The next presenter Mr. Paul Houghland, Jr., representing the National Hardwood Lumber Association which he is the executive manager here in Memphis. Mr. Houghland, if you would please come to the podium.

MR. HOUGHLAND: Thank you, Earl. I'm Paul Houghland and I represent the National Hardwood Lumber Association but also the American Forestry and Paper Association based in Washington D.C. To the panel I welcome you to Memphis, hardwood capital of the world as been known for decades. Apparently in the eyes of many forest products are not included when we talk about agriculture. Hopefully, we can address those issues today.

Mr. Secretary, when you revise your slides and look at figures I hope the forestry industry products get involved in that. I want you to listen.

The U.S. forest products is vitally important to the nation's economy. We employ 1.5 million people, are among the top ten manufacturing employers in 46 states and in each state represented in this district represented today the forest product industry is extremely important. We have annual sales in excess of 230 billion dollars. We account for about seven percent of U.S. manufacturing shipments. Our industry ranked earlier in this decade as one of the most globally competitive of all U.S. manufacturing industries. However, our experience stands as an unfortunate example of how U.S. acceptance of inequitable trade agreements on the sectoral level undermine the competitiveness of even the strongest American industries.

Our industry has been unable to achieve anything close to equivalent market access because our interest repeatedly gotten lost in the larger dynamics of comprehensive, multilateral negotiations.

For more than two decades the U.S. forest products industry has had its tariff protection sacrificed to win market concessions for other industrial sectors while competitor countries, Europe, Asia, Latin America, escaped making reciprocal concessions on our products. The opening of the Uruguay Round we originated the zero-for-zero concept in an attempt to change fundamental structure of trade negotiations in two important ways. One focused on the reciprocal tariff elimination within that specific sector, and, second, it moved away from a formulaic approach to an assured level end point. Which were disappointed in the results of the Uruguay Round because it failed to achieve a zero-for-zero agreement on wood tariffs. The U.S. government committed itself to work with our industry and at every opportunity to try to achieve Uruguay Round zero-for-zero objectives in wood products. The current tariff structure discourages trade in high value wood products where American producers have an edge. Zero tariffs on raw material imports throughout the world allow wood processors to import raw materials without tariff and add their own value. Tariffs are applied to the full value of imported manufactured products. Producers in Japan, for example, can import logs from the United States duty-free, but the U.S. imports of veneer, molding, plywood to that country are assessed a duty. In effect, the foreign producer has the cost advantage or trade protection which is significantly higher than the nominal duty imposed on the processed product.

Last November the Ministers from 1600 Asian corporations APEC forum agreed to move a nine-sector trade liberalization package to the WTO for completion. Ministers further agreed to work constructively with the WTO agreement in the nine APEC priority sectors, including forestry products in time for the Ministerial in Seattle this November.

We strongly endorse APEC initiative known as the Accelerated Tariff Liberalization, ATL in the WTO discussions. Those include a proposal to eliminate all tariffs on paper and wood products between the years 2000 and 2004. There is a real danger that European and Japanese official resistance to anything short of a comprehensive trade agreement with the WTO could derail early agreement on the ATL package and again put our interests at risk of being traded away where any economic benefits to our industry will not come for many years. The U.S. must not accede European and Japanese pressure on this point. We must preserve and fortify the concept of sectoral negotiations and adhere to our' APEC commitment to deliver an agreement on ATL at the time of the Seattle Ministerial as an essential nonnegotiable element of any agreement with WTO negotiating elements.

The U.S. forest products industry has consistently supported policies designed to foster free trade even in the face of past unequitable trade benefits on a sectoral level. We continue to believe that successful market access negotiations are the best antidote for protectionism. That's why the ATL initiative is so important and why the U.S. must make the achievement of a WTO agreement covering all priority sectors in the ATL package, including forest products. They are the single most important deliverable out of the WTO in Seattle. I do have a hard copy of comments I can leave with you. I do this, Earl, so I can keep one of them.

MR. MANNING: Thank you, Mr. Houghland, very much for your remarks and for your respect to the time restraints. I thank you for the hard copy. For other presenters if you do have a hard copy, you may leave those. This session is being recorded but hard copies are also desirable if you have them. I would also like to point out that if we do conclude the formal presentations by those registered to make presentations before 4 o'clock, if we have any minutes left, then we will have an open forum so that anyone may speak from the audience, but we'll see how it goes from a time standpoint. The next presenter is --

MR. SCHUMACHER: May I make a comment as far as what Mr. Houghland had to say? Relative to our forest products here in Tennessee obviously forestry products industry in Tennessee is important to us. We're a major hardwood producing state. Memphis is known as the hardwood capital of the world. We have the forestry industry division within our department of agriculture in Tennessee which is somewhat unusual, particularly in the South. (inaudible) I just want to make a point, export marketing is very important to many of our hardwood producers here in Tennessee. For example, I know of one family owned hardwood company in the middle part of our state that exports 30 percent of their production. They have sales representatives in foreign countries that are dedicated solely to their company and represent that company in our European market. I just wanted to add a word of support for Mr. Holden relative to the hardwood industry here in Tennessee and U.S.