- A os Castlégar News ociober 25, 1909 Interi By MALCOLM CURTIS Prince George Citizen PRINCE GEORGE (CP) — B.C. Interior sawmills could more than double sales to Japan in the next five years if Canadians can persuade the Japanese to axe @ softwood import tax, says the executive of a forest trading company “LT would say we could easily ship 750 million board feet if the tariff is removed,” said Kim Marshall, vice president of Balfour Guthrie, Vancouver-based lumber exporter Interior mills export about 300 million board f year to Japan, enough to build about 30,000 houses. To an industry besieged by problems with high provincial royalties and uncertainties about the traditional U.S. market, the land of the rising sun beckons as a potentially lucrative alternative. The figures are enough to make a lumberman salivate Japanese housing starts last year totalled close to 1.7 million units, eclipsing American starts (1.5 million) for the second year ina row Japanese builders put up 41,493 North American style housing units in 1988, a small but rapidly growing segment of the industry But the lack of federal success in negotiations to cut the Japanese tariff on spruce, pine and balsam fir (SPF) could stymie inroads being made by Interior lumber suppliers, including several Prince George sawmills GATT, the world trade body, last summer upheld on-a-technicalily Japan's eight percent levy on SPE lumber from the B.C. Interior : wn to North American grades and called “dimension lumber"’ by the industry, the wood is com monly known as the two-by-four Canadians claimed that Japan discriminates because it accepts other two-by-fours hemlock from the Northwest U.S., without tariffs REJECTS ARGUMENT A General Agreement on Tariffs and Trade panel rejected this argument, accepting the Japanese ‘ex planation that its tax is “species-specific.” **We looked dumb,"’ said Marshall, who said it’s notably time the federal government gave the issue a higher priority. “1 think we should be sending higher — and highest — calibre people on this quest.”” Left intact, the SPF tariff could cost struggling In terior forest companies $350 million in lost sales over the next five years, according to the Council of Forest In dustries. Dana Hayden of the B.C. International Business and Immigration ministry said the province is pressing the federal government to pursue one of several options It could launch another GATT panel review, pur sue the matter bilaterally or lobby for the matter to be resolved as part of the Uruguay round of GATT talks which will set new worldwide trading rules in December 1990. Prime Minister Brian Mulroney signalled the im LUCRATIVE MARKET . 's Interior sawmills could more than double sales to Japan in the next five years if the Japanese dropped an mn tenpert tax on softwood lumber, a Vancouver-based lumber exporter says. portance of the issue to his government by discussing it with Japanese Prime Minister Toshiki Kaifu when he visited Ottawa last month No quick changes are expected What is maddening is that American lumbermen are benefiting, tariff-free, from a market carved out by the Council of Forest Industries in the mid-70s, said John Powles, who heads the council's Tokyo office i don’t think there's any rational reason for it The council waged a successful campaign to change Japan's building_code which prohibited two-by-four construction until 1974 SURVEYS THE MARKET Powles said studies have shown that 80 per cent of Japanese people prefer to live in wood homes, but with prices averaging $500,000 or more in metropolitan areas, they’re largely aimed at high-income groups Traditional housing, which uses four-by-fours known as ‘baby squares,"’ still dominates Japan's singledwelling market B.C."s coastal sawmills supply that sector with clear, knot-free lumber of a higher moisture content than Interior softwood But kiln-dried products from the Interior are fast winning acceptance from Japanese house-building companies like Mitsui, Mitsubishi and Okura Interior firms are eager to become less dependent on the traditional American market which has gone through several boom and bust cycles in the past few recognize a diversity of markets is very desirable," said Ties Rubingh, product development manager for Canfor’s northern B.C. mills Canfor is converting its Fort St. John mill for Japanese lumber production this month.For the-past year, seven per cent of the output of its Fort St. James mill has been devoted to such items as taruki (Japanese rafters) and mabashira (Japanese studs) Dunkley Lumber ships more two-by-fours to Japan than any other firm in the region from its highly computerized mill About 30 per cent of the company’s output is ship: ped there, says Henry Novak, president of the com pany Japanese customers are demanding, he said seeking lumber that is free of the defects that North or sawmills eye Japan American builders are willing to overlook, The lumber that Dunkley shipped. there is specially packaged and sealed with a wax to prevent r It’s also straighter, free of twist and ‘twane,"” the natural curvature of the log ACCEPTS WANE Most builders here are willing to accept some wane in wood ised on the inside of buildings because it doesn’t affect strength “The Japanese are very conscious of appearance," said Novak, who has visited Japan severaliimes. Slocan Forest Products Lid. of Quesnel has spearheaded a move to produce metric-sized lumber for Japanese home-builders The company is spending $1 million retooling its mill to meet orders from Sekisui House Ltd. of Osaka The sariff remains an impediment, but many companies have discovered that courting Japanese customers is an ifvestment that pays off It’s unlikely the eight per cent Japanese tariff on B.C. Interior lumber will be scrapped, said a spokesman from the Japanese embassy in Ouawa “Lpersonally think thatto eliminate it is difficult,” Toschinori Kanno, a counsellor at the embassy, said of the levy It’s more likely the tax will be reduced as part of a formula to reduce international tariffs across the board, Kanno said. Several countries are proposing multi lateral tariff reductions for the Uruguay GATT meeting in December next year > Japan hasn't taken a position on tariff-reductions and the matter is Still a part of negotiations, he said Canadian trade officials argue that spruce-pine-fir should be treated the same as hemlock from the American Northwest since both are used to manufac ture the two-by- four studs used in house construction ttawa recently sent a diplomatic note to the Japanese government formally asking for the tariff’s elimination, said an External Affairs spokesman. It remains a bilateral issue,’’ the spokesman said, adding that the government will pursue whatever means is necessary to eliminate the tax The Japanese say the American wood is a different species with different strength characteristics But Japan's real reasons for the spruce-pine-fir tariff are baffling. The Canadian forest industry feels it’s being side-swiped by a measure that historically was aimedatadifferent country It was originally slapped on lumber trom the Soviet Union to protect Japan's sawmilling industry which im ported logs trom the Soviet Union, said Kim Marshall of the lumber trading firm Balfour Guthrie However, Japan's lumber industry has dwindled to 8,000 from as many as 25,000 small sawmills and log im ports have been cut, Ma Foru Takahashi, forestry and g hall said ricultural attache at the embassy, said the tariff is intended to protect Japan's domestic lumber industry, largely in the spar sely populated northern part ofthe country ates aaa You're Invited to help us Celebrate our 9th Anniversary Sale ”’ and to discover a Whole new horizon in ibopping Thurs., Oct. 26 to Sat., Oct. 28 - (CIELATENKO IMNUECA, 1150 LAKESIDE DRIVE NELSON NNIVERSARY DAYS...DISCOVER A WHOLE NEW HORIZON «'The Meeting Place" October 25, 1989 cl —=—_—_——E__ ADVERTISING FEATURE AUTOMOTIVE Let Toyota Camry fill all your requirements! 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