Lumber Imports Research Articles

Effect of the Timber Legality Requirement System on Lumber Trade: Focusing on EUTR and Lacey Act

This study provides novel insights into the policy effects of timber legality verification methods, specifically Due-diligence (under the European Union Timber Regulation (EUTR)) and Due-care (under the Lacey Act), on coniferous and non-coniferous lumber trade, highlighting their significance in the context of global lumber trade. Timber legality verification plays a pivotal role in the global timber trade. We comprehensively assess the impact of verification methods on coniferous and non-coniferous lumber trade, utilizing two decades of trade data (1997–2017) across approximately 160 countries. We employ the difference-in-differences method based on the gravity model of international trade, utilizing robust export–import data and demographic profiles. Our findings demonstrate that the effect of EUTR on coniferous lumber imports ranged between −0.32% and −0.05%, and that on non-coniferous lumber imports ranged between −0.44% and −0.05%, whereas the effect of the Lacey Act on coniferous lumber imports ranged between −0.93% and −0.09%. Non-coniferous lumber imports remained unaffected. The Voluntary Partnership Agreement (VPA) led to decreased exports to the EU and US. Our findings hold two key implications. First, Due-diligence exhibits more consistent policy effects than Due-care. Second, supporting VPA-participating countries is crucial for facilitating timber trade. These insights inform timber trade policies and sustainable practices.

Price Volatility Transmission in China’s Hardwood Lumber Imports

Hardwood lumber is the principal part of the global hardwood timber trade. China has become the largest importer of hardwood lumber in the world. However, China’s hardwood lumber imports are affected by price volatility. Thus, we investigated the price volatility transmission of China’s hardwood lumber imports. We aimed to detect the source, path, and intensity of the volatility transmission in China’s hardwood lumber imports, and reveal the intrinsic interactions between price volatilities. To date, there is little research on the price fluctuations of forest products. This paper provides an empirical analysis on the volatility transmission in China’s forest product imports. We selected four types of major hardwood lumber imports to China; that is, teak (Tectona grandis L.F.), merbau (Merbau), sapele (Entandrophragma), and casla (Terminalia spp.) (The Latin names of tree species are given in parentheses), and used their daily prices from 4 August 2010 to 15 April 2020. The Baba–Engle–Kraft–Kroner (BEKK) multivariate models and dynamic conditional correlation (DCC) models were employed. The empirical results indicate that there is an intrinsic relationship between the price fluctuations in China’s hardwood lumber imports. The volatility transmission chain originates from casla; it is transmitted along the casla→sapele→merbau→teak pathway. The direction of transmission is from lower prices to higher prices. The dynamic conditional correlation of each link in the chain does not exhibit any particular time trend. This suggests that volatility transmission is a crucial price mechanism in China’s hardwood lumber imports. Our findings have important policy implications for hedging timber price risks and designing timber trade policies.

Asymmetric Price Transmission of Hardwood Lumber Imported by China after Imposition of the Comprehensive Commercial Logging Ban in All Natural Forests

The Comprehensive Commercial Logging Ban in All Natural Forests (CCLB) policy, introduced in April 2015, aims to protect all natural forests in China. It has impacted both China’s domestic timber supply and imports. We investigated price transmission in China’s hardwood lumber imports resulting from the implementation of this policy. We selected three hardwood lumber species, i.e., Sapelli (Entandrophragma), Mandshurica (Fraxinus), and Laurel (Terminalia), and used their daily prices from 30 April 2015 to 30 November 2017. Threshold co-integration and threshold error correction models are employed for this analysis. We identified a structural breakpoint on 30 November 2016, and consequently partitioned the data series into two parts for the two subperiods separated by the breakpoint. The empirical results indicated that there was asymmetric price transmission (APT) for both subperiods. Adjustment of positive price deviations to the long-term equilibrium levels was slower than that of negative price deviations. In the short term, the price of high-quality lumber evolved independently, whereas the price of lower-quality lumber tended to return to the equilibrium. The APT reflects a redistribution of welfare, benefiting the exporters more than the importers. We find that positive discrepancies in each price pair were inclined to be more persistent in the first subperiod than in the second subperiod. This could attribute to the fact that the degree of CCLB intervention in the former one was higher than in the latter one.

Projected effects of US tariffs on Canadian softwood lumber and newsprint imports: a cobweb model

Starting from the cobweb theorem, a model of demand, supply, multilateral trade, and prices was formulated for the softwood lumber and newsprint markets in Canada, the United States (US), and the rest of the world. Parameters were estimated with panel data from multiple years and countries. The model was used to project the effects of US tariffs on softwood lumber and newsprint imports from Canada. To assess the uncertainty of the projections, multiple replications were performed by repeated sampling from the parameters’ statistical distributions. The results suggested that the initial shock of the tariffs dampened out and took 3 to 4 years to stabilize. In the long run, other things being equal, a 20.83% US tariff on softwood lumber imports from Canada decreased US imports from Canada by 4.7% to 8.0% and raised the US price by 0.3% to 2.3% and the US production by 0.9% to 1.7%, with 95% probability, while it lowered the Canadian price by 0.7% to 3.0% and Canadian production by 1.1% to 2.4%. A 28.69% US tariff on newsprint imports from Canada decreased US imports from Canada by 3.2% to 7.0% and raised the US price by 1.4% to 3.3% and the US production by 2.9 to 6.3%, while it lowered the Canadian price by 0.8% to 1.9% and the Canadian production by 1.6% to 3.5%.

Province specific impacts of the 2006 United States-Canada Softwood Lumber Agreement: A seemingly unrelated regression approach

In this paper, we evaluate effects of the 2006 U.S.-Canada Softwood Lumber Agreement (SLA 2006) in U.S. lumber imports from Canadian provinces. Based on monthly data from January 1988 to October 2015, we estimate a system of U.S. softwood lumber import equations by using Seemingly Unrelated Regression approach. The results reveal that SLA 2006 had a negative impact on softwood lumber shipments to the U.S. from British Columbia, Ontario, Quebec, and Saskatchewan, and no effect on those from SLA-exempted provinces. Thus, SLA 2006 did not provide an opportunity for trade diversion from SLA covered provinces to exempted provinces.

IMPERFECT COMPETITION IN CHINA'S IMPORT MARKET OF ROUNDWOOD AND LUMBER PRODUCTS

AbstractChina has become the largest importer of roundwood and lumber products in recent years. In this study, the degree of competition among major supplying countries in China's import market is measured through the inverse residual demand elasticity over 1995–2015. Time-series properties of the data are considered through the autoregressive distributed lag model. The analysis reveals that market power exists in roundwood and lumber markets for a few supplying countries. The suppliers in the lumber import market have more market power than those in the roundwood market. Individual countries with substantial market power have more fluctuations in trading volumes.

Policy impacts estimates are sensitive to data selection in empirical analysis: evidence from the United States – Canada softwood lumber trade dispute

In this paper, we use the U.S. softwood lumber import demand model as a case study to show that the effects of past trade policies are sensitive to the data sample used in empirical analyses. We conclude that, to be consistent with the purpose of analysis of policy and to ensure all else being equal, policy impacts can only be judged by using data up to the time when the policy is terminated.

Análisis de la industria de la madera aserrada en México

Con la apertura comercial, los productos forestales mexicanos han enfrentado dificultades para acceder a los mercados internacionales y mantener su participación en el mercado interno, disminuido las exportaciones y aumentado las importaciones, lo que se ha visto reflejado finalmente en un aumento del déficit de la balanza comercial. La industria del aserrío, la más importante tanto por el volumen que procesa como por el número de plantas industriales que existen, ha sido la más afectada. En los últimos seis años la importación de madera aserrada ha aumentado significativamente. Esto implica una mayor dependencia comercial de este producto, habiéndose cubierto gran parte del consumo nacional aparente de madera aserrada con importaciones provenientes de Chile, Estados Unidos, Brasil y Canadá. Para revertir esta tendencia, es urgente implantar una serie de políticas públicas en el mediano y corto plazo, que tiendan a fortalecer esta industria. De no hacerlo se preven efectos negativos, como una mayor presión sobre el bosque natural, el cierre parcial o total de aserraderos, aumento del desempleo y la pérdida de una importante fuente de ingresos para los propietarios del recurso forestal.

Welfare impacts of the 2006 United States – Canada Softwood Lumber Agreement

In this paper, we evaluate the market and welfare effects of the 2006 United States (U.S.) – Canada Softwood Lumber Agreement (SLA 2006) based on a U.S. import demand model for Canadian softwood lumber. We find that SLA 2006 reduces the U.S. lumber imports from Canada by 7.78% in the months when export taxes took effect. The welfare analysis based on a partial equilibrium framework shows that U.S. lumber producers gained $1.6 billion and U.S. consumers lost $2.3 billion in 9 years under SLA 2006.

Legjelentősebb környezeti terhek a fenyő rönkök és fenyő fűrészáruk behozatalának szállítása folyamán

<p class="p1">A cikk egy olyan kutatásról számol be, mely a fenyő faanyag behozatal szállításból adódó környezeti terheit az alábbi két területen mérte fel:</p><ul><li>üvegházhatású gázok kibocsátása</li><li>nem megújuló primer energiaigény.</li></ul><p class="p1">Mindezt azzal a céllal tette, hogy megállapítsa: ezek a számszerűsített környezetterhek hogyan módosítják az import fenyő faanyag környezeti megítélését. </p><p class="p1">A munka során az import mennyiségi adatokat statisztikából vettük, míg a szállítási távolságokat becsléssel határoztuk meg. A vizsgált két terület környezeti terheinek teljes életútelemzés (LCA; Life Cycle Assessment) alapján meghatározott fajlagos mutatói (kgCO<sub>2eq</sub>/tkm; és MJ/tkm) szakirodalmi forrásból származnak. </p><p class="p1">Mivel a fenyő faanyag egyik fő felhasználója az építészet, ezért a kutatást és az eredmények kiértékelését a faépítészetre figyelemmel végeztük el. Az üvegházhatású gázok kibocsátásával kapcsolatban megállapítottuk, hogy az import fenyő faanyag szállítási igénye nem módosítja jelentősen felhasználásának ilyen alapú környezeti megítélését, azaz a faanyag továbbra is megőrzi, különösen hosszú élettartamú nagy tömegű termékekben (pl. faépítészet) széntároló képességét. Ugyanakkor a klímavédelem érdekében változatlanul keresni kell – az import fenyő szállítása területén is – az üvegházhatású gázok kibocsátásának csökkentési lehetőségét.</p><p class="p3">A nem megújuló primer energiaigény vizsgálati eredményeit egy épület energiahatékonyságának vizsgálatára felhasználva teljesen újszerű megközelítésben jártunk el akkor, amikor az épület teljes életútjának összes nem megújuló primer energiaigényét két csoportra bontva az ún. „szürke energia” alakulását vettük figyelembe. Ennek során megállapítottuk, hogy az import fenyő szállításának nem megújuló primer energiaigénye már oly módon járulhat hozzá egy épület energiahatékonyságához, hogy az már nem hagyható figyelmen kívül, és intézkedéseket igényel. </p><p> </p>

Determinants of China's lumber import: A bounds test for cointegration with monthly data

Abstract This paper estimates the long- and short-run demand equations for imported lumber based on classical production theory. Chinese monthly data from January 2000 to December 2013 are used. To account for the mixed integrated orders of variables and to control for the potential endogeneity, the bounds testing approach for cointegration is employed within an autoregressive distributed lag framework. The results show that there exists a long-run cointegrating relationship between China's lumber import and some specific explanatory variables. In the long run, the import demand is found to be elastic with respect to the lumber import price and a macroeconomic shifter at the 5% statistical level. Imported lumber seems to be a complement to other input factors, but the effect is not statistically significant. As expected, the short-run price and income elasticities are smaller in absolute terms than their long-run counterparts. The projection indicates China's future lumber imports will probably keep growing, but with a slower annual growth rate than observed in the past.

The impacts of the Lacey Act Amendment of 2008 on U.S. hardwood lumber and hardwood plywood imports

The Lacey Act of 1900 was amended on May 22, 2008, to prohibit the import of illegally sourced plant materials and products manufactured from them into the United States and its territories, and to similarly ban their interstate transport. Trade theory suggests that the effect of the new law would be to reduce the flow of illegally sourced fiber into the United States, increasing prices. Monthly U.S. import data on tropical lumber (January 1989–June 2013) and hardwood plywood (January 1996–June 2013) quantity and unit value were used to estimate alternative statistical models that quantify the impact of the 2008 Lacey Act Amendment on import prices and import quantities of products from potential source countries. Results show that the Amendment's quantity effects are generally negative and double in magnitude in percentage terms than the price effects, consistent with expectations of the effects of a backwards shift in foreign supply against an elastic import demand. Models indicate that there have been double-digit percentage increases in prices and decreases in quantities of tropical lumber imports from Bolivia, Brazil, Indonesia, Malaysia, and Peru. Similarly large changes in hardwood plywood import prices and quantities from Brazil, Indonesia, and Malaysia have occurred, while smaller, and in some cases statistically insignificant, changes have been observed for hardwood plywood imports from China, Ecuador, and Taiwan.

Elasticity of demand for Canadian logs and lumber in China and Japan

Over the past decade, Chinese demand for forest products has increased substantially. While domestic production has risen, this increased demand has been met mostly by imports. The boom has been a welcome benefit to large forest products exporting countries such as Canada, especially in light of the weakened demand that occurred in the United States (US) following the financial crisis. While estimates of demand parameters for the US are vast, little is known about Canada’s other two leading markets: China and Japan. Furthermore, many existing trade models assume that logs and lumber are homogenous, perfectly substitutable regardless of their origin. In this note, we apply a source-differentiated Almost Ideal Demand System (AIDS) model to Chinese and Japanese log and lumber imports, with an emphasis on imports originating from Canada. Results indicate that the price elasticity of demand for Canadian lumber and logs in China is elastic. In contrast, in Japan, the price elasticity of demand for Canadian lumber is inelastic, but like China, demand for Canadian log imports is elastic. Expenditure elasticities suggest that Canadian wood products are expected to be favoured relative to other countries as demand in China grows; this finding may be attributed to marketing programs.

US Imports for Canadian Softwood Lumber in the Context of Trade Dispute: A Cointegration Approach

In this paper, we examine US imports of softwood lumber from Canadian provinces that are covered under various trade restriction measures between the two countries, and from the rest of the world, including other Canadian provinces that are not subject to the trade restriction measures and other countries. Using the cointegration framework, we find that in the long run, housing/construction activity and the US domestic lumber prices have a positive impact, while imported Canadian lumber prices had a negative impact on the quantity of US lumber imports from the covered provinces. In the short run, the last two lumber trade restriction measures, high Countervailing Duty and Anti-dumping Duty from August 2001 to September 2006, and the latest Softwood Lumber Agreement of 2006 from October 2006 to March 2012 (the latest data available), reduced the US imports of softwood lumber from the covered provinces by −12.8% and −11.2%, respectively.

Market Power in the Log and Lumber Import Market in Japan

Japan imports rather than exports forestry products even though it has ample forestry resources. Moreover, the leading exporters of forest products often have strong market power in the trade market of forestry products. The possibility of incomplete competition in the Japanese wood import market can also be suspected from the fact that the structure of imports of logs and lumber has remained unchanged over the past 10 years. However, there has been limited empirical economic analysis of the timber trade market to support this assertion. In this study, we examine the market power of the primary exporting countries in the Japanese log and lumber market based on the residual demand model. We analysed the import data of forestry products from 1988 to 2010 with respect to every main item exported to Japan. The analysis shows that Canada has market power over several items of logs in the Japanese import market, while the United States and Canada have market power over several items of lumber. The study also clarifies that imperfect competition exists in the Japanese timber import market and that the timber price in Japan is partially determined by the exporting countries. JEL Classification: Q17, Q23, Q27

Political Pressure: An Examination of U.S. Senators’ Actions in Restricting Canadian Softwood Lumber Imports

Over the past 30 years the U.S.–Canadian softwood lumber trade dispute has resulted in three managed trade agreements that have not been voted on in the U.S. Congress. Nevertheless, U.S. Senators have played an important role in shaping the political environment that has nurtured these agreements. In this paper we construct a lumber influence index based on 14 known events between 2001 and 2006 and analyze what factors influenced a senator's decision to publically call for restricting Canadian lumber imports and to adopt the 2006 Softwood Lumber Agreement. Our results show that the size of the wood products manufacturing industry in a state, campaign contributions, logrolling, and ideology played a significant role and that interest group politics is prevalent in this dispute.Au cours des 30 dernières années, le différend commercial entre le Canada et les États‐Unis au sujet du bois d’œuvre résineux s’est soldé par trois accords de commerce administré qui n’ont pas été mis au vote du Congrès des États‐Unis. Néanmoins, les sénateurs américains ont joué un rôle important dans le façonnement du climat politique dans lequel ces accords ont été préparés. Dans le présent article, nous avons mis au point un indice de l’influence fondé sur 14 événements connus qui se sont déroulés entre 2001 et 2006, et nous avons analysé les facteurs qui ont influencé un sénateur à préconiser publiquement des restrictions sur les importations de bois d’œuvre canadien et à adopter l’Accord sur le bois d’œuvre résineux en 2006. Les résultats de notre étude montrent que la taille de l’industrie de la fabrication des produits en bois dans un État, les contributions aux campagnes, les alliances politiques dans un but intéressé et l’idéologie ont joué un rôle considérable et que l’influence des groupes d’intérêt a été un facteur apparent dans ce différend.

The long-run determinants of U.S. lumber imported from Canada revisited

This paper examines the effects of the lumber price, the housing starts, and the bilateral exchange rate on U.S. softwood lumber imports from Canada in a cointegration framework. To that end, the Phillips–Hansen fully-modified cointegration (FM-OLS) procedure is applied to monthly data for the period from January 1994 through June 2009. Results show that there exists the long-run equilibrium relationship between the U.S. lumber imports from Canada and the selected macroeconomic and market variables. We also find that the U.S. lumber price and housing starts are more important than the bilateral exchange rate in influencing U.S.–Canada softwood lumber trade.

Demands on Lumber Suppliers within the US Prodealers Channel

Prodealers are building materials suppliers whose client base comes mostly from the homebuilding industry. Because they represent an important channel for wood products, a 2007 survey of US prodealers examined (1) lumber attributes demanded, (2) products and suppliers requirements, (3) trends in substitution between countries supplying lumber to the United States, and (4) trends toward prefabrication of structural components. Forty-six prodealers were surveyed; most answered for multiple stores. On average, respondents purchased 60 million board feet of lumber in 2007, and their overall consumption was estimated at 2.76 billion board feet. By far, the most common grade in the prodealer segment is dimension lumber (No. 2 and Better), and the most common type is the spruce-pine-fir species group (SPF). Within the sample, 5 percent of US lumber imports came from offshore. Canada supplied 51 percent of the lumber purchased by respondents, and the United States supplied 47 percent. Wane as well as warp and twist were consistently identified as the most challenging lumber attributes for prodealers. Product quality was identified as a primary reason for changing lumber suppliers. In characterizing properties of the dimension lumber imported from Europe to the United States, it was found that European lumber stands out mostly for visual appearance and low wane. For customer support and timely deliveries, respondents tended to favor US mills. The study suggests that customers are not fully satisfied with lumber, especially with regard to wane and straightness, and that lumber quality issues may be more important today than in the past.

Comparative Views of Different Stumpage Pricing Systems: Canada and the United States

Abstract Canada and the United States have many similarities, but major differences in the ownership and tenure of forestlands. These differences generate substantial differences in the way stumpage prices are determined in the two countries. These differences, including the argument that the absence of stumpages markets results in the de facto subsidization of Canadian stumpage prices, are used to justify the host of US trade restrictions on Canadian softwood lumber imports. This article examines the differences in the tenure systems. It cites the arguments commonly given in the dispute and draws out the implications of these systems on softwood resource prices. It discusses some studies, and alternative markets systems, currently under discussion to addresses the criticisms of the Canadian system and critiques one of the major proposals.

Le Japon : Conditions et dangers de la dépendance alimentaire

During the high economic growth years (1955-1973), Japan became heavily dependant on food, foodstuff and lumber imports. This evolution was due partly to general contraints (narrowness of land, rise in living standards, etc), partly to the structural transformations of Japanese agriculture (development of stock raising, shrinking of winter crops, etc). Custom barriers have been lowered in many cases. Nevertheless, agricultural and food prices remain very high, and the present policy is to stimulate the productions which, during the high growth era, had been given up to international concurrence. Priority is now given to maintaining or raising self-sufficiency ratios which had dangerously subsided during the sixties.