James TURNER
IUFRO Division 5 Conference
5.10.00 Forest Products Marketing
& Business Management
James Turner, Frances Maplesden,
Susan Bates and Andres Katz
Growing Wood Product
Exports via Market Access:
New Zealand Exports to
USA, Japan and China
Scion, Trade and Economic Development Group,
49 Sala St, Rotorua, New Zealand
Aim of Work
To understand potential changes in
New Zealand’s value-added export
market environment, the technical
barriers and opportunities likely to arise,
and the responses required to enable
export growth
Overview




Background – Why?
Methods – How?
Results – What?
Conclusions – So what?
Background
Opportunity
 Adding value & jobs – timber to carpentry
Adding value
New Zealand primary and secondary wood product exports
Export Value (US$ million)
2.5
2.0
Primary products
Secondary processed
1.5
1.0
.5
.0
1990 1992 1994 1996 1998 2000 2002 2004 2006
Opportunity
 Adding value & jobs – timber to carpentry
 Growing opportunity
Growing Opportunity
Trade value (US$ billion)
Global primary and secondary wood product trade
160
140
120
100
80
60
40
20
1960
1970
1980
1990
2000
Primary wood products
Secondary processed wood products
2010
Opportunity
 Adding value & jobs – timber to carpentry
 Growing opportunity
 Product differentiation
- Unrivalled brand, quality, service
Threat
 Trade barriers
- Tariffs – tariff escalation
Wood Product Tariff Escalation
Average Tariff (%)
Country
Raw
materials
Semimanufactured
Finished
products
China
1.11
4.05
5.07
Thailand
2.80
11.51
20.71
Australia
2.68
3.91
4.00
Threat
 Trade barriers
- Tariffs – tariff escalation
- Trade disputes – China bedroom furniture
- Non-tariff trade barriers
Non-tariff Barriers - Definition
Government laws, regulations, policies
and/ or practices which either protect
domestically produced products from
the full weight of foreign competition or
which artificially stimulate exports of
particular domestic products
Trade Barriers - Examples
 Social & political
- Processing subsidies
- Quantity controls
 Health & safety
- Phytosanitary regulations
- Restrictive testing and inspection
 Environmental
- Harvest restrictions
- Certification
Research Questions
 Are NTBs a significant barrier to New
Zealand value-added exports?
 What strategies can be used to
overcome these barriers?
Methods
Value-added Markets
 Builder’s carpentry &
joinery
- Wooden doors
 Mouldings & millwork
 Wooden furniture
 Prefabricated buildings
 China
 Japan
 United States
Methods
Exporter Survey
STEEP
Current barriers
Costs
Future barriers
Economic Impact
Assessment
Important barriers
Strategies
Exporter Survey
 13 one-on-one interviews
- prefabricated houses
- wooden doors
 Why not exporting?
 Factors affecting export growth
STEEP Analysis
 Social, technological, economic,
environmental, political
 Trends
- predetermined
- uncertainties
 Expert workshops
STEEP Analysis
 Determine future non-tariff barrier trends
by
- Identifying important trends and drivers
- Assessing implications for trade barriers
Economic Impact Assessment
 Global Forest Products Model
 Non-tariff measures
- Subsidies – export & production
- Shipping costs
- Manufacturing costs
 SPWP – imports & exports
Global Forest Products Model
 Forecasts
-
Prices
Demand
Supply
Trade
 Competitive equilibrium
 18 wood products
 180 countries linked by trade
Results
Results
Exporter Survey
STEEP
Current barriers
Costs
Future barriers
Economic Impact
Assessment
Important barriers
Strategies
Survey – Prefab Houses
 Japan – engineering certificates
 China – lack of IP protection
– lack of acceptance
– treatment of radiata
 USA – open & transparent
 Management time costly
- > $1 million over 5 years
- small firm size
- market development
Survey – Doors




Japan – no significant barriers
USA – fire rating requirements
Lack of scale
Market development
Exporter Survey
Country
Japan
Product
Non-tariff barrier
NTB Cost
(%)
NTB Cost
(US$/ t)
Prefab housing
Engineering certificate
7.0 – 13.0
165 - 307
3.0 – 5.0
71 – 118
20.0
473
Bureaucracy
1.0
3
IP protection
1.0 – 2.0
24 – 47
Timber treatment
1.5
35
Fire rating
3.0
41
Fire code
Design values
China
USA
Prefab housing
Doors
Results
Exporter Survey
STEEP
Current barriers
Costs
Future barriers
Economic Impact
Assessment
Important barriers
Strategies
STEEP Analysis
China:
 Environmental degradation
 regulations - recycling, energy, air quality
 Water - reliance on imported land-intensive products
 fewer barriers for forestry products
 IP protection might be tightened
 Biggest challenge - impending labour shortage
 reduced protection
 New Zealand has comfortable relationship with China
 easier to negotiate trade deals
STEEP Analysis
USA:
 Democrats likely to be more protectionist
 less likelihood of trade agreement with NZ
 US lobby groups
 countervailing duties - bedroom furniture
Results
Exporter Survey
STEEP
Current barriers
Costs
Future barriers
Economic Impact
Assessment
Important barriers
Strategies
Economic Impact
Country
Japan
Product
Prefab housing
Non-tariff barrier
Export Change
(US$ million)
Total Export
Change (%)
90 – 177
1.4 – 2.9
15 - 47
0.0 – 0.2
326
5.5
Bureaucracy
0
0.0
IP protection
1
0.0
Timber treatment
1
0.0
13
0.1
Eng certificate
Fire code
Design values
China
Prefab housing
USA
Doors
Fire rating
Japan
Prefab housing
Market devN
129
0.2
Prefab housing
MD and NTBs
730
12.6
Economic Impact
 Modest impact of current NTBs on
value-added products
- small proportion of total exports
- small part of production costs
 Combining market development and
market access beneficial
Conclusions
Conclusions
 Are NTBs significant barrier? NO and YES
- value-added exports small
- combined with market development
barriers are significant
 What strategies?
- clear market development strategy
Questions?