Exotic Pests and International Trade

C. Michael Hicks

Introduction
Forest products are an integral part of our lives, regardless of who we are or where we live. Just look around you, the house you live in, the newspaper you read, the car you drive, the chair you sit in, is made from, or contains some, wood and/or paper products. Wooden pallets and containers are used to load, store and protect most goods as they are moved from the factory to the warehouse to the neighborhood store or the buyer overseas. In many parts of the world, people still depend upon the forest for their very existence, i.e., for food and fuel for cooking and heating.

Forest Products and the Global Economy
The consumption and trade of forest products has increased substantially (approximately four-fold in real terms) over the last 30 years, and is projected to increase further in the years ahead. (Forest products is broadly defined to include unprocessed wood products (e.g. chips, logs, lumber), as well as highly processed wood (e.g. fiberboard, plywood) and paper products (e.g. printing and writing paper). According to the U.N. Food and Agriculture Organization, world trade (imports and exports) of forest products exceeded $250 billion in 1999.

Canada, the United States, Finland, Germany, and Sweden account for almost 55 percent of world forest products exports. Two of the countries, the United States and Germany, are also major importers. Other major importers include Japan, China, and the United Kingdom. Taken together, these five countries account for almost 45 percent of forest products imports. Historically, trade in forest products has been heavily regionalized, with trade within Europe and North America accounting for over three-fourths of total world trade.

There has been a significant increase in the volume of unprocessed forest products (pulpwood, chips, logs and sawnwood) entering the international trade. Exports of pulpwood and chips, industrial roundwood (sawlogs, veneer logs, pulpwood and chips), and sawnwood increased 37.7 percent, 2.9 percent, and 26.1 percent, respectively, in the period 1990-1999¹. In all likelihood, the increase in industrial roundwood exports would have been larger had it not been for significant economic weakness in Japan, the world’s largest importer of industrial roundwood. U.S. imports of industrial roundwood (much of it from Canada) surged during this period as the United States experienced an extended period of unprecedented economic growth, near record housing starts, and reduced availability of federal timber in the U.S. Pacific Northwest. U.S. imports of industrial roundwood increased almost thirty-fold during the period from 1990 to 1999 (from 246,348 cubic meters to 6,992,000 cubic meters). U.S. exports of industrial roundwood fell by over 40 percent (to 12,433,000 cubic meters), during this same period. Worldwide, imports and exports of unprocessed forest products were valued at over $75 billion in 1999.

A significant number of new players, i.e., non-traditional suppliers, emerged in the 1990s. With the breakup of the former Soviet Union, Estonia and Latvia emerged as two of the leading suppliers of industrial roundwood and sawnwood. Exports of industrial roundwood from Estonia and Latvia increased 42.5 percent and 21.3 percent, respectively, in a period of just five years (1995-1999.) Many of the logs found their way to mills in Finland and, to a lesser extent, Sweden, which is not surprising given the level of Finish and Swedish investment in these two countries. Finnish production of sawnwood and plywood, and paper and paper board has increased by over 50 percent and 40 percent, respectively, since 1990.

Russia also stepped up its production and export of industrial roundwood during this period. Exports of industrial roundwood from Russian increased almost three-fold, totaling 27.35 million cubic meters in 1999, with most of the logs going to Finland, China and Japan. Finland imported significant quantities of both softwood and hardwood logs while China and Japan imported primarily softwood logs. Were it not for the United States’ plant health regulations requiring heat treatment of unprocessed wood products prior to import, it is quite possible that the United States would have been a significant importer from Russia in 1999. (The economics are such that heat treatment is usually not a commercially viable option for logs.)

The other country to emerge as a significant exporter of industrial roundwood during the period was New Zealand. Unlike the other exporters previously discussed, almost all of New Zealand’s industrial roundwood harvest and exports are fast-growing radiata pine from plantations planted within the last 30 years.

Trade Heightens Pest Concerns
The emergence of non-traditional suppliers and the ever-increasing demand for forest products has heightened concerns worldwide that unprocessed forest products and the products manufactured from those products (e.g. wooden pallets and containers) can serve as pathways for the introduction of quarantine pests. A number of countries have already taken steps to address what they perceive to be plant health risks associated with unprocessed forest products and the products manufactured from unprocessed forest products, most notably solid wood packing material.

Europe Regulates Softwood Lumber
The European Community (EC) began regulating U.S. and Canadian shipments of unprocessed coniferous wood products in the early 1990s, following interceptions of the pinewood nematode (Bursaphelenchus xylophilus) in shipments of wood chips to Finland and Sweden. The pinewood nematode is a microscopic organism indigenous to North America, transmitted by pine sawyers. The pinewood nematode has caused extensive mortality in pines in Japan, but it is rarely a primary pathogen of native pines in North America. EC plant health authorities believed, however, that the pinewood nematode would eventually establish itself in European forests. The United States pointed out that it had been exporting unprocessed coniferous wood products (e.g. logs) to Europe since colonial days with no record of establishment, and that research had shown that the pinewood nematode is rarely found in coniferous species such as Douglas-fir and hemlock.

Beginning in June 1993, however, the EC began requiring all coniferous sawnwood to be heat treated and accompanied by a heat treatment certificate from a qualified U.S. supplier participating in the USDA’s Animal and Plant Health Inspection Service (APHIS) certification program or a phytosanitary certificate.

The EC’s decision to regulate the importation of coniferous wood had almost an immediate impact on U.S. and Canadian exports of coniferous lumber to Europe. In the case of the United States, exports of softwood lumber to the EU declined $69.6 million the first year (1994) after the regulations took effect.

Korea Lifts Import Ban on Pine Lumber
Regulations can also have a positive impact on trade. Korea banned the importation of unprocessed pine and larch products from the United States, Japan and Germany in 1986 because of concern over the possible introduction of the pinewood nematode. After lengthy negotiations (which included visits by Korean scientists to U.S. research facilities and lumber mills throughout the United States), the United States and Korea agreed on a protocol in late 1994 to allow the entry of pine and larch lumber that had been kiln-dried and originated from a subscriber mill under one of the grading agencies recognized by APHIS. Shipments also have to be accompanied by a phytosanitary permit issued by APHIS. (The temperatures normally reached in the kiln-drying process far exceed the lethal temperature for eradicating the pinewood nematode.) The United States exported $1.2 million worth of pine lumber to South Korea in 1999.

United States Puts in Place Comprehensive Regulations
The United States was one of the first countries to put in place comprehensive regulations to address the perceived risk associated with importing unmanufactured wood products. Increased interest in importing large quantities of logs and other unmanufactured wood articles (often from non-traditional sources) led to the U.S.’ decision to require treatment of most logs, lumber and other manufactured wood articles beginning August 23, 1995. The new regulations require a permit to import and the treatment of most logs, lumber and other unmanufactured wood articles from countries other than Canada and the border states of Mexico. (It had been previously determined that inspection at the port of arrival was not a viable alternative given the increased interest in importing large quantities of logs.)

In the fall of 1995, the new regulations came under fire from several European countries, as well as the European Community. They questioned the scientific basis for the new regulations in that they were neither country or pest specific, and implied that the regulations were too stringent in many cases and were intended to address the worst case scenario, i.e., Russian logs. (The importation of logs from the former Soviet Far East and Siberia had been prohibited prior to the new regulations.) With time, the clamor has died down, particularly as more countries have chosen to take a comprehensive approach.

The new regulations also came under fire from the environmental community for not being stringent enough. The Oregon Natural Resources Council sought (and received on June 5, 1997) a preliminary injunction in the U.S. District Court for the Northern District of California enjoining APHIS from issuing any new import permits (or modifying any existing import permits) for unfinished temperate logs, temperate lumber, and solid wood packing materials imported as cargo. The preliminary injunction was issued after the Court found that the Oregon Natural Resources Council had established "a substantial likelihood of irreparable harm resulting from the introduction of exotic pests into United States forests by means of imports of non-tropical unfinished wood products." APHIS subsequently prepared a Supplemental Environmental Impact Statement (EIS) addressing the perceived deficiencies in the original EIS and the preliminary injunction was lifted on January 15, 1999. (There were no changes to the regulations as a result of the litigation, but there was a significant disruption of trade while the injunction was in place.)

Need to Balance Concerns
We have seen the impact that plant health regulations can have on trade, but we only need to look at history to see what can happen when one introduces exotic forest pests into a susceptible host population. The introduction of the chestnut blight into the United States, presumably from eastern Asia, all but wiped out the American chestnut tree in the early 1900s. Dutch elm disease, introduced in the 1930s, has put in question the continued viability of the American elm. More recently, an outbreak of the Asian longhorned beetle led to the destruction of scores of maple trees in neighborhoods in New York and Chicago.

Every country clearly has the right to put in place measures they feel necessary to protect human, animal or plant life or health. This is one of the basic tenets of the World Trade Organization’s Agreement on the Application of Sanitary and Phytosanitary Measures. To ensure that measures do not constitute a disguised restriction on international trade, however, countries have agreed that any measure (regulation) will be “applied only to extent necessary to protect human, animal or plant life or health, (and).... based on scientific principles”². If only things were as simple as they sound.

¹ Food and Agriculture Organization, found at Internet address http://www.fao.org/default.htm, retrieved on Dec. 22, 2000.

² Office of the U.S. Trade Representative, Uruguay Round of Multilateral Trade Negotiations, Apr. 1994.