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8 November 2004

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International trade

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USA

New study examines impact of illegal logging

Washington DC, USA - A study released today quantifies the economic impact of illegally produced roundwood in the global market.

WASHINGTON, DC - A study released today quantifies the economic impact of illegally produced roundwood in the global market. The study, conducted by Seneca Creek Associates LLC and Wood Resources International LLC, analyzes the impacts of illegally produced and traded wood products on the ability of U.S. producers to export into key overseas markets and reviews the various institutional and government initiatives that have been proffered to address illegal logging.

"This study, for the first time, sheds new light on the serious negative impact of illegal logging on global markets and those companies who compete in those markets." said W. Henson Moore, President and CEO of the American Forest & Paper Association. "For a long time, we have known about the environmental damage wrought by illegal logging. Now we also know the economic costs. AF&PA and its members believe that responsible industry players must be leaders in the effort to combat illegal logging as the current situation is having an undesired impact on not just the U.S. but the global forest products industry."

Specifically, the study examined the flow of suspicious roundwood into lumber and plywood and found that it depresses world wood prices by seven percent to 16 percent on average, depending on the product. Were there no illegally harvested wood in the global market, the study estimates the value of U.S. wood exports could increase by over $460 million each year.

"$460 million is a lot of business that U.S. companies are losing out on,

" said Moore.

"Further, the elimination of illegal wood in the marketplace would affect the pulp and paper sectors as well. The U.S. government, through the President's Initiative Against Illegal Logging, is taking a serious crack at reducing illegal logging in a number of places worldwide. The U.S. industry applauds those efforts and looks forward to providing whatever additional help we can to help stamp out illegal logging."

The report cites the wide disparity between the cost of operating using legal wood supply as compared with illegally logged timber. If that spread can be reduced, the report concludes, the incentive for illegal logging activity would diminish. The report notes that some proposals to address the illegal logging problem could actually increase the cost for legitimate producers without increasing the cost on illegal sources, thus inadvertently exacerbating the problem.

"The US industry is committed to expanding the practice of sustainable forestry. Ending illegal logging is a critical first step to sustainability and makes good business and environmental sense," said Moore.

For a copy of the summary and complete version of this report, visit www.afandpa.org.

Newsletter

Assessing illegal logging

Chatham House is assessing the scale and effectiveness of the response to illegal logging and the related trade around the world. Full details of this work, including analysis and data, will be available online soon.