In a report commissioned by the Wood Council of New Zealand, Frances Maplesden and Gerard Horgan say the target of doubling the forest and wood industry’s exports to $12 billion in the next six years is being impeded by the barriers that are being put in place by countries around the world.
These trade barriers include higher value-added tax charges on sawn timber compared to raw logs and corrupt tax officials in China, bureaucratic business practices in India, and Canadian officials assisting the development of new building and fire codes in China and India which ensured the codes were written to support Canadian wood products.
The report also highlights that the concerns of NZ industry vary depending on size. Bigger companies were largely worried about big picture issues such as timber smuggling and illegal logging. The issues for smaller firms were around exchange rate fluctuations and volatile shipping rates, with some choosing to focus on the domestic market instead.
A more long-term worry is raised around restrictions of using methyl bromide to fumigate logs. NZ is committed to phasing this out by 2020 because the chemical damages the ozone layer, but this means negotiations on using alternatives have to be agreed with officials in export markets. The report expresses businesses’ concerns that negotiations, especially with the Chinese will be “difficult and lengthy”.
In the year to June 2015, NZ exported 16 million cubic metres of logs. The majority, 11.4 million, were exported to China. The report highlights a litany of complaints against the country including the different VAT treatment for logs compared to sawn timber, inconsistent applications of the rules to benefit domestic producers, difficulty of accessing credit compared to state-owned enterprises and government subsidies. But the country takes almost three-quarters of NZ exports, which largely explains why the Wood Council’s chairman Brian Stanley has focused so heavily on the market in interviews around the report.
Talking to Radio NZ, Stanley said the industry’s view was that the Free Trade Agreement had failed them. “From the wood perspective, from the forest industry perspective, the Free Trade Agreement with China is not an FTA, it’s an FTA with other exporters no doubt and other exporters are probably doing well out of it but our industry is not doing any good at all out of the FTA with China”. Stanley added that the government needed to raise the issues of the report through its negotiators, and if nothing was forthcoming, take a complaint to the World Trade Organisation.
