Forest Prods Promote Elimination Of Trade Barriers

Media information for immediate use

13 May 2004

Forest Products Industries Promote Elimination Of Tariff And Non-Tariff Barriers

Forest products industry representatives from Canada, New Zealand and the United States were in Geneva this week to push for significant progress in the latest round of industrial market access talks. The visit represented a renewed commitment to assist in advancing the negotiations following the failed Cancun World Trade Organisation (WTO) Ministerial meeting last September.

Industry representatives became the first business group to meet directly with members of the WTO’s Non Agricultural Market Access (NAMA) Negotiating Group. Meetings were also held with WTO officials and missions to encourage support for effective trade liberalization in forest, wood and paper products which will expand employment and economic growth and contribute to the promotion of sustainable development.

Efforts by Ann Wrobleski, Vice President of the American Forest & Paper Association; Edwin Mallory, Managing Director Europe of the Forest Products Association of Canada; and Stephen Jacobi, Chief Executive of the New Zealand Forest Industries Council, focused especially on the importance of eliminating non-tariff barriers (NTBs) in the forest products sector. The group identified common non-tariff barriers in the areas of standardization, quality assurance, product testing, building codes, and enforcement of regulations – among others. Eliminating tariffs and creating more effective trade rules were also emphasized.

“Eliminating trade barriers in forest products not only will expand the industry, but will generate economic growth and social progress in developing countries that have become important producers and exporters of forest products,” said Mallory.

“Sector-specific discussions in forest products, aimed at reducing or eliminating non-tariff barriers, offer a real opportunity that, if successful, could provide meaningful progress toward achieving free and fair trade in this sector,” said Wrobleski.

“Non-tariff barriers severely hinder trade and erode the benefits of tariff elimination. These discussions and resulting agreements could serve as models for expansion to other sectors in furtherance of the Non-Agricultural Market Access goals under the WTO’s Doha mandate,” concluded Jacobi.

ENDS

About New Zealand Forest Industries Council

NZFIC represents and promotes the interests of all sectors involved in the New Zealand forest industry. Membership comprises forestry, wood processing and paper companies as well as industry associations who collectively own, manage and derive products from a sustainable, planted production forest resource of 1.8 million hectares

New Zealand forestry directly employs 23,000 people, accounts for 4 percent of GDP, has annual sales of more than $5 billion and is the country’s third largest export earner at $3.5 billion annually. Through its Wood Processing Strategy and Vision 2025, the industry aims to become New Zealand’s largest export sector, directly employ 60,000 people, contribute 14 percent of GDP and record an annual turnover of $20 billion.

For more information about NZFIC and the forest, wood and paper processing industries in New Zealand visit www.nzfic.org.nz

PRESENTATION TO WORLD TRADE ORGANISATION NON AGRICULTURAL MARKET ACCESS NEGOTIATING GROUP

GENEVA, 12 MAY 2004

STEPHEN JACOBI
CHIEF EXECUTIVE
NEW ZEALAND FOREST INDUSTRIES COUNCIL

NEW ZEALAND EXPERIENCE WITH NON TARIFF BARRIERS IN THE FOREST AND WOOD PROCESSING SECTOR

Thank you for the opportunity to meet with you today and to speak about the experience of the New Zealand forest and wood processing industries with non tariff barriers.

First, though, I would like to underline the importance which the New Zealand industry places on the work of this negotiating group within the Doha Development Agenda.

New Zealand’s forest and wood processing industries contribute around 4 percent of the nation’s GDP.

We are the country’s third largest export sector, accounting for around 11 percent of total exports.

While clearly New Zealand has strong interest in the agricultural chapter of the Doha negotiations, achieving effective trade liberalisation in non agricultural products is also a key interest for us.

That’s why I am pleased to join my colleagues from Canada and the United States here today and to know that we are supported also by counterpart industry associations in Australia, Chile and South Africa.

Since March last year we have been working closely together to secure a robust outcome for our sector from the Doha negotiations.

While you, not we, are the expert trade negotiators, we have an awareness of the impact of trade restrictions on the current operations and future growth of the companies we represent.

In New Zealand our experience is that tariff escalation and non tariff barriers penalise our ability to add value to our export products and limit our ability to access higher value market segments internationally.

For some years now production from New Zealand’s sustainably managed plantation forestry resource has been growing significantly.

Since our domestic market is small, it is inevitable that all this growth in production must be exported.

Today just over 55 percent of our exports are in the form of unprocessed logs.

This figure has been rising steadily over time as our industry produces more and despite the fact that we are also processing and exporting more than ever before.

There is no doubt in our minds that one of the principal reasons we are expanding log exports rather than processed products is the impact of trade restrictions.

The focus of today’s meeting is on non tariff barriers.

We are fortunate that several studies over the last three years have increased our understanding of the impact of non tariff barriers on international trade.

A New Zealand study undertaken by AC Neilson for Standards New Zealand in June 2001 suggested that the financial impact of non tariff barriers is over four times greater than tariffs.

A comprehensive report prepared by New Zealand’s Forest Research Institute for APEC in December 1999 indicated that most APEC economies provided support for afforestation, or maintained either environmental or health and safety regulations or building codes or standards, or adopted other regulations which could discriminate against imports.

And a further report by Forest Research for the APEC Business Advisory Council in August 2002 assessed the cost of prescriptive building codes in APEC economies.

These reports have all served to underscore what we in New Zealand industry have been aware of for some time.

The effect of non tariff barriers is to:

- add to the cost of exporting so as to make our products less desirable in offshore markets (if not to ban their use altogether)
- prevent recognition of our premier tree species Pinus radiata and, in particular, restrict its use as a building material
- prevent recognition of building systems commonly in use in New Zealand and Australia
- deny consumers access to alternative products and systems; and
- promote the use of non-wood alternatives, such as concrete and steel.

A particular concern for our industry has been in relation to non tariff barriers in the construction sector which is commonly the highest value market into which wood products can be sold.

It is also in this sector where we believe there is the greatest opportunity to take some significant action through the WTO to eliminate these barriers consistent with the Doha mandate.

In the construction sector there are at least five areas where problems typically arise for exporters:

- standards
- quality assurance
- testing methods
- building codes; and
- enforcement of regulations.

Each of these areas is highly technical and we have worked with our governments to define more closely the problems that exist. You will be hearing more from our governments about this in due course.

At the broadest level there is a need for greater openness and transparency, national treatment, mutual recognition and consistency.

A key concept relates to the need for performance based rather than prescriptive regulations.

New Zealand for example moved to a performance based Building Code in 1992.

The key elements of the Code are written in terms of how buildings and products are required to perform, rather than prescribing how a building is to be constructed.

Where, for efficiency or safety reasons, prescriptive elements are retained, alternative methods of compliance based on performance, are also provided for.

The chief benefit of a performance-based framework is that it allows for innovation and the introduction of new products, including from overseas, while retaining the capacity to regulate to take account of local conditions.

It seems to us that encouraging the adoption of performance based building codes – as is envisaged in the Technical Barriers to Trade Agreement - would go a long way towards addressing many of the problems regularly faced by exporters seeking to enter and develop new construction markets.

I mentioned a moment ago that you, not we, are the expert trade negotiators.

We are convinced that a lot can be gained by industry and governments working together to diagnose the problem of NTBs and to develop possible solutions.

We very much welcome the resolve of Ministers at Doha to eliminate non tariff barriers.

We are conscious too that finding a way to meet this aim is far from straightforward.

That is why we endorse the proposal to take a vertical approach to tackling the complex challenges of NTBs.

After all, in our own sectors, we know what the problems are and we are very ready to contribute expertise and ideas through our respective governments to you in order to find effective solutions.

That seems to us to be a practical and pragmatic way to proceed.

Today we have spoken about NTBs in the forest and wood processing sector but our comments might equally point to a way forward in other sectors.

Certainly we feel that adopting a vertical approach will help you better understand the impact of NTBs across the board.

As I said at the outset, this negotiation is vitally important for the future growth of our industries, for the people we employ and for the consumers of our products.

We wish you and your colleagues well in your ongoing discussions and will continue to follow them with interest.

ENDS

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