1. James TURNER IUFRO Division 5 Conference 5.10.00 Forest Products Marketing & Business Management

2. Growing Wood Product Exports via Market Access: New Zealand Exports to USA, Japan and China James Turner, Frances Maplesden, Susan Bates and Andres Katz Scion, Trade and Economic Development Group, 49 Sala St, Rotorua, New Zealand

3. 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

4. Overview  Background – Why?  Methods – How?  Results – What?  Conclusions – So what?

5. Background

6. Opportunity  Adding value & jobs – timber to carpentry

7. Adding value New Zealand primary and secondary wood product exports

8. Opportunity  Adding value & jobs – timber to carpentry  Growing opportunity

9. Growing Opportunity Global primary and secondary wood product trade

10. Opportunity  Adding value & jobs – timber to carpentry  Growing opportunity  Product differentiation ­Unrivalled brand, quality, service

11. Threat  Trade barriers ­Tariffs – tariff escalation

12. Wood Product Tariff Escalation Average Tariff (%) CountryRaw materials Semi- manufactured Finished products China1.114.055.07 Thailand2.8011.5120.71 Australia2.683.914.00

13. Threat  Trade barriers ­Tariffs – tariff escalation ­Trade disputes – China bedroom furniture ­Non-tariff trade barriers

14. 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

15. Trade Barriers - Examples  Social & political ­Processing subsidies ­Quantity controls  Health & safety ­Phytosanitary regulations ­Restrictive testing and inspection  Environmental ­Harvest restrictions ­Certification

16. Research Questions  Are NTBs a significant barrier to New Zealand value-added exports?  What strategies can be used to overcome these barriers?

17. Methods

18. Value-added Markets  Builder’s carpentry & joinery ­Wooden doors  Mouldings & millwork  Wooden furniture  Prefabricated buildings  China  Japan  United States

19. Methods Exporter Survey Current barriers Costs Economic Impact Assessment Important barriers STEEP Future barriers Strategies

20. Exporter Survey  13 one-on-one interviews ­prefabricated houses ­wooden doors  Why not exporting?  Factors affecting export growth

21. STEEP Analysis  Social, technological, economic, environmental, political  Trends ­predetermined ­uncertainties  Expert workshops

22. STEEP Analysis  Determine future non-tariff barrier trends by ­Identifying important trends and drivers ­Assessing implications for trade barriers

23. Economic Impact Assessment  Global Forest Products Model  Non-tariff measures ­Subsidies – export & production ­Shipping costs ­Manufacturing costs  SPWP – imports & exports

24. Global Forest Products Model  Forecasts ­Prices ­Demand ­Supply ­Trade  Competitive equilibrium  18 wood products  180 countries linked by trade

25. Results

26. Exporter Survey Current barriers Costs Economic Impact Assessment Important barriers STEEP Future barriers Strategies

27. 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

28. Survey – Doors  Japan – no significant barriers  USA – fire rating requirements  Lack of scale  Market development

29. Exporter Survey CountryProductNon-tariff barrierNTB Cost (%) NTB Cost (US$/ t) JapanPrefab housingEngineering certificate7.0 – 13.0165 - 307 Fire code3.0 – 5.071 – 118 Design values20.0473 Bureaucracy1.03 ChinaPrefab housingIP protection1.0 – 2.024 – 47 Timber treatment1.535 USADoorsFire rating3.041

30. Results Exporter Survey Current barriers Costs Economic Impact Assessment Important barriers STEEP Future barriers Strategies

31. 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

32. STEEP Analysis USA:  Democrats likely to be more protectionist  less likelihood of trade agreement with NZ  US lobby groups  countervailing duties - bedroom furniture

33. Results Exporter Survey Current barriers Costs Economic Impact Assessment Important barriers STEEP Future barriers Strategies

34. Economic Impact CountryProductNon-tariff barrierExport Change (US$ million) Total Export Change (%) JapanPrefab housingEng certificate90 – 1771.4 – 2.9 Fire code15 - 470.0 – 0.2 Design values3265.5 Bureaucracy00.0 ChinaPrefab housingIP protection10.0 Timber treatment10.0 USADoorsFire rating130.1 JapanPrefab housingMarket dev N 1290.2 Prefab housingMD and NTBs73012.6

35. 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

36. Conclusions

37.  Are NTBs significant barrier? NO and YES ­value-added exports small ­combined with market development barriers are significant  What strategies? ­clear market development strategy

38. Questions?