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US Hardwood Exports: A Global Perspective Michael S Snow Executive Director AHEC

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AHEC Membership AHEC member companies supply the growing worldwide demand for U.S. hardwoods, exporting the full range of hardwood products including lumber, flooring, veneer, molding, and dimension materials. AHEC Members include: 111 direct company members; 12 export association members; 8 associate members; 4 sponsor members; Represents 90% of the U.S. hardwood industry

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AHECs Global Reach

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U.S. Hardwood Exports 1986-2007 $ Million

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Source: Global Trade Atlas Worlds Leading Hardwood Lumber Exporters: 2007

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Growing Importance of US Hardwood Exports: Exports as a % of US Production Source: Hardwood Review,

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Red Alder Exports $Millions FAS value)

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Main destinations for Red Alder Exports- 2007 $,Millions

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Source: GTA Red Alder Exports : Major Markets 2005-2007 (Millions of Dollars)

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Value of Hardwood Lumber Exports to Japan 1997-2007 ($ Thousand F.A.S. Value) Source: US Census Bureau

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Value of Hardwood Lumber Exports to Korea 1997-2007 ($ Thousands F.A.S. value) Source: US Census Bureau

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Center for International Trade in Forest Products (Photo by Dr. Dave Cohen, UBC) China: Threat AND Opportunity

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US Hardwood Lumber Exports to China ($ Millions FAS value )

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Demand Drivers Housing Privatization Commercial Construction Rising consumer wealth and sophistication; Domestic and export oriented manufacturing in furniture and interior fittings sectors; Hospitality industry 2008 Beijing Olympics/2010 Asian Games in Guangzhou

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Chinese GDP Growth 1999-2007 Pillars of Growth: High levels of investment spending Trade and Opening to world economy.

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China Accounted for 20% of Global Economic Growth 2000-2005 Automobile Market Exceeds Germany Largest Mobile Phone Market in the World Estimated 10% of Population with Middle Class Purchasing Power. Represents 130 million consumers and growing! Chinese Domestic Market

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Hardwood Demand Driver I: Furniture

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China Furniture Production & Exports Billion USD China National Furniture Association

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Greater China: Furniture Sector Chinese Furniture Export by Province 2006 (Million US$) Province Guangdong province accounts For over 50% of China furniture exports.

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Export Markets for Chinese Furniture in 2004 Greater China: Furniture Sector.

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Export Markets for Chinese Furniture 07 Greater China: Furniture Sector.

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Hardwood Demand Driver II: Property Development

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Approximately 700 million square meters of finished construction each year Flooring demand to hit 2.5 billion square meters in 2008 Door and window market to hit 500 million units in 2008 Greater China: Property Development Source: ITTO,

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AHEC Model Home: Shanghai

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Kitchen: American Red Oak Cabinets

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Hardwood Demand Driver III: Flooring and Secondary Manufactures

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million m 2 China Flooring Production : 2002-2006 China is the largest wood flooring producer & consumer Account for 50% world flooring production.

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Source: GTA US Hardwood Flooring Imports: Major Suppliers 2004-2006 (Millions of Dollars)

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million USD 2004-2006 China Door Production & Export United States is the largest export market for Chinese door, account for over 40% of the total export value.

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Will China become a major player in the lumber/veneer export markets? How much growth left in the furniture industry? Can Chinese plantations make them more self-sufficient in wood fibre? Whats Next?

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Source: Wood Markets Inc Chinas rank in wood products global trade: Production:Global Rank Plywood#1 MDF #1 Blockboard#1 Furniture #2 Hardwood lumber #2 Particleboard #3 Softwood lumber #4 (higher than Sweden) Finished Products Soaring Imports#2 (after the USA) Exports#1

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Source: World Trade Atlas Chinese Wood Product Exports: (Millions of Dollars/ 8 month totals)

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China is a Low Cost Producer, But Source: Wood Markets Inc

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Source: Global Trade Atlas Worlds Leading Hardwood Log Importers

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Chinese/Russian Border - Suifenhe

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US Hardwood Log Exports to China: 1997-2007 (Thousands of Cubic Meters) Source: USDA-FAS

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China: Hardwood Log Imports 2007 % Market Share Source: World Trade Atlas:

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China Domestic Timber Output Under NFCP Source: China Timber Import Export Co/IFSA Consulting

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Per Capita Wood Consumption In cubic meters per capita Source: China Timber Import Export Co/Hardwoodmarkets.com 2005

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Other Markets to Watch Southeast Asia/Vietnam Middle East Latin America India **The EU**

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S.E. Asia: Market Overview Million US$

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VIETNAM U.S. Hardwood Log, Lumber & Veneer to VIETNAM Million US$

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Source: Ministry of Agriculture & Rural development Picture of wood processing factories in VN Economy areaTotal (%) 1. North West110.9 2. North East524.3 3. Red river delta18915.8 4. Northern of Danang17014.2 5. Coastal of Southern DN16113.4 6. Highland15312.8 7. South East area37631.3 8. Mekong delta887.3 Establishment (company enterprise) 1 2 3 4 5 6 7 8

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Hardwood Lumber Exports to Mexico Source: Global Trade Index

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Mexico: Hardwood Import Market Share Source: Global Trade Index

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New Markets: Middle East (Dubai 1990)

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New Markets: Dubai (2007)

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New Markets: Dubai (2010)

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Exports of US hardwoods to the Middle East & North Africa 2002 - 2007 ($,000) Source: US Bureau of Census

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Exports of US Hardwood Lumber to the Middle East & North Africa 2002 - 2007 ($,000) Source: US Bureau of Census

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Turkey AHEC/AF&PA Korea Office September 2002 Furniture Industries 65,000 Manufacturers Exports exceeded $1.2 billion in 2007 Heavily dependent on Russian logs Opportunity Export-oriented furniture: Middle East and Europe

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South America AHEC/AF&PA Korea Office September 2002 Emerging Furniture Industries 13,000 Brazilian manufacturers U.S. exports of promoted products doubled Brazil12 th largest market for veneer Opportunity High end furniture

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Brazilian Furniture Exports ($million US) Source: Global Trade Atlas

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Caribbean Shortfall in the mahogany supply Supplies come from Brazil and Guyana Interior design (hotels, restaurants) Small scale furniture market

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INDIA

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Source: World Trade Atlas Indian Hardwood Imports: (Millions of Dollars)

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Indian Imports of Hardwood Lumber: 2001-2007 (Millions) )

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The Importance of Europe

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Worlds Leading Hardwood Lumber Importers: 2007

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Hardwood Lumber Exports by Volume - 2007 (m 3 ) Source: US Census Bureau

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US Hardwood Lumber Exports by Value 2007 Source: US Census Bureau ($1,000)

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Source: EUROSTAT EU Hardwood Lumber Imports (Billions of Euros)

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Architectural Projects

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Public sector procurement policies: EU and Japan EU governments developing procurement policies designed to eradicate illegal wood from supply chain. These policies actively promoted by certified wood suppliers. Increasingly sustainability equated with independent certification and traceability. Public sector procurement policies in UK, Netherlands, France, Germany, Spain, and Belgium favour certification. UK policy is the most stringent and insists on Chain of Custody and traceability. AHEC statements on sustainability not accepted by UK public authorities. UK government promoting harmonisation in Europe based on their model.

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Legislative Options: EU Effectively 2 options: 1) Burden of proof on the prosecution Similar to US Lacey Act Encourages risk assessment and due diligence Proportionate to the scale of the problem 2) Burden of proof on the importer/supplier Every shipment would have to be verified legal Takes no account of the risk of illegal activity Could lead to imposition of unnecessary bureaucratic controls Not proportionate to the scale of the problem

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AHEC Actions AHEC-commissioned study to assess the risk of American hardwoods being derived from illegal sources or controversial sources as defined by FSC Controlled wood standard Lobby national governments to accept detailed risk assessment as evidence of sustainability when dealing with small family-owned forests in countries demonstrating good forest governance Encourage timber importing associations to ensure risk assessment forms an integral component of private sector timber procurement policies Continue to explore with FSC and PEFC potential for regional certification of American hardwood forests accommodating large numbers of family owners at minimal cost

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For additional information contact : AHEC Headquarters 1111 19th Street, NW, Suite 800 Washington, DC 20036 Phone: 202/463-2720 Fax: 202/463-2787 www.ahec.org