STATEMENT OF JIM BLOMQUIST, WASHINGTON DIRECTOR, PUBLIC LANDS PROGRAM, SIERRA CLUB

Mr. BLOMQUIST. Mr. Chairman, members of the subcommittee, I'm Jim Blomquist. I'm the Washington director of the Sierra Club. I think you're well aware of the activities that we've been undertaking to preserve and protect the old-growth ancient forests in the Pacific Northwest.

As part of our efforts in doing that, we're supporting measures that will help ease the economic impacts of transition caused by such efforts. Among the measures that we're supporting to help do that would be those that restrict the export of unprocessed logs.

We support a number of bills that are in front of you. Obviously, the current vehicle that most members are talking about for enacting these restrictions into law is the amendment to the Export Administration Act, offered by Mr. Miller of Washington last week, that was adopted by voice vote of the House Foreign Affairs Committee.

We see that amendment as a positive step, though it falls short of its full potential as a means of helping the economic transition in this distressed region and in the distressed industry. I'd like to look back a little bit and talk about how we got to the situation we're into today before I go into a couple of changes which we recommend in this area.

First, we have seen a tremendous change in the forests in the Pacific Northwest really since the period during and right after World War II. We've seen tremendous forest resource now turned into a fragmented patchwork of clear cuts and small stands of native forests. We've seen overcutting of private lands by their owners, we've seen private lands cut and subdivided into small tracts and sold off for homes or recreational lands, we've seen the same private timber companies selling much of their timber to the export market, bypassing the very mills for which the forest industry has demanded a supply.

During these decades, the region has turned evermore increasingly to the national forest lands. Despite the fact that national forest lands were often poor sites for timber growth, the national forest timber cuts have gone up. Local communities have become dependent on their resources for employment. The industry has expanded to a larger than was supportable on a sustained yield basis. We've now reached a step of development where none of the forest lands, neither the private, the public, nor the State, can really withstand the level of demand placed on them. We cannot demand all that we want from this ever smaller and more fragile forest base.

Private landowners cannot cut without effective regulation. Sustained yield must be practiced on their land. They cannot expect to be exempt from export restrictions when the industry and the demand that they helped to build falls short of supply. We cannot see the most productive forest lands sold to the highest bidder and developed for homes and industrial sites.

The national forests cannot sustain the levels of cut they've been asked to without significant damage to their other multiple-use values. The ancient forest and its dependent wildlife is just a small

portion of the multiple-use values, for which our forefathers reserved these lands and that will suffer if we do not ensure protection of wild, undeveloped Federal forest lands.

These Federal lands have become the only haven for old-growth dependent wildlife species because the vast majority of the private lands have already had their ancient forests destroyed. Now the efforts to protect these old-growth dependent species on Federal land provide really a painless solution to the private timber owners who have had the freedom to cut their lands to date without any such

concern.

State lands, as well, must be managed for more than the highest possible economic income. Providing school funding without taxing citizens is a laudable goal, but what good is a school in a community whose economic base is shattered and migration is the only answer to unemployment?

Last week, a study was released of the economic impacts of the Interagency Scientific Committee's northern spotted owl conservation plan. It gives us a good look at some of the facts about the timber industry that's going to really govern the nature of a solution to this issue. The report underscores the fact that the vast majority of the timber and jobs in the Pacific Northwest are dependent on private lands.

These are the lands that are being overcut and sold off, and the timber is being exported. In 1988, the Pacific Northwest timber industry employed some 250,000 persons. Of these 250,000 jobs, only 20 percent, or 50,000 jobs, are dependent on Federal forest lands. In Washington State, 62 percent of the 1988 cut was from private lands, 11 percent from State lands, and 21 percent from Federal lands.

In northern California, during the period from 1980 to 1985, the private lands provided 90.2 percent of the softwood sawtimber cut. In Oregon, for the same period, private lands provided 51 percent. Clearly, the industry as a whole is very dependent on private lands. Overall, for the West side of the three States, Washington, Oregon, and California, for the period of 1980 to 1985, private lands provided 62.4 percent of the softwood sawtimber.

The trend for these private lands is clear. For years, the industry has been cutting its own forests very heavily. Now the cuts from these lands will decline. Weyerhauser has stated that it expects 15percent to 20-percent reduction in cut levels from its lands by the year 2000. In order to avoid layoffs, the industry will try to rely increasingly on Federal lands and will, at the same time, avoid restrictions on its own activities like log export bans or better, more sustainable forest practices.

But we cannot expect to provide security for the industry's workers in the national forests alone, any more than we can balance the Federal budget if we put the military budget and all of the entitlement programs off limits to any cutting.

As we see it, the task ahead is one of stabilizing log supply within the United States, retaining a natural base of national forest lands to insure multiple-use values are preserved, increasing the value-added manufacture of wood products in the region, finding new jobs for those who can no longer be employed in cutting, basic milling, and shipping of wood products outside the region for

manufacture, and, last, providing unemployment benefits and job retraining for the displaced.

The legislation that was incorporated last week into the Export Administration Act falls short of maximizing its potential. We suggest four changes be made to that. First, we suggest that there be a further restriction of exports from State land, that the Miller amendment would still allow for possibly 25 percent of the State timber in Washington State to be exported. We urge Congress to prohibit export from State lands altogether.

Second, is a point that I'd like to emphasize that the three Representatives who testified first talked about, the need to have increased value-added manufacturing to provide a place where we could have some industrial employment growth in the region. We have a vehicle in front of us, we believe, to do that. That is that we believe that the definition of unprocessed timber in the bill in front of your committee, in any of the bills in front of your committee, could be amended to require a higher degree of processing before it's exported.

Currently, the definition allows exporting of relatively large materials for further processing overseas. That may be the only language we could have at this time, because many industries, many companies are based on that type of export. But we could make a requirement, for example, that within 5 years the Secretary of Commerce would produce a new definition, one that would call for a higher degree of processing.

That would allow the mill companies to be able to contact their people to whom they supply, tell them about the new restrictions, and try to land new contracts for more highly processed timber products. We think that that allows an expansion in that area of the industry.

We also believe, third, in restriction of exports of unprocessed timber from private land. Private timber companies cannot expect to benefit from a reliance on Federal timber if they play no part in an effort to supply logs for their lands that are surplus to their own milling capacity.

It's obvious from last week's economic analysis that private lands can have a role in helping the region through the economic transition, but only if exports are restricted and the timber can be used domestically. We urge Congress to prohibit the export of unprocessed timber from private industrial timber lands.

Last, we would suggest that you require that there be new investment in wood products secondary manufacturing by any of the companies who receive special benefits so that they can continue to have direct and indirect substitution for Federal timber. A number of companies sought and received in the legislation these special benefits worth millions of dollars. All we suggest is we add a new requirement to them receiving that benefit and ask them to make investments in some additional secondary wood products manufacturing facilities within the region.

If they're getting a special deal from the Federal Government, and they are, we think that they should help the region out a little bit over the long run.

Thank you very much for this opportunity to testify.

[The prepared statement of Mr. Blomquist appears at the conclusion of the hearing.]

Mr. VOLKMER. Thank you, Mr. Blomquist.

Mr. Kirkmire.

STATEMENT OF NICHOLAS J. KIRKMIRE, EXECUTIVE DIRECTOR, WASHINGTON CITIZENS FOR WORLD TRADE, ALSO ON BEHALF OF PACIFIC RIM TRADE ASSOCIATION

Mr. KIRKMIRE. Mr. Chairman and members of the subcommittee, I am Nicholas Kirkmire, executive director of Washington Citizens for World Trade, a trade association working on behalf of companies and enterprises engaged in international trade of forest products. I'm also testifying on behalf of our sister organization, the Oregon-based Pacific Rim Trade Association, which has a similar membership and interest in this legislation.

I appear before you today for three reasons. First, to emphasize to this subcommittee the impacts on our members resulting from log export restrictions. Second, to underscore our view that we are here today talking about the wrong issue. The Federal timber supply/spotted owl controversy is the root cause of small mill owners' complaints, and restricting log exports will not solve the spotted owl problem. Finally, I will explain how some of the provisions of the legislation before this subcommittee are preferable to the provisions of Senator Packwood's amendment to S. 1594.

The ban on log exports from State lands carries an extremely heavy price tag, particularly in Washington State. It will disrupt jobs, homes, lives, and communities in a successful, competitive, self-reliant sector of the forest industry. In effect, penalizing one sector of an industry in the hopes of helping another sector may only amount to an expensive transfer of jobs.

Moreover, a ban on log exports from Washington State lands will force the citizens of Washington State to shoulder the cost of a greatly increased subsidy to certain sawmills by forcing the sale of logs for domestic processing at less than market prices.

Because of the pending public policy decisions on national forest plans and protection of the northern spotted owl, the amount of subsidized logs available to Federal timber dependent sawmills in Washington and Oregon could be sharply curtailed. What has been often lost in the rhetoric of the so-called timber supply crisis is that log exports are not the reason for the depressing raw material outlook.

A ban on State land log exports will not add one sliver of wood to the log supply from Federal lands. We believe that log exports have been unfairly singled out as a solution to Federal timber cutbacks. We would like to remind this subcommittee that the export market has acted as a safety net for the wood products industry on a number of occasions when the market went soft. Now, this segment of the industry is being asked to bear the brunt of a quick fix for troubled smalf mills.

We have recognized, however, the political reality of efforts to help the small mills, and our organizations did participate in the crafting of the Domestic Timber Processing Allocation Act of 1990, the Miller amendment. Of all the State land log ban proposals now

being considered, we support it as being the most reasoned. We particularly favor the provision enabling the President to rescind State log export restrictions.

Regarding the Miller amendment's treatment of substitution, it is important to understand that any changes in the substitution rules would not add appreciably more timber to regional timber supply. Such changes would alter the competitive position between mills and affect employment and communities in both Washington and Oregon.

Substitution practices have been an important aspect of the purchase, exchange, and utilization of Federal timber. We support changes in this practice, most of which are contained in the Miller amendment to H.R. 4653. We remain strongly opposed, however, to the substitution provisions of Senator Packwood's amendment to S. 1594.

The Packwood amendment would eliminate market efficiencies associated with the current substitution rules and would artificially alter the competitive balance of the industry. The Miller amendment reflects concern for the economic impacts of log export restrictions and represents an attempt to prevent unintended harm. Our support for the Miller amendment is given in the hope that Congress will deal forcefully and fairly with the National Forest timber supply issue. When Members of Congress are asked what they did about the spotted owl, we hope that they can say more than, "why, we voted to ban the export of logs from State lands." Such votes will do precious little to mitigate the affects of the spotted owl problems, but they certainly mean trouble ahead for the timber export dependent sectors of the Northwest economy.

Thank you. I would be happy to answer any questions you may have.

[The prepared statement of Mr. Kirkmire appears at the conclusion of the hearing.]

Mr. JONTZ [acting chairman]. Thank you, Mr. Kirkmire.
Mr. Hayward, please proceed.

STATEMENT OF R. DENNIS HAYWARD, EXECUTIVE VICE
PRESIDENT, NORTH WEST TIMBER ASSOCIATION

Mr. HAYWARD. Thank you. Members of the subcommittee, it's a pleasure to be here. My name is Dennis Hayward, I am executive vice president of North West Timber Association, headquartered in Eugene, Oregon.

I'm pleased to be able to be here today to speak in support of the legislative effort that are underway. I bring a message of support, not only from my organization but from a coalition of public timber dependent firms, which represent an estimated two-thirds of the solid wood manufacturers in Washington and Oregon.

These firms range from very small family owned operations in rural communities to large corporations with multiple, highly integrated plants. Our 22-year-old association illustrates the support for such legislation. My members are small family owned lumber and plywood firms in western Oregon which are almost totally dependent upon public timber for their existence.