'Greens' Take Aim at WTO Plan To Eliminate Tariffs on Lumber
By JIM CARLTON Staff Reporter of THE WALL STREET JOURNAL
SAN FRANCISCO -- When thousands of environmentalists descend on the World Trade Organization summit in Seattle next week, they will be protesting the group's influence on everything from marine destruction to global warming.
But the most heated issue of all is over a proposal by the U.S. and some other WTO members nearly to eliminate tariffs on lumber and other logging products. Called Accelerated Tariff Liberalization, or ATL, the plan would phase out most tariffs by 2004, allowing a flood of new forestry products to enter markets all across the world, including countries such as Japan and China, where tariffs as high as 40% have kept most imports out.
Economists' Position
To most economists, any measure that liberalizes trade is a win-win for the global economy. They believe that reducing trade barriers enhances productivity and growth, puts downward pressure on inflation by increasing competition and creates jobs. In Japan, tariffs are so high on imported finished-wood products that U.S. companies don't have much market there. And high local prices limit domestic demand in Japan. But if tariffs were reduced, demand for lumber products from the U.S. could surge, creating additional logging jobs in the U.S. and additional import-related jobs in Japan.
"The irony here is that, with high tariffs, you are protecting an industry [in nations like Japan] that has been responsible for stripping timber in country after country," says Greg Mastel, director of global economic policy at the New America Foundation, an economic think tank in Washington. Mr. Mastel adds that freer trade actually increases protections for the environment -- for example, by boosting living standards enough in developing countries for people to become more aware of problems such as pollution and deforestation. "The fear that less developed countries will systematically lower their environmental policies to attract polluting industries from countries with more stringent environmental policies has not been borne out by the evidence," Mr. Mastel says.
But environmentalists view it very differently. Their chief worry is that a nontariff market, which would result in lower prices, will stimulate so much demand that logging will intensify in the world's remaining ancient forests, which they say serve as habitat for complex ecosystems that otherwise cannot survive intact in forests that have been cut into fragments. Such old forests still exist across much of Canada and Russia's Siberian region, as well as in Alaska. The Alaskan boreal forests are so vast, environmentalists point out, that they can support large populations of free-roaming predators such as grizzly bears and wolves, which in turn keep moose and caribou populations in check.
In New York, Pennsylvania and other states in the Northeast, however, the forests have been so chopped up that many large predators have been driven from the land, leaving virtually no check on the deer population. As a result, deer are in a state of overpopulation.
"The accumulating and undeniable body of evidence demonstrating globalization's devastating impact on the world's forests should compel governments to pause in their headlong course," said Victor Menotti, director of environmental programs at the International Forum on Globalization, a San Francisco-based group opposed to economic globalization, in a policy report being released this week.
Report by Administration
Indeed, the Clinton administration recently issued a report that acknowledges the tariff measure would adversely affect some of the forests. While concluding that timber harvests would increase just 0.5% world-wide by 2010, the report also estimates that logging would jump significantly in places such as Indonesia and Malaysia, where virgin forests are already under siege. Indonesia's harvest would increase 4.4%, according to the report, while Malaysia's would increase 2.6%. Logging would also intensify in developed countries such as Finland (11%) and Sweden (7.6%), but change little in the U.S.
Both administration and industry officials play down the adverse impacts, however, arguing that reduced tariffs would boost world economies by decreasing the cost of housing, paper and other products made from wood, while actually helping forest conditions. For example, timber officials in the U.S. say they could go into a place like Indonesia and persuade local firms to adopt their more conservation-minded techniques.
"We need to go in and say, 'Don't burn down the whole island of Borneo, use this kind of practice,' " says W. Henson Moore, president and chief executive officer of the American Forest and Paper Association, an industry trade group in Washington.
Actually, the ATL measure would reduce tariffs on seven other industrial goods, including oil seeds, certain foods, fertilizers and automotive products. Producers in low-tariff countries such as the U.S. have bitterly complained of having to pay more to operate in higher-tariff countries such as Japan, while also having to compete against those producers at home. "It's made it very difficult for us to compete against them," says John Begley, president and CEO of Port Townsend Paper Co., a paper producer in Port Townsend, Wash.
'Wheeling and Dealing'
Environmental activists began laying plans for the Seattle protests last summer, mobilizing about 400 organizations from across the U.S. and as far away as India. They object, in part, to what they call the WTO's practice of closed-door meetings and lobbying by big corporations that benefit from free trade. "It is basically reducing world affairs to wheeling and dealing," says Vandana Shiva, director of the Research Foundation for Science, Technology and Natural Resource Policy, a conservation group in New Delhi.
One tactic that environmentalists are using: an attempt to discredit the Geneva-based WTO, whose power to authorize trade sanctions has allowed it to greatly influence a number of environmental policies. For example, activists point to the fact that the WTO has blocked a U.S. rule ordering fishermen to equip shrimp nets with a device that allows endangered sea turtles to escape. The WTO found the ruling discriminated against foreign importers who lacked nets.
Environmentalists also say that the WTO's policies of rapid trade and investment liberalization have opened the world's forests to more development. In his report, for instance, Mr. Menotti of the International Forum on Globalization said forest-protection laws were rolled back in Canada, the U.S., Mexico and Brazil soon after the WTO's formation. In the U.S., Mr. Menotti noted that a rider attached to a 1995 social spending bill authorized the expansion of logging in national forests by about six billion board feet. U.S. officials say the two are unconnected.
Activists also are concerned about what the impact will be on forests from future WTO policies. Aside from the proposed reduction in tariffs, they are poised to oppose other WTO plans that may come up at Seattle, such as restrictions on exports of certain types of logs and labeling of wood products as ecologically satisfactory.
"What's at stake here is the world's last remaining intact forests," says Nigel Sizer, director of forest policy for the World Resources Institute, a research institute in Washington.