Woodworking industries: external dimension
International competition for wood and wood-based products
Roughly 10% of the EU woodworking industries' wood raw material is imported, mostly from other temperate and boreal coniferous and non-coniferous forests. Russia has been the main source over the last two decades, supplying up to 60% of all imported wood. However, rising Russian export taxes have reduced that flow. The balance of imported roundwood is made up of temperate hardwoods from North America, followed by other categories, including tropical hardwoods. A number of voluntary partnership agreements, mostly with tropical wood-exporting countries, are being negotiated and signed under the EU's FLEGT Action Plan (more information on FLEGT is available on the Directorate-General for Development website and that of the Directorate-General for the Environment). Imports of both round and processed wood from those countries will be subject to licensing, which will be controlled at the point of entry into the EU.
All roundwood imports enter the EU tariff-free. The EU applies rates of duty to plywood and particleboard, which, although relatively low by international standards (the maximum possible is 10%), are higher than for many other EU imports, including those of other wood products.
Lower-cost competition for EU wood product imports comes mainly from China (now the world's fastest growing producer, consumer and trader of wooden products) and more recently from Vietnam. The competition increasingly concerns panels and added-value wooden goods such as flooring. Russia is also an important supplier of a range of wood products, together with Latin America (mainly Brazil, which remains a significant supplier of panels, especially plywood) and some south-east Asian (ASEAN) countries (mostly ASEAN). On top of low wood costs and low production costs, some exporters to the EU also receive export subsidies from their governments.
The woodworking industries' production is based on sustainable and high-quality EU wood. A small but growing proportion of is exported, but the sector still posted an overall negative trade balance of €2.7 billion in 2008, whereas sawnwood and some panels showed small trade surpluses. The main clients for EU exports in 2008 were Switzerland, Norway and the USA.
Important niche export markets, especially for EU flooring products, have built up in the US over recent years. However, this trend is threatened by the slump in US housing starts (down from 1.8 million in 2006 to 0.8 million in 2008) and the slump's knock-on effects may also see other historical suppliers to the US, such as Chile and Brazil for wood-based panels, unloading on international markets, including the EU. The US market has also been affected by the 2008 government amendment to the Lacey Act, expanding its protection to include plants and plant products, with the aim inter alia of combating illegal logging. However, the amendment requires non-US suppliers to carry out an exhaustive import declaration procedure.
Elsewhere, in markets such as Japan, EU sawn timber, panels and glued-laminated beams from the EU now have proven export opportunities which could further expand. China has a large potential for consumption too but is currently a large producer and exporter of many wooden construction and other products. (The complaints of EU industry against Chinese export subsidies on both furniture and other wooden products have continued to increase). India remains a significant long-term target for EU wood exports but maintains its high tariff and non-tariff barriers.
Japan's construction sector (residential and non-residential) is a market where North American standards for construction products have long been recognised. Building on the recent work of the EU-Japan Wooden Building Experts' Dialogue (WBED) - under the EU-Japan Regulatory Reform Dialogue, efforts are under way by the Commission together with: the private sector European Wood Initiative, CEN, MS Notified Bodies and the Japanese authorities to improve the recognition of EU wood species and standards for wooden building products.
Similarly, a Subgroup for the Forest-based Sector has been re-established as part of the EU-Russia Regulatory and Industrial Dialogue. This will focus more on sustainable forest resources in both regions as a basis for sustainable wood supplies and comparability of EU and Russian standards and legislation affecting the forest-based industries. Similar dialogues are being developed with Brazil and Canada.
Other relevant international bodies
Other important international bodies with relevance to the EU woodworking industries include the:
- World Business Council for Sustainable Development (WBCSD)
- United Nations Economic Commission for Europe (UNECE), Timber Section, which is active via its annual Timber Committee, the Joint Working Party on Forest Economics & Statistics and the Team of Specialists on Forest products - Markets and Marketing
- Food & Agriculture Organisation of the United Nations (FAO), Forestry Department which is active via its Advisory Committee on Paper and Wood Products (ACP&WP).