Introduction

The European Union is taking significant steps to protect its timber market from a surge of inexpensive plywood imports from China. With a reported increase of 23% in Chinese plywood entering European ports in just the first eight months of 2024, the EU's decision to launch a 14-month anti-dumping investigation signals a greater scrutiny of trade practices within the wood industry.

Background on Investigations

This investigation comes in response to concerns raised by the Greenwood Consortium, which supports hardwood plywood producers from Poland, Finland, France, and the Baltics. The consortium alleges that Chinese manufacturers are selling plywood at prices below production costs, undermining European producers and violating fair trade regulations. The European Commission is specifically targeting plywood products classified under HS codes 4412 31, 4412 33, and 4412 34, which include wooden sheets having a ply thickness of no more than 6 mm.

Key Concerns and Allegations

A significant aspect of the complaint is the allegation that these plywood products may be sourced from Russian timber before being exported to China, which could allow Russia to evade existing EU sanctions. The Greenwood Consortium indicates that these circumstances create a competitive imbalance, as Chinese manufacturers are supported by substantial market distortions including lower costs for raw materials, energy, and labor.

Impact of Chinese Market Practices

China dominates global plywood production, accounting for over 70% of the market, with more than 50% of its plywood being traded in Europe. However, increasing international competition is putting pressure on Chinese manufacturers, prompting responses from countries such as the United States, Turkey, and Morocco through tariffs and sanctions aimed at Chinese products. The current crisis underscores a broader shift in trade dynamics, highlighting vulnerabilities within Chinese plywood exports.

Wider Trade Implications

Experts warn that the EU's anti-dumping investigation could escalate trade tensions with China, which has already been a focal point of contention in various sectors. The recent imposition of a 45% tariff on Chinese electric vehicles, met with retaliatory tariffs from China on European products, indicates a deteriorating trade relationship. Alicia García Herrero from the Bruegel think tank remarks that the era of constructive engagement between the EU and China has likely drawn to a close.

Next Steps in the Investigation

The investigation will focus on whether the proposed trade measures align with the overall interests of the European economy. As the inquiry proceeds, various parties including importers, producers, and trade unions are being called upon to present evidence supporting their claims. The outcome of this investigation holds significant weight for the future of the plywood market in Europe and could potentially reshape trade policies concerning timber imports moving forward.

Conclusion

With such a substantial portion of the European plywood market at stake, the ongoing investigation will be critical in determining how the region navigates the complex relationship with Chinese plywood exports. Wholesale timber buyers and suppliers in Europe and the US should monitor the developments closely, as changes in trade policy could affect the landscape of the timber industry significantly.