De Jaeger: Export Taxes on Logs are just one Alternative
In an exclusive interview Filip De Jaeger comments on an initiative of the French woodworking federation FNB regarding the establishment of a European customs policy aimed at promoting local processing of resources. The secretary general of the European Organisation of the Sawmill Industry EOS and of CEI-Bois, the European Confederation of woodworking industries, looks upon export taxes as a last resort but favors the education of all market partners being involved in the roundwood business.
IHB: Do the issues raised by the FNB on 29th of March concern the other European countries as well?
De Jaeger: Other European countries face the same situation as France, in particular as regards the hardwood market. This is especially true of Germany, Belgium and Romania, but also of other European hardwood-producing countries where first processors have to contend with raw material prices which are way higher that those they are able to offer, that is, if they intend to keep their business profitable. Moreover, logs exported to Asia return to the European market as finished or semi-finished products (such as wood flooring or furniture) which are offered at unbeatable prices. This trend is beginning to affect the softwood market too, albeit to a lesser extent. In fact, it is not confined to the wood industry. We are witnessing a similar phenomenon in the paper recycling sector.
IHB: Is this a new phenomenon?
De Jaeger: This phenomenon is not new. We have seen it through the 2000s, when Europe already posted a rise in exports of raw materials to Asia, and China in particular. This trend slowed down with the economic downturn, but it is now resuming with renewed vigour.
IHB: Has there been no involvement whatsoever of European authorities thus far?
De Jaeger: At this stage the European Commission lacks direct means of action in this matter, as a consequence of the agreements concluded in the framework of the World Trade Organization, although it is aware of the issue. Some members of the EU will need to make some explicit demands. However, the Commission’s services have raised this issue at a recent meeting with Chinese authorities about raw materials. In its capacity as an organisation, EOS has always advocated a free market approach and has therefore acted, for instance, against export duties introduced by Russia. Such a request would thus be extremely difficult to make at the European level. This does not rule out other measures which could be taken or considered and which are now under discussion.
IHB: Why a French initiative rather than a joint European one?
De Jaeger: We have all been talking about this since the conference in Brasov, Romania, and things are taking shape as far as European actions are concerned. France is ahead of other EU member states due to the opportunity that presidential election debates mean, but European partners are on the same wavelength as that country and will take over from it. The German federation of the sawmill and woodworking industries (BSHD), for example, has taken up the issue with several European MPs.
IHB: Is there any credibility in the demand for imposing export duties on logs or import duties on wooden products coming from Asia?
De Jaeger: First and foremost, EU authorities share our assessment of the state of affairs, as proves the opinion on the European woodworking and furniture sector which was published on the European Economic and Social Committee’s website. This should soon lead to an action plan to improve European competitiveness, but concrete measures have not been firmed up yet. We already wish to alert our Asian partners to the problems that the current situation poses for the management of raw materials in Europe. Levying export taxes on logs is not impossible as a last resort; there are other options though. It is important that forest owners and forest management authorities should be made aware of the medium-term consequences of the phenomenon they are currently contributing to. Indeed, the flight of raw material entails the closing down of sawmills which have been their first clients so far. Today log exports may bring in better profits, but what will they do tomorrow if the tide turns against them and there are no more sawmills to buy their wood?