Globalization and World Trade

Abstract

This chapter discusses economic globalization and world trade in rela- tion to forest sector modeling for the US/North American region. It discusses drivers of economic globalization and related structural changes in US forest prod- uct markets, including currency exchange rates and differences in manufacturing costs that have contributed to the displacement of global manufacturing capac- ity. It includes detailed discussion of paper and paperboard trends. Bilateral trade flows between the USA and Canada for all wood products, were modeled within the Timber Assessment Projection System, with currency exchange rate assump- tions among key elements influencing projected trade. This chapter describes how assumptions about globalization and trade influenced model results, using exam- ples of recent RPA Timber Assessments. Techniques and results of the Timber Assessment Projection System models are compared to those of a more general global trade model, the Global Forest Products Model (GFPM). The GFPM was used recently to project international forest sector developments conditional on the 2000 RPA Timber Assessment. The results showed that while the USA, Japan, and Europe were predicted to remain major importers of forest products out to 2030, the rapid economic growth of China would make it the world's largest market for raw wood and intermediate and final forest products. In a separate study, exchange rate assumptions were found to be important determinants of major US trade flows as projected by GFPM, particularly for manufactured commodities such as pulp and paper.