1. Red Alder Export from the US Dr. Ivan Eastin Director, CINTRAFOR College of Forest Resources, UW Presented at the: Western Hardwood Association Annual Meeting Whistler, British Columbia 13-14 July, 2008

2. Center for International Trade in Forest Products Weak US Dollar helps exports The weak dollar has significantly improved the competitiveness of US wood exports, particularly with respect to Europe and Canada products

3. Center for International Trade in Forest Products US Wood Products Trade Deficit The US trade deficit has declined by 21.8% since 2005

4. Center for International Trade in Forest Products US Red Alder Log and Lumber Exports

5. Center for International Trade in Forest Products Red Alder Log Export Markets

6. Center for International Trade in Forest Products Red Alder Lumber Markets

7. Center for International Trade in Forest Products Unit Values of Log and Lumber Exports

8. Center for International Trade in Forest Products Vietnam is a Rapidly Emerging Market

9. Center for International Trade in Forest Products Recent Trends of Interest  Russian announcement of log export tariffs aimed to encourage investment in wood processing industry  Initially 6.5%  20% on July 2007 (but not less than €10/m 3 )  Currently 25% in April 2008 (but not less than €15/m3)  80% by January 2009 (but not less than €50/m3)  Japanese and European public procurement policies require certification of legality for wood used in public projects (expected that private companies will comply eventually)

10. Center for International Trade in Forest Products Russian Softwood Logs Exports Russia supplies over 80% of China’s SW logs and over 50% of Japan’s SW log imports. The loss of Russian logs provides opportunities for the US.

11. Center for International Trade in Forest Products Russian Hardwood Logs Exports

12. Center for International Trade in Forest Products Results of a Survey of Chinese Companies with Chain of Custody Certification  200 companies with CoC certification as of November 2006  Surveys were faxed in December 2006 / January 2007 to all CoC firms  Completed surveys received from 41 companies  Response rate of 20.5% Public Procurement Policies Drive Chinese Demand for Certified Wood

13. Center for International Trade in Forest Products Number of Chinese Firms with CoC Certification As of yesterday, there were 408 companies certified in China

14. Center for International Trade in Forest Products Location of Chinese Firms with CoC Certification Most CoC companies are located along the coast

15. Center for International Trade in Forest Products Product Mix of Chinese Firms with CoC Certification Furniture manufacturers represent the largest segment of certified companies

16. Center for International Trade in Forest Products RMBUSD Evaluation fee¥66,980$8,404 Audit fee (per year)¥33,721$4,231 China CoC Survey Results Average Cost of Gaining CoC Certification for a manufacturer or Trading Company Acquiring CoC certification is costly and may be a problem for the smaller companies.

17. Center for International Trade in Forest Products End marketsFrequencyPercentageProportion of sales for each end market Europe3538.4%54.6% United States3033.0%29.8% Canada1112.1%8.4% Australia55.5%1.6% Japan44.4%0.6% China33.3%2.8% Other33.3%2.2% Total91100% China CoC Survey Results Over 90% of total sales for CoC companies go to North America and Europe

18. Center for International Trade in Forest Products China CoC Survey Results Price premiums for certified wood products vary by market but can be substantial in the US and EU

19. Center for International Trade in Forest Products Observations Weak US dollar has improved the competitiveness of US wood products in foreign markets, especially in relation to European and Canadian suppliers Slowing US housing market should encourage exports Domestic US recession has reduced demand for wood furniture, flooring and cabinets which has translated into reduced demand for US hardwood species in foreign production markets Harmonized codes for red alder lumber changed in 2007 from dry and green to a single product dry+green Trade data appears skewed since change in harmonized codes

20. Center for International Trade in Forest Products Observations (2) Reduced logging in PNW resulting from steep drop in softwood lumber production has reduced volume of red alder logs available Main log markets are China and Germany Main lumber markets are China, Italy, Mexico and Vietnam Unit value of logs has always been below lumber but in 2007 the trend reverses Emergence of Vietnam and loss of Russian logs presents strong export growth opportunity for US hardwood industry

21. Center for International Trade in Forest Products Questions?