[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34304-34306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16242]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

COUNCIL ON ENVIRONMENTAL QUALITY


Request for Public Comment Regarding the Economic and 
Environmental Effects of Tariff Elimination in the Forest Products 
Sector

AGENCY: Office of the United States Trade Representative and Council on 
Environmental Quality.

ACTION: Request for written public comment.

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SUMMARY: The Office of the United States Trade Representative (USTR) 
and the Council on Environmental Quality (CEQ) are seeking public 
comment about the economic and environmental effects of the initiative 
to eliminate remaining tariffs on forest products. These comments are 
sought in the context of a written analysis which CEQ and USTR are 
undertaking of that initiative. The initiative, which is now the 
subject on negotiations within the World Trade Organization (WTO), is 
part of an eight sector accelerated tariff liberalization (ATL) 
proposal. The other ATL sectors are environmental goods and services, 
gems and jewelry, medical equipment and scientific instruments, 
chemicals, energy, fish and toys.
    The ATL proposal in forest products covers all of Chapters 44, 46, 
47, 48, 49 on the HTS as well as portions of chapter 38 (certain wood 
chemicals), and 94 (furniture and prefabricated buildings.)
    The complete list of tariff lines included in the initiative can be 
found in the Federal Register notice announcing ITC Investigation No. 
332-392, Advice Concerning APEC Sectoral Trade Liberalization, (Federal 
Register, April 1, 1998, Vol. 63, No. 62).
    The analysis will address the following broad subject areas: the 
history of the initiative, a description of how the forest products ATL 
relates to other U.S. government goals and objectives in the forest 
policy arena, the likely economic impact of tariff elimination in terms 
of shifts in production and consumption of forest products and the 
reasonably foreseeable environmental impacts of these shifts, and 
appropriate policy responses. The report is intended to focus on the 
effects of the ATL initiative on the United States but will also 
address broader global implications of the initiative. Specific 
information regarding, or empirical studies of, the economic and 
environmental impacts of past trade liberalization in this sector which 
interested parties may have would be particularly welcome.
    Testimony related to the subject of this request which has been 
submitted in response to the following will be made a part of the 
record of this study and does not need to be resubmitted: ITC 
Investigation No. 332-392, ``Advice Concerning APEC Sectoral Trade 
Liberalization'' (Federal Register, April 1, 1998, Vol 63, No. 62); 
USTR Notice ``Negotiation of Sectoral Market Opening Agreements'' 
(Federal Register, May 15, 1998, Vol. 63, No. 94);

[[Page 34305]]

USTR Trade Policy Staff Committee Notice ``Request for Public Comment 
Regarding Negotiations on Market Access and Other Issues in the World 
Trade Organization and Under the Free Trade Area of the Americas'' 
(Federal Register, April 14, 1999, Vol. 64, No. 71); and ITC 
Investigation 332-400,``Conditions of Competition in U.S. Forest 
Products Trade''.

FOR FURTHER INFORMATION CONTACT:
Office of the U.S. Trade Representative, Environment and Natural 
Resources Section, telephone 202-395-7320 or the Council on 
Environmental Quality, International Affairs, telephone 202-456-6224.

SUPPLEMENTARY INFORMATION:

1. Background

A. History of Tariff Liberalization in the Forest Products Sector

    The United States sought elimination of all tariffs in the forest 
products sector during the Uruguay Round. The round resulted in a 
``zero for zero'' (reciprocal tariff elimination) agreement which 
included the United States, Canada, Finland, Austria, Singapore, Hong 
Kong, Japan, EU, Korea and New Zealand for paper products (chapters 47, 
48 and 49 of the HTS) by 2004. At the same time there was agreement to 
reduce, over five years, tariffs on wood products. In the United 
States, such reductions amounted to just over a one-third cut in 
average tariff levels from an average tariff level of 3.1% to an 
average tariff level of 1.8%. Under the Uruguay Round Agreements Act 
and its accompanying Statement of Administrative Action, Congress 
listed a number of industrial or agricultural sectors in which complete 
tariff elimination was not achieved in the Uruguay Round but for which 
Congress determined that obtaining further reductions and elimination 
of tariffs was a priority objective. Under section 11(b) of the Uruguay 
Round Agreements Act, Congress provided the Administration with ongoing 
authority to seek reductions in tariffs on wood products, among other 
sectors.

B. Initiative Begun in APEC

    In mid 1997, APEC Ministers called for the nomination of sectors 
for Early Voluntary Sectoral Liberalization (EVSL) among APEC 
economies. Four nominations were received in the forest product area 
from the United States, Canada, Indonesia and New Zealand. These four 
proposals were merged together in September 1997, with New Zealand 
agreeing to act as coordinator for the proposal. Indonesia, the United 
States and Canada have remained active proponents of the proposal in a 
co-sponsor role. At the APEC summit in Kuala Lumpur in November 1998, 
APEC leaders agreed to move the tariff portions of the EVSL initiative 
to the WTO in order to seek a critical mass of support for concluding 
an agreement on all eight sectors by the end of 1999. The non-tariff, 
building standards and economic and technical cooperation areas of the 
proposal continue to be worked on within APEC.
    C. Major global importers and exporters of forest products, 1996:

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                   Importers                       1000 US$                 Exporters                1000 US$
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USA...........................................     $22,558,540  Canada..........................     $25,333,160
Japan.........................................      18,890,400  USA.............................      16,939,900
Germany.......................................      11,926,820  Sweden..........................      10,996,200
United Kingdom................................       8,476,689  Finland.........................      10,301,020
Italy.........................................       6,148,593  Germany.........................       9,438,751
France........................................       5,356,351  Indonesia.......................       5,206,522
Netherlands...................................       4,489,773  France..........................       4,193,914
Korea, Republic of............................       4,425,527  Malaysia........................       4,161,279
China (excl. Hong Kong).......................       3,858,254  Austria.........................       4,149,678
Spain.........................................       3,552,249  Brazil..........................       3,233,476
Belgium-Luxembourg............................       3,544,574  Russian Federation..............       2,995,568
Hong Kong, China..............................       3,488,083  Italy...........................       2,486,782
Taiwan........................................       3,040,661  Netherlands.....................       2,406,430
Canada........................................       2,622,203  Belgium-Luxembourg..............       2,180,694
Switzerland...................................       2,501,957  Norway..........................       2,059,960
World.........................................     138,652,200  World...........................     134,656,400
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 Source: FAO

D. Trade Barriers Faced by Sector

    The sector faces a range of barriers. Tariffs remain particularly 
significant barriers. The 1998 FAO publication Trade Restrictions and 
Their Impact on International Trade in Forest Products which is 
available in hard copy and on the FAO website [www.fao.org/ur] provides 
a detailed explanation of the barriers faced in this sector.
    Applied tariffs in OECD economies for these products, in general, 
are relatively low, however, tariffs for specific products remain high. 
This is especially true for wood panel products, builders' woodwork 
items, and furniture for those countries that did not agree to the zero 
for zero on furniture rates for particular products are higher, 
commonly 10-15%. Tariffs in other countries are higher than this, with 
rates commonly falling between 10 and 60%.
Tariffs, Selected Countries
    HTS Product Chapters: 44, 47, 48, 49, 94 (part).

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                                                           Tariff %  MFN
                                                              average
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Australia...............................................            2.88
Canada..................................................            3.88
Chile...................................................           11
China...................................................           20.86
Taiwan..................................................            3.22
Hong Kong, China........................................            0
Indonesia...............................................            9.7
Japan...................................................            1.14
Korea...................................................            4.98
Malaysia................................................           12.26
Mexico..................................................           11.32
New Zealand.............................................            6.06
Singapore...............................................            0
Thailand................................................           20.04
USA.....................................................            1.4
EU......................................................            5.26
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 Source: FAOSTAT Website

E. Scope

    The ATL proposal covers all forest products--from rosin (ex 3804), 
to logs and wood products (ch44), ratan products (ex 46), pulp, paper 
and paper products (ch 47, 48 and 49), wooden furniture (ex 9401, ex 
9403) and prefabricated buildings made of wood (ex 9406).

[[Page 34306]]

F. The Tariff Proposal Target

    Existing parties to the Uruguay Round zero for zero agreement to 
accelerated removal of tariffs in chapters 47, 48 and 49 of the HTS 
(pulp, paper and paperboard and printed material) would agree to move 
up the elimination of tariffs in these sectors from 1 January 2004 to 1 
January 2000. Others would attempt to remove tariffs by the same date 
but countries could delay tariff removal until 1 January 2002 on a case 
by case basis for a limited number of specific products.
    The proposal calls for the commencement to tariff cuts on all other 
products with the goal of eliminating tariffs by 1 January 2002, but 
accepts that in special circumstances and on a case by case basis 
elimination could be delayed to 1 January 2004.

G. Non-Tariff Measures

    As part of the original APEC EVSL agreed to in November 1997, APEC 
economies agreed to hire a consultant to undertake a study of non-
tariff measures which may be affecting trade in the forest products 
sector. This past April, APEC issued a request for proposals for the 
study. The United States is the APEC coordinator for the study. Under 
the terms of reference, the study will include:

--A comprehensive inventory of non-tariff measures and other policies 
affecting trade in forest products;
--An identification of the most frequently used measures and policies;
--A qualitative and quantitative analysis of the impact of these 
measures/policies on trade, including a broader analysis of the policy 
goals underlying those measures/policies and the economic and 
environmental costs and benefits stemming from their application.

    APEC members have been asked to notify and cross notify on NTMs in 
effect in their own economies and the economies of other APEC members. 
The study is to be completed by August 30, 1999, after which an APEC 
forest experts groups will formulate appropriate recommendations for 
the voluntary elimination of any unjustified measures identified in the 
report. APEC economies are then to submit individual, voluntary reports 
on timetables for the implementation of those recommendations.

H. Economic and Technical Cooperation

    Four proposals have been received to date for projects under the 
environmental and technical cooperation (Ecotech) portion of the APEC 
EVSL. APEC economies have agreed that Ecotech cooperation projects in 
support of the forestry initiative should be focused on programs which 
further environmental goals, such as forest fire prevention, pest 
control, and adoption of sound phytosanitary standards. The four 
Ecotech projects under consideration are

--Projects to increase communities' forestry knowledge and their 
ability to develop solutions to such issues as forest resource 
assessment using criteria and indicators;
--Enhancement of local industry development in a sustainable manner 
through training programs on sustainable forest management;
--Cooperation to enhance collaborative work on forest fire prevention 
and management systems and development of fire monitoring and 
information systems; and
--Cooperation in such areas as (1) enhanced infrastructure, personnel 
and exchange of information on standards and technical regulations in 
the sector; (2) making information and training programs available on 
paper making, paper stock collection and utilization, recycling and 
waste reduction, panel production, furniture design, finishing and 
packaging, and builder's carpentry and joinery design; (3) enhancing 
transparency in customs procedures applied to the forestry sector 
through the Subcommittee on Customs Procedures of the APEC Committee on 
Trade and Investment; (4) promoting exchange of market information 
through cooperation among relevant organizations; and (5) improving 
information and monitoring systems associated with harmful pests.

2. Written Comments

    Persons wishing to submit written comments in response to this 
notice should provide 20 copies no later than 30 days from the date of 
this notice to Gloria Blue, Executive Secretary, Trade Policy Staff 
Committee, ATTN: Forest Products ATL, Office of the U.S. Trade 
Representative, Room 122, 600 Seventeenth Street, NW, Washington, DC 
20508. Any business confidential submissions must be clearly marked as 
such on cover page and succeeding page. Such submission must be 
accompanied by a non-confidential summary thereof.
    Non-confidential submissions will be available for public 
inspection at the USTR Reading Room, Room 101, Office of the U.S. Trade 
Representative, 600 Seventeenth Street, NW, Washington, DC. An 
appointment to review the file may be made by calling Brenda Webb at 
(202) 395-6186. The Reading Room is open to the public from 10 a.m. to 
12 noon and from 1 p.m. to 4 p.m., Monday through Friday.
Frederick L. Montgomery,
Chairman, Trade Policy Staff Committee.
Dinah Bear,
General Counsel, Council on Environmental Quality.
[FR Doc. 99-16242 Filed 6-24-99; 8:45 am]
BILLING CODE 3190-01-M