr. Wineland. Well, that, that commitment came in context
of the strategic economic dialog, which was established by
Treasury Secretary Paulson last fall.
In the December 1 meeting of the SED, we agreed to talk
about four main work streams, including economic and trade
issues, as well as environmental trade issues. In the context
of our work in the SED on environmental trade issues, through
the spring, based partly in the concerns that we'd heard from
you and from industry about illegal logging, we sought from
China an agreement to work together on illegal logging,
recognizing that in some, unlike say a country like Indonesia,
the problems on the demand side by Chinese processing industry.
So, we, in the course of negotiating the strategic economic
dialog outcomes, which came last week, we asked the Chinese to
cooperate on this issue for the sake of the environment as well
as the sake of a level playing field. China agreed to that.
To answer your question about holding their feet to the
fire, I think the SED, the continuing meetings, it's twice a
year exercise, the continuing meetings of the SED will build in
some accountability on China's part to move toward a dialog on
this issue, as well as concrete steps.
Senator Wyden. Can we count on you all to stay and raise
it, all of these strategic economic dialog programs until we
get this resolved? I hate to use the initial SED kind of lingo
for what these processes are described in Washington, DC, but
to me here at home, what it means is every time we sit down for
the big time talks with China, we're going to have these
practices brought up and you'll have a chance to push the
Chinese to change. Can you all keep bringing them up and make
that commitment today until we get this resolved?
Mr. Wineland. You absolutely can from the USTR. The State
Department has joined the responsibility of the illegal logging
issue. We certainly will. It's part of the administration
broader efforts to come back and to do the logging in the
region.
Senator Wyden. I appreciate that. Tell the Ambassador that
we appreciate her office as well. She's got a lot on her plate
right now. It's important that this be there as well. We
appreciate the response.
Let me ask you, if I might, for our Customs. Is there a
hardwood enforcement action underway now, Ms. Adams? I know you
can't get into the case, and I appreciate that, in our
discussions, but I think it is possible to just in a yes or no
way to state so we have it for the record, whether or not
there's a hardwood plywood enforcement action underway from
your department?
Ms. Adams. Yes, I can confirm that yes, we have an
enforcement action underway to address the issue. I can tell
you that we have sampled shipments that comprise approximately
120 different employers. Those samples are pending lab analysis
to determine whether the classification issue, which is an
issue of whether it's birch or hardwood, is bonafide. Those lab
analysis are pending. So we don't have the results yet but yes,
we do have an action on those.
Senator Wyden. Without compromising your case, and you can
see how I'm sort of trying to kind of skirt around this, you
all were successful in a wood flooring enforcement action. Is
that from a comparative standpoint of some value in terms of
looking at what our folks are dealing with here in the
Northwest?
Ms. Adams. Yes. For two main reasons, and this is what I
was somewhat alluding to in my opening statement. When it comes
to classification of some of these hardwood products, there's
three basic issues involving the classification to make sure
you get to the correct one. No. 1: ``What is the material made
of?''; No. 2: ``How is it constructed?''; and No. 3: ``Is there
any further processing done before it arrives at our shore?''.
Those same classification criteria apply in hardwood flooring,
and to some extent, in the plywood situation.
So, you know, all of the expertise and knowledge of how
they, the violators are misclassifying the hardwood puts us on
the alert in terms of what kind of issues to look for in the
plywood.
Sometimes when you have an industry group of importations
that are commercially related, when you find violators in one
segment, often the same importers are importing the same thing
in other segments that you're now looking at. So, one of the
things that we are in the process of doing is doing a crosswalk
between the violators we've discovered in the hardwood flooring
issue and see if those same importers are importing the
plywood. By doing that crosswalk, we can vary, you know, more
readily probably focus where the risk is going to be.
So that's where the benefit of the hardwood flooring
operation comes into being, both from a technical issue, as
well as from it tells us the violators are in one issue, and if
they are also the importers of the plywood, which sometimes
they are, we can more narrowly focus and start to know where
the risk is likely to be.
Senator Wyden. Heaven help us if one branch of government
talks to another. I think you've laid out a good case for how
to take this up. I appreciate that approach.
Tell me, if you would, about this matter of unsafe
formaldehyde and content. Without going through all of the kind
of technical issues, I think that our folks, our plywood people
believe that with their sealing to bind the plys that contain
formaldehyde, they have got actual alternatives they are using,
soybased alternatives, and we obviously are concerned about the
safety issues that we heard about earlier. Have your lawyers
concluded that you don't have the authority to enforce a
formaldehyde standard?
Ms. Adams. The preliminary analysis is, you know, CBP or
Custom's can enforce many regulations for many different
agencies. The difficulty with the HUD regulation on
formaldehyde is that it's specifically geared toward what the
end use of that product is. Meaning, if the wood product is
used in the construction of a home, then it has to meet the
certain HUD standards.
Unfortunately, at the time that the product crosses the
border, we don't know what the end use of that wood product is
going to be, which makes it very difficult for us to enforce a
regulation like that or that type of requirement. We call those
end use provisions. In fact, even as difficult as it is for us
to know the end use, a lot of times the importer does not know
the end use because they may be a distributor reselling
downstream to further, you know, to construction companies or
other things and they may not know exactly what the end use of
that product is going to be. That's where the challenge of
enforcing that type of regulation at the border comes in to
play. Sorry, I'm very dry.
Senator Wyden. No. I, I had gotten the sense from our
discussions, there was some questions about your authority to
enforce formaldehyde standards, some questions about your
authority to enforce these labeling standards, you know, where
our people are trying to do the certification, FSC kinds of
issues. If you want to add anything to it--you've been very
forthcoming today--if you want to add anything now or you can
send it into the record. The reason I'm asking is we're going
to get into the trade debate on the Finance Committee later
this year. If you all were to tell us that you didn't have the
authority to enforce formaldehyde standards and meet
certification standards, then I'm interested in working with
the Administration on a bipartisan basis to get that done.
Ms. Adams. We, we have the preliminary announcement from
Counsel, but they had asked some additional followup questions
on this end use situation. So, I prefer to submit something for
the record when we get their final opinions back to us.
Senator Wyden. Good. Let's leave it in the context that if
it comes back that your lawyers do not feel they have the
authority to enforce--formaldehyde is a safety issue. There are
labeling kinds of questions that go to whether or not we have
fair treatment for our plywood folks, I'm interested in
following up with you all and the Administration.
Ms. Adams. The trademarks issue is a little bit of a
different situation.
Senator Wyden. Right, I understand.
Ms. Adams. If you'd like to me to address that.
Senator Wyden. Fine. I understand that. I just want it, I
just want it understood that because you all are initiating
proceedings already, we welcome that. I wanted to get some
information as to whether you have adequate authority in those
kinds of areas and please offer anything else you'd like to
now.
Ms. Adams. The issue of, if the--in your letter you had
brought up the issue of the fraudulent stamping.
Senator Wyden. Right.
Ms. Adams. For voluntary standards, we cannot enforce the
standard per se, unless it is backed by some kind of a Federal
regulation or standard. But what we can do similar to the UL
logo, the UL market, we're all used to seeing on our electronic
appliances, if there is some kind of trademark, registered
patent trademark, I believe the gentleman that was sitting here
had mentioned such a situation, I'd like to followup on a
dialog with him about that, his comments. If that trademark is
also registered with CBC, we can enforce those types of
trademarks, just like we do for Underwriters Laboratory.
What we are enforcing is the mark itself, not the standard
behind the mark. The way it works with UL is we have access to
their data base. We can see all of their registration numbers
and the products related to those numbers. When something comes
into the country and we verify with UL's data base whether that
product is allowed to have that mark on it, and if not it's an
IPR, it's product violation and we can easily seize that for
that mark. So to the extent that the forest product industry
can pursue that line, that we can easily work on that type of
enforcement with them.
Senator Wyden. I thank you, thank you both. I've got my
constituents in the audience I see making paper fans trying to
cool themselves off. So, I should probably wrap this up
shortly, but we thank you very much for your responsiveness on
these, these issues. It wasn't very many months ago when I
raised this after folks in the hardwood plywood industry in our
State brought it to me. You all both swung into action. We
appreciate it. It's a long way to go.
But as you probably have picked up, in fact you can tell
anybody else in the Administration, how strongly people in
Oregon feel about the county payments legislation when you go
back to Washington, DC, I suspect they already know, but you
can tell them that nine or ten more times when you get back.
Tell them to make sure that we look at the kinds of
industries that we are focused on today because we want to work
with the Administration first to secure this multi-year county
payment agreement. We very, very much need those dollars for
libraries and police and schools and essential services, but we
need them also to provide a transition into other areas. That's
why it's so important that these kind of value-added industries
like hardwood plywood get fair treatment because they are
exactly the kind of industries that are going to pick up some
of the slack as we deal with this transition on the county
payment issue.
So you all have been very responsive. We'd like to give our
witnesses, particularly the ones that come from Washington, DC,
the last words for today's program.
Mr. Wineland, Ms. Adams, anything else you want to add.
Mr. Wineland. No thank you. We look forward to continuing
to work with you on these issues.
Ms. Adams. Likewise as well.
Senator Wyden. With that, the subcommittee is adjourned.
[Whereupon, at 1:50 p.m., the hearing was adjourned.]
APPENDIX
Additional Material Submitted for the Record
----------
Statement of the Forest Service, Department of Agriculture
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to submit written testimony to you today on the impacts of
the Chinese hardwood plywood trade on National Forest System lands. The
Chinese hardwood plywood trade has a negligible effect on National
Forest System lands in Oregon. However, there have been changes to the
forest products industry in the U.S. and in Oregon, which we will
describe below.
a rapidly changing forest products industry
The U.S. has been the world's largest market for wood and wood
products, fueled by its demand for wood-frame housing.\1\ However,
forest product markets are changing, both in terms of where the
products originate (domestically or abroad) and what products are being
produced and consumed.
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\1\ From Challenge and Response--Strategies for Survival in a
Rapidly Changing Forest Products Industry, by Al Schuler, USDA research
economist; Craig Adair, market research director for the Engineered
Wood Association; and Paul Winistorfer, professor, Virginia Tech,
Engineered Wood Journal, Fall 2005.
---------------------------------------------------------------------------
Source changes for forest products are being driven by
globalization trends, technology advancements, and labor costs and
supply, which are causing builders to change not only the way they
build houses but also their choice of building materials.
Most imported structural lumber and panels in the U.S. continue to
come from Canada. However, there are increasing softwood plywood
imports from South America, and softwood lumber from both South America
and Europe. Total North American structural panel imports are
approximately two billion square feet (\3/8\" thickness) and that
figure is expected to continue rising as more foreign mills obtain
certification for our markets.
In another trend, more housing components are being manufactured in
the factory (e.g., trusses, wall panels, and engineered floor systems),
and shipped to the job site for final assembly. Conventional wood
products, mostly solid sawn dimension lumber, are being replaced by
engineered wood products that offer improved performance durability and
efficiencies in site construction.
Non-wood products such as steel and concrete continue to make
inroads into traditional wood markets, particularly in the South. The
South accounted for 50 percent of housing starts in 2006, but termite
problems have favored an increase in non-wood building materials.
Additionally, technological improvements in communication,
computing, and distribution are driving changes in the supply chain.
The number of parties participating in the supply chain is shrinking as
more products go directly from the mill to the consumer with an ever-
smaller market share moving through traditional distributors.
More recently, consolidation in the residential construction
industry has resulted in fewer builders producing a larger share of
houses. The top 10 builders now produce more than 20 percent of the
single-family homes in the U.S., up from 10 percent a decade ago. The
larger builders are leading the transition toward more factory
manufactured components and are demanding more services from their
suppliers, such as installed windows, doors, and wall panels; and
complete framing packages cut to specification.
Builders want to simplify the construction process by accelerating
accurate assembly of components on the job site, devoting more of their
time to locating and developing land, providing financing to potential
buyers, and reducing litigation risks.
All of these trends indicate that the North American wood products
industry will face challenges ahead.
plywood production trends in oregon
A large percentage of the United States forest products are
consumed in one market--residential construction. About three quarters
of structural wood panels and softwood lumber, and nearly 90 percent of
the engineered wood products (e.g., I-joists and LVL) are consumed in
residential construction including new construction and remodeling).
Oregon is the largest hardwood plywood producing state in the United
States and this plywood is used in manufacturing cabinets. However, the
National Forests in Oregon are not a source of hardwood for these
manufacturers as there is little high quality hardwood on National
Forest lands. Most plywood manufacturers import their veneer from
eastern Canada, the eastern U.S. including eastern national forests,
and from overseas.
There have been several significant events that have greatly
affected softwood plywood production in Oregon over the past two
decades:
--Plywood production has fallen steadily in Oregon since 1987 as
the production of other structural panels, particularly
oriented strand board (OSB), has increased both in Oregon
and elsewhere in North America. Currently OSB accounts for
about 60 percent of the structural panel consumption in the
United States.
--During the early 1990's, timber harvest in Oregon fell by nearly
50 percent as a result of the implementation of the
Northwest Forest Plan. This caused an increase in prices
for softwood products due to a reduced supply.
--In the mid to late-1990's, exports from the region fell because
of these increased prices and the 1997 collapse of the
Japanese real estate markets.
--Lastly, the recent downturn in U.S. housing markets has depressed
lumber and panel prices leading to production curtailments
among producers during 2006--2007.
In light of these trends and changes in the North American forest
products industry, it is important that a strong industry is available
to utilize wood from the national forests. To manage for healthy,
sustainable forests, the national forests, as well as small non-
industrial private landowners, need markets for a variety of timber
products, including lumber, plywood, OSB, furniture, and flooring.
conclusion
This concludes the Forest Service statement. Please submit any
questions you may have to the Chief of the Forest Service.
______
Statement of the Hardwood Federation
Mr. Chairman and members of the Subcommittee, thank you very much
for holding this hearing. The Hardwood Federation (HF) was formed in
April 2004 to represent the interests of the hardwood industry in
Congress and with the Administration. The HF was designed as an
umbrella group of associations and serves to coordinate and align all
key issues for the industry so that we speak with one voice on broad
policy issues.
The HF is the largest forest products industry association in the
United States representing over 14,000 businesses, 30 trade
associations and over one million hardwood families. The Federation
represents the majority of organizations engaged in the manufacturing,
wholesaling, or distribution of North American hardwood lumber, veneer,
plywood, flooring, pallets, kitchen cabinets and related products. The
vision of the HF is to have a healthy hardwood community and the HF's
mission is to:
--Promote and represent the common business interests of and
improve business conditions among members of the hardwood
industry.
--Maintain a healthy business environment for family businesses and
small companies in the hardwood community.
--Maintain commercial access to federal and private hardwood
timberlands.
--Maintain and improve the health of public and private hardwood
forests through effective legislation.
The HF and its members believe it is critical to keep American
companies operating and our citizens employed given the impressive
record of hardwood forest stewardship and the growing consumer demand
for hardwood products.
We are pleased that two of our leading member companies, Columbia
Forest Products and Timber Products Company are appearing before you
today to present a first-hand view of the impact of illegal logging,
and Chinese imports on their Oregon businesses and federal timber
resources. These companies have taken a lead in our efforts to address
the inequities and unfairness currently being experienced in our
worldwide trade, particularly with our trading partners in Southeast
Asia and China. These companies also have experienced first hand the
impacts on their neighboring federal forests and our industry echoes
the concerns they are outlining in this important hearing. We would
note that while most hardwood resources supplying our mills come from
private landowners, the lines between public and private lands are
immaterial when judging the impact of unfair trade policies; all stand
to lose, and most critically, the health of this valuable U.S.
resource.
Companies in the hardwood industry are predominantly small, family-
owned businesses, dependent upon a sustainable supply of healthy timber
resources. Many are operated by third, fourth or even fifth generation
family owners. With facilities and employees in all 50 states, we have
a wide U.S. presence.
U.S. hardwood plywood producers are facing unprecedented and
rapidly growing competition in the U.S. market from imported products
coming from China and Southeast Asia. In addition, competition from
international producers is affecting the U.S. industry's ability to
compete in export markets. If allowed to continue unchecked, this
rapidly growing competition with an uneven playing field will result in
the displacement of a significant portion of U.S.-based hardwood
plywood industries.
Thanks to the efforts of Chairmen Wyden and Baucus, the
International Trade Commission (ITC) has been asked to conduct a
``Section 332'' study to investigate unfair trade practices of imported
Chinese hardwood plywood and wood flooring. Among other concerns the
study will look at the misclassified Chinese hardwood plywood imports
and illegal logging in Asia which we believe have put the U.S. plywood
and flooring industries at a competitive disadvantage. The Hardwood
Federation is working closely with our U.S. government trade analysts
to provide a complete picture of current market practices and impacts.
We are assured that the continued interest and support from our elected
officials, particularly Chairman Wyden will help result in a complete
and comprehensive study.
Hardwood plywood import tariffs vary depending on the species of
hardwood on the face and back of the plywood: oak-faced plywood has an
eight percent tariff, birch-faced plywood has no tariff. Chinese
hardwood plywood is most likely being improperly characterized (e.g.,
identifying the back as the front) to avoid applicable tariffs. As a
result, Chinese hardwood plywood enters the U.S. market duty-free,
giving it an unfair competitive advantage over legally identified
imported hardwood plywood and U.S. produced hardwood plywood.
In addition to tariff misclassification, illegal logging has hurt
the competitiveness of the U.S. wood products industry. According to an
American Forest and Paper Association (AF&PA) study, illegal logging
robs U.S. companies of $460 million a year in lost sales. A great deal
of illegally harvested wood is shipped to manufacturing hubs in China
before it is sent to the U.S. It is difficult for domestic hardwood
industries to compete with foreign industries not adhering to timber
harvesting laws.
Earlier this year, the Hardwood Federation issued the first public
statement of support for efforts to end illegal logging, including the
possibility of amending the Lacey Act. We are currently reviewing
legislative proposals to determine implications for domestic hardwood
producers and are optimistic that some agreement can be reached among
various stakeholders to join together in supporting legislative action.
Curbing illegal wood imports will help protect U.S. industries and
employees.
Again, Mr. Chairman, thank you for calling this important hearing,
and for your leadership in addressing the issues facing the hardwood
industry in the State of Oregon and throughout the U.S.