V. Trade in wood and wood products

The general pattern of the trade
Trends in trade in forest products

Forest products enter into world trade at all stages - as primary, semiprocessed, processed, and manufactured products. There are few countries which are not either dependent upon imports for at least some part of the supplies of forest products that they consume, or upon export markets as outlets for an appreciable part of their production. Many countries are both importers and exporters of forest products.

In earlier chapters it was seen that much of the additional demand for wood and wood products in the period to 1975 will emerge in parts of the world which cannot meet all of the additional volume from their own forest resources. At the same time, much of the world's potentially available reserves of wood is in areas which will not experience large additional local demands during that period. Consequently, it is to be expected that these trends in the world forest and wood products economy will be reflected in important changes in the world trade of forest products, not only in the total volume, but also in the pattern of trade. As processing of wood raw material can involve weight or volume reductions of up to 70 percent, and as the unit values of the forest products at different stages of processing which enter international trade vary widely, it is also likely that a growth in trade will be accompanied by shifts in its commodity composition.

Consideration of the likely magnitude and pattern of world trade in forest products by 1975 will be deferred to the final chapter. The present chapter is an examination of the nature and evolution of trade in recent years; and in particular of those features which might point the way to the future development of trade, and the problems and barriers which are likely to hinder development.

For the purposes of the analysis of world trade in forest products, countries and subregions have been considered as: (a) net exporters and net importers, (b) developed and developing, and (c) in combinations of (a) and (b). This helps show the extent to which countries and regions are with or without forest resources and/or the capital, skills and other factors of production required to build up the processing industries in order to transform the forest resources into wood products.

Within this framework attention is also paid to the effects on the supply pattern of such factors as comparative advantage and size of market, and to the effects on trade of import tariffs and quantitative restrictions, of export taxes and incentives, customs unions and other forms of multilateral or bilateral agreements. Finally, freight rates and prices are also touched upon briefly.

The general pattern of the trade

Commodity composition of the trade
Geographical pattern of the trade

In 1960-62 the estimated total value of world exports of all forest products amounted annually to roughly $6,100 million (f.o.b.) and imports to $6,900 million (c.i.f.). This was about 5 percent of the value of total annual world trade in that period.

Commodity composition of the trade

The composition of this trade in forest products is shown in Table V-1 which also shows for each product what proportion of the world's production enters trade. In terms of the equivalent volumes of wood raw material, about one fifth of the world's exports of forest products are in roundwood form - most of it raw material for the sawmilling, plywood, veneer and wood-pulp industries. Another quarter of the total consists of wood pulp, a semiprocessed form. A little less than two fifths is sawnwood, and about a sixth is paper and paperboard.

In terms of volume of wood, therefore, a major part of forest products entering international trade does so at the raw material or semiprocessed stage. Nevertheless, it is significant that the ratio of exports to production is generally higher among the more processed products, the outstanding example being newsprint, 50 percent of the world production of which is exported. This is largely a reflection of the importance of the competitive advantage enjoyed, as a result of scale economies, by the very large, vertically integrated producing units in countries rich in coniferous forests.¹ The strong competitive position of producers with very large raw material resources and processing plants also helps account for the extensive trade in chemical pulp,² sawn softwood and certain paper grades, notably kraft paper.

¹ It should be noted that the trade in newsprint is dominated by the huge flow from Canada to the United States, which makes up about 75 percent of total world trade in this commodity.

² The comparatively small trade in mechanical pulp is explained by the fact that most of it is produced and converted into newsprint in integrated plants.

TABLE V-1. - WORLD EXPORTS OF WOOD AND WOOD PRODUCTS, 1960-62

				Volume
	Unit (in million)	Value		Product measure	Roundwood equivalent¹		Exports as percent of world production
		US$	Percent		Cubic m ®	Percent
Coniferous sawlogs	Cubic meters ®	104.1	1.7	5.50	5.50	2.8	1.1
Broadleaved sawlogs	Cubic meters ®	362.1	6.0	14.03	14.03	7.2	9.2
Pulpwood	Cubic meters ®	142.2	2.3	12.08	12.08	6.2	5.9
Pitprops	Cubic meters ®	40.2	0.7	2.95	2.95	1.5	5.9
Poles	Cubic meters ®	48.4	0.8	1.88	1.88	1.0	1.3
Fuelwood	Cubic meters ®	13.6	0.2	1.63	1.63	0.8	0.15
Charcoal	Metric tons	6.2	0.1	0.16	0.16	0.1	-
Sawn softwood	Cubic meters (s)	1 375.9	22.6	36.89	61.61	31.5	13.9
Sawn hardwood	Cubic meters ®	273.6	4.5	4.33	7.88	4.0	6.0
Sleepers	Cubic meters ®	34.5	0.6	0.89	1.62	0.8	7.3
Veneer	Cubic meters ®	92.4	1.5	0.34	0.65	0.3	13.8
Plywood	Cubic meters ®	219.3	3.6	1.62	3.73	0.9	9.5
Fibreboard	Metric tons	79.1	1.3	0.87	1.74	0.9	18.5
Particle board	Metric tons	23.3	0.4	0.21-	0.42	0.2	0.9
Mechanical pulp	Metric tons	84.2	1.4	1.27	3.18	1.6	6.8
Chemical pulp	Metric tons	1 135.8	18.7	8.63	42.29	21.6	19.8
Newsprint	Metric tons	981.6	16.1	7.57	21.20	10.8	52.8
Printing and writing paper	Metric tons	254.6	4.2	1.07	3.75	1.9	7.5
Other paper and paperboard	Metric tons	807.3	13.3	3.85	9.63	4.9	7.9
TOTAL	Metric tons	26 078.4	100		195.93	100

¹ The product quantities have been converted into equivalent volumes of roundwood using the standard factors published In FAO, Yearbook of forest products statistics. - ² Differs from the recorded value of world exports in Table V-2 by an allowance for unrecorded trade.

TABLE V-2. - RECORDED VALUE OF TRADE IN WOOD AND WOOD PRODUCTS, 1960-62

	Exports	Share of total exports
	Million U.S. $	Percent
EUROPE	2 756	47	4
of which:
Northern Europe	1 763	40	28
Central Europe	294	5	9
U.S.S.R.	356	6	6
NORTH AMERICA	2 075	35	8
of which:
Canada	1 557	26	27
United States	518	9	3
LATIN AMERICA	92	2	1
AFRICA	201	3	3
of which:
Western Africa	162	3	10
ASIA-PACIFIC¹	424	7	3
of which:
Southeast Asia²	225	4	5
Japan	133	2	3
WORLD TOTAL	5 904	100	5
EUROPE	3 612	54	5
of which:
EEC	1 713	26	5
United Kingdom and Ireland	1 208	18	9
U.S.S.R.	91	1	2
NORTH AMERICA	1 628	24	8
of which:
United States	1 516	23	10
LATIN AMERICA	303	5	3
AFRICA	243	4	3
of which:
Northern Africa	119	2	5
Southern Africa	68	1	5
ASIA-PACIFIC¹	798	12	4
of which:
Japan	284	4	5
Pacific	167	3	5
WORLD TOTAL	6 675	100	5

¹ Excluding Mainland China. - ² Insular and Continental Southeast Asia.

TABLE V 3. - PRINCIPAL TRADE FLOWS IN FOREST PRODUCTS, 1959-61

(Average annual export value in millions of dollars, f.o.b.)

From/To	All destinations	I	II	III
		Developed market economy countries	Developing countries	Centrally-planned economies
All origins	6 957	4 413	675	269
I	4 462	3 813	505	134
II	465	345	117	4
III	440	256	53	131

In fact, in terms of total world output of roundwood only a relatively small share enters trade in this raw form - as is to be expected with a commodity which has such low value per unit of weight or volume, and much of which becomes waste in the course of processing. The principal exception is hardwood logs for the plywood and veneer industry. In Table V-1 this commodity is shown together with hardwood sawlogs, but probably as much as half of all the hardwood veneer logs used in the world were imported in 1960-62, a fact which reflects a growing dependence by the hardwood plywood and veneer industries in the north temperate zone on tropical hardwood logs as raw material. A high proportion of hardwood plywood and veneer also enters world trade - in fact about a fifth of total world production.

TABLE V 4. - TRADE PATTERN OF FOREST PRODUCTS: MAJOR TRADE FLOWS

Direction	Main commodities	Trends in past decade	Remarks
Intra-European (33 percent)¹	All commodities, but specially sawn softwood, wood pulp, paper and paper board, pulpwood. Shift in emphasis in Scandinavian exports toward greater relative importance of pulp and paper, less of sawn softwood	Fairly strong expansion, with imports growing faster than exports and consequent involution of trade	Main flow is from north southward and westward with a secondary flow from east westward and south ward. Intra-EEC and intra-EFTA trade of manufactured products growing as internal tariff barriers are lowered
Intra-North American (26 percent)	Sawn softwood, newsprint, chemical pulp and coniferous roundwood	Steady expansion, except for north-south flow of pulp-wood which has declined rapidly	Main flow from Canada to United States but two-way flow of roundwood - saw logs from United States to Canada, pulpwood in other direction
North America to Europe (6 percent)	Sawn softwood, newsprint, other paper and paperboard, chemical pulp, plywood	Until recent years rather irregular tend. Since about 1962 clearer indications of expansion. Trade between Canada and EEC growing quickly	Largest single flow from Canada to United Kingdom
U.S.S.R. to Europe (eastern and western) (6 percent)	Sawn softwood, coniferous roundwood, plywood, chemical pulp	Rapid expansion from low postwar levels to surpass by 1964 the prewar levels	Has replaced Finland as leading supplier of coniferous roundwood and sawn wood to Europe

¹ Percentages are approximate share of total world trade (by value).

FIGURE 3. - PRODUCTION, EXPORTS AND CONSUMPTION OF INDUSTRIAL WOOD,¹ BY REGION, 1960-62

¹ Wood raw material equivalent of all wood products consumed (excluding veneer and dissolving pulp). Only trade flows in excess of 1 million ma ® per year are shown.

Geographical pattern of the trade

Over one quarter of all trade in forest products (in value terms) consists of exchanges between Canada and the United States, while about one third takes place between the European countries. In each region trade consists principally of a flow from the northern countries, in the coniferous zone, to the rest of the region, and is made up largely of sawn softwood, chemical wood pulp, newsprint, and kraft paper and paperboard. In fact, 40 percent of the value of all the world exports of forest products comes from northern Europe and a quarter from Canada, while the EEC countries account for a quarter of the value of total imports, the United States for rather more than a fifth, and the United Kingdom and Ireland for a sixth (Table V-2).

In addition to the principal north-south flows there are also important flows westward into northwestern Europe (United Kingdom and Ireland plus EEC) from central (Austria), Northeastern and southeastern Europe, and from the U.S.S.R.³ Trade also flows eastward from North America to northwestern Europe and westward to Japan - which also imports extensively from the northeastern U.S.S.R., and in turn exports processed products, principally to the United States. There are also major south-north flows of tropical hardwood logs from insular southeast Asia to Japan and from western Africa to Europe, with a smaller but still important outflow of sawn hardwood from continental southeast Asia, mainly to Europe.

³ In terms of volume the U.S.S.R. is one of the principal exporters of forest products in the world, but as these exports as yet consist of low value roundwood and semiprocessed products, their share of the value of total world exports amounts to only about 6 percent.

A principal feature of the trade in wood and wood products is thus the high proportion of trade between developed countries. In 1959-61 the flows between the developed countries (both market and centrally-planned) accounted for more than 80 percent of total trade in forest products (Table V-3). The balance was principally composed of a flow from- the developed market economy countries to the developing, and a lesser (in value terms) reverse flow. There was very little trade between developing countries, and as a group they had a trade deficit in forest products which in 1959-61 amounted to about $300 million (export values f.o.b., import values c.i.f.). This deficit is to be attributed in part to the fact that their imports are mainly of the more highly processed wood products, while they export mainly lower value roundwood and semiprocessed products. Whereas exports of forest products amount to 5.5 percent of the value of exports of all commodities in the case of developed countries with market economies, and 4 percent in that of developed countries with centrally-planned economies, in the developing countries exports of forest products represent only 2 percent of total value of exports.

The salient features of each of the different trade flows have been brought together in summary form in Tables V-4, V-5 and V-6, which may also serve as an introduction to the following section which deals with recent trends in trade.

TABLE V-5. - TRADE PATTERN OF FOREST PRODUCTS: SECONDARY TRADE FLOWS

Direction	Main commodities	Trends in past decade	Remarks
Europe to other regions (10 percent)	Pulp and paper, sawn soft-wood, fibreboard, sawn hard-wood	On the whole stagnant or declining as competition in- creases from other exporters (especially Canada) and producers in importing countries	Coniferous-based, products mainly from Scandinavia to all regions. Declining United Kingdom paper (re-) exports to Commonwealth. Sawn hardwood exports from southeastern Europe to rest of Mediterranean area tending to rise
North America to other regions (6 percent)	Pulp and paper, sawn soft-wood, coniferous roundwood	Generally expanding strongly but experience in different regions varied according to local conditions	Both Canada and United States exporting more. Tendency to replace Scandinavian products in Latin America. Volatile round- wood trade between the United States and Japan
Southeast Asia to east Asia (3 percent)	Almost exclusively tropical hardwood logs	Very rapid expansion not yet seriously inhibited by supply problems in main exporting countries	Mainly from the Philip- pines and Malaysia (Sabah and Sarawak) to Japan, South Korea, Hong Kong and China (Taiwan). Main species group is lauan
Africa to Europe and North America (2.5 percent)	Tropical hardwood logs, sawn hardwood, plywood and veneers	Rapid expansion, faster for logs than for processed products. Increasing difficulties in maintaining supplies of commercially popular species in desired qualities	Eight countries on west coast of Africa to western Europe. Most of increased log imports went to EEC countries. United Kingdom main importer of African sawn hardwood and plywood (also northern Africa to North America)
Far East to North America Europe (2.5 percent)	Plywood (exports and re-exports), veneers, sawn hardwood, hardwood logs	Rapid expansion, notably of exports of plywood (mainly from imported lauan logs) from Japan, China (Taiwan) and South Korea to North America; also exports of plywood and veneers from Philippines to North America and of sawn hardwood from Malaysia to Europe	Growth of plywood re-export businesses based on imported logs is significant from point of view of potential exporters in developing countries. Long freight distances to Europe and North America have kept log trade relatively modest
Intra-Latin America (1 percent)	Sawn softwood, hardwood logs and sawnwood, chemical pulp	Declining. Problems of economic and political instability and of internal transportation	Largest flow from Brazil, Paraguay and Chile to Argentina. Liable to violent fluctuations according to Argentina's trade balance

TABLE V-6. - TRADE PATTERN OF FOREST PRODUCTS: AS YET MINOR BUT POTENTIALLY SIGNIFICANT TRADE FLOWS

Direction	Main commodities	Trends in past decade	Remarks
U.S.S.R. to Japan and other Far East and Pacific (1 percent)	Coniferous roundwood and sawnwood, chemical pulp	U.S.S.R./Japan trade has grown from virtually nothing to considerable annual volume. Efforts being made to export to Australia and countries in Far East	Further growth dependent on transport links between Siberian combinats and U.S.S.R. east coast ports
Now Zealand to Australia and Far East	Coniferous roundwood and sawnwood, chemical pulp and newsprint	Grown from virtually nothing in few years to substantial levels. So far mainly to Australia, but potential there for broader distribution of exports, even possibly as far as Europe	Based entirely on man-made forests of Pinus radiata.
Southern Africa to Europe	Chemical pulp, fibreboard and particle board	Grown from nothing; still quite small, but potential for expansion	Chiefly to the United King- dom. Based entirely on man-made forests of coniferous species
U.S.S.R. to Mediterranean area	Mainly sawn softwood	Some expansion, mainly at the expense of Scandinavian and Austrian exporters. Competition from Romania and Yugoslavia	United Arab Republic most important customer
Latin America to North America (0.5 percent)	Sawn softwood, hardwood logs and sawnwood	Stable sawn softwood (Brazilian Paraña pine) and hard-wood exports to western Europe (mainly United Kingdom and Fed. Rep. of Germany). Higher sawn hardwood but lower log exports to the United States	Realization of export potential dependent on improved internal transportation and establishment of regular shipping links with export markets. Mexico potentially well placed for North American market
(Latin America to Far East and Pacific)	(Hardwood logs and sawn-wood, pulp)	Trade negligible at present, but importers, particularly Japan, interested in new sources of supply, e.g., hardwood logs	See remark directly above

Trends in trade in forest products

Trends in exports
Trends in imports
Trends in the balance of trade

Trends in exports

Between 1955-57 and 1960-62 the recorded value of world exports of forest products rose from $4,700 million (f.o.b., current market prices) to $5,900 million. Annex Table V-A shows the growth in the volume of exports of individual products and subregions. As most of the trade in nearly every product originates in a relatively small number of countries, the discussion that follows is arranged within the framework of the flows from the major coniferous and hardwood areas.

EXPORTS OF NORTHERN SOFTWOODS

As is shown in Table V-7, the bulk of the world's exports of coniferous roundwood and sawn softwood comes from Canada northern Europe and the U.S.S.R. and the greater part of the wood pulp, paper and paperboard ⁴ exported comes from North America and northern Europe. Canada is also the principal supplier of softwood plywood on the international market. The other important exporters of these commodities, in particular roundwood and sawnwood, are a number of countries in eastern and central Europe, notably Austria. The subregions shown in Table V-7 in fact account for 85 percent or more of total world exports of each of these coniferous commodities.

⁴ Although considerable quantities of hardwoods are used in the manufacture of wood pulp, paper and paperboard, most of the quantities entering trade, in particular from the countries considered here, are conifer-based.

Coniferous roundwood

Table V-7 shows that exports of coniferous roundwood have been rising steeply. This increase consists mainly of sawlogs exported to Japan from the U.S.S.R. and the United States, and pulpwood flowing from the U.S.S.R. to Japan and Europe. The very sharp rise in the United States exports of large-sized coniferous logs in recent years was caused by the need to clear rapidly extensive windblown areas along the west coast. Comparison of the exports of the period between 1962 and 1964 with earlier years therefore undoubtedly exaggerates the real rate of growth of exports. The flow of roundwood from the U.S.S.R. to Japan has accompanied the opening up of the vast coniferous forests of the Soviet Far East, an event of considerable importance in view of the very large potential of this area. Because of its remoteness from the principal domestic markets in the U.S.S.R., there is good reason to expect that this potential will continue to be developed in part to serve export markets. But it is equally to be expected that as processing capacity is built up in this area, the flow of roundwood will be curtailed in favor of exports of processed products, though this is not likely to happen in the immediate future. In the other major exporting areas, exports of roundwood fell, in particular those from northern Europe where the scope for further expansion of the domestic supply of coniferous roundwood is now limited. As has been noted in Chapter IV, in Scandinavia emphasis is being put on expanding the more advanced woodusing industries, and exports from northern Europe increasingly take the form of the higher valued pulp and paper products, in particular the latter.

Sawn softwood

Sawn softwood is far and away the most important forest product to enter world trade, accounting for nearly a quarter of the total value of all forest products trade and more than 30 percent of the wood volume entering world trade. About half of the quantity of sawn softwood traded flows to northwestern Europe and a further quarter to the United States. As is shown in Table V-7, trade in sawn softwood has been growing strongly recently.

The U.S.S.R. registered the fastest growth in exports, principally to Europe. Exports from Canada, by far the largest supplier of sawn softwood on the world market, have risen by an even larger volume, and its exports to Europe have increased particularly sharply in the past few years. Within Europe exports from Finland and Sweden - together still the region's largest supplier - have grown only slowly, in part due to competition for wood raw material from the pulp and paper industries. Exports from Austria, the other major European exporter, have fallen, but those from Czechoslovakia, Poland, Romania and Yugoslavia have risen. However, these involved much smaller quantities, and in aggregate a growing share of Europe's requirements have been coming from outside the region.

The other major sawn softwood flow, from Canada to the United States, has grown appreciably over the past few years, and both North American countries also exported increasing quantities to Japan. Exports of sawn softwood to northern Africa and the Near East have risen, chiefly because of higher shipments to these areas from the U.S.S.R., but imports into most other developing areas declined. Exports from the only important producer outside the northern coniferous zone, Brazil, also tended to decline due to import fluctuations in Argentina, its most important customer. The growth in trade in sawn softwood was therefore almost exclusively between developed countries, with most of the growth in exports contributed by Canada and the U.S.S.R.

Pulp and paper

In contrast, the northern countries have raised their exports of wood pulp, paper and paperboard to most parts of the world, although most of northern Europe's exports - in fact a growing part - goes to the rest of Europe and most of Canada's exports still go to the United States. Within Europe the trade in paper and paperboard has been growing faster than that of wood pulp,⁵ due partly to the developments in the northern European wood processing industries mentioned above, and partly to the dismantling of tariff barriers between the countries of the European Free Trade Association (EFTA) which has improved the position of the northern European exporters of paper and paperboard in their largest market, the United Kingdom. Northern Europe in fact accounted for about half of the growth in annual world pulp exports in the period since 1955-57, and most of the additional paper and paperboard entering world trade.

⁵ In more detail, European trade of other 'paper and paperboard' rose faster than that of newsprint, and a substantial growth in trade of chemical pulp compared with a negligible expansion in that of mechanical pulp.

Canadian exports to the United States rose only slowly because of the sluggish growth in demand for newsprint -which forms a large part of the flow. Canada's trade in pulp and paper to the United States appears also to have been adversely affected by developing technology within the United States pulp and paper industry which seems to have offset some of the advantages formerly enjoyed by Canadian producers. The growing competitive ability of the United States industry to supply certain grades of pulp and paper has also enhanced its export position. Both Canada and the United States increased their exports of wood pulp and of paper and paperboard to Europe, and in recent years both countries have also been exporting growing quantities of wood pulp to Japan.

As was noted in Chapter IV, pulp and paper producers in both Japan and Europe have been investing in producing capacity in North America, and North American producers in processing plants in the European market. The growth in trade is consequently in part due to this growth in interregional integration within the pulp and paper industry, being flows of semiprocessed materials between the constituent parts of companies operating in two regions. A related factor bearing upon the growth in the west-east trade in wood pulp across the Atlantic has been the growing emphasis on paper and paperboard production in the northern European industry, which has tended to curtail the growth in supplies of market pulp available from within Europe.

Of the quantitatively smaller trade flows, the exports of pulp and paper from North America and of paper from northern Europe to the rest of the world in aggregate rose steadily in spite of a decline in imports of these products in some countries - for instance, South Africa, Australasia, Chile, Brazil, India and Pakistan - which have been building up their own domestic capacity. The U.S.S.R., which is still engaged in expanding its pulp and paper industry to meet its fast-growing domestic needs, is not as yet an important supplier to the world market.

Softwood plywood

In effect, the only important trade flow in this commodity is from Canada to the United Kingdom, a trade which has been growing sharply. In the last year or two Canada's exports of softwood plywood to continental Europe have also shown signs of expanding.

TABLE V-7. - EXPORTS OF MAJOR CONIFEROUS WOOD CATEGORIES, 1955-57 TO 1963

(Thousand units)

¹ Logs, pulpwood and pitprops. Pulpwood and pitprops may include minor quantities of broadleaved roundwood. -² Of which: Czechoslovakia, 774,000 m³ (+ 50%); Poland, 777,600 m³ (+ 121%); Romania, 1,320,300 m³ (+ 66%).

Fibreboard

Historically, Scandinavia has been the most important supplier to the rest of the world. Recently its exports to Europe have grown, but those to other regions have not. Within Europe, Scandinavian exporters have been facing increased competition from other western European producers exporting particularly special types of board, and more recently from the U.S.S.R. and eastern European countries exporting low priced board.

In terms of the growth in overall supply of coniferous wood to the international market, the salient features have thus been the large additional quantities of roundwood and sawnwood coming from the U.S.S.R., the roundwood, sawnwood, pulp and paper from North America, and the shifts in northern Europe in favor of exports of pulp, and even more of paper and paperboard, rather than exports of roundwood and sawnwood.

EXPORTS OF SOUTHERN SOFTWOODS

In recent years a number of countries in the Southern Hemisphere have built up exports of coniferous wood, pulp and paper which, though very small in world terms, are important because they are based upon man-made tree plantations. There is good reason to believe that this marks the beginning of much larger and eventually much more widespread developments of this nature.

The principal countries involved at present are New Zealand, which exports coniferous sawlogs to Japan, and sawn softwood and newsprint to Australia;⁶ the Republic of South Africa, which exports chemical pulp and panels to Europe and North America; and Chile, which exports sawn softwood, chemical wood pulp and newsprint to neighboring countries in Latin America, in particular Argentina. Chile has also placed as yet small quantities of sawn softwood and pulpwood on the European market.

⁶ Australia and New Zealand reached an agreement in August 1965 on limited free trade between the two countries. New Zealand's forest product industries are expected to be some of the main beneficiaries.

The recent origins of this trade and its growth over the past few years can be seen from the data shown in Annex Table V-A. This development of domestic wood supplies and wood processing capacity - has had the further effect of cutting back the level of imports of these products into these countries. As has been noted in Chapter III, other countries for example, Australia, Rhodesia and Brazil - have also developed plantations and plantation-based industries and thus reduced their import dependence, and others are establishing plantations on a scale designed to support export industries - for example, Kenya and Malawi.

EXPORTS OF TROPICAL HARDWOODS

Due to the growing demand in developed countries for peeler logs and logs for decorative veneers and sawnwood, the trade in tropical hardwoods has shown a remarkable expansion in the postwar period. It is now one of the more important elements of the world trade in forest products. As is shown in Table V-8, this trade now comprises a very large volume of hardwood veneer and sawlogs, a much smaller though still large volume of sawn hardwood, and a yet smaller volume of hardwood plywood and veneer.

Only comparatively few countries are important exporters of tropical hardwoods, and the trade in logs in particular is narrowly confined to flows from western Africa (Cameroon, Congo [Brazzaville], the Democratic Republic of the Congo, Gabon, Ghana, Ivory Coast and Nigeria ⁷) to Europe, and from insular southeast Asia (Philippines, Sabah and Sarawak) to Japan and east Asia (China [Taiwan], Republic of Korea and Hong Kong). Undoubtedly the importance of freight costs, which can amount to at least 30 to 40 percent of the c.i.f. cost of logs imported into Europe from western Africa, encourages this exclusive pattern of comparatively short south-north supply flows. There is virtually no log trade between western Africa and Japan, and the flow of logs from southeast Asia to Europe is small compared with the western Africa to Europe trade. An important part of the exports of sawn hardwood from continental southeast Asia, on the other hand, does go to Europe. Latin America, remote from either market, has practically no exports of tropical hardwood.⁸

⁷ There is also a major flow from Spanish Guinea to Spain.

⁸ However, there is a considerable internal flow from Paraguay to Argentina. In recent years this has declined.

TABLE V-8. - EXPORTS OF HARDWOODS 1955-57 TO 1963

(Thousand cubic meters)

	Hardwood logs		Sawn hardwood		Hardwood plywood and veneers
	1963	Change 1955-57 to 1963	1963	Change, 1955-57 to 1963	1963	Change, 1955-57 to 1963
TROPICAL HARDWOODS		Percent		Percent		Percent
Western Africa	15171	+ 82	471	+ 29	158	+ 92
Insular southeast Asia	210560	+ 219	342	- 2	3403	+ 750
Continental southeast Asia	255	+ 123	703	+ 64	4	+ 150
East Asia	-		-		4525	+ 190
TOTAL WORLD EXPORTS OF TROPICAL HARDWOODS	16405	+ 141	1870	+ 33	1171	+ 170
TEMPERATE HARDWOODS
Finland	44.9	- 28	31.5	+ 68	384.1	+ 42
EEC	5771.4	+ 26	5431.3	+ 7	6255.3	+ 42
Eastern Europe	3.8	+ 100	7702.6	+ 98	7119.3	+ 193
U.S.S.R.	63.8	+ 42	-		144.7	+ 84
Canada	82.8	- 22	366.6	+ 16	..	..
United States	325.2	+ 142	223.6	- 22	..	..
Japan	0.3	- 40	196.0	- 23	..	..
TOTAL WORLD EXPORTS OF HARDWOODS	17841	+ 127	4432	+ 25	..	..

¹ Of which: Congo (Brazzaville), 425,000 m³ (+ 140%); Gabon, 1,157,400 m³ (+ 37%); Ghana, 670,500 m³ (+ 16%); Ivory Coast, 1,445,000 m³ (+ 355%); Nigeria, 666,400 m³ (+ 42%). - ² Of which, Philippines, 6,520,800 m³ (+ 280%); Sabah, 3,000,800 m³ (+ 630%); Sarawak, 874,700 m³ (+ 470%). - ³ Of which: Philippines, 374,300 m³ (+ 1,000%). - ⁴ Of which: Japan, 344,500 m³ (+ 25%); China (Taiwan), 133,400 m³ Includes small quantities of temperate hardwood plywood. - ⁵ Of which: France, 613,400 m³ of logs (+ 32%) and 316,700 m³ of sawnwood (+ 4%). - ⁶ Includes small quantities of tropical hardwood and softwood plywood. - ⁷ Of which: Romania, 627,600 m³ of sawnwood (+ 96%) and 83,800 m³ of plywood and veneer (+ 560%).

The western African trade is also influenced - in both direction and form - by its origins in colonial times and the trading links that were built up then. Thus, the United Kingdom still imports predominantly from Commonwealth countries, and France mainly from its former territories. Until recently this pattern was reinforced by the respective tariff arrangements of the United Kingdom and France.⁹ On the other hand, such countries as the Federal Republic of Germany and Italy have drawn their supplies of tropical hardwoods from a wider range of sources.

⁹ At a General Agreement on Tariffs and Trade (GATT) meeting of ministers in May 1963, a number of developed countries, including France and the United Kingdom, agreed to remove customs duties on tropical hardwoods irrespective of origin. This agreement came into force, initially for a two-year period, on 1 January 1964. However it apparently applies only to tropical hardwood logs and sawnwood, the tariffs on e tariffs on hardwood plywood and veneer remain.

Former colonial links have also affected the commodity composition of the tropical hardwood trade. The United Kingdom, for instance, with little domestic processing industry to sustain or protect, has imported the greater part of its requirements in the form of sawnwood, plywood and veneer rather than logs. This was encouraged both by tariff policy (Table V-9) and by the willingness of British timber interests to invest in sawmills and plywood mills in such countries as Ghana, Nigeria, Burma and Malaysia. Although the circumstances were rather different, a parallel can be drawn with the United States investments in the Philippines. However, as is shown in Table V-9, United States tariffs do discriminate against processed wood products.

In the countries of continental Europe and in Japan, where the demand was for log raw material for domestic industries, tariff structures have discriminated against the import of sawnwood, plywood and veneer, and still do to a certain extent against the import of the latter two products.

Hardwood logs

At least until the last few years the export of logs from both Africa and southeast Asia was growing faster than the export of sawnwood, plywood and veneer, although exports of the latter have also grown by wide margins. Table V-8 shows the massive increases registered in log exports in the period since 1955-57.

In Asia, the trade has until recently been principally from the Philippines to Japan, but in the last few years Sabah and Sarawak have also become important exporters, and their exports are now growing faster than exports from the Philippines. At the same time, a growing share of the trade is now being directed to east Asian countries other than Japan to China (Taiwan), the Republic of Korea and Hong Kong -which have also been building up plywood and veneer industries based, as in Japan, on imported raw materials. Meanwhile, the Philippines has also built up an important domestic plywood and veneer industry of its own.

In western Africa the exports from some of the early front runners in the trade, Ghana and Nigeria, have also slowed down, partly due to an increasing difficulty in, and the rising cost of, producing the sought-after species and qualities. Exports from the Ivory Coast have continued to grow, and exports are also building up from the region to the east of these countries - from Gabon, Cameroon and Congo (Brazzaville). More than half of the volume exported from western Africa still goes to France and the Federal Republic of Germany, but the fastest growing trade has been to Italy.

TABLE V-9. - APPROXIMATE TARIFFS ON SELECTED WOOD PRODUCTS IN MAJOR IMPORTING COUNTRIES

(Percent ad valorem, except where otherwise stated)

	France¹	Germany, Federal Republic of¹	EEC Common external tariff¹	United Kingdom²	United States	Japan
Pulpwood	0	0	0	0	0	0
Sawlogs and veneer logs	0	0	0	38	0	40-5
Sawn softwood	0	0	0	58	6$0.35-1.50	40-10
Sawn hardwood	0	0	0	8	6$1.50-3.00	40-10
Veneer sheets	11.4-17.4	2	10	8	8-16.66	415
Plywood	10.6-15.6	7-11	15	10	15-40	20
Particle board	13.9	11-13.5	13	20	12	15-20
Fibreboard	15	6-10	15	20	5-9	15-20
Wood pulp	6	0.6	6	0	0	5
Newsprint	1.7	0	7	0	70	7.5
Printing and writing paper	16-19.3	10	16-18	16.7	4-7.5	10
Other paper and paperboard	18-19.3	10	18	14-15	5-15	10-20

¹ Tariffs on intra-EEC trade had been reduced to 30 % of basic level by January 1065, and the common external tariff to 70 % of its eventual level. Imports by EEC countries from countries associated with EEC are admitted duty free. - ² Tariffs on intra-EFTA trade had been reduced to 30% of basic level by 1 January 1965. United Kingdom imports from Commonwealth countries are admitted duty free. - ³ For hardwood logs; tariff on softwood logs is 8s. per standard. - ⁴ Tariff on specified species is 20 %. Per standard. - ⁵ Per 1,000 board feet. - ⁶ For standard quality newsprint.

A number of these western African countries are also attempting to expand their own domestic processing industries, with a view to exporting in the form of semiprocessed and processed products rather than as raw materials. Although the development, in the Philippines and in these western African countries, of domestic processing industries has not materially altered the overall pattern of the trade in tropical hardwoods yet, it clearly has contributed to the change in log availabilities for export in particular countries, and is likely to prove a significant pointer to future shifts in the form which the trade takes.

Hardwood sawnwood, plywood and veneers

Exports of sawn tropical hardwood have not grown strikingly. There has been some expansion in exports from Ghana and Nigeria, principally to the United Kingdom, and a more vigorous growth in export from Malaysia and the Ivory Coast. Otherwise there has been little progress.

Exports of plywood and veneer, on the other hand, have grown very fast, the biggest advance among tropical countries being by the Philippines, which has in recent years gained a sizable and growing share of the tropical hardwood plywood market in the United States. In western Africa, Gabon, Nigeria and Ghana have all expanded their exports of plywood and veneer, mainly to Europe. But the striking feature of trade in tropical hardwood plywood and veneer is that about half of the world's exports comes from countries outside the tropics which manufacture these products from imported tropical hardwood logs. Japan, China (Taiwan) and the Republic of Korea all in this fashion manufacture and export tropical hardwood plywood, principally to the United States, and Israel exports it to Europe.¹⁰

¹⁰ A part of the intra-European trade in plywood is also tropical hardwood plywood manufactured in Europe.

With large and still growing established industries outside the tropics relying upon tropical hardwood logs for their raw material, with new industries of this sort growing up, and with the principal tropical suppliers of this raw material also seeking to build up or expand their own processing industries, the competition for tropical hardwood veneer logs is intensifying. The long-term implications of this development will be considered in the final chapter. In the short term, it seems likely that the trade will continue to expand in, and into, the areas which still have large remaining reserves of appropriate quality - that is, west-central Africa, Sabah and Sarawak, Indonesia and parts of Latin America.

EXPORTS OF TEMPERATE HARDWOOD

The massive growth of the trade in, and use of, tropical hardwoods has overshadowed the slower expansion of the trade in temperate hardwoods.¹¹ As can be seen from Table V-8, the latter now account for only a small part of the overall trade in hardwood- logs - the most important form in which hardwood enters world trade - but still account for a large part of all the sawn hardwood and hardwood plywood and veneer traded.

¹¹ It was the relatively slow growth in the domestic supplies of temperate hardwoods of appropriate size and quality which was largely instrumental in bringing about the growth in demand for tropical hardwoods.

French exports of hardwood logs, mainly to neighboring countries, have fallen, but United States exports to Europe have risen. There has been a considerable growth in exports of sawn hardwood from southeastern Europe (Romania, Yugoslavia and Bulgaria) where there remain considerable hardwood resources still to be brought into use. Romania is now the world's largest exporter of sawn hardwood. A substantial part of this hardwood goes to the U.S.S.R.; Italy is another major buyer. Intra-European trade of sawn hardwood has grown steadily, whereas the volume of intra-North American and North American exports to Europe has not changed appreciably. Exports from Japan, the other major exporter of this commodity, declined, reflecting the decreasing availability of Japanese oak for export.

Trade in temperate hardwood plywood has expanded steadily, sharing in the overall growth in demand for this panel material. The principal exporter is Finland, whose birch plywood goes mainly to the United Kingdom and the United States. The U.S.S.R. shipped large and growing quantities of this type of plywood to the United Kingdom, and exports from Romania and Yugoslavia are also growing fast. There is in addition a considerable intra-European trade originating in France, the Federal Republic of Germany, Belgium and the Netherlands.¹²

¹² As noted earlier, part of this intra-European trade is in tropical hardwood plywood.

Trends in imports

Between 1955-57 and 1960-62 the recorded value of world imports of forest products rose from $5,000 million (c.i.f. current market prices) to $6,700 million. The origin, evolution and direction of the overall trade of each product has been covered in the preceding examination of the trends in exports. Attention in this section will, therefore, be confined to the aggregate pattern of imports, and the evolution of this aggregate, for the principal importing areas. (The imports of individual subregions are shown, by product, in Annex Table V-B).

Four subregions account for nearly three quarters of the value of total world-imports of forest products - the United Kingdom and Ireland, the EEC countries, the United States and Japan. As is shown in Table V-10, the imports of all four over recent years have grown considerably in absolute terms. Where they differ is in the form their imports take.

There is a marked distinction between the United Kingdom and Ireland and the United States on the one hand, which tend more and more to import their requirements in semiprocessed or processed form, and on the other hand the EEC countries, and to an even greater extent Japan, which still meet an important part of their requirements in raw material form in order to support existing or expanding primary processing industries.

In the United Kingdom imports of roundwood declined, imports of wood pulp rose moderately, and imports of paper and paperboard, sawnwood and plywood rose strongly. As is shown in Table V-10 very little roundwood is now imported into the United Kingdom and Ireland. Their imports consist largely of sawnwood and chemical pulp and of paper, paperboard and panels.

The trend in United States imports followed a similar pattern, except that imports of newsprint increased very slowly because of the slow growth in demand and the apparently improved competitive position of domestic producers. Also of note has been the rapid growth in United States imports of hardwood plywood and veneer. These increased from 13 percent of United States requirements (in terms of the equivalent volume of roundwood) in 1952 to 46 percent in 1962, and despite the substantial tariff on these commodities, most of the volume imported was by the latter year in processed rather than log form.

The EEC countries imported growing quantities of nearly all forest products but imports of logs grew faster than imports of sawnwood or plywood and veneers. Sawnwood, chemical pulp, and paper and paperboard account for the bulk of the subregion's imports, but in terms of wood raw material about one fifth of EEC imports are still in roundwood form.

Three quarters of Japan's imports are in roundwood form and over the period reported upon in Table V-10 these quantities rose faster than the imports of the respective processed products. Nevertheless, what is probably more important for the future is that in the last few years Japan did begin importing sawnwood and chemical pulp in substantial and fast-growing quantities. In other words, it appears that Japan also is now beginning to find it necessary to import a larger part of its increasing import requirements in semiprocessed rather than raw material form.

The quarter of the world's trade in forest products which did not flow into these four principal importing areas was distributed widely among the other countries of the world. There was a general tendency for this trade to become more heavily weighted with pulp and paper and other of the more highly processed wood products. In Asia,¹³ Africa¹⁴ and Latin America imports of sawnwood between 1955-57 and 1963 grew appreciably only in northern Africa and the Near East. Elsewhere increased domestic production accounted for any rise in domestic requirements. There was also, as was noted in Chapter IV, a considerable growth in the pulp, paper and panel industries in all regions, which tended to hold growth in imports in check. But many branches of these industries benefit considerably from economies of scale, and the large number of countries with markets as yet too small to support such industries continued to depend on imports. Between 1953-55 and 1959-61 the value of imports of forest products into the developing countries as a whole grew at an average rate of 6.6 percent a year, and by the latter period pulp and paper accounted for two thirds of the imports of forest products into these countries (in terms of value).

¹³ Less Japan and China (Mainland).

¹⁴ Less southern Africa.

TABLE V 10. - IMPORTS OF WOOD AND WOOD PRODUCTS, 1955-57 TO 1963¹

¹ See also Annex Table V-B. - ² All Africa, excluding southern Africa, Asia, excluding Japan and China (Mainland), and Latin America. - ³ No imports in 1955-57. - ⁴ Sawlogs, veneer logs and logs for sleepers.

Trends in the balance of trade

There remain two further aspects to be examined in putting together this picture of world trade in forest products: to consider the changes in the net export surplus or import dependence of the different areas, and from this to appraise the shifts in the nature and degree of the dependence of the different parts of the world one upon another.

Perhaps the most important development in world trade in forest products during the past 10 to 15 years has been the growth and extent of net dependence on imports of wood and wood products of two of the major consuming regions of the world: northwestern Europe and Japan. As is shown in Table V-11 the size of net imports of both these regions is already very large, and is growing fast. In the United States, the other major importing region, net imports of most forest products (though not necessarily imports) have been declining. At any time, they form only a minor part of that country's overall supplies of wood.

Of the major exporting regions, only in northern Europe are limitations in raw material beginning to hinder export expansion in terms of wood volume. However, it should be noted that, along with the shift to the more highly processed products, the region's total net exports of wood products are still rising vigorously. But with a limit now evident to northern Europe's ability to continue to raise its exportable surplus of wood volume, Europe as a whole is a significant and growing net importer: a fact that is clearly of prime importance to the forest and wood-producing economy of the rest of the world.

Neither Canada nor the U.S.S.R., the two other major exporting areas, is faced with an imminent raw material supply ceiling. As has been pointed out in Chapter III, both have enormous forest resources still to be drawn upon. Both have in the recent past considerably increased their net outflow of wood to the rest of the world, principally to Europe and Japan. While exports from the U.S.S.R. are mainly in the form of sawnwood and roundwood, exports from Canada, with its large, highly developed forest industries, are mainly in the form of sawnwood, wood pulp and paper.

TABLE V-11. - REGIONAL NET TRADE, 1955-57 AND 1960-62

[Million units, net exports (+), net imports (-)]

¹ Sawlogs, veneer logs and logs for sleepers, pulp wood and pitprops. - ² Excluding veneers.

Western Europe and Japan are therefore becoming increasingly dependent upon the rest of the world for supplies of wood and wood products. These additional supplies are at present coming principally from North America and the U.S.S.R. - with important additional volumes from western Africa and southeast Asia.

Among the developing countries the growth in market size of many has permitted a greater degree of domestic production of even the more highly processed products. But the absolute volumes of imports are growing, particularly in the smallest and least developed countries, and as few have been able to develop a wood-based export trade, the net deficit on the value of trade in forest products of many; if not most, developing countries has worsened. Because there is so little intraregional trade in these forest products within Asia, Africa or Latin America, most of their additional wood product needs continue to come principally from North America and Europe.

As has been shown in this chapter, world trade in forest products has undergone in recent years, and is still experiencing, a number of important changes, as much in its form and direction as in its magnitude. Some of these changes can be seen as being probably in the nature of a return to a previous situation. Over a longer time horizon than is considered here, there have been a number of temporary fluctuations in the trade. In the recent past, the second world war in particular caused massive dislocations of the trade pattern: it is, for example, only in the last few years that the important trade in sawn softwood from the U.S.S.R. to the United Kingdom attained once again the volume it had reached in the 1930s. But other changes reflect new developments in the wood-using economy; for instance, the hitherto unparalleled magnitude of the demand for wood and wood products in some of the principal consuming regions; the growing use of wood in the form of pulp and panel products; the technologically widening raw material base of many of the wood-using industries; and the economic opening up of new sources of wood raw material. Trade in a number of forest products, for instance, tropical veneer logs, has sharply reflected such changes in the woodproducing and wood-using sectors of the world economy. One of the purposes of the final chapter of the study will be to consider how the developments foreseen for the period to 1975 might be accompanied by further changes in world trade in forest products.

ANNEX TABLE V-A. - EXPORTS OF WOOD AND WOOD PRODUCTS, 1955-5 TO 1960-62

(thousand units)

¹ Sawlogs, veneer logs and logs for sleepers, pulpwood and pitprops. - ² Excludes veneer.

ANNEX TABLE V-B. - IMPORTS OF WOOD AND WOOD PRODUCTS, 1955 57 TO 1960-62

(thousand units)

¹ Sawlogs, venner logs and logs for sleepers, pulpwood and pitprops. - ² Excludes veneer. - ³ Where there have been significant quantities of unrecorded imports in this period, estimated total imports are shown in the footnotes that follow: ⁴ 25; ⁵ 160; ⁶ 48; ⁷ 72;⁸ 135; ⁹ 81; ¹⁰ 102; ¹¹ 178; ¹² 90; ¹³ 69; ¹⁴ 12; ¹⁵ 50; ¹⁶ 77; ¹⁷ 58; ¹⁸ 38; ¹⁹ 22. For further explanation see the Appendix.