TESTIMONY OF

TOM CHAMBERLAIN

PRESIDENT, OREGON AFL-CIO

Before the United States Senate Committee on Energy and Natural Resources

Subcommittee on Public Lands and Forests

Hearing on the Impact of Chinese Hardwood Plywood Trade on the National Forest System and Other Public Lands and the Communities that Depend on Them

May 30, 2007

Medford, Oregon

Mr. Chairman. Thank you for taking the lead on this very important issue to workers in Oregon and for giving me the opportunity to testify. My name is Tom Chamberlain and I have had the honor of serving as the President of the Oregon AFL-CIO since 2005. My organization represents more than 135,000 union members in Oregon, and our members support hundreds of thousands of spouses and children. There are approximately 20,000 union members, both in the AFL-CIO and in other unions, who work in the Oregon forest products industry. The value these 20,000 workers add to the economy is very important in three ways.

First, this industry has a high job multiplier. Depending on the economic analysis you read, it is somewhere between four and six. This means that for every one person employed by the forest products industry, there are somewhere between four and six other Americans employed in support industries – such as logging, transportation, utility and retail – who rely on this industry for their jobs.

Second, these are the good manufacturing jobs that we should be striving to keep in the United States – they are highly skilled manufacturing jobs that pay high hourly wages and often come with full benefits. They keep up the local tax base that maintains necessary services such as police, fire and education. They are not low paying, no benefit “McJobs.”

Finally, these Oregon workers and their families make up the backbone of many rural communities in our state and elsewhere in the United States. It is these well paying, highly skilled jobs that keep many of these communities financially afloat.

As you mentioned in your opening statement, more than 70 percent of the companies in the hardwood plywood industry are headquartered in this state. There is no doubt that the future of this industry is of significant importance to Oregon.

The timing of this hearing is very important, as it comes on the heels of last week’s Strategic Economic Dialogue talks in Washington. While issues such as China’s huge trade surplus with the United States, the Chinese government’s unwillingness to float its currency and the country’s seeming inability to protect American intellectual property have garnered much of the attention, the corrosive effects of practices of the Chinese forest products industry are only beginning to receive much public attention.

But this is quickly changing. Thanks to your efforts along with a few other Members of Congress, the reporting of a few news outlets and the attention of a handful of governmental and nongovernmental organizations, the country and the world are beginning to realize what the hardwood plywood industry and its workers have known for many years – the Chinese do not play by the rules and will do whatever is necessary to establish global dominance.

What makes Chinese actions even more worrisome is that they go to such great lengths to lure well paying, highly skilled manufacturing jobs that were formerly held by unionized workers in Oregon and other parts of the United States to China. What we are seeing is an industry that threatens to destroy large portions of the global ecosystem – be it in Asia, Africa or even South America – in order to keep its mills running at capacity with low cost, largely illegally logged supplies of fiber in the short run. In the long run, as biosystems are destroyed, everyone loses – even the Chinese.

Rather than recapping what the problems are, I would like to spend a few minutes of the Committee’s time talking about some of the consequences of this activity.

Illegal Subsidies – Several studies have documented that the Chinese government has subsidized its forest products industry to the tune of nearly two billion dollars over a five-year period. Chinese mills are quickly becoming some of the most modern and efficient in the world, while American workers are forced to compete in older mills since the industry can no longer fund necessary improvements to keep them competitive. It doesn’t take a MBA from Yale to understand the long term consequences.

Customs Issues – By mislabeling exports to avoid duties, the Chinese make it harder for U.S. firms to compete as this deception makes it easier for U.S. resellers to choose Chinese products based on their unfair price advantage. It is impossible to “Buy American” if you cannot find American made forest products in the stores.

Fraudulent stamping and illegal logging – In recent years, American companies and consumers have become increasingly aware of the importance of sustainably harvested wood products. However, as the Washington Post, Chicago Tribune and Popular Mechanics have reported, the Chinese forest products industry, having seen the negative effect over-harvesting domestically, has been importing illegally harvested logs from Indonesia, Burma, Russia and any number of other countries and accepting obviously false certification papers. These activities also undermine the certification systems that have been set up to protect global ecosystems. According to the OECD, illegal logging results in an annual loss to the global economy of $15 billion a year; the U.S. economy alone takes a $1 billion hit. Imagine what an additional billion dollars could for our industry or for rural school districts and counties in Oregon.

Lack of reciprocal market access – While it remains fashionable for proponents of so-called “free trade” to claim that labor is opposed to trade, that is, of course, false. Organized labor supports trade as long as it is fair and the country we are trading with gives us reciprocal market access. When we lose access to such a quickly growing market, we lose access to one of the ways to grow our industry outside of North America.

So what are the next steps?

We need to adopt the tactics of other groups that have begun to show some success in getting the Chinese government to act on issues such as Darfur. We need to shine a spotlight on Chinese practices and embarrass them into action. We need to garner support on all fronts from multiple allies. Here are some examples.

First, we need to put the U.S. government’s feet to the fire to pressure the Chinese forest products industry to reform its tactics. So far, we have seen some successes – the U.S. government last year filed an unfair subsidies case against the Chinese hardwood plywood industry at the World Trade Organization and earlier this year was finally willing to apply duties on Chinese coated paper imports due to subsidies they receive. But these should not be the last steps – they should be the first. We need to remind the Bush administration that trade laws are only good if they are enforced.

Moreover, steps that you and other Members of Congress have taken are just the first steps. Not only do we need to see the U.S. International Trade Commission complete its current investigation, but we need to see action from the Administration. Not only do we need more hearings on the Chinese forest products industry, but we also need Congress to revise the Lacey Act with the input of industry, labor and the environmental movement in order to help curb illegal logging.

Finally, we need to promote the fact that American wood products are harvested legally. This can happen in two ways. First, the wood products industry can promote their work so that Americans concerned about illegal logging know that the “Made in the USA” label means that the product was harvested legally. Second, Congress can encourage “Made in the USA” as a way to say that we do not condone illegal logging.

These are just the first steps. Much more needs to be done. The Oregon AFL-CIO looks forward to working with you in the future to find solutions to this problem.