Import Tariffs on Wood Products to Be Cut

China's accession to the World Trade Organization (WTO) will protect the country's forest reserve but it will also deal a blow to the domestic manufacturer of artificial boards, industry experts say.

According to the country's agreement with other WTO members, import tariffs on wood products will be cut from the original 15 to 20 percent to an average of 2 to 3 percent by 2004.

"Timber imports will continue to rise after China entered the WTO," said Jia Qian, an official with the State Forestry Administration.

It is necessary for China, a country short on forests, to import a large amount of timber and wood products in the next 10 years or even longer, Jia said.

The government has been working to protect natural forests since 1998, causing timber volume to drop to 40 million cubic meters per year from 70 million. This leaves a shortage in the domestic market of about 60 million cubic meters every year.

Increasing timber imports will help ease the shortage and stabilize timber prices on the domestic market, Jia said.

It will also help prevent exploitation of the country's natural forests and improve the environment.

Tariffs on log and processed timber have already been eliminated since last year to encourage timber imports. The country imported a total 1.85 million cubic meters of log and processed timber in the first 11 months of last year, according to Customs statistics.

The tariff rate on artificial boards including fiberboard and scale board remained relatively high before China's entry into the WTO, in a bid to protect domestic manufacturers.

But the country has promised that import tariffs on fiberboard will be cut from 12 percent to 18 percent to 8 percent to 13.8 percent this year and even further to 4 percent to 7.5 percent by 2004. Scale board tariffs will be cut from 15 percent to 10.6 percent to 12 percent this year and to 4 percent to 10 percent by 2004.

"The increase in imports of artificial boards will bring great challenges to domestic enterprises. They are likely to go bankrupt if they fail to improve product quality and lower production costs in a short period," Jia said.

The equipment and techniques of the domestic artificial board industry is just reaching the levels that developed countries saw in the 1980s.

Small scale and duplication of similar projects also hinder the development of the industry, where enterprises have an annual output less than 10,000 cubic meters each account for 80 percent of the total artificial board companies.

Artificial board manufacturing has been developing rapidly in recent years, but a shortage of raw materials has become a big problem.

Finding timber resources in the international market will help solve the problem, experts said. (China Daily February 19, 2002)

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