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October 3, 2012 | Back to: News

Oregon lawmakers urge probe into China's timber industry

Oregon federal lawmakers this week urged U.S. trade officials to curb what they claimed are China’s illegal tactics to sell more hardwood plywood and paper products to American consumers.

In both cases, the lawmakers allege that Chinese manufacturers are breaking international trade laws to make their products artificially cheap and gain the upper hand in timber-related industries.

“American manufacturers can’t compete when the deck is unfairly stacked against them,” U.S. Rep. Peter DeFazio said in a statement supporting an investigation of Chinese plywood manufacturers. “We cannot afford to allow China to get away with manipulative trade practices that hurt American companies and cost us jobs.”

A coalition of U.S. companies, including Roseburg Forest Products, last week requested the investigation by U.S. trade officials.

The Coalition for Fair Trade of Hardwood Plywood alleges that China sells hardwood plywood at less than fair market value and its manufacturers receive government subsidies banned by trade laws.

Chinese exports are a significant issue for RFP, which competes with China for orders from major customers, such as home-improvement stores, the company’s vice president of sales and marketing, Steve Killgore, said Tuesday.

Hardwood plywood, made by bonding two or more layers of wood and used in decorative carpentry and cabinet making, accounts for about half the production at RFP’s 300-employee Dillard complex, he said.

U.S. manufacturers suspect they are up against Chinese companies that cut production costs through government subsidies and illegal practices, including obtaining raw material from illicit logging.

“It’s created a very difficult competitive situation,” Killgore said. “We’re really trying to defend our turf.”

Killgore said competition from China has grown in the past decade. Initially, Chinese plywood was substandard, but it’s improved over the years, he said.

“They stubbed their toe, but they got better at it,” he said.

Chinese manufacturers have been able to undercut U.S. domestic suppliers by up to 50 percent and capture about half of the U.S. plywood market, according to the coalition.

“These unfair trade practices present a fundamental, if not insurmountable, obstacle to the domestic industry’s ability to recover its competitive footing,” the coalition’s counsel, Jeff Levin, said.

The coalition said it expected an investigation by U.S. trade officials would take a year. The investigation could result in increased costs for U.S. buyers of Chinese plywood.

The coalition said it anticipated opposition to any action from U.S. businesses that import Chinese plywood or are involved in overseas manufacturing.

Chinese paper manufacturers also are coming under fire.

In a letter sent Tuesday, six Oregon lawmakers asked U.S. trade officials to investigate whether subsidies to Chinese paper manufacturers violate trade agreements and World Trade Organization rules.

The letter, addressed to U.S. Trade Representative Ron Kirk and Acting Commerce Secretary Rebecca Blank, was signed by DeFazio, a Springfield Democrat. Sens. Ron Wyden and Jeff Merkley and Reps. Earl Blumenauer, Kurt Schrader and Suzanne Bonamici, all Democrats, also signed the letter.

The lawmakers said labor costs account for only 4 to 8 percent of paper mill operating costs, so China’s “surge of paper-products exports” can’t be attributed to differences in wages for American and Chinese workers.

Instead, Chinese manufacturers are benefiting from government subsidies for coal, electricity, pulp and recycled paper, lawmakers claimed.

Plus, manufacturers benefit from low-cost government loans and “the extensive role of local governments in providing incentives for local paper production,” lawmakers stated.

The lawmakers cited job losses at U.S. pulp and paper mills in arguing for quick action.

“Recent events suggest that if we do not take further action to restore a level playing field, the American paper industry will be in serious danger,” the lawmakers stated.

• City Editor Don Jenkins can be reached at 541-957-4201 or djenkins@nrtoday.com.

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The News-Review Updated Oct 4, 2012 02:01PM Published Oct 5, 2012 06:51AM Copyright 2012 The News-Review. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.