Senator SARBANES. I'd like to be clear on one question. You indicated you were speaking for the Pacific Rim Trade Association. Is that correct?

Mr. DOUGLAS CAFFALL. That is correct.

Senator SARBANES. And yet we have this letter from the Georgia Pacific Corporation, a member of the Pacific Rim Trade Association, taking a position on this legislation diametrically opposed to the one you asserted on behalf of the Association; which obviously leads to the question of:

On what basis are you speaking for the Association? Or for how much of the Association are you speaking?

Mr. DOUGLAS CAFFALL. Well, Mr. Chairman, I have not talked to Georgia Pacific since I've been back here. That is the first time I have heard about that letter. However, I know that they have opposed restrictions in the past, but I think we need to look at the overall picture of both organizations in which we have voted to oppose both of these bills.

Now, I can't really speak for Georgia Pacific. I can just speak for-

Senator SARBANES. The Association took a formal position on these bills?

Mr. DOUGLAS CAFFALL. Yes.

Senator SARBANES. OK. When did they do that?

Mr. DOUGLAS CAFFALL. I'd have to look back in my records, but it's been, oh, a couple of months ago.

Senator SARBANES. OK.

Mr. DOUGLAS CAFFALL. I'd also like, if I may, to point out that Georgia Pacific was named on the short supply petition that was sent back here. And they have asked to be taken off of that position.

Senator SARBANES. Well, of course, an Association can take a position and some of its members may disagree with the position. It still represents the position of the Association. I just wanted to establish that for the record.

But, the Pacific Rim Trade Association has formally taken a position on this legislation in opposition to it; is that correct? Mr. DOUGLAS CAFFALL. That is correct.

Senator SARBANES. Thank you.

Next, I think we will turn to Mr. Hendricks, the Executive Director of the Port of Port Angeles, and a member of the Board of Directors of the American Association of Port Authorities.

And, Mr. Hendricks, we will then follow you with Mr. Frampton, the President of the Wilderness Society.

STATEMENT OF D.G. HENDRICKS, EXECUTIVE DIRECTOR, PORT OF PORT ANGELES, MEMBER, BOARD OF DIRECTORS, AMERICAN ASSOCIATION OF PORT AUTHORITIES

Mr. HENDRICKS. Thank you, Mr. Chairman. I also have a written statement I would like to present to the record.

Senator SARBANES. It will be included in the record.

Mr. HENDRICKS. My name is Jerry Hendricks. I am the Executive Director of the Port of Port Angeles in Port Angeles, WA. I'm also a member of the American Association of Port Authorities and

presently serve as President of Washington Citizens for World Trade.

I'm here to testify against S. 754 and S. 755.

The American Association of Port Authorities had extensive discussions around these bills in a recent meeting in Tampa, Florida. The U.S. Delegation passed a Resolution that's attached to my testimony representing the opposition to those bills.

The principal concern is a diametrically opposed position that these bills would be regarding support of expanded trade policies, where these bills tend to represent just the opposite.

A particular concern I think of the Association membership is the precedents these types of legislation, if passed, would present to the various agricultural interests. Not only forest products, but other agricultural products.

Our membership only remembers too well, issues like soy bean and wheat embargoes that were presented and didn't work all that well. We don't look forward to this type of legislation.

Also of concern to the Association membership is the issue of delegation of trade policies to the State. And in this case, possibly even to State subdivisions.

So the American Association has presented a Resolution that would oppose these bills. Personally, I am from a timber family. My grandfather, my father and I have grown up in the business. My earliest work experience, in fact, was working in my father's small sawmill.

I personally have experienced over my working career the cyclical nature of the timber business. What we see right now is the period of time when both domestic and export markets have been strong and have caused some extreme movements in prices and have caused some difficulties for segments of the industry.

However, I can remember only too well years when exports and export markets were not available to our products and the lows were much lower than we had seen in the past.

In the early eighties, when both the domestic and the export markets were soft, in our community, log exports were just about the only game in town.

Many mill workers were out of work, but there were many loggers, truckers and rock workers that were able to provide for their families.

I guess I'd like to address a couple of misconceptions that I'd heard. First of all, an export log has been characterized as a raw material with no value added services to it.

And I want to tell you that that is just not the case. In our community, a typical value-added log were services of something in the magnitude of $90 per thousand board feet.

If I can believe, and I believe these numbers I've seen are true, a reasonably modern sawmill on an equivalent basis might be providing value added of something about $110 a thousand board feet.

Now I will grant you that that $110 is larger than $90, but we can't discount that 90 is a very substantial-represents a substantial number of jobs, a substantial number of services provided by U.S. workers for that product.

The other issue I guess I'd like to touch on is the issue of price. What we're talking about is price of timber.

I have to believe that bills such as this that are designed to drive the price of timber down will not necessarily help this industry.

The private sectors of our industry need to reinvest and have been reinvesting, but if we expect that to happen in the long-term, the commodity has to have value.

Likewise, many of the environmental goals that we have laid out or would like to lay out for forestry, in the forests of our Western United States, are going to cost money. That means the products have to be valuable to carry that.

And those considerations I wish you would filter in to some of your thinking here.

I guess I would also just like to end with these kind of proposals are, in my view, a very quick fix or an attempt at a quick fix and some problems that deserve much more consideration and a much better proposal.

It's bad policy and a bad idea.

Thank you.

[The complete prepared statement of D.G. Hendricks follows:]

TESTIMONY OF D. G. "JERRY" HENDRICKS,

EXECUTIVE DIRECTOR OF THE PORT OF PORT ANGELES

BEFORE THE

SUBCOMMITTEE ON INTERNATIONAL FINANCE AND MONETARY POLICY

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

U.S. SENATE

NOVEMBER 7, 1989

Mr. Chairman and Members of the Subcommittee:

My name is Jerry Hendricks and I am the Executive Director of the Port of Port Angeles in Washington State, and a member of the Board of Directors of the American Association of Port Authorities (AAPA) representing the North Pacific Region. I am also currently serving as President of the Washington Citizens for World Trade, a forest products and maritime trade group headquartered in Seattle.

I am here to speak in opposition to S. 754 and S. 755 both from a local perspective as representative of these two organizations and from a national perspective as well.

AAPA was founded in 1912 and represents virtually every U.S. public port agency, as well as the major port agencies in Canada, Central and South America and the Caribbean. My testimony today, however, reflects only the views of the United States delegation of AAPA.

Mr. Chairman, the Port of Port Angeles, like many other West Coast ports, depends to a large extent on revenue earned from log exports. Of the twenty ports in California, Oregon, Washington and Alaska that handle export logs, nine are primarily log export ports. Some, like the Port of Port Angeles, depend heavily on logs harvested from state owned lands. Ports like ours have much to lose from further restrictions on these exports.

While the vast majority of U.S. ports do not depend on log exports for a significant percentage of their revenue, they are, as you know, mandated by law to serve public purposes, primarily to facilitate waterborne commerce and to generate local and regional economic growth. I just returned from the annual meeting of the American Association of Port Authorities where we had considerable discussion about these two pieces of legislation.

The AAPA has consistently supported a U.S. trade policy aimed at international trade liberalization on a fair and equitable basis. More specifically, we favor approaches or policies that increase rather than diminish trade flows and that enhance the stability and effectiveness of the international trading system. Given our current trade imbalance, we find it all the more imperative that we look for ways to increase exports while maintaining open markets at home.

The members of AAPA have serious reservations about these two bills, especially S. 755, which would give states the authority to prohibit exports of logs from state owned lands. We believe that such a policy is inconsistent with our nation's long term international trading interests and conflicts with a coordinated and far-sighted U.S. trade policy.

We believe that, first and foremost, the federal government, and not the individual 50 states, should determine which products should or should not be exported. S. 755 would, in our mind, establish a dangerous precedent by turning this responsibility for regulating international commerce over to the state governments--a consequence clearly not intended by our founding fathers. Recent actions in Washington and other states would indicate that this authority might even be delegated to local governments. While S. 755 may be limited to logs today, as those of us involved in international trade wonder which other commodities might follow.