By Jake Handelsman
Senior Director, International Trade
During National Forest Products Week, we underscore the importance of free and fair trade to our industry. With more than $21 billion in exports, the U.S. pulp and paper industry depends on access to foreign markets. These exports account for some 52,000 direct jobs, and many more indirect jobs depend on these exports, often in rural communities. In addition, domestic sales of paper and paper-based packaging materials to domestic customers that export their goods represent indirect exports for our industry.
As a result, the industry supports trade agreements such as the North American Free Trade Agreement (NAFTA) with Canada and Mexico, which represent $9.6 billion in pulp and paper exports, or 45 percent of the industry’s global exports. We also support the enforcement of U.S. and multilateral trade laws and the elimination of foreign unfair trade practices.
On the positive side, on September 30, the U.S. and Canada reached an agreement that allowed Canada to join the U.S.-Mexico trade agreement negotiated earlier. The new agreement, to be called the “United States-Mexico-Canada Agreement” (USMCA), will replace the 24-year-old NAFTA. The USMCA maintains duty-free trade in North America and makes a number of upgrades to the existing NAFTA. It also commits the three countries to combat illegal logging and associated trade. However, the agreement reduces protection for U.S. manufacturing companies investing in Canada and Mexico that the U.S. pulp and paper industry sought to preserve.
President Trump’s corporate tax cuts and deregulatory initiatives have been a boon to U.S. manufacturing industries such as the pulp and paper industry. However, the administration’s push to cut the trade deficit by unilaterally imposing tariffs on imports and seeking to leave or rebalance trade deals can upend decades of effort of opening up foreign markets for U.S. manufacturing and agricultural goods. Raising tariffs increases costs to both consumers and to producers some of whom depend on global supply chains to bring the final product to market. U.S. tariffs also have provoked retaliatory tariffs by foreign governments which reduces exports.
This year has seen the U.S. place import tariffs on steel and aluminum products from major trading partners and on thousands of Chinese products for that country’s violation of U.S. trading rights. In response, China and other countries have placed retaliatory tariffs on close to $300 billion in U.S. goods. U.S. pulp and paper with a combined value of about $3.5 billion have been subject to tariff retaliation by China, Canada and Turkey.
We support the intention behind the policies to ensure that China and others who break the rules or who’ve taken advantage of them are brought to task. However, prolonged trade disputes and retaliatory tariffs on U.S. exports put in jeopardy the gains our industry and its workers stand to reap from sales to the growing customer base outside the U.S. Quick resolution of trade violations can help ensure that U.S. manufacturers claim a piece of global economic growth in the future.