A Guide to Exporting Solid Wood Products

m

k.

A Guide to Exporting Solid Wood Products

>^^\ United States ' ° 'I Department of ■.f Agriculture Foreign Agricultural Service Forest Products Division Agriculture Handbook No. 662 Revised §'^ July 199(1 4;..:

!llm

IVE iiSrClStíSiE i*.ïi_

.♦í.í'í

: i: i.:

P

if

I

Jl ^%

"—

■Hi.-^-i

.Ttr

T:C

loi^-'i'

■1,1 ■

,-*!,•

r .4

"■tí

^-ï. -»^»Jdft.

Sîti Krft

■Ni?:'

; ■;■:

!■:

!*

Abstract This handbook provides a guide for U.S. wood products producers to develop a successful export marketing strategy. It covers how to obtain accurate and up-to-date export marketing information so that the production, scheduling, and shipping of U.S. wood products can be done profitably. Keywords: Wood products, export markets, exporting, marketing information, export financing, shipper's export declaration, shipping documentation, business organization, market development cooperators, trade servicing.

Acknowledgments This is the first revision of the handbook originally published in 1986 by William G. Westman, who specifically acknowledged work done by David R. Schumann and Ralph T. Monahan, USDA Forest Service in The Lumberman's Guide to Exporting. Portions of this revised publication draw on work done by the USDA's Office of Transportation and its publication, Export Handbook for U.S. Agricultural Products. Thanks also go to the state and federal agencies, cooperators, and others mentioned in this publication who provided information and assistance. The material in this publication was prepared solely for the purpose of assisting U.S. firms interested in exporting U.S. solid wood products. References to private publications and firms do not imply endorsement by the Foreign Agricultural Service or the U.S. Department of Agriculture.

:|^ United States })) Department of Agriculture Foreign Agricultural Service Forest Products Division Agriculture Handbook No. 662 Revised July 1990

A Guide to Exporting Soiid Wood Products By Cynthia Evans Agricultural Economist

Contents

Page Introduction Exporting Wood Products Trade Servicing

^ 5

Supply Considerations

6

Pricing Products for Export

6

Financing Exports Payment Options for Export Shipments Letters of Credit and Invoices Foreign Credit Insurance Association (FCIA) Export-Import Bank (Eximbank) of the United States Overseas Private Investment Corporation (OPIC) Small Business Administration (SBA) U.S. Trade and Development Program (TDP) Trade Finance Corporation/American International Group (TRAFCO)

8 9 10 11 11 11 12 12

Export Shipping Carriers Terminals Packaging and Shipping Export Documentation Shipper Export Declarations (SED's) Exporting Checklist

14 15 15 15 17 20

Business Organization "In House" Export Management Companies (EMC's or agents) Export Trading Companies (ETC's) Export Merchants (EM's) Foreign Sales Corporation (FSC)

22 22 22 22 23

Export Market Information and Assistance United States Government U.S. Department of Agriculture Foreign Agricultural Service Overseas Offices Market Reports Export Services Office of Transportation Animal and Plant Health Inspection Service Forest Service U.S. Agency for International Development U.S. Department of Commerce Office of the United States Trade Representative

25 25 25 25 26 27 27 28 29 29 30

State Departments of Agriculture and State Export Agencies Private Sources

30 32

USDA Export Programs Cooperator Targeted Export Assistance Credit Guarantees P.L 480

34 38 40 41

Major Markets Japan European Community (EC) United Kingdom West Germany Italy Belgium/Luxembourg Spain Canada People's Republic of China South Korea Taiwan Africa/Middle East Oceania Australia Latin America

50 53 53 55 56 56 57 59 61 63 66 68 70 71 71

Table Table Table Table

1 2 3 4

Table 5

Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure

1 2 3 4 5 6 7 8 9 10 11 12

— — — —

Major Activities Associated with Exporting Elements of Pricing Goods for Export Shipping Documents Required in Exporting U.S. Exports of Solid Wood Products by Principal Products/ Countries, 1989 — Tariffs Imposed on Imports of U.S. Solid Wood Products in Selected Countries

3 7 16

— — — — — — — — — — — —

46 46 52 58 60 63 65 67 69 70 73 76

U.S. Wood Export Markets, 1989 Value of U.S. Wood Products, by Commodity, 1989 Value of U.S. Wood Exports to Japan Value of U.S. Wood Exports to the EC Value of U.S. Wood Exports to Canada Value of U.S. Wood Exports to China Value of U.S. Wood Exports to South Korea Value of U.S. Wood Exports to Taiwan Value of U.S. Wood Exports to Middle East Value of U.S. Wood Exports to Africa Value of U.S. Wood Exports to Australia Value of U.S. Wood Exports to Latin America

44 47

Appendix I Appendix II Appendix III

—

Appendix IV Appendix V Appendix Appendix Appendix Appendix Appendix

VI VII VIII IX X

— — — — —

Selected Publications Samples of Shipper's Export Declaration and APHIS Phytosanitary Certificate Samples of "Export Briefs," "Buyer Alert," & Foreign Importers Listing Addresses of State Foresters Desk Offices of the International Trade Administration, U.S. Department of Commerce U.S. and Foreign Commercial Service District Offices Small Business Administration District Offices Glossary of Forest Products and Exporting Terms Forest Products Volume Conversion Units Forest Products Shipping Weights and Volumes

77 80 85 89 92 93 96 99 106 113

III

Introduction

This revision of the 1986 handbook provides a guide for U.S. wood product producers to develop a successful export marketing strategy. It covers how to obtain accurate and up-to-date export market information so that the production, scheduling, and shipping of U.S. wood products can be done profitably. The flow chart on page 3 provides an outline of the major activities associated with exporting and export marketing. The outline includes many of the topics covered in this guide to exporting wood products. Major topics include trade servicing, supply considerations, a review of the major U.S. wood product markets, sources of export information, USDA export programs, export financing, shipping and documentation, product pricing, and the business organization of an export-oriented company. By the turn of the century, U.S. exports of wood products are projected to be at least 50 percent larger on a value basis than the estimated 1989 level of $6.0 billion. Environmental concerns about dwindling tropical hardwood forests, coupled with export bans/restrictions on logs and rough lumber in tropical hardwood exporting countries, will increase demand for both U.S. hardwoods and softwoods. The Philippines, Indonesia, Cote d'Ivoire, and Thailand are recent examples of countries that have either banned or curtailed exports and/or commercial logging. Traditionally, the U.S. forest products industry has not considered the international market to be an outlet for its products. Only during the 1980's did companies begin to seriously consider exports as a long-term market for wood products—partly in response to the U.S. recession in 1981-82. Yet, while export value has doubled since 1985, exports of wood products still represent a minor portion of U.S. annual wood production. The decision to enter the export market is not for every company. Producers must have the flexibility or willingness to tailor a product line to meet specifications quite different from those used in the United States. Producers should be prepared to develop a long-term foreign market development strategy because commitment to foreign importers will include staying with sales when their market is weak. Before getting involved, consider carefully your short- and long-term corporate objectives, the resources available, the level of international business expertise required, and the commitment your firm must make to servicing the export market. Servicing the export market will retain, expand, and diversify your outlets for U.S. forest products. Strategic export planning in the world market can provide new jobs, greater income, and increased profitability for U.S. wood producers. A stronger forest products industry will lead to new investment in forest management, thus assuring a continuous supply of wood and fiber for the United States and its customers overseas. A genuine commitment to exporting will include long-term sales to overseas markets regardless of domestic market conditions. "In and out" exporting will guarantee a company's failure in the overseas market and give U.S. producers a reputation for being unreliable.

Exporting clearly requires a long-term outlook as the following table illustrates. The decision to enter the export market requires the producer to commit sufficient managerial, economic, and financial resources to the task. Each company must weigh the advantages and disadvantages of exporting to determine if projected profits, possible losses, and inherent risks justify management's commitment to exporting.

Table 1 — Major activities associated with exporting

STEP!

STEP II

STEP III

STEP IV

Management Commitment

Analyze objectives, strengths, and weaknesses

Develop contacts and collect current market information in the United States

Conduct market analysis

1. Short- and long-term goals 2. Personnel 3. Resources 4. Production 5. Financing 6. Knowledge of export marketing

1. U.S. Government and State agencies 2. Banks with international departments 3. Freight fon/varders 4. Marine insurance agents 5. U.S. port authorities

STEPV

STEP VI

STEP VII

Country/market selection

Develop marketing approach targeted to one or two countries

Trade servicing

1. Demand potential/ trends 2. Product identification 3. Standards and specifications and trends 4. Language requirements 5. Distribution channels 6. Business practices 7. Tariff and nontariff barriers 8. Licensing/phytosanitary requirements 9. Legal considerations 10. Shipping costs

1. Organization of the firm 2. Determine production 3. Contact foreign importers 4. Schedule marketing/ sales trip to the country or market

1. Product development/ modification in response to changes in demand 2. Attention to importer's needs/ commitment to the market 3. Periodic visits to the market to maintain good customer relations and develop new contacts 4. Refine marketing approach

1. U.S. export statistics 2. Foreign import statistics 3. Current market developments and trends 4. Import barriers 5. Other factors (political, economic, geographic, and cultural)

Exporting Wood Products: Advantages, and Risks

The decision to enter the export market requires the producer to commit sufficient managerial, economic, and financial resources to the task. Each company must weigh the advantages and disadvantages of exporting to determine if projected profits, possible losses, and inherent risks justify management's commitment to exporting. The advantages of exporting wood products include new marketing and financial opportunities, diversification of risk, and increased financial leverage and credit. In addition, revenue derived from export sales permits spreading fixed costs over a greater number of production units. Wider margins may be realized on higher valued products. Producing for foreign markets can also have its downside. Tailoring wood products to foreign standards and specifications requires skilled personnel for procurement and milling operations. Plans to produce according to foreign specifications may not match with existing highspeed, high-volume manufacturing practices. As a result, production costs per unit may be higher. If wood products designed and produced to foreign specifications need to be sold on the domestic U.S. market, they may require additional processing such as resawing, planing, or sanding. Common mistakes made by companies entering the export market are: • Failure to obtain qualified export counseling. • Failure to develop an international market plan. •

Insufficient commitment by top management to overcome the initial difficulties and financial requirements of exporting.

•

Insufficient care in selecting overseas agents or distributors.

• Pursuing orders from around the world, the shotgun approach, instead of establishing a basis for profitable operations and orderly growth. • Neglecting export business when the U.S. market booms. • Failure to treat international customers on an equal basis with domestic counter parts. • Unwillingness to modify products to meet regulations or cultural preferences of other countries. • Failure to print service, sales, and warranty messages in locally understood languages. • Failure to consider use of an export management company or other marketing intermediary. • Failure to consider licensing or joint-venture agreements.

• Failure to realize that it takes patience and understanding to develop the ties necessary to obtain and retain export sales. Success or failure in exporting hinges on an exporter's willingness to allocate sufficient resources to research foreign demand, develop contacts, and produce, market, ship, and sell wood products overseas. These activities are referred to as "trade servicing. Trade Servicing: The Key to Success

If employed conscientiously, trade servicing helps overcome many of the disadvan^^ges and pitfalls in export marketing and helps lessen the effect of economic forces and other factors which an exporter cannot control. There is no substitute for a good working relationship with the overseas buyer. This is particularly important given the U.S. wood exporter's reputation overseas as an "in-and-outer" in servicing the export market. The producers who have stayed in the export market, in good times as well as bad, have proved to be the most effective. Being reliable sometimes means sacrificing short-term gains for long-term market development opportunities.

Supply Consideration: What Do You Have To Sell Overseas?

Deciding what you can sell overseas depends on a host of variables. You will have to consider what you are producing now, your access to timber resources with respect to species, qualities, and quantities; access to processing facilities; transportation; proximity to ports; and how adaptable your current operation is to cutting special orders or scheduling the mill to cut or produce for export markets. Success in the export market may even involve adapting production facilities to produce for foreign grades and specifications. Before taking on the world, you may do best by focusing first on one or two countries where U.S. wood products are familiar to importers. Become knowledgeable about the country and develop a consistent pattern of trade contacts with importers in that country. Nurturing a commitment to marketing in one or two countries before branching out will pinpoint your strengths, weaknesses, and limitations in serving export markets. Once your expertise develops you may feel confident in testing new markets and new products, and in diversifying your export market portfolio.

Pricing Products for Export Table 2, on page 7, outlines the elements of a price quote for each stage through which products move as they pass from the mill to the port of destination overseas. The quote basis used, such as free-on-board (f.o.b.) vessel or cost, insurance, and freight (c.i.f.) named port overseas, will depend on the arrangement negotiated with the importer. A price quote that more closely reflects the cost of goods delivered to the importer's yard has a much better chance of being negotiated and accepted than a quote based on delivery to the U.S. port prior to export. Quotes should include information on shipping arrangements and dates, payment terms, weights, and total cubic volume. The actual price quote will include these elements but will be influenced by foreign import demand, freight rates, insurance costs, domestic supplies, and proximity to exporting facilities and ports. Quotes based solely on domestic U.S. prices plus additional transportation, handling, and insurance costs may or may not be acceptable in international trade. This depends on the negotiations between the U.S. exporter and the foreign buyer. Current benchmark or average prices for specific species and grades of forest products in international trade may be obtained from the publications and newsletters outlined in this handbook. In the United States, forest products are bought and sold according to volume designations such as 1,000 board feet, 1,000 square feet, or 1,000 linear feet. In foreign countries, common volume units in the wood trade are 1,000 cubic meters, 1,000 square meters, and metric tons. The exporter must be familiar with converting U.S.-based volume measurements to the metric system. Forest products volume conversion ratios and methods are shown in appendix IX. Shipping weights and volumes for a number of products and species are shown in appendix X.

Table 2 Elements of pricing goods for export

Element

F.o.b. F.o.b. F.o.b. C.&f. C.&f. C.i.f. (Factory) (Point of (Vessel) (Named (Named (Named export) port) port) port)

Cost of producing wood products

$

$

$

$

$

$

Packaging

$

$

$

$

$

$

Processing/handling

$

$

$

$

$

$

Inland transportation

$

$

$

$

$

Unloading fees at port

$

$

$

$

$

Forwarder's charges

$

$

$

$

Consular fees

$

$

$

$

Ocean freight Marine insurance Terms used: f.o.b.—free on board; c.& f.—cost and freight; c.& i.— cost and insurance; and c.i.f.—cost, insurance, and freight. Source: Inbound Traffic Guide, 1978.

FINANCING EXPORTS

Payment Options for Export Shipments

Listed below are nine options for receiving payment for exported goods. The best method to use depends on a number of factors including the credit rating of the foreign customer, any foreign exchange restrictions imposed by the importing country, and competitive goods and credit facilities available to overseas buyers. Your bank or financial institution should be knowledgeable about most of these payment options. Cash In advance—This is the most desirable and safest method of receiving payment since the exporter has immediate use of the money and is not concerned with repayment schedules. The percentage of trade conducted under this method is low. Open account—This is the riskiest method because it is merely an arrangement between the buyer and seller for payment at a later date with no legal document or recourse available to the exporter. Also, the exporter's capital is usually tied up until time of payment. This method is used by exporters who deal with longstanding customers of unquestionable integrity. Consignment sales—Under this method, the goods are available to the foreign firm on a deferred payment basis. The exporter usually secures political and commercial risk insurance for the goods until payment is received. Sight draft—Money is payable at sight of the completed documents. This method is used when sellers wish to retain control of the shipment either for credit reasons or for the purpose of title retention. A bank acts as an intermediary and is presented with the original bill of lading endorsed by the shipper and other documents (such as packing lists, consular invoices, and insurance certificates) which are not released to the importer until payment of the draft. The advantage of this method is that the exporter retains title to the goods until payment is made. The disadvantage is that the importer can refuse to pay the draft, and the exporter is responsible for shipping the goods back to the United States at the seller's expense or reselling to a third party in the foreign country. Time or acceptance draft—This method is similar to a sight draft except that the importer may defer payments of the draft for 30, 60, 90, or 180 days. Although the exporter does not have any legal recourse if the importer does not pay, a foreign or U.S. bank does act as an intermediary for collection purposes. Date draft—The date draft requires payment by a specified date regardless of the date on which the goods and the draft are accepted by the importer. Date drafts prevent the importer from extending the period of credit as a result of postponing receipt of the goods. Delivery orders—Some countries do not recognize or permit sight draft shipments, including negotiable bills of lading. Shippers may consign the merchandise to a third party, such as an import broker, in the foreign country on a straight bill of lading. The shipper will write a letter called a "delivery order" to the third party authorizing release of the shipment to the bearer of the original delivery order. The required documents will be sent to the importer's bank with instructions to the broker to release goods to the importer only after the draft is accepted. The importer's bank is usually the third party.

Letters of Credit—The "letter of credit" is a document issued by a bank at the importer's request in favor of the exporter obligating the importer to pay for the shipment when the bank receives the required shipping documents. There are two types of letters of credit. The first is an irrevocable letter of credit confirmed by a U.S. bank. This guarantees the seller that payment terms and conditions of the letter credit have been met. The second type is an irrevocable letter of credit confirmed by the foreign bank but not the U.S. bank; payment is guaranteed by the foreign bank. The first type is preferred because the U.S. bank accepts the responsibility to pay and the exporter receives payment as soon as the documents are presented to the bank. Barter and Countertrade—Countertrade is an arrangement for payment or financing by a means other than a cash-for-goods basis. Barter is the easiest form of countertrade to understand: goods for goods. Bartering benefits Third World countries by offsetting the influence of other market forces that may work against their competitive position including high interest rates and a high relative strength of the U.S. dollar compared to other foreign currencies. Countertrade may be considered as an alternative payment or financing scheme and is promoted by centrally planned economies. The method is not generally used by U.S. companies because it increases costs, requires additional management time and planning, and is characterized by detailed contract requirements. In the ideal countertrade arrangement, a company receives goods that it can use internally or sell to established customers. Selling or distributing countertraded goods which are not traditionally handled by the firm will require new marketing practices and channels. Additional costs should be anticipated when handling new products obtained in countertrading. The company may consider employing a countertrade specialist or trading company to sell the goods. Letters of Credit and Invoices

Information required in the letter of credit (L/C) must match with other shipping documents and invoices. Information from an American Express Company brochure lists some of the most common errors and oversights associated with shipping documentation: Merchandise description not identical to that in the letter of credit (L/C). Buyer's name not identical to that shown in the L/C. Total amount not identical to that shown in the draft. Excess drawing or excess shipment. Net value in excess of L/C amount. Prices not as specified in the L/C. Incorrect extension of prices. Omission of the price basis, such as f.o.b., f.a.s., or c.i.f., specified in the L/C. Inclusion of charges not specifically permitted under the terms of the L/C, such as commission, storage, or messenger costs. Not marked "PAID" when specified in the L/C. Not certified, notarized, or visaed if required by the L/C. Absence of statements required by the L/C. Type of packing, weight, or marks omitted from invoice. Marks and numbers not consistent with other documents. Weights not consistent with those shown in other documents. Gross weight shown for net when not expressly permitted by L/C. Order and license numbers required by L/C omitted.

• Goods termed "used" or "second hand" when not allowed by L/C. • Absence of specified signature. • Insufficient number of copies. Foreign Credit /prMA^"^^ Association ^ '

The Foreign Credit Insurance Association (FCIA) is an association of leading private insurance companies which works in cooperation with the Export-Import Bank of the United States (Eximbank). FCIA offers export credit insurance policies protecting U.S. exporters against the risk of nonpayment by foreign debtors due to commercial (insolvency, default) or specified political (war, revolution, currency inconvertibility) reasons. FCIA offers a wide variety of policies for short-term sales (up to 180 days) and medium-term sales (generally, up to 5 years). Products must be of U.S. manufacture and contain no more than 49 percent foreign content (including labor, but exclusive of markup) for short-term sales, and generally no more than 15 percent foreign content is allowable for medium-term sales. Coverage is also available for services and for operating and financing lease transactions. The widely used Multi-Buyer Export policy is generally written to cover shipments during a 1-year period and insures a reasonable spread of an exporter's eligible sales. It enables the exporter to make quick credit decisions, providing faster service to overseas buyers, and reduces paperwork. The exporter can obtain financing and can offer competitive credit terms to attract and retain buyers around the globe even in higher risk markets. The policy insures short-term sales with repayment terms generally up to 180 days and, in an alternative version, covers medium-term sales, with repayment stretching out to 5 years, or longer under certain circumstances. At the inception and at each annual renewal of the Short-Term Multi-Buyer policy, the exporter may choose to cover 90 percent of commercial risks and 100 percent of political risks, or choose equalized coverage at 95 percent for both commercial and political risk. Certain agricultural commodities may be insured under this policy, with terms extended to 1 year, if needed, and with commercial coverage increased to 98 percent. On short-term transactions coverage applies to the gross invoice amount and, in many cases, to interest at FCIA specified rates. Since medium-term sales require a minimum 15 percent cash payment by the buyer on or before due date of first installment, coverage here applies to the balance—the financed portion—of the transaction plus interest at FCIA specified rates. The Multi-Buyer Export policy has a deductible feature similar to that of major medical and other forms of insurance. The policy is subject to limits. The aggregate limit represents the insurers' maximum liability under the policy. Exporters make their own credit decisions for shipments up to the amount of a discretionary credit limit (DCL), after checking the country limitation schedule (CLS) and documenting the credit worthiness of the buyer as specified in the DCL endorsement to the policy. For larger amounts, a special buyer credit limit (SBCL) is available upon application to FCIA. For additional information, contact FCIA at 40 Rector Street, 11th Floor, New York, NY 10006. Tel. (212)227-7020.

10

Export-Import Bank of the United States

The Export-Import Bank (Eximbank) of the United States is the U.S. Government agency that facilitates the export financing of U.S. goods and services. Eximbank helps U.S. exporters compete against foreign governments subsidized financing in overseas markets. Eximbank offers four major export finance support programs: loans, guarantees, working capital guarantees, and insurance. Lending Programs—Eximbank's loans provide competitive, fixed interest rate financing for U.S. export sales of capital equipment and services. Eximbank extends loans to foreign buyers of U.S. exports and intermediary loans to fund responsible parties that extend loans to foreign buyers. These loans are made at low, fixed interest rates according to the Organization for Economic Cooperation and Development arrangement. Special features are available for small businesses. Guarantee Program—Guarantees provide repayment protection for private sector loans to creditworthy foreign buyers of U.S. goods and services. The guarantees provide coverage for both political and commercial risks. Working Capital Guarantee Program—Eximbank also offers guarantees to lenders to support pre-export financial needs. The Working Capital Guarantee Program can help small- and medium-sized exporters obtain the financing they need to produce and market goods for sale abroad. Insurance—The insurance program administered by the Foreign Credit Insurance Association, offers insurance policies to protect U.S. exporters and banks against the political and commercial risk of nonpayment by foreign debtors. Special policies exist for small or new-to-export businesses. Inquiries should be directed to Eximbank Marketing Division, 811 Vermont Avenue, NW., Washington, DC 20571. Tel. (202) 566-4490; Small Business Hotline: (800) 4245201.

Overseas Private Investment Corporation (OPIC)

Small Business Administration (SBA)

OPIC is a U.S. Government corporation that promotes U.S. investment in less developed countries. OPIC's finance program is oriented towards medium- to long-term investments that involve significant developmental benefits. The program provides insurance coverage for U.S. investments against expropriation, inconvertibility of local currency, or losses resulting from war, revolution, or civil disorders. OPIC does not handle export financing directly but may assist in financing complementary projects, such as a distribution yard for U.S. wood products. Insurance on letters of credit may also be obtained in the absence of FCIA or other commercial insurance. The insurance covers 90 percent of the investment plus attributable earnings. For additional information, contact OPIC, 1615 M Street, NW., Washington, DC 20527. Tel. (202) 457-7010. Fax:(202)331-4234. The mission of the Small Business Administration is to aid, counsel, assist, and protect the interests of small business; ensure that small businesses receive a fair portion of Government purchases, contracts, and subcontracts, as well as of the sales of Government property; make loans to small business concerns, state and local development companies, and the victims of floods or other catastrophes or of certain types of economic injury. The SBA also licenses, regulates, and makes loans to small business investment companies.

11

Export Revolving Line of Credit Program (ERLCP)—The Small Business Administration (SBA) can guarantee up to 90 percent of a bank line of credit to an eligible small business or Export Trading Company (ETC) to finance the acquisition of raw materials, inventory, or labor needed to produce, acquire, or market the product or service to be exported. The ERLCP may not exceed 18 months or $750,000. Funds may not be used to acquire fixed assets or retire existing debt. The Export Trading Company must have been in business for 1 year (not necessarily in exporting) prior to applying for an ERLCP loan through its bank. SBA Regular Business Loan Program—Under this program an eligible small business or Export Trading Company may obtain longer-term financing (depending on use of proceeds). Up to $750,000, or 90 percent of the loan, may be obtained on an SBAguarantee basis. Up to $150,000 (depending on availability of funds) can be obtained as a direct loan under this program. Interest rates may be fixed or variable. Regular Business Loan Program—Funds may be used to obtain plant or equipment and for working capital. However, export trading companies with any bank equity participation are not eligible for these SBA financing programs. SBA can assist only those eligible small businesses and export trading companies which have the majority of their assets in the United States. Funding through these programs cannot be used to establish joint ventures overseas. Small Business Investment Companies (SBIC)—Equity capital or long-term financing may be obtained by eligible small businesses from SBIC's which are licensed by SBA, if these SBIC investment companies have an investment strategy that includes such activities. SBIC's may invest in export trading companies in which banks have equity participation, provided other SBIC requirements are met. For further information and a copy of a directory of SBICs, contact the Office of Investment, Small Business Administration, 1441 L Street, NW., Washington, DC 20416. Tel. (202) 653-2806. Fax: (202) 254-6429. U.S. Trade and Development Program (TDP)

The U.S. Trade and Development Program (TDP) of the U.S. International Development Cooperation Agency promotes U.S. exports to developing nations. The program provides financing for feasibility studies for public and private sector projects in developing economies which would lead to the export of U.S. products and services. Helping U.S. businesses win construction contracts overseas is one of the main objectives of the TDP. For example, an export trading company of construction, architecture, and engineering firms might approach the TDP for financing a construction, building, or housing project which could lead to an increase in U.S. wood products exports. Other studies include large-scale energy generation and conservation, infrastructure, mineral development, agribusiness, and basic industrial facilities all of which could use U.S. wood products. For additional information on country eligibility, developmental priorities, and U.S. goods procurement requirements, contact the U.S. International Development Cooperation Agency, Washington, DC 20523. Tel. (703) 875-4357.

Trade Finance Corporation (TRAFCO)

TRAFCO offers fixed and floating interest-rate financing for medium-term export loans insured by a major insurance companies. Export credit insurance covering commercial

12

and political risk is required in this financing program. TRAFCO "conduit" securities, representing a segment of a pool of export loans, are certificates that can be sold to institutional and private investors. The "pools" are held by a trustee who receives payments on behalf of the holders of the certificates. TRAFCO funds are generated through the U.S. capital market. Additionally, the program has effectively introduced export financing paper to the capital market. Principal buyers include insurance companies, fiduciaries, mutual funds, and public funds. For more information, contact TRAFCO, 2121 Ponce de Leon Blvd., Suite 920, Coral Gables, FL 33134. Tel. (305) 446-5607.

13

Export Shipping

The development of a successful export strategy must encompass a thorough knowledge of shipping procedures, documents required, and methods. The mechanics of shipping include: (1) attention to packaging, including banding of bundles, grade stamping, labeling, and color coding; (2) proper documentation; (3) scheduling the best shipping routes and carriers; and (4) an understanding of U.S. and foreign customs, regulations, tariff rates, and plant health requirements. Often, the details of export shipping may be handled by a "freight forwarder," who acts as an exporter agent shipping goods overseas. Freight forwarders are licensed by the Federal Maritime Administration to facilitate the movement of goods from U.S. ports. They may advise the exporter regarding freight costs, port charges, consular fees, documentation fees, insurance, and handling costs. In addition to assuring that the goods arrive overseas in good condition, they review the letter of credit and other necessary documentation and may prepare the ocean bill of lading. After shipment, the forwarder will send all documents to the paying bank to confirm the export of the commodity. Additional information on freight forwarders may be obtained from port authorities, the International Trade Administration; the U.S. Department of Commerce; banks; or from the National Customs Brokers and Forwarders Association of America whose address is One World Trade Center, STE 1109, New York, NY 10048. Tel. (212) 432-0050. USDA's Office of Transportation also helps exporters with problems concerning the transportation of U.S. agricultural products, including forest products. For further information, see page 27. Carriers

Three types of ocean carriers ship products overseas. The first are conference lines which consist of an association of ocean carriers providing common rates and services. Individual conference carriers may take independent action and offer shippers lower rates. Also shippers may form associations to negotiate lower rates with conferences. The second type of carriers are the independents. Independent rates may be higher than other carriers, but they also may be lower when in direct competition with conference carriers. Both conference and independent carriers operate on regular schedules and trade routes. Independent proprietary carriers include major forest products companies with their own transportation operations. These lines specialize in forest products and other bulk commodity shipping. The third type of carrier is the tramp vessel. These carriers generally handle only bulk cargo and are not on regular schedules or trade routes. According to the Western Wood Products Association, tramps are the most common means of shipping wood products as they are relatively economical. A booking contract is mandatory to reserve space for the cargo on a specified vessel. The contract is binding insofar as the carrier has the right to charge for reserved space that is not used or to charge for canceled reservations without adequate notice.

14

Terminals

Packaging and Shipping

The use of specialized forest products handling facilities at the ports of export and destination prove to be the most cost effective. This will be reflected in lower freight rates and landed costs. Moving lumber and other forest products through general cargo terminals can be very expensive. Packaging products is of vital importance particularly when shipments are bound for ports with inadequate handling and storage facilities. Lumber, plywood, and veneer bundles must be securely strapped and protected from damage because of rough handling, moisture, or weathering. This is essential in foreign ports where bundles may be stored uncovered while awaiting pickup or delivery. Bundles should be clearly marked according to foreign specifications and include the company logo or color coding. Wood products are shipped by a variety of methods including break bulk, containers, flat racks, and lash barge. The most common methods are break bulk for lumber and plywood shipments and containers for higher valued shipments such as kiln-dried dimension stock, lumber clears, and veneer. In general, wood shipments from U.S. Atlantic ports are containerized, whereas those from the Gulf and West Coast ports tend to be break bulk. There are exceptions depending on the destination country and the type of wood product shipped. Freight containers are capable of holding approximately 4,000 board feet of logs or 10,000-14,000 board feet of lumber depending on the product and moisture content. Maximum cargo weights are, however, limited by carriers to comply with laws established to protect roads and bridges. A 40-foot container, therefore, can only be loaded with about 46,000 pounds of forest products when traveling over U.S. highways. Containers loaded at the port may have higher cargo weights.

Export Documentation

The documentation of exports is just as important as the goods you are exporting. Faulty information or incomplete documentation can lead to delays in transporting goods to their destination. Forty-six separate documents are the average for one shipment of goods being sold abroad. Many countries have laws that must be followed when completing export forms. A freight forwarder, a specialist in this area of exporting, can often provide the necessary documentation for shipping your goods. Every country varies as to the number and kind of documents that are necessary for importing different goods. The Department of Commerce's district office closest to you or your forwarder can provide you with up-to-date and specific information on export documentation.

15

Table 3 Shipping documents required in exporting^

Documentation

Prepared by

Export License - issued upon application to the U.S. Department of Commerce

Exporter

Destination Control Statement - prevents export to unauthorized destinations

Freight forwarder

Shipper's Export Declaration - for compiling U.S. statistics/enforcing U.S. export controls

i(

Banking papers

"

Letters of Transmittal - for items eligible for duty drawback

»

Notice of Exportation - for items eligible for duty drawback Certificates of Origin - for items eligible for duty drawback Export Packing List - itemizes product shipped

t(

Domestic Packing List - itemizes product shipped

Exporter

Insurance Certificate

Freight forwarder

Pro Forma Invoice - a formal price quotation with a detailed account of individual costs

Exporter

Letter of Credit - a promise to pay a specified amount of money upon receipt by the bank at the buyer's request in favor of the seller

Importer

Bill of Lading - a detailed description of the cargo including destinations. Two types are necessary: an inland and an ocean bill of lading

Ocean-freight forwarder

Phytosanitary Certificate - a certificate stating that the goods are free of disease and infestation

APHIS

^ More detailed information about exporting documentation may be obtained from the international departments of major banks, freight forwarders, or the United States Council of the International Chamber of Commerce, 1212 Avenue of the Americas, New York, NY 10036.

16

"

Shipper Export ^ Declarations (SED's)

The Shipper Export Declarations (SED's) are very important documents that are used ^^^ ^^^ly ^^ ¡dentify cargo, but to determine the official U.S. export statistics as well. These trade statistics are used throughout the Government and industry organizations and distributed to the industry. The importance of accurate information on the export declarations can not be understated. Forms: The forms used for export declarations are: SED Form 7525 or 7525-V-Alternate. These forms and continuation sheet must be copied. Sample copies may be obtained from the Bureau of the Census, Washington, DC 20233. When privately printing SED's, the forms must conform in every respect to the official forms in size, wording, color (black ink on buff paper for Form 7525-V), weight of paper stock (not less than 16 nor more than 20 pounds commercial substance), and arrangement, including printing the Office of Management and Budget Approval Number in the upper right-hand corner of the face of the form. The alignment of form 7525-V corresponds with air waybills and other vertically oriented documents while form 7525-V-Alternate corresponds with the ocean bill of lading and other horizontally oriented documents. (See sample documents in appendix II.) However, either form may be used regardless of the method of transportation or destination. The Bureau of the Census has a program. Automated Reported Program, to which exporters, carriers, or freight forwarders may submit monthly reports by computer (tape, floppy disk, or direct transmission). For further information on this program, contact the Automated Data Reporting Branch, Department of Commerce, Suitland, MD 22222. Tel. (301) 763-7700. When Required: SED's are required for nearly all shipments (see section 9 for exemptions) from the United States, Puerto Rico, U.S. or Puerto Rican Foreign Trade Zones (FTZ), and the U.S. Virgin Islands. SED's are not required for shipments from the United States or Puerto Rico to U.S. possessions, except to the U.S. Virgin Islands or from a U.S. possession to the United States or Puerto Rico. Number of Copies Required: a) One copy for shipments to Canada, Puerto Rico, and the U.S. Virgin Islands; b) One copy for exports through the U.S. Postal Service; and c) Two copies for all other shipments. Additional copies may be required for export control purposes by the International Trade Administration, other government agencies (when authorized), customs directors, or the local postmaster. Preparation: The SED must be prepared in English in a permanent medium (ink, typewritten, etc.) with the original signed (a signature stamp is acceptable) by the exporter or an authorized agent of the exporter. The agent must be authorized by a power-of-attorney or item #23 on form 725-V (an informal power-of-attorney) must be completed.

17

Requirement for Separate SED's: Separate SED's are required for each shipment from one exporter to one importer on a single carrier (including each rail car, container, or other vehicle). However, customs directors may waive this requirement if multiple car shipments are made under a single loading document and cleared simultaneously. Also, merchandise requiring a validated export license shall not be reported on the same SED with goods moving under a general license. Presentation: a) Postal shipments—SED's must be delivered to the postmaster when the packages are mailed. b) Pipeline shipments—SED's must be submitted to the customs director within 4 working days after the end of the calendar month. c) All other shipments—SED's must be delivered to the exporting carrier before exporting. d) Exporting carriers are required to file SED's and manifests with customs. e) Shipments from an interior point—SED's may accompany the goods being transported to the exporting carrier or the port of exportation, or they may be delivered directly to the exporting carrier. f) Shipments exempt from SED filing requirements—a reference to the exemption must be noted on the bill of lading, air waybill, or other loading document for verification that no SED is required. Corrections: Corrections, amendments, or cancellations of data may be made directly on the SED if it has not already been sent to the Bureau of the Census. If the SED has been sent to the Bureau, any corrections, cancellations, or amendments must be filed on a copy of the original SED but marked correction copy and filed with the customs director or the postmaster where the declaration was originally presented. Retention of Siiipping Documents: Three years is the usual length of time that the Bureau of the Census, U.S. Customs Service, and the International Trade Administration may require exporters or their agents to produce copies of shipping documents. Exemptions: a) Shipments (excluding postal shipments) where the value of the goods under each schedule B number or HS code is $1,500 or less and for which a validated export license is not required and when shipped to countries not prohibited by the Export Administration Regulations.

18

b) Shipments through the U.S. Postal Service that do not require a validated export license: (1) when the goods are valued $500 or less, (2) if either one of the parties is not a business concern, or (3) the shipment is not for commercial consideration. c) In-transit shipments not requiring a validated export license and leaving for a foreign destination by means other than by ocean vessel. d) Shipments from one point in the United States to another point by routes passing through Canada or Mexico, and shipments from one point in Canada or Mexico to another point by routes passing through the United States. Administrative Provisions: SED's and the information that is written on them are confidential and are exempted from the Freedom of Information Act. SED's are only for official purposes authorized by the Secretary of Commerce in accordance with 13 U.S.C Section 301. Neither Commerce nor the Census Bureau will give out the information to anyone except the exporter or his or her agent. Information from SED's (except common information—that is, information that is on both the SED and the manifest) may not be copied from manifests; other exporters may not give SED's or their information to anyone for unofficial purposes (for example, if the customer requests a copy of the SED). Copies of the SED's may be supplied to exporters or their agents when they are needed to comply with official requirements; for instance, authorization for export, export control requirements, or USDA requirements for proof of export in connection with subsidy payments. These copies will be stamped certified and are not for any other use and may not be reproduced in any form. When the Secretary of Commerce or a delegated person determines that withholding information on a particular SED is contrary to "national interest," the Secretary or delegate may make the information available while taking safeguards and precautions as deemed appropriate. A SED presented for export is a representation by the exporter that all statements and information follow the export control regulations. The product described on the SED must be described the same on all applicable licenses. It is unlawful to knowingly make false or misleading representations for exportation. This is a violation of the Export Administration Act 50 U.S.C App 2410. It is also a violation of export control laws and regulations to be connected in any way with an altered SED. Goods that have been, are being, or for which there is probable cause to believe they are intended to be exported in violation of the Export Administration Act are subject to seizure, detention, condemnation, or sale under 22 U.S.C. section 401. To knowingly make false or misleading statements relating to information on the SED is a criminal offense subject to penalties in 18 U.S.C. section 1001.

19

Violations of the Foreign Trade Statistics Regulations (FTSR) are subject to civil penalties as authorized by 13 U.S.C. section 305. Regulations: Detailed information about the SED and its preparation is contained in the FTSR (15 CFR Part 30). Also, the FTSR should be consulted for special provisions under particular circumstances. Copies may be purchased from the Bureau of the Census, Washington, DC 20233. Information concerning export laws and regulations of the International Trade Administration is contained in the Export Administration Regulations, which may be purchased from the Superintendent of Documents, Government Printing Office, Washington DC 20402. Reference Schedules Schedule B—Statistical Classification of Domestic and Foreign Commodities from the United States. For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402 and local U.S. Customs District Directors. Schedule C—Classification of Country and Territory Designations for U.S. Foreign Trade. Free from the Bureau of the Census, Washington, DC 20233. Also included as part of Schedule B and USTSA. Schedule D—Classification of Customs Districts and Ports. Free from the Bureau of the Census. Also included as part of Schedule B and USTSA. Schedule K—Classification of Foreign Ports by Geographic Trade Area and Country. Also free from the Bureau of the Census. Foreign Trade Statistics Regulations—For sale by the Bureau of the Census. Exporting Checklist

The following checklist is a general guide outlining the steps involved in completing an export shipment under a confirmed letter of credit (L/C). The actual procedure will vary according to the bank's financing arrangements and the services provided by the freight forwarders and steamship companies. The price basis (f.o.b., f.a.s., c.i.f., etc.) and the terms of sale agreed upon between the exporter and importer also will affect the procedures to follow in exporting. Check first with the international department of your bank and the freight forwarder to determine all financing and documentation requirements and procedures. • • • • •

U.S. exporter and foreign importer agree on the terms of the sale. Importer applies for a letter of credit (L/C) at the foreign bank. Foreign bank issues the L/C to the exporter's bank. Importer sends a purchase order accompanied by a copy of the L/C to the exporter. Exporter prepares the order for shipment, arranges for inland transportation of the shipment to the port, and issues shipping instructions to a freight forwarder. • Exporter's freight forwarder selects a suitable vessel, contacts the outbound steamship line office, and books space on a particular vessel. The freight forwarder also collects or prepares the exporting documents, including the inland bill of lading, ocean bill of lading (B/L), insurance, and phytosanitary certificates. (The exporter may arrange for marine insurance through a private insurance company.)

20

Freight forwarder pays the due bills from the outbound steamship line and transmits to the exporter the original ocean bill of lading, together with the bill covering the inland freight, the stevedoring costs, and the freight forwarder's services. Exporter prepares a "commercial set"—a negotiable bill of lading, a copy of the L/C, an invoice, a bill for the freight forwarder's charges, insurance certificates, and, if necessary, a customs invoice. The exporter sends the commercial set to the exporter's bank. Upon receipt and acceptance of the commercial set, the bank pays the exporter covering the shipper's invoice in accordance with the L/C issued by the importer's bank. The bank transmits the commercial set and a debit notice to the importer's bank for payment. The exporter or freight forwarder sends a non-negotiable copy of the bill of lading to the importer notifying that the cargo has been shipped. After the vessel has sailed, the outbound steamship line's office sends the manifest to the inbound steamship office, together with non-negotiable copies of the bills of lading, arrival notice, delivery receipt, and container list. Outbound steamship office submits to the U.S. Customs one non-negotiable ocean bill of lading copy with the shipper's export declaration. This must be accomplished within 4 working days of the vessel's clearance from the U.S. port. Depending on the terms of the sale and financing arrangements, the exporter may be liable for the shipment after the vessel has sailed. Check with the bank, freight forwarder, and insurance company to determine your rights, responsibilities, and liabilities, as well as the proper procedures to follow in completing the export sale.

21

Business Organization of Firms Involved In Exporting

"In House"

The organization of the firm and how your wood products are sold overseas are related and depend on several factors including the size of the company, productive capacity, types of wood products and degree of processing, previous exporting experience, and business conditions overseas. "In-house" organization of the business involves direct selling of wood products by the U.S. producer to the foreign importer. The producer is usually responsible for shipping the product overseas. Traditional and customary marketing and business practices in a foreign country will dictate how the products will be sold. Depending on the country, direct selling may involve working with foreign sales representatives, agents, or distributors. For example, agents are very active in the wood products trade in the United Kingdom and other European countries. In Japan, trading companies are the primary contacts. "In-house" organization will provide the company greater control over the export marketing procedures for the firm's products. In general, there are higher start-up costs and fewer economies of scale under this organizational structure than with the others described below.

Export Management Companies (EMC's or agents)

EMC's are generally small, closely held companies which represent wood products manufacturers in export marketing. The EMC may represent a number of small, unrelated companies and provide benefits (economies of scale) relating to foreign sales, marketing missions, and scheduling or shipping products for export. The EMC often retains the identity of the manufacturer when dealing with foreign importers, whereas agents work under their own names.

Export Trading Companies (ETC's)

The largest domestic barriers to exporting—lack of knowledge of foreign marketing, limited credit facilities, and legal restrictions in cooperating with other U.S. companies (antitrust violations)—may be hurdled by forming an export trading company (ETC). ETC's may assume the risks involved with international trade by taking title to the products and assuming responsibility for marketing and selling the products overseas. One publication, the Export Trading Company Guidebook is available for sale from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Additional assistance may be obtained from the Office of Export Trading Company Affairs, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230. Tel. (202) 377-5131.

Export Merchants (EM'S)

Similar to an ETC, an export merchant (EM) may take title to a producer's goods and be responsible for selling to the foreign importer. The advantages of using an export merchant include: 1. Wood products are sold to an export merchant domestically. Producers do not need to be familiar with foreign business practices—this is the responsibility of the EM. 2. The EM may handle all intermediate processing and handling functions, such as pressure treatments or kiln-drying of lumber prior to export. 3. The EM may serve as a "sorter" or distribution yard for lumber and other products. This permits lumber to be regraded specifically for export and specialty markets. Lower volume, high-quality products may become more marketable as a result of using an EM.

22

4. EM'S may become familiar with the operation of small lumber mills and wood producers and may provide valuable assistance in producing wood products for the export market. Foreign Sales Corporation (FSC)

Under the Foreign Sales Corporation (FSC) Act of 1984, an FSC is a corporation established in a foreign country or U.S. possession, excluding Puerto Rico, which may obtain a tax exemption on a portion of the earnings generated by the sale or lease of export property and the performance of some services. As a general rule, 15 percent of the profits from qualifying export transactions are treated as tax-free income. An FSC program was intended to replace the Domestic International Sales Corporation (DISC) program which has been interpreted by members of the councils of the General Agreement of Tariffs and Trade (GATT) as an illegal tax subsidy for exports. FSC's cannot provide long-term tax deferrals and retention of profits to secure tax benefits. Rather, FSC's obtain tax exemptions on approximately 30 percent of the FSC foreign trade income if the FSC buys from independent suppliers—a smaller percent is given if parent corporations are the suppliers. Special administrative pricing rules apply if the FSC purchases from related suppliers. An FSC must be incorporated and have its main office in a foreign country or U.S. possession, including the U.S. Virgin Islands, American Samoa, Guam, and the Northern Marianas. Additionally, an FSC must have at least one director who is not a U.S. resident and maintain a set of books at its main off-shore office. It cannot have more than 25 shareholders and cannot have any "preferred" stock. An "election" to become an FSC must be filed with the Internal Revenue Service (1RS). An FSC may be incorporated in the following countries and U.S. possessions: American Samoa Austria Barbados Belgium Canada Cyprus Denmark Dominica Egypt Finland

France Germany Grenada Guam Iceland Ireland Jamaica Malta Morocco Netherlands

New Zealand Northern Marianas Islands Norway Pakistaan Philippines South Korea Sweden Trinidad and Tobago U.S. Virgin Islands

When selecting a location for the FSC you should take into account that the 1RS will not allow foreign tax credits for foreign taxes imposed on the FSC's qualified income. Because of this, most FSC's are incorporated in the U.S. Virgin Islands. Small exporters may establish either a "small" FSC or an "interest-charge" FSC depending on the level of export income. Small FSC's, «with gross export income of $5 million or less, have less stringent rules to meet.

23

FSC's can be formed by manufacturers, nonmanufacturers, and export groups. They can function as principals, buying and selling for their own account, or as commission agents. The FSC may be related to a manufacturing parent company or can be an independent merchant or broker. Commission agents are required to perform specific activities with respect to the export sale. Other management activities must be performed at the offshore location. For further information about FSC's, jointly-owned FSC's, minimal foreign presence FSC's, small business FSC's, and export trading companies, contact: Office of Trade Finance, U.S. Department of Commerce, Room 4420, 14th and Constitution Avenue NW., Washington, DC 20230. Tel. (202) 377-3277.

24

Export Market Information and Assistance

U.S. Department of Agriculture

United States Government Foreign Agricultural Service The Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture is responsible for developing, maintaining, and expanding export markets for U.S. agricultural commodities—including solid wood products. FAS provides foreign market information, works to gain foreign market access for U.S. farm, food, and forest products, and cooperates with U.S. nonprofit trade associations in conducting market development activities in overseas markets. Overseas Offices—FAS represents U.S. agriculture overseas through a network of agricultural counselors, attaches, and trade officers in 96 foreign posts covering 110 countries. The staff supervises market development activities, reports to FAS/Washington, and alerts the U.S. trade to foreign market opportunities and competition. The U.S. agricultural counselor/attache office is in frequent contact with foreign buyers and overseas representatives of U.S. firms and associations, and helps U.S. agricultural exporters, associations, and allied groups establish contacts with government officials and the foreign trade. In addition, 15 Agricultural Trade Offices (ATO's) have been opened in Algiers, Baghdad, Beijing, Caracas, Guangzhou (Canton), Hamburg, Istanbul, Jeddah, Lagos, London, Manama, Seoul, Singapore, Tunis, and Tokyo. These trade offices serve as a one-stop service center with facilities for trade representatives, nonresident private trade groups, and others engaged in exporting and importing U.S. agricultural commodities. Annual reports on wood products production, marketing, and trade for 30 selected foreign markets are also available on an annual subscription basis. The markets are: Australia Austria Belgium Brazil Burma Canada Chile China Cote d'Ivoire Denmark Egypt

Finland France Germany, Federal Republic Indonesia Italy Japan Korea, South Malaysia Mexico Netherlands

New Zealand Philippines Spain South Africa Sweden Taiwan United Kingdom U.S.S.R. Venezuela

The annual reports are prepared by FAS agricultural counselors, attaches, and trade officers overseas. To order a subscription for the scheduled reports, voluntary reports, and report updates contact the Reports Officer/FAS, USDA, Room 6078-South Building, Washington, DC 20250-1000. Tel. (202) 382-8924. Market Reports—FAS issues quarterly circulars on the world supply and demand situation for wood products on an annual subscription basis. The reports include summaries of U.S. exports of logs, lumber, plywood, veneer, wood chips, and a variety

25

of other softwood and hardwood products. Foreign wood products production, supply, and distribution data are also provided. The charge for four issues is $10.00 for domestic mailing and $15.00 for foreign mailing. For further information, contact FAS/lnformation Division, Room 4644-South Building, USDA, Washington, DC 20250-1000. Tel. (202) 382-9445. Export Services—Through FAS services, agricultural exporters can keep abreast of foreign market development opportunities with marketing research reports, trade leads, product publicity, and listings of prospective foreign importers. FAS is working to expand its telecommunications link with its agricultural trade offices overseas in an effort to increase the volume and timeliness of trade leads available to U.S. agricultural exporters. FAS serves as the liaison between U.S. companies and foreign importers seeking U.S. wood and other agricultural products. FAS works to help U.S. producers introduce products in new markets and further expand established markets. FAS's agricultural counselors, attaches, and trade officers transmit market information, trade, and economic statistics electronically to FAS offices in Washington, DC. U.S. companies can subscribe to the following export services: 1. Trade Leads provide trade leads in overseas markets. They are distributed in three ways: a) Electronic Dissemination. Electronic access to trade leads is available on a daily basis via computer information services that offer the leads on electronic bulletin boards. To access the trade inquiries you need a minicomputer with a modem and communications software. Listed below are the companies to contact directly to receive this service. Agridata Resources, Inc. 330 East Kilbourn Milwaukee, Wl 53203

Dialcom, Inc. 600 Executive Blvd., Suite 150 Rockville, MD 20852

Tel. (800) 558-9044

Tel. (301 ) 770-4280

Master Productions 7300 Candletree Lane, Suite 21 Lincoln, NE 68506 (402) 489-2183

Intellibanc Corporation 2214 Torrance Blvd., Suite 101 Torrance, CA 90501 (213) 618-9597

California Agricultural Technology Institute Maple and Shaw Avenues Fresno, CA 93470-0115 (209) 294-4872 b) Export Briefs is a weekly bulletin of all trade leads received during the previous week. Export Briefs also includes highlights of upcoming trade shows, foreign trade developments, and changes in trade policy issues, product standards, and labeling 26

information. Information in each inquiry is identical to that in the electronic access. The subscription fee is $75 per year. c) The Journal of Commerce, a daily paper, publishes export opportunities supplied by the U.S. Department of Agriculture regularly in its column "Agricultural Trade Leads." For information, contact The Journal of Commerce, 110 Wall Street, New York, NY 10005. Tel. (800) 221-3777; in New York: (212) 425-1616. 2. Foreign Buyer Listings are on a database that includes 15,000 foreign firms interested in importing agricultural (including wood) products. Each listing may be formatted (a) by specific commodity for the entire world; (b) by specific country for all commodities; and (c) by specific commodity and country. These lists provide company and contact name, address, telephone, and telex number. The charge for each list is $15. 3. The Buyer Alert Notice uses high-speed telecommunications links, to forward specific information about the products you want to sell to foreign importers in 50 countries. This product publicity service is offered at no charge. For further information on trade leads. Export Briefs, Foreign Buyer Lists, or the Buyer Alert contact: Foreign Agricultural Service, Room 4649-S, U.S. Department of Agriculture, Washington, DC 20250-1000. Tel. (202) 447-7103. Refer to appendix III for examples of Export Briefs, Foreign Buyer Listings, and the Buyer Alert. Office of Transportation USDA's Office of Transportation (OT) provides the following services: • Technical Assistance—OT publishes export handbooks, directories, and statistical news reports; sponsors export seminars; and participates in technical exchanges with other countries. • Economic Studies—OT analyzes such topics as the future transportation needs of the U.S. agricultural export community, the impact of various cargo preference initiatives on agricultural shippers, and the feasibility of a transportation-oriented export trading company. • Technological Research—OT works to develop better procedures for shipping agricultural commodities (including forest products), evaluates equipment needs, and analyzes and tests transportation packaging techniques. For further information contact the USDA Office of Transportation, Washington, DC 20250-4500. Tel. (202) 653-6275. Animal and Plant Health Inspection Service USDA's Animal and Plant Health Inspection Service (APHIS) actively participates in international programs to protect against the spread of plant and animal pests and diseases. Many foreign countries require that shipments of wood products be accompanied by phytosanitary certificates, issued by APHIS at the request of the shipper, certifying that the products conform to foreign quarantine import requirements. 27

For example, the European Community (EC) requires a phytosanitary certificate for U.S. shipments of veneer logs certifying that the logs have been fumigated with methyl bromide according to approved EC treatment schedules and procedures. (See appendix 2 for an example of a phytosanitary certificate.) Inspection is handled by Federal and State government cooperators and the inspections are normally not valid if conducted more than 14 days prior to the export of the commodity. The exporter must make written application for inspection and make the commodity available for physical inspection. Certification is recognized by foreign plant protection services and by regional plant protection organizations. Phytosanitary certificates are not issued to satisfy letter of credit or other commercial contract terms and are not certifications of grade or quality. Criteria on foreign country plant import requirements may be obtained by contacting: Protection and Quarantine (PPQ), APHIS, USDA, at ports of export, or by writing PPQ, APHIS, USDA, Port Operations, Room 633, Federal Building, Hyattsville, MD 20782. Tel. (301) 436-8537. Forest Service USDA's Forest Service conducts research and analysis of U.S. timber supply, demand, and wood products trade. The Forest Service experiment stations and the forest products laboratory can provide useful information and research on exporting. The Southern Forest Experiment Station handles research involving exports of wood products from the southern United States and on the costs of exporting. Contact: Principal Economist, USFS/SFES, Room T-10034, 701 Loyola Avenue, New Orleans, LA 70114. Tel. (504) 589-6651 ; Fax: (504) 589-3961. The Pacific Northwest Forest Experiment Station handles macroeconomic modeling of U.S. and international markets of wood products. Contact: Principal Economist, USES/ PNWFRES, P.O. Box 3890, Portland, OR 97208. Tel. (503) 231-2193; Fax: (503) 3262272 or (503) 326-3096. The Northeastern Forest Experiment Station handles research on U.S. hardwood exports. Contact: William G. Luppold, Project Leader, Forestry Scientist Laboratory, Box 562-B, Princeton, WV 24740. Tel. (304) 425-8107. The Northeastern Area State and Private Forestry office provides technical assistance on the exporting of forest products. Contact: Director, USFS/NA, Five Radnor Corporate Center, Suite 200, 100 Madsen Ford Road, Radnor, PA 19087. The Southern Region State and Private Forestry Office provides technical assistance on the exporting of forest products. Contact: R-8, S&PF, 1720 Peachtree Road, NW., Atlanta, GA 30367. Tel. (404) 347-7930; Fax: (404) 347-4488. The Forest Products Laboratory conducts research and provides information on foreign and domestic woods and wood products. Contact: Information Office, Forest

28

Products Laboratory, One Gifford Pinchot Drive, Madison, Wl 53705-2398. Tel. (608) 231-9200; Telex: 7400032; Fax: (608) 231-9592. U.S. Agency for International Development (AID)

The Agency for International Development (AID) publication, Export Opportunities With Agency for International Development, explains AID'S programs. The AID Documents Kit for Export Suppliers is another useful publication. Both can be obtained by writing to the Office of Business Relations, AID, Washington, DC 20523. Additional AID publications are available on a subscription basis including: AID Financial Export Opportunities (SBC), AID Procurement Information Bulletins (PIB), or AID Small Business Memo (SBM).

U.S. Department of Commerce

The International Trade Administration (ITA) of the U.S. Department of Commerce provides a wide range of services and programs to assist U.S. firms in developing export markets. The best point of contact for U.S. firms is their local Department of Commerce district office, of which there are 48 across the United States. These offices are run by the division of ITA known as the U.S. and Foreign Commercial Service. For those companies operating from foreign locations, there are 66 commercial offices, which are part of this same network, located in embassies and consulates in countries comprising more than 95 percent of the world market for U.S. products. For information about a specific country, contact the appropriate country desk officer at the ITA. A list of ITA desk offices is provided in appendix V. U.S. and Foreign Commercial Service District Offices are listed in appendix VI. The services provided by the Office of Trade Information Services, ITA, are listed below: • Agent Distributor Service is handled through the district offices. U.S. commercial officers overseas locate interested and qualified representatives on behalf of a U.S. firm. The commercial officer prepares a report identifying up to six foreign prospects that have examined the U.S. firm's product literature and have expressed interest in representing the company. There is a charge per market or specific area. • The Trade Opportunities Program (TOP) Notice Service offers individual messages on current foreign trade leads detailing specifications, quantities, end-use, delivery, and bid deadlines for the products requested by the foreign buyer. TOP'S are available only electronically via the Economic Bulletin Board. To subscribe, contact the National Technical Information Service (NTIS) at (307) 487-4630, or write to the NTIS at 5285 Port Royal Road, Springfield, VA 22161. The registration fee now is $25 and gives the user 2 hours of connect time. After the initial 2 hours, the user is charged 10 cents per minute of connect time. • Customized Export Mailing Lists (EML) provide profile information which allows the subscriber to identify only the most relevant potential contacts. Gummed labels for direct mailings are also available. The cost for this service is $10 for the basic fee and 25 cents for each name. •

International Market Research (IMR) Surveys are organized under foreign country/ product categories and contain statistics and analysis of trade, information on endusers, purchasing patterns, marketing practices, trade restrictions, and key contacts in Government purchasing agencies and other organizations. IMR's cost $50 to

29

$200 and range up to 400 pages in length. These are available through the district offices via the Commercial Information Management System (CIMS). •

World Traders Data Reports (WTDR) provide background material on individual foreign firms, giving information about each firm's reputation, credit worthiness, and its overall reliability and suitability as a trade contact for U.S. exporters. WTDR's are designed to help U.S. firms locate and evaluate prospective customers overseas. Information includes: name, address, key contact, number of employees, type of business, general reputation in trade and financial circles, year established, sales territory, and products handled. The cost is $100 per report.

• Commercial News, USA (CNUSA) assists U.S. companies in advertising the availability of new U.S. products in foreign markets and provides one method for t esting new markets. Under CNUSA short descriptions of the products are published in the monthly publication Commercial News, USA. For further information on these publications contact the Information Management Division at (202) 377-4203. • The Office of International Major Projects (OIMP) helps qualified U.S. firms develop exports by obtaining early information on upcoming engineering and construction projects valued at no less than $3 million. The office provides information to prospective U.S. bidders and special assistance to U.S. companies to enhance their ability to compete for contracts. A monthly listing of major projects is available. OIMP has a staff of project officers who will work individually with firms to assist them in competing for individual project contracts. Contact: OIMP, U.S. Department of Commerce, Room 2015B, Washington, DC 20230. Tel. (202) 377-5225. • The Office of Forest Products and Domestic Construction offers various reports on foreign and domestic developments, and is active in export services. Contact: Director, Room 4045, ITA, U.S. Department of Commerce, Washington, DC 20230. Tel. (202) 377-0382 • The Office of Trade Finance (OTF) offers counseling and advice on countertrade only. Contact: OTF, ITA, U.S. Department of Commerce, Room 4004, Washington, DC 20230. Tel. (202) 377-3277. Office of the United States Trade Representative

The Office of the U.S. Trade Representative (USTR) is an agency of the Executive Office of the President. It is responsible for directing all formal U.S. trade negotiations and for formulating U.S. trade policy. USTR works closely with USDA and other agencies in this effort. It represents the United States in formal tariff and nontariff negotiations. Individual exporters rarely have direct contact with this office except if they wish to file a complaint about unfair subsidized overseas competition or other trade practices which may violate the General Agreement on Tariffs and Trade (GATT). USTR may be reached at 600 17th Street NW., Washington, DC 20501. Tel. (202) 395-3230.

State Departments of Agriculture and State Export Agencies

30

State departments of agriculture and related agencies cooperate with USDA in promoting and marketing U.S. foods and other agricultural products abroad. Many of these State agriculture departments now have full-time international marketing specialists. Also, some State foresters have a trade specialist on their staff. The 1989 Roster of State Foresters is shown in appendix IV.

These State departments of agriculture provide assistance to new-to-export and established exporting firms. In addition, they assist FAS in arranging itineraries and appointments for foreign buyers, agriculturalists, and government officials. Forty-nine States, Guam, Puerto Rico, and American Samoa are members of four regional groups that work exclusively on coordinating and expanding activities for exports of food and agricultural products. The organizations and member States are: Eastern U.S. Agricultural and Food Export Council, Inc. (EUSAFEC) Members: Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. Headquarters: 2 World Trade Center, Suite 2717 New York, NY 10047 Tel: (212)432-0020. Telex: 420859 EUSAFEC. Fax: (212)488-205 Southern United States Trade Association (SUSTA) Members: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Puerto Rico, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. Headquarters:

International Trade Mart 346 World Trade Center New Orleans, LA 70130 Tel: (504) 568-5986 Telex: 568598 SUSTA UR Fax: (504)568-6010

Mid-America International Agri-Trade Council (MIATCO) Members:

Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

Headquarters: 820 Davis Street, Suite 212 Evanston, IL 60201 Tel: (312)866-7300 Telex: 880179 MIATCO CGO Fax: (312)866-7413 Western U.S. Agricultural Trade Association (WUSATA) Members:

Alaska, California, Colorado, Guam, Hawaii, Idaho, New Mexico, Oregon, Washington, Wyoming, Utah, Montana, and American Samoa.

31

Headquarters:

Private Sources

13101 N.E. Highway 99, Suite 200 Vancouver, WA 98685-2876 Tel: (206) 574-2627 Telex: 298572 NEAUR Fax: (206) 574-7083

A variety of private, credit-reporting, financial, and market-servicing firms target their services to the U.S. exporter. Generally, these companies provide weekly or monthly reports by world areas with special reports targeted to specific countries. Market research and studies outlining short-term trends in international markets and financing also are available. The companies listed below provide many of these services and represent a small sample of firms providing this information. The following information was provided by the companies and citation in this publication does not represent an endorsement by the U.S. Department of Agriculture or any other U.S. Government agency. Additionally, no guarantees of commercial performance or reliability are intended nor intent of discrimination implied. Equifax Services—Provides credit reports for countries throughout the free world through the Foreign Department of the New York Metro office. Regions and countries covered by Equifax include all of South America; all of Europe, except the Eastern Bloc countries; the Middle East, except for Iran, Iraq, Turkey, and Syria; and all of Asia, except for Thailand, the People's Republic of China, and North Korea. Equifax correspondents are generally business reporting agencies in their respective countries. They provide information about a foreign company's current directorship, ownership, annual turnover, and net worth, plus a description of its date of chartering, present size, and nature of operation. Cost of the reports is approximately $130-$140 each and varies by region or country. Reports may be received by cable or telex for an additional charge of $15-$30. Contact: Equifax Services, New York Metropolitan Office, 80-15 164th Street, P.O. Box 10, Jamaica, NY 11431. Tel. (316) 466-2000; or Equifax Services Foreign Department. Tel. (718) 380-2022; Cable: RECCOM New York; Telex: 667607 RECCOM or 668365 RECCOM. Predicasts—Compiles, organizes, and publishes information on industries, products, markets, technologies, and economics. Predicasts offers indexing services, statistical services, and abstracting services. In addition, Predicasts produces a series of industry-specific publications to keep patrons up to date with specialized ongoing information requirements on the latest international events. Additional reference tools, including a company thesaurus and a directory of source publications, exist to enhance the use of Predicasts' publications. The "F&S Index International" includes information on business developments in Latin America, the Middle East, Japan, Asia, Canada, Africa, and Oceania. The "F&S Index Europe" provides literature summaries for the European Community, Scandinavia, other countries of Western Europe, the USSR, and other countries of Eastern Europe. For further information, contact: Predicasts, Marketing Services Department, 11001 Cedar Avenue, Cleveland, OH 44106. Tel. (800) 321-6388 (outside Ohio); (216) 795-3000 (in Ohio); Telex: 985-604; Fax: (216) 229-9944.

32

The Economist Intelligence Unit (ElU)—Offers a series of regular reports covering business conditions, trends, and prospects worldwide. ElU's "Country Reports" (published quarterly) provide latest facts and forecasts together with indepth analysis for over 165 countries. In addition, a variety of monthly and quarterly publications are available on: Paper & Packaging, Commodity Forecasts, and Marketing in Europe. Other special reports recently published include "Waste Paper: Development & Forecasts to 1992" and "European Community: Economic Structure and Analysis." For a free listing of other publications contact: The Economist Intelligence Unit, 215 Park Avenue South (15th floor). New York, NY 10003. Tel. (212) 460-0671; Fax: (212) 9958837. Dun's Marketing Services—Provides a source of publications about international marketing, exporting, and foreign corporations and companies. Dun & Bradstreet International's "Exporters' Encyclopedia" includes information on export shipping documentation, export market profiles, financing, laws and regulations, communications, and transportation. Other publications available from Dun & Bradstreet include "Principal International Businesses," "1984 Export Documentation Handbook," "Export Made Easy," and "Who Owns Whom" (identifies parent companies, their subsidiaries, and associates). Contact: The Dun & Bradstreet Corporation, 2700 South Quincy Street, Suite 250, Arlington, VA 22206. Tel. (703) 824-8383. TRADEC—Offers a range of domestic and international trade promotion and marketing services. TRADEC tailors its services on an industry sector or individual firm basis. Marketing research, language translation, export and import marketing strategies, and sales contracts are some of the services offered to small- and medium-sized businesses in the international market. TRADEC has been successful in opening new markets for Pacific Northwest exporters in Europe, the Pacific Rim, and Latin America. For further information contact TRADEC, 910 Fifth Avenue, Seattle, WA 98104. Tel. (206) 447-0359. The Business International Corporation (BIC)—Monitors and analyzes international Investment and trade. Reporting on 75 countries, BIC provides macro and microeconomic data, information on political developments, socioeconomic trends, managerial, functional, and operational techniques. BIC's publications include "Financing Foreign Operations" (offers detailed country information), "Investing, Licensing, and Trading Conditions Abroad," and weekly "Business" newsletters covering international management/trade, international business updates, and trade outlooks for Europe, Latin America, Eastern Europe, Asia, and China. A weekly "Money Report" is also available which provides information on export financing, financial risk, and trends in exchange rates. Contact: BIC, 215 Park Avenue South, New York, NY 10003. Tel. (212) 4600600; Cable: "BUSYMAG NEW YORK"; Telex: 175 567.

33

USDA Export Programs

Cooperator Program

The Foreign Agricultural Service export market development program is carried out in cooperation with some 50 agriculturally oriented, nonprofit commodity associations known as foreign market development cooperators. Agreements between the cooperator and FAS authorize the cooperator, in partnership with FAS, to conduct overseas promotional activities. Cooperator projects are designed to acquaint potential foreign customers with U.S. agricultural products, to show how they might be used, and to create or stimulate demand. The Forest Products Division of FAS administers the program for solid wood products. FAS has a cooperative agreement with the National Forest Products Association (NFPA) to develop foreign markets for U.S. solid wood products. The NFPA has the responsibility for coordinating all of the export market development programs being undertaken with FAS. In turn, NFPA member trade associations conduct market development activities in cooperation with FAS. Jointly financed export promotional activities include advertising, merchandising, trade servicing, training and educational programs, seminars, demonstrations, international trade exhibits, and trade missions to and from the United States. This program is not available to individual companies. For more information on cooperator associations, contact the U.S. Agricultural Export Development Council, 600 Maryland Avenue, SW., Suite 510, Washington, DC 20024. Tel. (202) 554-9538. The activities of the principal associations participating in the Cooperator Program for solid wood products are summarized in the following sections.

American Hardboard Association

The American Hardboard Association (AHA) is the national trade organization of manufacturers of hardboard products used for exterior siding, interior wall paneling, household and commercial furniture, and industrial and commercial products. AHA administers a quality conformance program for hardboard siding. Participation in the program is voluntary. It is open to members and nonmembers of the Association. AHA programs to promote increased use and consumption of hardboard products as well as to assist industry members, product users, and the general public include: Standards/specifications Environmental affairs Government relations Education Research and publications For further information contact AHA, 520 N. Hicks Road, Palatine, IL 60067. Tel. (312) 934-8800; Fax: (312) 934-8803.

American Hardwood Export Council

34

The American Hardwood Export Council (AHEC), formerly known as the Hardwood Export Trade Council, was created to serve the global demand for American hardwood products. AHEC, an umbrella association comprising the major U.S. hardwood product associations and hardwood exporting companies, maintains offices in Asia and Europe. These offices provide market intelligence, participation in trade fairs, technical assistance, and other trade servicing activities. AHEC services that support exporting include:

• • • • • • • • • •

Market development programs Technical information and seminars American marketing and manufacturing systems Promotional assistance Market intelligence Trade missions, fairs, and exhibitions Trade barrier reduction Overseas offices Source list of supplies for retailers and consumers AHEC membership directory

For further information contact AHEC, 1250 Connecticut Avenue NW., Suite 200, Washington, DC 20036. Tel. (202) 463-2720; Fax: (202) 463-2785. American Plywood Association

The American Plywood Association (APA), founded in 1933, represents structural panel producers who manufacture approximately 80 percent of the structural panels made in the United States. APA represents 50 member companies who are located throughout the United States. The APA provides a variety of services for its membership. The objectives of these services are to: Increase product demand through domestic and international product promotion and marketing. Maintain product quality through a rigorous quality inspection and testing program. Research and develop new panel applications and construction systems.

American Walnut Manufacturers Association

The American Walnut Manufacturers Association (AWMA) is a national trade group representing manufacturers of walnut lumber, gunstock blanks, and dimension. AWMA participates in trade fairs and other activities as a member of the American Hardwood Export Council. For further information contact AWMA, 5603 Raymond Street, Suite 0, Indianapolis, IN 46241. Tel. (317) 244-3311; Fax: (317) 244-3386.

Appalachian Hardwood Manufacturers Association

Appalachian Hardwood (AHMA) is a trade association of 177 members. Its members are mainly sawmillers in a 12-state Appalachian mountain region from north Georgia to southern New York. Associate members are distributors, consumers, suppliers, and producers of fine Appalachian hardwoods. Although AHMA is interested in all the issues that impact the forest products industries, it is primarily concerned with promotion of the product. Promotion efforts include projects with cabinet producers, molding and millwork manufacturers, flooring and architectural woodwork manufacturers, and furniture producers. AHMA is active in education and information distribution through slide shows, seminars on hardwoods, and printed material. International promotion and marketing efforts are done as a member of the American Hardwood Export Council. AHMA participates in trade fairs in Europe and Asia and benefits from trade advertising by the council in major woodconsuming nations around the world. For further information contact AHMA, P.O. Box 427, High Point, NC 27261. Tel. (919) 885-8315 or (919) 885-4410.

Fine Hardwood Veneer Association

Fine Hardwood Veneer Association (FHVA) is the international trade association representing the decorative veneer industry. Membership is open to face veneer manufacturers, dealers, veneer custom cutters, rotary face and crossband manufactur35

ers, hardwood industry suppliers, veneer salesman, and veneer face plants. In addition, contributors are welcomed for forestry and trade promotion. FHVA is a member of AHEC. For further information contact FHVA, 5603 Raymond Street, Suite 0, Indianapolis, IN 46241. Tel. (317) 244-3386. Hardwood Plywood Manufacturers Association

Pre-finishers of hardwood plywood, manufacturers of hardwood plywood and veneer, and suppliers to these industries are the groups that the Hardwood Plywood Manufacturers (HPMA) represents as an international trade association. HPMA is a member of AHEC. HPMA has programs that are designed to support the interest of its members and to advance the use of hardwood plywood and veneer. Some of the programs are: • Industry promotion—a member listing of manufacturers that includes sales, contacts, sizes, species, and speciality items Exhibits; trade opportunities program with the U.S. Department of Commerce Technical and laboratory facilities and services Standards Government representation Regional meetings For further information contact the HPMA, P.O. Box 2789, Reston, VA 22090-2789. Tel. 703-435-2900.

National Dimension Manufacturers Association

National Dimension Manufacturers Association (NDMA) changed its name in 1985 from the Hardwood Dimension Manufacturers Association to reflect its growing membership base. NDMA currently represents more than 80 dimension manufacturers located in Canada and the United States. NDMA provides its membership with: • • • • • • •

U.S. trade show exhibitions International promotional activities Industry research and market studies Seminars and meetings for members Publications (newsletter and books) Government relations Service as a business referral clearinghouse for members

NDMA is also a member of AHEC. For further information contact NDMA, 1000 Johnson Ferry Road, Suite A-130, Marietta, GA 30068. Tel. (404) 564-6660. National Forest Products Association

The National Forest Products Association (NFPA) is the umbrella association for the forest product industry. The NFPA works in conjunction with FAS to increase exports of American wood products. NFPA provides many services for its membership such as: Government relations Market development Industry research and market studies Trade seminars Economics and information For further information contact NFPA, 1250 Connecticut Avenue, NW., Washington, DC 20036. Tel. (202) 463-2724.

36

National Hardwood Lumber Association

The National Hardwood Lumber Association (NHLA) is a nonprofit trade association composed of 1,200 member firms which produce, sell, and use hardwood lumber. The grading rules that NHLA developed for hardwood lumber are used by the United States, Canada, and to a certain extent, the world when trading in hardwood lumber. NHLA provides these services for members: • • • •

Inspection school to train graders from all over the world Continuing education—inspection short courses, seminars, and training programs Hardwood promotion—consumer awareness and public relations Export development—publishes monthly export newsletter and rules in a variety of languages • Membership directory and annual report • Hardwood research • Annual convention For further information contact NHLA, P.O. Box 34518, Memphis, TN 38184-0518. Tel. (901) 377-1818; Fax (901) 382-6419.

National Particleboard Association

The National Particleboard Association (NPA) is the trade association for the particleboard and medium density fiberboard (MDF) industry. Since NPA was established in 1960, it has been recognized by the Congress, Government agencies and nongovermental organizations as the spokesman for the particleboard and medium density fiberboard industries. NPA's 18 members represent over 80 percent of the U.S. manufacturing capacity for particleboard and MDF. NPA carries out a broad education program aimed at furniture, cabinet, and woodworking customers to assist them in the use of particleboard and MDF. The NPA also provides coordination for standards development, and acts as a clearing house for industry statistics. NPA actively promotes the increased use of particleboard and MDF through its promotional programs. While many of its members are actively involved in exporting their products, NPA does not provide direct export assistance and advice. For further information on services and publications provided by NPA, contact NPA, 19828 Premiere Court, Gaithersburg, MD 20879. Tel. (301) 670-0604; Fax: (301) 8401252.

Northeastern Loggers Association, Inc.

The Northeastern Loggers Association (NELA) has approximately 2,500 members. It is a trade association that covers the area from Maine to Minnesota and south to Maryland and Missouri. NELA publishes The Northern Logger and Timber Processor, a monthly magazine that covers the industry in that same area. NELA also sponsors the Northeastern Loggers Congress and Equipment Expo each year, promotes the export of American hardwoods, and publishes a directory of its members interested in exporting to world markets. NELA is a member of AHEC. For further information contact NELA, P.O. Box 69, Old Forge, NY 13420-0069. Tel. (315) 369-3078; Fax: (315) 3693736.

37

Southeastern Lumber Manufacturers Association

Southeastern Lumber Manufacturers Association (SLMA) is comprised of 365 independently owned lumber manufacturers in 13 southern states producing in excess of 3.7 billion board feet of southern and Appalachian hardwoods and cypress lumber. SLMA exhibits at foreign lumber and furniture trade shows. The Association publishes lumber export directories in German, Italian, and Japanese. The Association invites inquiries from foreign buyers of southern pine, the various species of hardwoods, and cypress lumber. SLMA is a member of AHEC. For further information contact SLMA, P.O. Box 1788, Forest Park, GA 30051-1788. Tel. (404) 361-1445; Fax: (404) 3615963.

Southern Forest Products Association

Southern Forest Products Association (SFPA) is a nonprofit trade association of southern pine lumber manufacturers from the states of Virginia, North Carolina, South Carolina, Georgia, Florida, Tennessee, Alabama, Mississippi, Louisiana, Arkansas, Texas, and Oklahoma. SFPA has regional marketing managers in the South, East, and Midwest; a European marketing manager in London, and a Caribbean manager in Santo Domingo, Dominican Republic. A new office is opening in Italy to cover the Middle East. SFPA provides its membership with: • • • • • •

Marketing (expansion and opening new markets for southern pine) Public relations and advertising Seminars for SFPA members and people in the building industry Government affairs lobbying Environmental issues Publications (newsletters and books)

For further information contact SFPA, P.O. Box 52468, New Orleans, LA 70512. Tel. (504) 443-4464. Western Wood Products Association

Western Wood Products Association (WWPA) is a nonprofit trade association that represents lumber manufacturers in the 12 western states, from the Canadian border south to Mexico and from the West Coast to the Black Hills of South Dakota. It represents an industry that produced almost 22 billion board feet of lumber in 1988. WWPA plays a dual role in helping the western lumber distribution system serve Its markets by providing its members with: • Engineering research related to design values • 14 professional field representatives and 29 lumber inspectors across the United States • Promotions in export markets abroad with advertising, publicity, merchandising aids, seminars, technical literature and training videos For further information contact WWPA, Yeon Building - 4th floor, 522 SW. 5th Avenue, Portland, OR 97204. Tel. (503) 224-3930.

Targeted Export Assistance Program (TEA)

38

The Targeted Export Assistance Program (TEA) helps U.S. producers finance promotional activities for U.S. agricultural products disadvantaged by unfair foreign trade practices. The TEA program gives first consideration to agricultural products which have received a favorable decision under section 301 of the Trade Act of 1974 or whose exports have been adversely affected by retaliatory actions related to a favorable Section 301 decision.

Under the TEA program, surplus stocks or funds from the Commodity Credit Corporation (CCC) are used to partially reimburse agricultural organizations conducting specific foreign market development projects for eligible commodities in specified countries. TEA funds have gone to NFPA and APA who are the industry representatives. Proposals for TEA programs are developed by the two trade organizations and submitted to USDA by a deadline. After a program has been approved and announced by USDA, participating organizations or firms sign a program agreement with the CCC. The TEA participants then submit activity plans to FAS describing specific activities and proposed budgets, which are partially reimbursable with CCC funds or certificates. Certificates can be redeemed for commodities from the CCC inventory or sold. FAS may approve requests for advances of CCC resources not to exceed 40 percent of the dollar amount approved by FAS in an organization's activity plan. The advance must be fully disbursed within 90 days of receipt. No certificates are issued to reimburse expenses until the organization submits expense claims sufficient to offset any outstanding advance. Activities financed by the programs vary from commodity to commodity. For example, a program to promote exports of U.S. wood products to Japan financed the construction of a three-story, wood demonstration building featuring advanced timber technology. The demonstration unit provided the focal point for a promotional and technical program. Associations participating in the fiscal 1990 market development cooperator program are: National Forest Products Association Hardwood Products (Managed by the American Hardwood Export Council) Appalachian Hardwood Manufacturers, Inc. Fine Hardwoods/American Walnut Association Hardwood Manufacturers Association Hardwood Plywood Manufacturers Association Lake States Lumber Association National Dimension Manufacturers Association National Hardwood Lumber Association Northeastern Loggers Association Southeastern Lumber Manufacturers Association Softwood Products American Plywood Association Southern Forest Products Association Western Wood Products Association Otiier Wood Products American Hardboard Association American Institute of Timber Construction

39

National Particleboard Association Wood Molding & Millwork Association Export Credit Guarantee Program (GSM-102)

The Export Credit Guarantee (GSM-102) program, administered by FAS, is designed to facilitate financing for foreign purchases. Credit terms are generally from 180 days to 720 days for wood products. With each transaction, the foreign buyer's bank must issue an irrevocable letter of credit covering the port value (f.o.b./f.a.s. value) or, in some cases, cost and freight (c. & f. value) of the commodity exported. The U.S. exporter pays a fee and receives a payment guarantee from the CCC that will cover most of the amount owed to the U.S. bank in case the foreign bank defaults. The fee rate is equivalent to approximately one-third of 1 percent per annum on the outstanding coverage. Usually, the exporter will assign the proceeds which may become payable under the payment guarantee to the U.S. bank financing the export sale. Thus, the foreign buyer may purchase commodities on deferred payment terms, and the exporter may nevertheless receive payment immediately after shipment. The U.S. bank financing the sale is protected by the CCC's guarantee in the event the foreign bank defaults under a letter of credit or related obligation. By transferring the risk of loss from U.S. exporters and U.S. financing to the CCC, the program helps to facilitate exports and permits exporters to meet competition from other countries. The GSM-102 program is intended for cases where credit is necessary to increase or maintain U.S. exports to a foreign market and where private financial institutions would be unwilling to provide financing without the CCC's guarantee. The GSM-102 program is not designed to displace normal commercial transactions that would have occurred in the absence of the program. The program is directed toward countries where the guarantees are necessary to secure financing of the exports and where the destination country has the financial strength to provide a reasonable expectation that foreign exchange will be available to make payments as scheduled. The CCC reviews requests on a case-by-case basis, and does not publish an eligible commodity or country list. Any U.S. agricultural commodity whose export furthers the CCC's long-range market development objectives may be considered. For additional information about the GSM-102 program contact the Director, the CCC Operations Division, Export Credits, Room 4503-S, Foreign Agricultural Service, USDA, Washington, DC 20250. Tel.(202)447-6211.

GSM-102 Programs for Forest Products

Regarding forest products, the GSM-102 program has been very successful in Jamaica, Iraq, Algeria, South Korea, and Mexico. The CCC credit guarantee program was first used in Jamaica in FY 1981. Exports of solid wood products to Jamaica increased from $3.2 million in 1979 to over $9 million in 1989. Sales of wood products under GSM-102 to Iraq went from almost nothing to $124 million in FY 1988—this included $54 million of lumber, including $3 million of cants, $21 million of panel products, and $46 million of wood pulp. In 1989, $161 million worth was sold to Iraq— $98 million in lumber, $20 million of panel products, and $43 million of wood pulp. Also, the GSM-102 program was utilized to finance the first U.S. lumber exports to Algeria—$20 million in FY 1988 and $29 million of lumber plus $20 million of wood pulp in FY 1989. In FY 1988 there were other smaller new sales to Turkey, Haiti, and

40

Mexico as a result of this credit program. These sales to Mexico totaled $64 million (all wood pulp) in FY 1988, were restricted to $28 million in FY 1989, and are planned at $50 million in FY 1990 ($25 million lumber and $25 million wood pulp). South Korea has taken about $10 million in wood products in FY 1988 and FY 1989, and $10 million has been planned for FY 1990. All of this has been for lumber and veneer. The GSM-102 program has opened up markets which previously were totally dominated by Scandinavian, Canadian, West European, and Soviet Bloc exporters. Public Law 480 (Title I)

Title I of Public Law 480 (P.L. 480) provides for U.S. Government financing of sales of U.S. agricultural commodities to friendly countries on concessional credit terms. Sales are made by private business firms, usually on a bid basis in response to tenders (invitations for bids or "IFB's") issued in the United States by the importing country. The Food Security Act of 1985 (1985 Farm Bill, Public Law 99-198) authorized the Local Currency Initiative (section 108) under the authority of title I of P.L. 480 to generate economic growth through the private sector in recipient countries. U.S. commodity suppliers receive payment in U.S. dollars regardless of the type of P.L. 480 agreement signed. Commodities programmed in recent years include wheat, corn, grain sorghum, rice, vegetable oil, cotton, wood products, tallow, beans, wheat flour, and blended fortified foods. Through the end of 1989, only one country (Jamaica) received wood products under the P.L. 480, title I program. This program was developed after Hurricane Gilbert devastated the island in September 1988. Another title I wood products program was negotiated with Costa Rica for FY 1990, and several more of these programs are expected to be developed in FY 1990 and beyond.

Eligibility of Commodity Suppliers

U.S. commodity suppliers interested in selling commodities under P.L. 480, title I must submit the following information to USDA, which will determine their eligibility: • A current financial statement of the person or firm wishing to become eligible, as evidence of financial responsibility. • A statement containing general background information about the firm, with particular reference to the firm's experience as an exporter of U.S. agricultural commodities, and any other information relating to whether the person or firm is a responsible party and able to perform the obligations of the P.L. 480 regulations and the purchase authorization. • A statement, to be maintained on a current basis, listing the name, address, and chief executive officers for all branches, affiliates, subsidiaries, and associated companies, both foreign and domestic, in which the supplier has a controlling interest. This statement must also furnish the same information for any companies which have a controlling interest in the supplier, either directly or through subsidiaries. Suppliers of wood products should submit statements to P.L. 480 Operations Division, Foreign Agricultural Service, U.S. Department of Agriculture, Washington, DC 202501000.

41

USDA reserves the right to permit a person or firm to act as a supplier only on submission of acceptable performance security, in the form of a letter of credit, which will assure that the supplier will perform the obligations of the P.L. 480, title I financing regulations and the purchase authorization. For further information about P.L. 480 programs, contact the Director, P.L. 480 Operations Division, Export Credits, Room 4079-S., Foreign Agricultural Service, USDA, Washington, DC 20250-1000. Tel. (202) 447-4274.

42

Major Markets

Introduction

The market summaries give a brief overview of the top export markets, examining marketing channels, practices, major end-uses for specific products, and recent developments in each market. Small and nontraditional export markets such as the Caribbean, Africa, or South America may provide better opportunities, if your firm can provide the type of wood products needed at a profitable price. Export markets for "specialty products," including items such as barrel staves and pencil slats, are extensive and varied. The best opportunities for foreign sales of these products may be in nontraditional U.S. solid wood markets. For example, in 1988 the largest export market for pencil slats was West Germany. However, Mexico was No. 2, and combined exports to Venezuela and Egypt exceeded U.S. exports of this product to West Germany. An examination of other U.S. wood products exports provides insight into the diversity of U.S. markets overseas. In 1988, the Bahamas was the No. 1 importer of dowel rods ($1.1 million). The top four markets for casks, both new and used, were Venezuela, India, Japan, and Canada. Such items as coopers products, casks, and pencil slats are the types of commodities that succeed in nontraditional markets. Successful exporters will search for the niche that will give them an edge in the marketplace. Success in exporting is a function of the ability of the company to be flexible and responsive to changes in consumer demand and the willingness to investigate new opportunities. Most important is the commitment by the U.S. exporter to studying and servicing the foreign market to assure that export marketing becomes a vital aspect of planning and profitability for the business. The top U.S. markets and the leading products exported on a value basis for 1988 are shown in table 4; figures 1 and 2 graphically show distribution of U.S. overseas markets and wood products exported in 1989. Information on foreign tariff and nontariff barriers, an important consideration in pricing products and preparing shipments for export, is in table 5. The reader may also contact the National Forest Products Association for information on this subject by referring to page 36 for the address.

43

Table 4 — Value of U.S. exports of solid wood products by principal countries, 1989 ($000) West Mex Germany

Product

Japan

Canada

S. Korea

SW Logs

1,598,963

74,761

254,861

751

1,152

HW Logs

50,128

17,638 12,400 1,241

17,219 5 11,441

3,251 4 71

3,722 1,104

161,587

11,258

28,068

115,555 7,630

11,988 477

6,259 22,147

0

55,678 2,642 2

0 39

290 11

0 10,435

51 11,211

1,821

36 171

109

528

493

6,619

20,234

350 3,424

87,438 2,378

4,843 1,325

20,149 35,744

4,285 15,111

288 6,788

16,511

31

88,001

12,903

4,923 46,593

2,289 17,711

1,259

5,582

235 4,527

645,265

354,001

33,808 233,332

224,135

208,435

181,719

180,828

178,716

Poles,Piles, & Post Wood Chips SW Lumber HW Lumber Flooring Siding Molding Treated Lumber Railroad Ties HW Veneer SW Veneer

128 353,033 559,645 133,414 7,118 920 1,280 1,140 0

HW Plywood

10,770 6,586 374

SW Plywood Hardboard

3,699 141

Particleboard

3,595 Mise Panel Products^ 32,951 Mise Wood Products'- 77,831 Total 2,841,697

2,720 15,520 4,737 7,804 28,882 20,894

Note: Totals may not add due to rounding. includes such panel products as insulation board, and laminated boards. ^Such products as wood waste, pulpwood, building components, containers, and small industrial and household woodenware. Source: Official statistics of the U.S. Department of Commerce.

44

U.K.

China

Taiwan

Italy

378

174,200

24,986

1,472

46,831 18

355 0

25,395 112

18,489 0

7,414

5

14,504

98,868 27,022

21,879 37,107

0 359

0 99,949 37,292

614

227

59 819

0

103 97

0 20 207 60,611 577 623 19,817 104

148 37

5,381 58,994 526

112 74

0 0 69

43 7 41

3,600 1,020

75 11,704 74

0 7,462

166

75 8,428 22 44

10 2 0 12 40 608

61 3,559 11,232 18,384

102 117

316

Table 4 — Value of U.S. exports of solid wood products by principal countries, 1989 ($000)—Continued

Algeria Denmark Jamaica

Product

Spain Belgium

Iraq

Neth.

SW Logs

1,786 5,072

0

0

8,245 0

0 0

68 1,124

0 0

10

0

0

0

0

61,610

0 10,234

53,375

4,818

28,590 363

42,783 14

0

0

0 4

0 0

18,055 184 12

36,316 0

0

0

0 0 3,434

0

36

151

HW Logs Poles, Piles, & Post Wood Chips SW Lumber HW Lumber Flooring Siding Molding Treated Lumber Railroad Ties HW Veneer SW Veneer

10 0

1,058 22 0 3,433 4

HW Plywood SW Plywood

122 274

Hardboard

434

Particleboard Miso Panel Products^ Mise Wood Products^ Total

4 4,439 107,752

0 0 0

41

179

8 2,098 11,508

1,265,361

1,391,171

2,791

488 95

572,413

644,593

20,190 7,389

22,200 7,880 27,072

0 0 0 0 0

0

0

931 0

859

0

11

0

33,560 237

2,055

21,796

0 1,242

105 241

0 0

0

538

106 56,787

3,743 51,214

2,920 103,291

227,473 25,464

1,683

0 0

2,146,155

0

0

0 0

2,133,930 198,764

World

15,960 388,024

0 0

473 0

49 802

530

0

0

Total Other

0 25,308

0

383 171

0 294

460 1,067

36,609

33,019

20

388,154

5 1,455 772

26,378 5,794

180

128,250 16,482

157,294

39,877

24,156 267,892

88 1,412

21,558

13,012 10,407 14,874

939 90

231,721 32,637

238 2,282

58,868

39,710 63,612

122,693 317,537

170,033 389,247

10,851 32,571

5,585,577 6,030,398

Note: Totals may not add due to rounding. ^Includes such panel products as insulation board, and laminated boards. ^Includes such products as wood waste, pulpwood, building components, containers, and small industrial and household woodenware. Source: Official statistics of the U.S. Department of Commerce.

45

U.S. Wood Export Markets 1989 Japan 47.1%

$ Thousand F.A.S. Value

Canada 10.7% Total Other 10.2%

South Korea 5.9%

-China 3.0% -Taiwan 3.0%

Mexico 3.7%

-European Community 16.4% Source: U.S. Department of Commerce

Value of U.S. Wood Products by Commodity 7989 $ Thousand F.A.S. Value HW Plywood 0.4%

SW Logs 36.9%

Wood Chips 4.2% Railroad Ties 0.2% HW Logs 3.9% Hardboard 0.7% SW Plywood 4.6%

Siding 0.1%

Panel Products 2.9% HW Lumber ll.io/o

Misc. Wood Products 6.7% Veneer 3.0%

Molding 0.5%

Particleboard 1.1% SW Lumber 23.9% Source: U.S. Department of Commerce

46

Table 5 — Selected Tariffs Applied to Imports From the United States Tariff Rate

Item/Country

1989 Percent Logs jCo n if ero LJ s Japan ^,,^,......,,,^,,,,,,,^ Carrada ^..,..,^.,,^,.,,.^ CNna...... ...^,.. ..^v,^. -European Community South Korea .,,.^ Taiwan .. Australia, Nonconiferous

Japaii Can ad a China..

.^,,^.,..,,_.,,. ,.^,...... .^,,,, ■ - •_■ A-• • ■ : • • • • • ■ •

Free Free 3 Free

1.5 Free Free Free Free 25 Free

European Community..^... 3^1 South Korea ■■^,::^Free Taiwan .,,^,,, .^^...... Free Australia Lumber Coniferous 8 Japar^,^. Free (untreated)-6.8 (treated)^ Canada China.... X^IZ_"Z^-"Free-4.9 European CorpnnuriitY South Korea ASZZ Free Taiiwan ..^...^....^.....^^^^^ 15 Australia Nonconiferous Free Japan Free (untreatedl-6^8_(treated^^^ Canada 9 '"""'""" 2, China .....^...^^^^ Free-4.9 EuropeanCommunity 20 South Korea 2.5 Taiwan 15 Australia, Wood continuously shaped, along any of its edges Coniferous 7.2 Japan ....^ L--i-• i-• • ■ i^:• ■-Free (untreated)- 6.8 (treated)^ Canada ...^.......^^... 40 „_ China _ ..^.. 3 European Community .._. 20 South Korea ^.,.,,. Free TaiWajl^..............,,^...,..,...:..,^^.^■ •• ll5 . Australia....................^...v......vvv.v-----Continued page 48

47

Table 5 — Selected Tariffs Applied to Imports From the United StatesContinued Item/Country

Tariff Rate 1989 Percent

Nonconiferous Japan .^ Canada China.... European Conimunity ^uth Konea^...^....^...^. Taiwan Australia, Veneer Cpnifefous Japan Canada ..^................... China European Community South Korea Taiwan Australia..^.. Nonconifej'ous Japan Canada China...^,...................^.^ European Community South Korea ........^...... Taiwan .........^............. Australia Plywood Coniferous Canada ^. China.... European Communi^^^^^^^^ South Korea^.^.^......... Taiwan...^.........^.....^..^ AjustraHa ....^.^^^^^^^^^ Nonconiferous

12 Free- i5,5:oak)2

4Ö7 3

Î5 Free

15 5 Free 30 0-6 15 Free

b^Z Free 20 0-6 15 Free 5 ~

10 15 2 ~ Ï2-T7 iO 20 7.5-^5 25 Ï2.5"

Canada China European Community. South Korea Taiwan Australia Continued on page 49

48

87{9.2 surface covered)^ 8 10 Ï5 ' 25 25

Table 5. Selected Tariffs Applied to Imports From the United States—Continued

Item/Country

Tariff Rate 1989

Partlcleboard Japan

12

Canada China European Community

30 10_

Soutln Korea Taiwan

15 3.75

Australia FIberboard Japan Canada

__^

20 3^ 6.5^

China European Community

30 1_0_

South Korea Taiwan

20 3.75

Australia

20

Note: EC imports of softwood plywood are eligible for duty-free treatment on the first 650,000 cubic meters entered during the calendar year. ^ 5 years reduction until free of duty on January 1, 1993 ^10 years reduction until free of duty on January 1, 1998.

49

^^P^"

• J^Pan is the world's largest importer of forest products and the largest solid wood export market for the United States, with shipments totaling $2.8 billion in 1989, representing 47 percent of all U.S. wood product exports. • Nonresidential and residential construction and home improvements, paper and pulp, furniture industry, and do-it-yourself and material handling products are the major uses of wood. Approximately three-quarters of the lumber consumed in Japan is used for construction, of which 60 percent is utilized in residential construction. • In 1988, 66 percent of total Japanese roundwood consumption (67 million cubic meters) was sawn into lumber, 18 percent went to pulp and chips, and 16 percent was processed into plywood. The supply of domestic logs in 1988 equaled 31 million cubic meters. Domestic softwood logs, approximately two-thirds of the total log supply, are used primarily in construction. Seventy-five percent of domestic hardwood logs are processed into chips and pulp. • "Ordinary" plywood is used for general purposes, concrete forming, or structural applications. Major end-users include construction, furniture cabinets for electrical equipment, decoration in exhibits, pallets, and sewing-machine tables. Plywood is classified by species (face-veneer basis), type (bonding strength), classes (surface defects), dimension, and end-use. There are four types of ordinary plywood: Special and Types 1, 2, and 3, ranked in decreasing order of the water resistance of the bonds. Japanese Agricultural Standard (JAS) specifications for plywood based on enduse include concrete-form, structural, fire-retardant (interior), slow-burning (for stage and exhibition halls), fire door, scaffolding, and pallet. • "Special" plywood (mostly Lauan) includes panels with a sliced, natural wood face, overlaid with polyester, melamine, or polyvinyl-chlohde resin, or with printed wood grains, patterns, or coatings. Special plywood is specified by the degree of bonding, moisture content, and the finishing quality of the sides and butt ends. • Wood product quality specifications are classified according to the JAS. These product standards are required in instances of Government-financed housing and in all Government-financed 2x4 platform housing. On July 26, 1989, the Ministry of Agriculture, Forestry, and Fisheries (MAFF) officially designated the American Plywood Association (APA) as a foreign testing organization under the auspices of JAS. This designation will allow APA to speed up the approval process for member mills which wish to become JAS-approved plants. Lumber is classified as boards, strips, or squares; and special class (for resawing), first class, or second class, according to surface quality. • Long-term market opportunities in Japan for wood products are encouraging, particularly for both hardwood and softwood—lumber, plywood, veneer, and panels. Japan's imports from the United States have increased by nearly 120 percent from 1984 to 1988. As domestic production costs increase and tariffs decrease, more and more processed wood products are imported. • Japan's wood products sector demand is dependent to a large extent on domestic housing starts. Although housing starts increased annually from 1984 to 1988, they were expected to decrease in 1989 due largely to soaring land prices in urban areas. It is not sure yet how severe the effect of the 3-percent consumption tax, effective April 1, 1989, will be on future starts. Even though the average size of a wooden home has increased, the percentage of wooden homes has decreased from 70 to about 40

50

percent over the last few decades. Non-wooden housing construction uses plywood for concrete forming. High material costs, extremely high land prices, a shortage of skilled labor, and more restrictive building codes are the cause for the decline in wooden housing construction. Housing surveys have shown that the Japanese still prefer wooden housing but are restricted by these obstacles. • Demand for lumber and plywood have followed the trend of housing starts. Threequarters of all lumber and 55 percent of all plywood is used in building construction. Domestic production of wood products has slowed due to a tighter supply of logs, especially from the Asian markets, and higher domestic production costs. Demand has been met by an increase in imports. Log imports are not, however, expected to pass their 1988 peak. Increasing lumber imports are primarily from the United States, while the increasing hardwood plywood demand is being met by Indonesia. • The number of domestic plywood plants has been decreasing under the 5-year revitalization plan, initiated in March 1986. In order to reduce plywood tariffs of 15-20 percent, the Finance Ministry agreed to fund a Forest Agency revitalization program. Revitalization of the forest industry is primarily focused on the plywood sector as the plan entails closing inefficient mills, modernizing some existing mills, and building new state-of-the-art mills. Domestic production supplied 80 percent of the domestic consumption in 1988, down from 88 percent in 1987. Ninety-five percent of the plywood consumed is tropical hardwood plywood produced domestically from Luan logs originating in Malaysia. Plywood normally used in housing are panels measuring 3 X 6, rather than the 4 x 8 panels produced in the United States. Acceptance of U.S. 4 x 8 panels is slow but growing. One market that has been opening for U.S. products is 2 X 4 platform housing. • Japanese particleboard consumption is centered in the furniture industry. The particleboard industry in Japan is faced with a dwindling supply of raw materials as more wood waste is being used for fuel. Additionally, competitively priced plywood has affected the demand for particleboard in the furniture industry. • Demand for wood chips, both hardwood and softwood, has grown in Japan due to a strong demand for paper and related products. Also, one of the largest suppliers, Australia, has decreased its export of chips because logging has been restricted and chips are being processed into pulp before being exported. With the strong yen in 1987 and 1988, imported wood chips were cheaper than those produced domestically. Imports of wood chips equaled 12.8 million metric tons in 1988 compared to a domestic consumption of 21.3 million metric tons. The major suppliers are the United States, Australia, Canada, New Zealand, South Africa, and the USSR. • Major U.S. hardwood species in demand include white and red oak, red alder, cherry, ash, and paulownia. The Japanese are interested in hardwoods exhibiting uniform color, fine grain, and no defects. A trend towards solid wood furniture and increased use of U.S. hardwoods in Japanese flooring should benefit U.S. producers. • Japan has been identified by the United States as a Super 301 priority country, partly due to its wood product barriers. This action is provided for under the Omnibus Trade Bill Act of 1987. U.S. industry's Super 301 submission targets the identification and elimination of all barriers to trade in processed wood products. The bilateral negotiation process, involving both the private and the governmental sector, is already underway. An interagency task force has been established to support these efforts. The trade barriers discussed include tariff escalation for processed wood products, 5t

Value of U.S. Exports to Japan by Commodity 7985-7989

($000) 3,000,000 •

2,500,000 ..•• ..••*

2,000,000 •

/ ..•*'

1,500,000 •

-■'■■'■"

^^-^

1,000,000 ' ^^^^^^^„.^

500,000

1

1

1

1

1

1985

1986

1987 Years

1988

1989

SW Logs SW Lumber Total Source: U.S. Department of Commerce

52

building codes, and technical standards. The laminated veneer lumber tariff misclassification issue is listed as a priority item. • Import distribution channels—The Japanese distribution system for wood products is complex as business relations are built upon tradition, service, loyalty, personal relationships, and financing by suppliers for customer purchases. Purchases are financed by a promissory note system to large distributors who then resort and sell the products in smaller lots to smaller distributors. Wood products may pass through many distributors before finally reaching the wholesaler. At each stage, the intermediate buyer also maintains inventory and may provide other services to customers. The distribution system is slowly simplifying as regional banks are beginning to provide letters of credit to smaller buyers. • Japan has been one of the main focus points of U.S. market promotion. TEA projects include the Summit House and Seattle Village. The Summit House, opened in May 1986, is a 5,400-square-foot, three-story building erected by the U.S. wood industry. As a direct result of this activity, the Ministry of Construction revised the national building code to include three-story, wood-frame construction. Although the building has now been turned over to the Japanese, it is still used to conduct seminars for architects, engineers, and builders. Seattle Village, now in the final stages of construction, is a 13-unit model home project in Kobe. The project has special promotional significance as it provides a major case history for a new Japanese "4 x 8 Construction Guide" so that Japan's Government Housing Loan Corporation will be able to approve loans for 4 x 8 construction. Other marketing activities include trade show participation, trade missions, trade servicing, and various seminars. European Community

• The European Community (EC) of 12 nations is, collectively, the second largest export market for the U.S. wood product industry. In 1989, the United States exported $987 million of such products to the EC. Exports consist primarily of lumber and other processed wood products. The top five markets for U.S. wood products in the EC are the United Kingdom, West Germany, Italy, Belgium/Luxembourg, and Spain. • The EC seeks to eliminate many of the tariff and nontariff trade barriers among the member states and create a single internal market of 320 million consumers by 1992. The EC Internal Market Program involves the adoption of 279 new regulations and policies, two of which target solid wood products: 1) the Plant Health Directive, and 2) the Directive on Construction Materials. These directives establish minimum standards to which all member states must comply. However, member states may establish more stringent regulations. The U.S. industry is concerned that standards which had previously applied to only one EC member may now apply as the minimum standard for all member states.

United Kingdom

• The United Kingdom is the largest market for U.S. wood products within the EC, accounting for 23 percent of U.S. exports to the EC. Hardwood lumber and softwood plywood are the most popular of the U.S. products, each comprising one-third of U.S. wood exports to the United Kingdom. Since the United Kingdom is only 8-percent self sufficient, there is a strong growth potential for U.S. wood. • The U.S. market share in temperate hardwood lumber in the U.K. market has risen substantially to 17 percent in 1988. This is primarily due to the impact of tropical forest conservation issues on manufacturers who are now more inclined to keep solid product lines (particularly in furniture) featuring temperate hardwoods. This trend is also opening new markets for lighter colored woods. 53

• The major temperate hardwood lumber species imported include red and white oak, elm, chestnut, and maple. Imported hardwood lumber must be square edged, kilndried, or fumigated to meet phytosanitary requirements. U.S. hardwood lumber accounts for 50 percent of such imports and 17 percent of the hardwood lumber consumed. • The United Kingdom does not allow the import of U.S. oak logs as a phytosanitary precaution against oak wilt disease. • The United States provides 46 percent of the U.K. demand for softwood plywood. It is used primarily in crating and concrete forming, and, to a lesser extent, in sheathing and home repairs. Extensive market development, being done by the U.S. industry in the latter two areas, is showing positive results. • Sixty-seven percent of the softwood lumber imported originates in Sweden, Canada, and the USSR. The United States holds a marginal but growing market share. Only softwood lumber free from bark is permitted to enter the United Kingdom. The bulk of softwood lumber is used for construction, but there is increased interest in joinery (millwork) grades. • Opportunities for southern pine lumber include molding, skirting, boards, and kitchen furniture. Lumber discoloration problems may occur because of warm and damp shipping conditions. Each piece of lumber must be grade marked. • The British Standard (BS-5268) Code of Practice covering the structural use of timber provides additional market opportunities for U.S. softwood lumber. The standard allows machine-stress grading to the two visual grades of general structural (GS) and special structural (SS)—designated MGS and MSS—and two special grades M50 and M75. Provision is made for the following North American grades structural joists and planks and light framing, select No. 1, No. 2, and No. 3; light framing (construction); standard, utility, and stud. Design stresses are provided for southern pine, western white woods, and Douglas-fir. For example, a southern pine No. 2 visual grade would fall into the SC-3 strength class and could be stamped as such. This is important because it not only makes U.S. products more marketable in the United Kingdom but also demonstrates the willingness of the United States to provide wood products consistent with British grades. • The importing agent plays a dominant role in arranging and financing hardwood and softwood imports. An increase in softwood lumber merchants dealing directly with large foreign wood products corporations threatens the importer's position for these products. Turning to hardwoods, the diversity of temperate and tropical species in demand assures the agent specializing in these products a strong position in the distribution chain. • FAS sponsors, through market development and intensive promotional programs, activities to increase market awareness of U.S. wood products. Programs include trade show participation, U.S. wood-specific technical seminars, and other promotional trade servicing activities. More elaborate promotions include building on-site exhibits of homes made completely of U.S. woods. Recently, the "Street of Dreams" contest for a home of U.S. woods was held to inspire U.K. consumers to design their own homes featuring U.S. wood. Of the five designs selected and built, one design was chosen as the best and the winners were awarded the construction of this house on a plot of their choice and a 2-week trip to the United States. FAS also maintains an agricultural trade office in London to assist U.S. industry in promotional activities. 54

West Germany

• West Germany is the second largest market for U.S. wood products in the EC. The United States exported 21 percent of its EC-bound wood products to West Germany in 1989. Hardwood logs and veneers are the most popular U.S. wood products. West Germany imports approximately one-third of its temperate hardwood needs from the United States. • West Germany is the largest foreign market for U.S. hardwood veneer and logs. The United States supplies approximately 50 percent of West Germany's import requirements for oak logs, lumber, and veneer. West German supplies of veneer quality oak logs are limited. Because domestically harvested roundwood is considered medium quality, high-grade logs and lumber are in demand for furniture and paneling. Oak, mostly lumber, is the most popular furniture wood, but opportunities exist for walnut and cherry lumber and veneer. There is also a trend towards lighter colored woods as the darker tropical species decline in popularity. • West Germany, in accordance with EC phytosanitary standards, requires that all incoming U.S. oak logs be either fumigated (barked) or heat treated (debarked). U.S. barked white oak logs are exempted from these requirements between October 15 and April 30. • Sales contracts for hardwoods are traditionally based on National Hardwood Lumber Association grading rules. Established U.S. exporters to this market sell "company" grades or products of a specific quality or size which is in demand. • A special housing program for 30,000 homes for German-origin immigrants from East Bloc countries is giving additional impulse to the building market. Also an increase in home improvements has stimulated demand for lumber and wood flooring. • Imported softwood lumber is used for door or window parts, molding, and paneling. Most of imported lumber shipments are "unsorted 5ths," R-list clears, and southern pine clears. Lumber is used as profile boards (9.5 -12.5 mm) and tongue-and-groove paneling (100 mm, 4" wide). • The United States provides a negligible amount of West Germany's sawn softwood imports. The largest suppliers are Sweden, Finland, and the USSR. Of the small amount imported from the United States, importers prefer softwood sales contracts based on the Gulf Coast Classification (1923) and the old Southern Pine Inspection Bureau grading rules (1977). • The West German wood product industry consists mainly of small- to medium-sized companies. Brokers and agents play key roles in the distribution of wood products because individual end-users do not often purchase full container loads. Fifty to 60 percent of U.S. softwood products are imported via brokers. Brokers play a lesser role in purchasing hardwood logs. Agents generally receive a 3- to 5-percent commission on an f.o.b. price basis. • As in most of Europe, the West German wood trade prefers to establish long-term business relationships with exporters. Importers seek quality products and reliable delivery schedules and may pay a premium for wood products of a particular origin or type.

55

• FAS sponsors, through market development and intensive promotional programs, activities to increase market awareness of U.S. wood products. Programs include trade show participation, U.S. wood-specific technical seminars, and other promotional and trade servicing activities. FAS also maintains an agricultural trade office in West Germany to assist U.S. industry in promotion activities. • Italy is the third largest market for U.S. wood products in the EC. The United States exports 18 percent of its EC-bound wood products to Italy where imports provide 80 percent of the domestic requirements. Italy

• Italy depends entirely on imports for softwood lumber, of which the United States enjoys 6 percent of the market share. Austria provides 59 percent, mostly attributable to the quotations in European currencies, delayed payment, and capability to purchase partial shipments. • Given the strength of the Italian furniture industry and diminishing suppliers of tropical hardwoods, Italy looks to the United States as an increasing supplier of temperate hardwood lumber, veneer, and plywood. • The Italian furniture industry imports a wide range of hardwood species. Hardwoods are by far the most popular furniture wood in Italy. Despite the low quality of its product and the increasing unavailability of older stands, Yugoslavia remains the major supplier to Italy because of its low prices and willingness to quote in Italian lire. As supplies of tropical hardwood decrease, U.S. yellow poplar enjoys increasing popularity with the furniture and veneer industry as does alder. • Italy, in accordance with EC phytosanitary standards, requires that all incoming U.S. oak logs be either fumigated or heat treated. • Although Italian construction is traditionally based on concrete and masonry, wood use in residential construction is applied to roof trusses, usually spaced 24" to 32" on center. Most flat roofs consist of concrete slabs or poured concrete. Plywood or metal concrete forms are placed on 2" x 6" framing lumber spaced 32"-36" on center. Wood is also used for scaffolding to facilitate construction and renovations of the units. • Joinery manufacturers are the major consumers of Douglas-fir and hemlock. R-list clears are popular in sizes ranging from 2 1/2" x 6" to 12" x 12." R-list clears are a set of grades developed by the Pacific Lumber Inspection Bureau and represent the most common grades of Douglas-fir and hemlock exported from the west coast of the United States. Merchantable grades may be more economical than R-list for the foreign manufacturer depending on the dimension of clear lumber required. • Italy still faces a softwood plywood quota, as dictated by the EC. As with other EC members, excess above the quota face a 10-percent tariff. • The wood distribution system is similar to that of other European countries. Agents perform the purchasing functions for the importers (the major wholesaling group). • FAS marketing funds are used for a variety of promotional and trade servicing activities, including the publication and distribution of Italian technical manuals on the use of softwood species.

Belgium and Luxembourg 56

* Belgium and Luxembourg comprise the fourth largest market for U.S. wood products in the EC. The United States exports 10 percent of its EC-bound wood

luyiionrtDHayii^s innrpmtSt. - Snnî]©113S0ffii,ttteuiffleGintirïïTrtiiœn'4^ GDirlfe^ M p®î(D©im Gïff dril! ann^te-ífennri tinnrii8@r-#!^inn^ afPIpliolIßDin inn IíS)íAKH£íMíI ítranrann^ (Mriit^^iuuEtionm. Siaiinn&^i®6a^^MU¿fKeiíni£i5a> oáf ttte ofisiiooiHíilta^s dff ttte uiJSB^ orff \AMmiiQti fti3tinri£äD aHimisiíng) üoiiiliitteis sat^ aHicd1rílk£ULlfc5> MUúIII ftiurttlr^r iímai^ss^tfte ui@@(Œff \M(S)Q!]QtJ irm Hirsiranr^ smnU mimxiiiBäi'asm innitliíatnssi. * Sttiuiorttiiiioäl ILiiJinitt&^uisffîotj ihn ŒB^yram GDSDiiisttiiiiiidlQDTn (íUQini5j{£lt5>csff8&(¡D-9(¡D fp^iGseirtt"íinsrTttlrsfirin fpnnë''((SonratJnfmiùÊHïïi aiiiitj 1^^ ILUS. ätnuiidtiiiiaäl lliiJin^^ s)pffîQDff^. (Bes!m\sA\\ji/„ ttte lUJhrit^ S^teSB tiäHnrnioill ouinipœtte Mwittin ItiMKffîir piJissQtJ SBtEafnidimmxionn ranT¡tJfRlji^atm\x0((sxsx!fe(^

GDaruuTíttíiffia. « F>^Œmmp8maitimsGiSTntin^ GU^ttaiitf isiin OEfí rniEËfioc® itenr^^

** intenniie^jM||DQDittcn^ üi^ Itei^ tticKitteiSb. SB^y ram MWísxQiiti tttadtetis rai@ nEraitlJiaiíJM^ op^lt^ csniranttedl rairaij picro (gaimscinmii^.TÍHn^váéattlliu^^ ílitmttier ttliig^ pjirn^ i&i^RdtirKiteraïïi!tisffî^sEtlffîra%SBii^ » O^fiurmot^.ttiniQau^iiiiGH^ iniEri^QBS® rrinraM^ aBiwrai@inssBS (¡Eíf Ulis. ^^ pHTtfcsiiDStiiim, Ulis. \M((saoQti^p^fii3D tlSQ^^ 9@iiiriiirai^, ranidi (Qttlrsrr\xraiíQaiifiB (pcDinstfQDinäl ramoli tkiradte a§@i\)ciQiirm|9 raaiixitiffîSa. ¥f¡^ 3AÍ31D iiirarnifciiriiüb itls ItfisBäimn tts) ttte Ëiuxspffîram Oinnniimrirí%inn Shi]ifi£sätetGD|p(s>xidtetite 11^ lilis. ospíimittiiJi^l ©sfpisiitls.

iniiiiliiBEtkijs^^därni^

~ ^pannistttefffttifílbBipESEttraTroMft^ OCl. litte UMt^ St^iœsB ©spßDtiäB 11GD n^^ ** S^pranrí^@QiQDifi¡anTi£)n@5a]iii ffeai^ialÉiteftim^ttiristteTrotite piGS^petít^ aË iteESBSít uuiitill 1^ ©innn^, raifíiti ttte SSEMtn tOnsssa^ uipsijsuíninrg] ©ú(«»nibi, tttecciiunsitiuuEÜQOin imiÜJisStJi^cBsSMV^ HTEKB irniciKsaïffisÉ cEtnemrailteäUbB ^xs)Min nstfôsa. ilifí aBQttatitiiinr\, tttec^^ mssïBM^ ^mm ttte cUffíimltt tinnisB ©opsiíeiircQsdJ Us^URissin 1\w/t!¡> aEnratl HSSSGD. IRiDissItpQSQilitQlEB i iTipairîtËB \MÍ í 11 (i[S£rntf iii^ *" 9k%-€iïm^||B@fKiD39ltt(# UISSíRl. liïte Ullirítl^ Sitákes oajufin^irtl^ Hradblis aß WD^pmssmtï mraitteät attirais. Oirl^ ssftbiKQiQBQil lliUIltlll@rftl®8B fílGDTF UirailiK í^

SST

Value of U.S. Exports to the EC by Commodity 7985-7989 ($000) 1,200,000 1,000,000 800,000 600,000 400,000

200,000

1985

1986

1987

1988

Years SW Lumber HW Lumber SW Plywood Total Source: U.S. Department of Commerce

58

1989

• The utilization of softwood lumber by the building industry, for which demand is growing, is primarily for concrete forming. Timber-frame housing is only an emerging trend. FAS market development efforts, such as technical seminars and coordination of trade servicing by agricultural attaches and cooperators stationed in Madrid, are successfully increasing consumer awareness. • Spain, in accordance with EC phytosanitary standards, requires that all incoming U.S. oak logs be either fumigated or heat treated. • Since hardwood veneers and lumber are already processed and meet phytosanitary requirements, U.S. exports of these products have increased. Currently, the United States holds a 50-percent market share in oak. France is Spain's largest supplier of all temperate hardwood lumber, holding a 40-percent market share, compared to the U.S. share of 10 percent. • The surge in construction has also increased the demand for plywood. Spain is emerging as a considerable market for U.S. softwood plywood in residential construction, concrete forming, packaging, and agricultural applications. Poplar accounts for much of Spain's production of temperate plywoods. Most poplar plywood is cut into strips used for packaging. Cherry and birch plywoods are used for furniture. • Spain looks to the United States and New Zealand as main suppliers for hardboard, one of the many panel products gaining popularity in construction. • Commercial representation, in the form of agents and importers, is a requirement in Spain to facilitate trade. Required documents include: 1) commercial invoice; 2) certificate of origin; 3) bill of lading; and 4) U.S. Shipper Report Declaration. • FAS funds, through market development and promotional programs, activities to increase market awareness of U.S. wood products. Programs include trade show participation, U.S. wood-specific technical seminars, and other various trade servicing and promotional activities. TEA funds have been awarded to APA to participate in the 1992 World's Fair in Seville, by building a 50,000-square-foot pavilion. Canada

• Canada is both a natural market and competitor for the United States in international wood products trade. Canada is the leading supplier of U.S. wood and wood products imports, and our largest competitor in foreign softwood markets. Canada also is the second largest single export market for U.S. wood products. • The United States suffers a wide trade gap with Canada in most of the major product groups, with the exception of logs and hardwood plywood. • The Canadian forest products industry depends heavily on the level of construction activity and softwood lumber demand in the United States. Approximately 28 percent of U.S. softwood lumber consumption in 1988 was met by Canadian imports. These shipments totaled almost 14 billion board feet and accounted for 81 percent of Canada's softwood lumber exports to the world. • Canada is a major competitor for U.S. producers in Europe and Japan. The Canadians are dedicated to servicing export markets and allocating generous and efficient resources for the products requested. For example, in Japan, the Council of Forest Industries of British Columbia (COFI) maintains a staff of seven professional wood products specialists to serve that market. One product of intense competition is

59

of U^BqportsiD

wnußmui

iiSDK

uns.

dff

n9Bm

1I90B

softwood plywood. The Canadians use their unique product standards to position their softwood plywood as superior to that of the United States. As provisioned in the FreeTrade Agreement (FTA) between the United States and Canada, efforts are under way to remove the standards distinctions. • Canada has consistently been the largest exporter of softwood lumber to Japan. In the past, the United States provided primarily softwood logs. To compete in the softwood lumber market, U.S. exporters will need to meet the standards requirements of the Japanese market. Competition between Canada and the United States for overseas market may increase productivity efficiencies in the global market. • In Europe, Canada has a successful niche in the European softwood plywood market by positioning the product as superior to that of the United States by virtue of Canada's unique prescriptive standards that the United States does not comply with. A research program between the United States and Canada is working towards resolving this issue. People's Republic of China

* ^^^ People's Republic of China is expected to offer one of the most promising longterm export markets for U.S. wood product producers. Consumption is now estimated at 350 million cubic meters per year. Imported wood products accounted for 9 percent of Chinese consumption in 1988 and is expected to increase in both share and quantity. Due to a tightening of the supply of foreign exchange, the Government announced a 40-percent cut in forest product imports in 1989. However, demand for wood products is growing as income levels increase, in spite of a slowdown in construction activities. The United States supplied 52 percent of the total roundwood imports in 1988. The USSR, Malaysia, Canada, and Chile are other major trading partners. • Forests cover 13 percent of China's area, roughly equal to 9 billion cubic meters of total timber volume. The current plan is to increase the forested area to 30 million hectares by the year 2000. Domestic production of roundwood was 128,000 cubic meters in 1988. China continues to implement a major reforestation program. However, forests under this program are plagued by such problems as survival rates of 50 percent; low use of fertilizer and pesticides; acid rain; and illegal and indiscriminate cutting of the forests for high-priced logs and firewood. • Although the major use of wood in China is in the construction industry. State policy discourages its use and, therefore, only limited quantities are used in construction. Wood products are usually used for doorways, windows, scaffolding, and some concrete forming. Wood use is greater in rural housing, where it may be used for poles for the roof and for doors. Other uses include mining timber, railroad ties, shipping containers, and firewood. In 1988, the Government banned the use of wood in construction, electric power, railroad, road and water transport, shaft mining, fuels, and the coffin industry. Except in specified areas, materials such as steel, iron, or plastic are to be substituted for wood. • Softwood lumber is used primarily in construction, for windows, doors, and lintels. Wood use per home is highest in the rural communities, approximately 0.15 cubic meter per square meter of floor space, and lowest in urban centers at 0.02 cubic meter per square meter. The size of the average house in China is approximately 50-60 square meters in urban areas and from 100-120 square meters in the rural areas. Due to its competitive price, Canada is the primary supplier of the small quantity of lumber imported.

61

• There is great concern in China about improving wood utilization. The Ministry of Forestry has targeted a 15-percent annual growth in panel product production which is seen as a promising avenue for providing local employment and generating revenue for local use through exports. In order to increase production in this area, particleboard and fiberboard production lines have been imported. The Chinese are also encouraging joint venture operations. The small amounts of panel products imported are supplied by Indonesia, Malaysia, Thailand, the Philippines, the United States, and North Korea. • Although there is an official ban on the use of wood for railroad ties, concrete ties cannot be used in some areas. About 40 percent of railroad ties are imported, almost exclusively from the United States. Imports are expected to increase modestly as the Government has planned to expand the existing rail system. • Imports of wood products are expected to increase from approximately 10 million cubic meters in 1988 to 30 million cubic meters by the year 2000 due to increased demand and limited domestic forest resources. Most forest product imports are softwood logs. Logs are more attractive since Chinese labor costs are low and available foreign exchange is tight. Although imports of logs in 1988 surpassed the record set in 1985, imports are expected to slow down in the short term. The United States supplied 63 percent of 9 million cubic meters of softwood logs imported in 1988. Malaysia supplied over 80 percent of the 1 million cubic meters of tropical hardwood logs imported. Despite the price advantage of other sources, such as Soviet logs, the demand for U.S. logs will continue. Many mills in China are set up to handle the larger U.S. logs, which have a quality reputation. Most imports of U.S. logs are from the west coast due to the lower transportation costs. China is developing a furniture industry and is experimenting with U.S. hardwoods. In order for this market to expand, China needs more familiarity with U.S. hardwoods on how to saw and season them. • The Chinese furniture industry is growing both domestically and in the export market. Panel products are primarily used for this industry. However, the Government is encouraging increased use of rattan, bamboo, and willow in such production. Emphasis also is being placed on using other materials, such as steel and aluminum. • One of the major constraints to expanding U.S. exports to China is a lack of knowledge of Chinese products, standards, and end-uses. U.S. industry and Government officials have found that a significant increase in U.S. value-added wood products exports to China will occur only with a long-term commitment to learning how to service this growing market. • Log and lumber procurement from foreign suppliers is handled by a number of agencies, ministries, and corporations in the Chinese Government. The principal buyer is the China National Native Produce and Animal By-products Import and Export Corporation (China Tuhsu) of the Ministry of Foreign Economic Relations Trade. China Tuhsu maintains a purchasing office in the United States at 1010 South 336th Street, Federal Way, Auburn, WA 98003. Tel. (206) 874-4051. • Other major participants in the wood products purchasing and distribution chain include the China Timber Corporation, Ministry of Railroads, Ministry of Forestry, and the China National Light Industrial Products Import and Export Corporation (China Light). China Light is responsible for importing plywood and other panel products. Nearly 100 percent of the plywood imported originates in Southeast Asian countries.

62

Value of U.S. Exports to China by Commodity ($000)

1985-1989

500.000 450,000 400,000 350,000 300,000 250.000 200,000 150,000 100.000 4 1985

1989 SW Logs Total

Source: U.S. Department of Commerce

63

• The Ministry of Railroads plays a significant role in the distribution chain for wood products. Wooden ties (made from Douglas-fir, pine, and some hardwoods) are used in trunk lines and switching yards. The ministry operates its own sawmills, builds homes for ministry employees, and is involved in other major construction projects. • Promotional activities in China under the marketing plan include the publication of educational material in Chinese and seminars on concrete forming. Under the TEA program, the Chinese market is being researched with the possibility of the construction of a demonstration project. South Korea

• South Korea's demand for wood products is increasing with imports more than doubling in 1987 and 1988. Wood products are primarily used for construction, furniture, packing materials, and for the manufacture of musical instruments. Construction for the 1988 Olympics, an increase in housing starts, and booming musical instrument and container and packing materials industries were responsible for the significant rise in demand for wood products. The growing demand was met by increased imports as domestic production is limited. These upward trends in demand are expected to continue but at a slower rate. The Government is following an ambitious plan to build 2 million new houses by 1993 and 180,000 units of high-rise apartments by 1991. • South Korea's forest resources (6.5 million hectares) are diminishing and the quality of wood is poor. The reforestation program, aimed at controlling erosion and landscape beautification, has employed faster growing species of trees that are not necessarily economical for the timber industry. • South Korea imports logs to support a diverse plywood and lumber production industry. Domestic sawmills processed 6.6 million cubic meters of logs in 1988. The supply of hardwood logs has declined as some Southeast Asian countries, such as Indonesia and Malaysia, have restricted or banned the export of logs. Thus, South Korea is in the process of switching from Asian hardwood to U.S. softwood. Imports of softwood logs increased 70 percent, while tropical hardwood log imports rose only 15 percent in 1988. The main suppliers of logs are now Malaysia and the United States. U.S. exports of softwood logs to South Korea totaled $255 million in 1989, consisting primarily of Douglas-fir, hemlock, and spruce. Imports of southern yellow pine and ponderosa pine are prohibited because of pine nematode. • South Korea is no longer a major exporter of plywood for several economic reasons. The greater activity in various industries, such as construction (concrete forming), furniture, musical instruments, and packing materials, have resulted in a growing demand for plywood. With rising domestic wages, a lower tariff rate for plywood, and thinner, cheaper plywood produced in Indonesia and Malaysia, this demand is met increasingly with imports. Because of its low price, tropical hardwood plywood accounts for 98 percent of plywood imports. Logs for tropical hardwood plywood production are imported from Malaysia and Papua New Guinea. Temperate hardwood plywood is neither produced nor imported in Korea. • South Korea produces no softwood plywood and imports small quantities from the United States, West Germany, and Japan. The increasing provision of technical information on U.S. softwood plywood and competitive prices should spur demand for this product. • Particleboard and medium density fiberboard (MDF) demand significantly increased in 1988 in response to a greatly expanded domestic and export furniture market. This

64

Value of U^ Eipofis lo S. Korea by

100,000

1989 SWLogs Total Soun»: U.S. Oefartment of Cammen»

65

increase is expected to continue since domestic production capabilities are limited and wood chip supplies are decreasing. MDF is a relatively new product and is replacing particleboard and plywood for many applications. However, the strong demand from the furniture and electrical industries will ensure growing markets for both particleboard and MDF. The United States is the main supplier of these imported products due to lack of competition. Hardboard is produced by only one South Korean firm whose production is sufficient for domestic consumption. • Growth in imports of processed wood products is expected due to the increasing log export restrictions in Southeast Asia and rising South Korean wages. Some South Korean plywood manufacturers have moved their processing facilities to Malaysia and Indonesia and more are expected to follow. Imports of lumber and panel products increased 141 percent in 1988. Imported softwood lumber (primarily spruce and cedar) is used mainly in the musical instrument industry. Hardwood lumber also is used in this industry as well as in the furniture industry. The United States is South Korea's largest supplier of softwood and temperate hardwood lumber, exporting Douglas-fir, hemlock, oak, walnut, and maple. Larger quantities of tropical hardwood lumber are supplied mostly by Malaysia and Indonesia. • Recognizing the potential for U.S. wood product exports to South Korea, the National Forest Products Association is opening an office for an overseas representative in Seoul with 1990 TEA funds. The representative will establish a strong presence for U.S. wood products through a wide range of activities. The activities include initial studies of the South Korean wood products markets, technical seminars, establishment of a joint wood products committee, development of professional relationships, curricula development in architectural institutions, public relations, and translation of technical information to be distributed. • Import distribution channels: Most sawmills rely on logs imported by specialized traders due to inexperience and lack of collateral. Imported logs are procured by several companies that maintain their own offices in the northwest United States and distribute to domestic sawmills. Inchon and Pusan are the major ports, accounting for more than 90 percent of total log imports. Consequently, sawmills are heavily concentrated in the Pusan and Inchon area. Taiwan

• Taiwan is the eight largest market for the United States with the potential to grow even further in the 1990's. After Malaysia, the United States is Taiwan's largest source of roundwood. Domestic roundwood production is now almost nonexistent since the logging ban on most species of softwoods. North America is viewed as the only reliable long-term source of wood, and its market share is expected to increase. Restrictions on log and lumber exports, coupled with a decreasing supply, have limited imports from the other major trading area. Southeast Asia. • Wood production in Taiwan is declining for three major reasons: (1 ) a labor shortage; (2) increasing wages; and (3) a ban on logging of domestic softwood. As incomes rise, fewer people are willing to do mill work and those who do demand higher wages. Pressing environmental concern is said to have been the cause behind the logging ban of most softwoods and limiting the harvesting of hardwoods. In addition, rough terrain and small-scale operations make local production less price competitive. • The Taiwan furniture industry, primarily for export, accounts for 31 percent of total wood use. The plywood industry comprises 25 percent, pulp 21 percent, construction 11 percent, and the rest fir. In the face of the production problems, Taiwan furniture

66

Value of U.S. Exports to Taiwan by Commodity 7985-7989 ($000) 250,000

200,000 150,000 4 f\r\ f\f\f\

100,000

50,000

0

1

1

1

1

1

1985

1986

1987

1988

198 9

Years HW Logs HW Lumber Total Source: U.S. Department of Commerce

67

maä ípilpowixDxdl irrrattusörnies mm mmÁm^ to Smulltesasít âmm wMsm ílaÉamr m píterntlííy I anraa itesss ©«p©nffiiNí®.. ¡Htaxmeocen, îttris inniipcaEliicarni miW tee ipmni^ll'y iîiifestt toy arm irmDrsase m tttne muiinirtiiœrr aîff fadtoniies pîtDxrfto ftiiJTTniilun© aniîii pœaiterr üjffi© (ofl ^^^ (cnmieiiinni©rirntïaDï^ ftiumrilliuir® irntÉiistliîy is irm HornigattBam, fiïïmïwi^în^ smm/ irwD \\smhmma opoirrtt ptrawUiiidfe toworaï ínnüdl-rrairnge mmä Itiij^hhoitdi Itacalllsy ©mnsuiinnisilJ ittenrns. Htue irnuliiuslliîy is ©sparrratltmg ite espßirrtt rnmarrtete m\ú lupdisälirnig pitortfe to mmate tjttann iüntiaras tslidienft. iÄllltaiJi^ ríímafm¡y fatítomies arr© rnmtnNíirnig to S(Q)UjMtiiesQs(t y^ia, TaNooorm will oMliirniue to lu^e lUI.S. \)ooKnmils as itfô opnirrtt îïïmaîtels (Priiitedl SMte, Jlapen., BuinpB,, and ALUisitrailÊa:) are fenniiíiar vewíftn am«jl dternmamdl US.. ItnandbioKQXDxdl spedies. * SsifcoKQXQxiJls arre luisedl irm tte conistadforii iirnaii^y. Oenmamidl ttnadi ítseem tlrra(dillii(Q]rmalll¡y irnn^ isjf dtorTTmesüirc suppliies vooâîiîA a^e rmearrilf atepileteíl. Tite oornisílíriuidíi^ iimriliUJSIliTy iis sdiill ^xery adüNíe armdl Táimmw rririiarrmiáainlujireirs ^m^m alteaß% iheguim e;^^f)eiriinTnerntiiinig ^itlItD US.. stoflltoQXQxdls. Urntottuirriat^lj^,, tttnef arre rnioltHarniiEerwM^ US.. sniEammiopalfíl^,, prnossessiimg irrmelteds,, graidles,, arrnd trade ser^rcB.. HoNoxei^er,, tne^arre eage^ pmmtsSm^ am íinninmernse rnmarrlkett copporttujiniiit^ tovr U.S.. siuppliietrs.. ) flue dhnrTmesOic ptrodtuctiiKQitn) cestt iimoreasiirmg amd flne HarJü ireduKcedl to zemo tor ikiiinnitDer,, TaiNooorm iis ttumirnig rnmore amdl rnmere to pooessedl wütmü pmáml ¡irrmpoirrtls,, espedialll;y pairneli prodiuclls smäk as IMIOF.. • Wood pirodydis are dustbrjibxijiedl ttnroujiglhi llarge wMlesallerrs wto Wneim iresdil m smmalller ibtls to smmalllerr wMlesallerrs oir (diirreidtll!^ to eimdküseirs.. intnese ^udDollesalieirs wiiil trernnaiirn) ttne soujirnce off wood prodiuidls far Taiieami"s ffiumüjiire anid p^ff Kwod iimidijslörii^ m SoüÉteast Asiia. • IMIatrfeelt proinmolüiorniall adtii^iiffiies iimi Tmmam win eipanid ^iin fie openuiimg off aim olioe far a U..S.. wood produjidts iirmdujisltiry rrepreseinitlattirœ wffiio wiüll seirviioe fiialt inniairfcelL. Forr eiainnplle,, flue offiioe ^ill ooirndiuKCt mniairlkelt e^lmaltJioirDs ainid gàm senrniiirDatrs ^ün edujcaltiioirDall irimalleiriiall taimsllal^ iiimto Täiwainiese. • lim 11989„ ttne Miiddlle Easlleinm irimairketls aoooyimled far $124 miiiliiioim off US. wood prodiUKCt expoims. Aihriica took $79 miiiioim woirttn iiim 1989.. Ahica and the ■fiddle East

• The ooyimtbriies off ffne Miiddlle Easit aimd Affiriica dUer sigimüffücairntt poteimltiiall for US. wood pirodycit pirodiuiceirs. Reall soocess iiim «is iregiioim off ttne woirild Ihas beeo oomered by compelöllöirs ffiroinni Eoirope aimd «hie Soviielt Uimiioni. US.. ifModocems lladk Ikimowlledge off local ciuisïoinnis„ markellüimg techoiiqyes, œimsftnucttiioim inniettlhiods, aimd mairket oppoirtyoues. The poteotial far US. peoetratüoo io tthiis mairket is eocoyiragiog, partiicylairlly io sypplyiog materials for housong aimd nofiraslbnuictyre develoipmeot.

• During the past 5 years« the U.S. timber iodosîtry has begoo exportiog io Middle East and African markets with the help of USDA s GSM-102 credit guarantee program. This program makes U.S. goods as competitive as the European products. Iraq and Algeria are two success stories. Iraq's imports off U.S. wood products increased from $392,000 in 1983 to $57 million in 1989, making it one of the top 20 U.S. martlets. Algeria, only recentiy included in the program, imported $37 million in wood products in 1989. • Many of the African nations are wood-producing competitors of the United States, but heavy deforestation and desertification are beginning to be felt in their timber 68

Value of U.S. Exports to the Middle East 1985-1989 ($000) 140,000 -

120,000 -

100,000 -

80,000 / /

60,000 40,000 /

/

20,000 1

1985

~'>^ ■

"J w

•s

o OÍ (/) CD

I

§1

if

e

Hia§ tu c ,1 ^ 2 § -33 2 5 "^îP S h: «JeoCO

1 (d t^

^

v

¡c

:2; OQ CU

■B 0) rg ^ o

Q

5 .'S

(O

< CO

îrt

g) w

3

N

PL,

o :?

bD

82

CO M _j

O

m

>-

V) LU

5 O 13

á 2

LU

53

d

m

z

§ "1 Q

»S

3

EH

CO

w

9

0

SHIPPER'S EXPORT DECLARATION

f0í»M7B2S-V n-^M»

OM0 Wo, 0607-0018

la. IXPOüTEfl (Nêm9 ënd Mddtêuê lñ0ñTEA'8 EIN UR8I NO.

D Rtlotod

97-0124609

D Noo-rtlittd

252 South Ridge Road QueJ?§LM» • f «P«;?^ ^^ ^. iUr*«lôff>." I undtrstiod thtt civil and criminal oona'.ilül, Inclüdlno '©♦'••turf ird •«I«, imy bf \mopií94Í for maWnc fais« or IrtuduUftf •^'[•^^•"^ltYíi^ví'TJ/fpnr'Mit ih» r*ou«tt*d hformttlon or for violation of Ujjff'" J'í fS^^Í TJS 4i ? AI

Ü.S.C. Stc. 305î 22 U.8.C. Ste. 40!: iau.S.C.S«yc. 1001; 60U.S.C. App. U\Ol

Oil»-

Xrea tdftnt... 4/1/89 T^i-: •

^Af (OA (r.'.Alv for of e¡ai o^poiti luthentftf by tN Stc/euiy :«cr«Ml ftr U.S. CiMlOfrtf .eñH-nt

25. AUTHENTICATION i\^'rtrt\ ftquhtä) ir U.S.

\.[%'. Î:!.!..* ,.-:•;...:- ••-::r

90««^ftm*nt

PrIiUtnf

ottieii

lilt—S4f'f»'

-? C :":^^.t. -.rr -.•.... C;.-:î->n". Oi^sirp:! Olrêcicf J. ;'h§ ^Correct

83

(DTWm wen. iiq>//a»g)(iag

WteiHtlMtonBrtt^BWW ttmmñlBaÉam cmn^ bm MmutRü tuitlll tm ^n^lJoaHâlini Ite c OJ LÜ

tfi

01 H-



n o

^ ••

r-

y~ F-

m

■11

»—

■•

-•

;<

U1

m

^

c

01 •U 01 H- 1— ♦—

•-• ••

-o

••-• •• ^ S•JJ •• XI

••

ir-

o z ■

•—•

n C-4 00

>

>o

■»-*

^ ••

<

r—

OJ 01

OJ

»~ »—

Uí

••

•—t

.ai U tn JD !L •11 3 tn

en UJ > .. X ui

c •• X C '11 ÜJ

>:

^

-ac en U ÜJ OQ XJ S01 3 X Ul i/i C • r-

01 Q.

'11 CL

en

en

en

u ÜJ ni J2 ül 1. S•u 01 ■■ n 3 JZ. 01 E \X% U1 c 3 c •1-

X 01 ÜJ

•Ti '11

-ií

0Ch

>

Xl 1. '11 •■ 3 JZ t/l \f\

►-< 1. o o Ö O Ul o -? Q. «í£

tn

-r-i

•--I

^-4

.::¿ en U ÜJ

!L 01 XI lU £ c 3 o Z X D. iL 01

•»J i> O CL S

o

■•

r> 00 T -

Z5

OJ OJ Q.

C/3

111

en

Ixl •TJ JD 1. •U •■ 3 -C ut Ifl C ir-

z>

£

■«í-

00

tn

>■

1—

>^

n o

>-

Z?

CJD

r-i

OJ

•L

;'-

en

en

■^

n o.

E 1- T] 'D 3 o "~ ^ £

OJ -P

Z

ÜJ — h^ Z 3

en r> CL

.,- ^ z

I X

3 Z "Cj-

n CM

O r-s o r-si

¿55 r- ^ flÖ .r-

-P r-

t—i

o o

E

re 3 o £ U O Su '-

O i- >• lU- ÎJïXÏ E < H-i m E £ r- en Su flO .r- .r5u 01 Ü.

z

en

C-J

OJ

•u

•»-I 2Ü O X »~ O •LD

en en

E 1. iN o íD c^

o ir

Su -P

o »D E

o

en en

ÜJ

ÜJ

hÜJ ÜJ

-j

< I— Z

03 E 't¡

I CJ3 ÜJ —• -J CCl O < -J

«13 E •U

\n z

CL ca

•^ ^~ O

ÜJ K- 3

00

»-i

z

Z) Z

ra UT -J

*-i

en f— ir Z3 O •D

Q

<

OJ

>

,f

5Cx

ir _J _J X •lu X 3 ÜJ o

z o r-j 15

■»-<

Z 1 O ■ U 01 01 SL XI XI 111 «Ti 3

z

z o

o

o o ü

01

^