And what the legislation does is kind of interesting. It really allows States to impose a content requirement. Traditionally, the American view of content requirements has been, well, we're against them because we don't want other people to emulate them. Now, I'll be the first to say that I think there are times when content requirements make sense. We do have some Buy America requirements on certain national defense articles. But that's buying with the taxpayer's money. This is not a case involving the taxpayers.

And, second, it is a State option. That gives me considerable pause because while I might be attracted to some of these principles and problems because they strike a resonant chord with me, the methodology for achieving them strikes me as very dangerous, having 50 different trade policies in this instance.

I think a better solution would be to make the short supply provisions that we have in the trade law generally apply to timber. Now, the problem is that the short supply laws as written are for manufacturers generally, whether it's scrap steel, which falls under their purview once in a while, are different than those that apply to timber.

And that's because timber is managed by the Department of Agriculture. And because of the very unfortunate experience we had with grain exports when President Carter put on a grain embargo to the Soviet Union, the way the short supply provisions have been written with respect to agricultural products, including lumber, make them more difficult to apply.

Nonetheless, I think the right answer is:

Shape those up. Make them work. Don't make a provision unworkable just because one President on one occasion made a mistake that all the farmers are very sorry about.

And that, Mr. Chairman, is kind of my opening statement, leading to a question, which is:

Does anybody disagree with my analysis or my conclusion? [Laughter.]

Mr. R.D. HAYWARD. I would just correct one thing, Senator. We are not faced with a demand problem for our product. The United States for the last several years has had record consumption of wood products and demand overseas for finished products is also increased.

Ours is a supply-based problem rather than a demand.

Senator HEINZ. Then why can't the mills compete with the Japanese for the logs and pass the price on to the consumer?

Mr. R.D. HAYWARD. I think that's probably a question we've asked a long time, and we were very pleased about a year and a half ago when Senator Packwood asked Commerce to look at Japanese trading practices to try to give us a clue as to why, when we're the most efficient producers in the world, they can outbid us by $100 and $200.

I'm not an expert on trade, but I have read through that report and it lists a long list of practices within Japan that discourage the import of finished product and to encourage log, imports all the way from cartels to the way they handling their building codes to all sorts of things.

And it's really excellent background.

Senator HEINZ. Well, one of the answers is they protect their little timber mills.

Mr. R.D. HAYWARD. Absolutely. Absolutely.

Senator HEINZ. I don't know what our Government has been doing about it.

Mr. R.D. HAYWARD. What they're doing-well, they've done this study. I think that's a long-term project-I'm not a trade expert. That's a long-term trade issue, to work toward truly free markets for our products.

Our view as small timber-dependent people is that we can compete on a fair and open market on products with anybody in the world. But this is not, in our view, a situation on these logs, where we have that opportunity.

Senator HEINZ. Yes.

Mr. Chairman, could I continue for one additional minute?
Senator SARBANES. Sure.

Senator HEINZ. When I was in Japan in April, I had occasion to meet the brother of a very old friend of mine, whose Japanese, who bought, actually entered into a joint venture with an American timber mill in Čalifornia in order to prove that it would be possible for Americans to actually market successfully finished timber in Japan.

And there were two parts to it that weren't easy. The first part is what you might expect. There were a lot of trade barriers, there were a lot of problems getting the lumber in-the product in, because this was plywood and other mill products.

The second problem was that it took a lot of work with the mill to make a product that was saleable in Japan. The products that were made from our mills just weren't—and it turned out for good reason-weren't what the Japanese really wanted. And once the mill learned that the Japanese really did have solid reasons in most instances for what they wanted and made it that way, they were quite successful.

So there may be a problem there that we don't recognize.

Senator SARBANES. Mr. Frampton, we're going to turn to you now. But, before I do that, I want to just put a hypothetical question to Mr. Hendricks, before we get away from the Association of Port Authorities. A very hypothetical question, I understand.

From the point of view of the Port Authorities, if you took all of the lumber that was being exported as raw logs and turned that lumber into finished wood product and exported the finished wood product, what would the impact of those two different situations be on the sort of economic activity and receipts of the Port-related activities?

In other words, you're taking a fixed amount of lumber. You export the raw product. Take the same fixed amount of lumber, you move it from raw product into finished wood product, and then you export that finished wood product.

What is the impact of those two situations on the economic activity of the Ports and the people who work at the Ports?

Mr. HENDRICKS. Let me that is a very astute question and I'm sorry I didn't touch on it before in my statement. But, the basic situation is that the activity surrounding movement of logs is not nearly as efficient as the movement of finished products has grown.

One of the best things that's happened to the Pacific Northwest, in fact has been development of a very efficient movement for finished products into the overseas markets.

And that has been to the detriment, quite frankly, of some of the ports, such as mine, and some of the labor groups, such as the Longshoremen, because it does not take anywhere near, and I'm just going to say hypothetical around, it would probably take something in the magnitude of 10 percent of the labor to do the lumber versus what it would do to load logs.

It's considerably different.

The other thing that's happened is that the transportation system, as you know, on the East Coast and the Gulf and the West have developed into hubs, transportation hubs. And the economics surrounding that mean that finished product that are manufac tured today in my community and are being shipped into the export markets that we've just been discussing, and they go every day, they're going to the ports of Seattle and Tacoma where the load centers are.

And there's not much that my port can do economically, short of subsidizing that ship call in some way, to be able to turn that around. So it has a very major effect and it has a dislocation also of where the work is.

Senator SARBANES. Accepting that latter point, and that's a problem between ports, but looking at it from the point of view of American ports generally, does the export of the finished product bring a greater return to the port than the export of the raw product?

Mr. HENDRICKS. No, I don't think it would be significantly different to the port itself. In fact, in our case, the log movements probably provide better revenue to us than the equivalent lumber movement would be to some of the competing ports.

Senator SARBANES. Well, I've always been under the impression that the movement of general cargo is a more lucrative port activity than the movement of, in effect, bulk or raw cargo.

Mr. HENDRICKS. In some commodities, that is true.

Senator SARBANES. Perhaps it doesn't work in the lumber busi


Mr. Frampton, why don't you go ahead.


Mr. FRAMPTON. Thank you, Mr. Chairman. I appreciate the opportunity to appear before you on behalf of the Wilderness Society and its 350,000 members across the country.

One of the highest priorities of the Wilderness Society today is to try to develop strategies that will allow us to save the remaining old growth forests on Federal lands in Oregon and Washington and, at the same time, protect jobs and move to a sustainable second growth timber industry there.

And I want to try to respond to your question of a number of other witnesses about why there is an intimate connection between those goals on the one hand and the subject of this hearing.

Today, the timber industry in Oregon and Washington is producing more board feet of product, raw and manufactured product, than it was 10 years ago. But, jobs are down 15-20 percent.

Now, the timber industry likes to blame spotted owls and environmentalists for those job losses. But there's no credible evidence that environmental constraints have had any impact on jobs in the last decade. The real culprits are technological change and log exports.

Technological change we want to encourage because technological change is bringing us a more productive, more efficient and more competitive timber industry. Indeed, an industry which, if we could deal effectively with the non-tariff barriers that Senator Heinz referred to, Japan and other Pacific Rim countries would make for widely-expanded markets for very efficient industry manufacturing high-value added products.

This is something we want to encourage. And as timber supply falls from both private and Federal lands in the Pacific Northwest, as it inevitably will, technological change is going to continue and jobs are going to be decreased further in the next 30-40 years. This is something we want to encourage.

Log exports, on the other hand, are something we want to do something about. In 1988, we exported about 30 percent of Oregon's wood products to the Pacific Rim, about 25 percent of the total production in Oregon and Washington. And estimates of job losses go to 10,000 jobs or more.

We are today one of the two countries in the world that exports any significant amount of raw log material without any kinds of barriers, tariffs or taxes. And, basically, we are treating ourselves like an under-developed country.

Now, why is that putting pressure on old growth forests?

Let me see if I can explain why the legislation that Senator Packwood has sponsored not only has some important job benefits but some important environmental benefits, as well.

The timber industry in the Pacific Northwest is in the middle of the most important transition in its history. It is going in the next 15 or 20 years to be a very different industry. It is going to be an industry which is smaller, more efficient and which is only cutting second growth logs.

We are here today (left hand being held up), we are a mixed old growth, second growth timber industry. And 20 years from today (right hand being held up), we are going to be here. No more old logs are going to be cut because all the old trees between now and 20 years from now are either going to be cut or they're going to be set aside in some protective scheme of some kind or another. That's inevitable.

So, the choice facing us is how do we get from A to B? Do we get there on a path that liquidates all the remaining unprotected old growth? Or do we get there on a path that protects most of it?

Now, the political and economic reality is that, if we want to get there on a path that protects most of the small remaining irreplaceable old growth forest we have, we're going to have to do that in a way that protects a lot of jobs in the transition period in the next 15 to 20 years.

And log exports are key to that because if we continue to hammer logs overseas, it means that the demand for those remaining old growth logs there's going to be a tremendous fight over in the next decade is going to be much, much higher.

And that's the principle. It's this transition where we're either going to save this old growth or cut it all down-what's remaining, that's not protected in Parks and Wilderness Areas-that's the period that we have to look at and that's the period during which trying to do something about log exports is going to be key to the environmental issues involved.

What can we do?

No. 1, enact this legislation. I think other witnesses have referred to the fact that this is not bad forest policy, the GATT conservation provisions dealing with exhaustible natural resources are there.

More important, these are public resources, public timber. The Government, both the State and Federal Government don't have to allow this timber to be cut at all. If it's cut and sold to private enterprises, it should be cut and sold in a way and with conditions that it's used primarily to produce American jobs and American manufactured value-added products for foreign markets. No. 2, close substitution loopholes.

No. 3, try to deal with the tariff and non-tariff barriers in the Pacific Rim countries that are hindering the export of manufactured products.

And, beyond that, I want to suggest in closing that there is something else that no one here has addressed. And that is the question of what the timber industry is prepared to do to help protect jobs in the Pacific Northwest with respect to exports from private lands.

None of these bills deal with private lands-not yet. But, as a number of witnesses mentioned, there are petitions for emergency Commerce Department action that would restrict timber imports from private lands.

What is the timber industry prepared to do to protect jobs and trees in the Pacific Northwest?

Is the timber industry prepared to have a voluntary export, raw log export quota in the next five years?

Is the timber industry prepared to get together and see what can be done voluntarily, to avoid government action?

The Japanese automobile manufacturers do it. Is the timber industry prepared to do it?

The Wilderness Society is going to propose as part of the overall package that Congresswoman Unsoeld spoke about earlier, that a part of the total program to save old growth for us in the Pacific Northwest are voluntary, significant voluntary export quotas by the timber industry on old growth raw logs that are shipped to Japan and Pacific Rim countries.

Is the industry prepared to do that to protect jobs in the Pacific Northwest?

Thank you, Mr. Chairman.

[The complete prepared statement of George T. Frampton, Jr., follows:]

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