EU Investigates Hardwood Plywood Imports from China

In a decisive move to protect its timber industry, the European Union (EU) has initiated an investigation into hardwood plywood imports from China, driven by claims of unfair pricing practices. This investigation was catalyzed by a complaint from the Greenwood Consortium, a coalition representing local European plywood producers, forest owners, and suppliers, submitted on August 27, 2024.

Background of the Investigation

The Greenwood Consortium's appeal stems from significant recent increases in the import of hardwood plywood from China, which they argue undermines local producers. They assert that various Chinese manufacturers have been selling these products at prices below production costs— a practice known as dumping—which has resulted in substantial losses for European companies in terms of both sales volumes and pricing power.

Moreover, concerns have arisen over the use of Russian timber by Chinese manufacturers, which is particularly troubling given the European Union's ban on timber imports from Russia initiated after the Ukraine invasion in 2022. Such practices not only threaten local businesses but also pose risks regarding the legality of timber sourcing.

Implications of Price Competition

Countries with robust plywood production, including Poland, Finland, the Baltic States, and France, are feeling the strain from competition posed by Chinese imports. In 2023, the EU imported approximately 750,000 cubic meters of Chinese hardwood plywood valued at €327 million, representing over half of the EU's total wood imports.

In response to these challenges, the EU plans to implement a registration system for all plywood imports from China. This move aims to track and control the flow of plywood and enforce compliance with fair trade practices. If the investigation substantiates the claims of unfair imports, the EU could impose retroactive tariffs, preventing companies from sidestepping regulations by stockpiling products ahead of such measures.

Similar Investigations and Regulatory Actions

This investigation is not unprecedented, as the EU has previously examined imports of birch plywood from Kazakhstan and Turkey, where links to Russian timber were established. A further investigation into multilayer wooden floors imported from China was also initiated in May 2024, highlighting the growing concern over dumping practices affecting local producers. Temporary payments aimed at mitigating the effects of such imports are set to commence in mid-November 2024 and are expected to last for six months.

The Debate on Fair Trade Practices

As the investigation unfolds, it will scrutinize whether the increased imports from China are causing injury to the European industry. The period of analysis for the dumping and injury investigation is set from July 1, 2023, to June 30, 2024. Observations regarding market dynamics and potential distortions will also be factored into the examination.

The Greenwood Consortium underscored the urgency of addressing illegal timber trade and protecting local interests. However, skepticism remains among industry stakeholders regarding the focus on Chinese products, as articulated by the Plywood Trade Interest Alliance (PTIA). They caution against potential overreach and protectionist measures that could disadvantage European manufacturers, potentially fuelling demand for alternative products in a market where local suppliers may not meet demand.

Conclusion

The ongoing investigation into Chinese hardwood plywood imports not only highlights pressing trade considerations but also stirs a broader conversation about market dynamics and fair competition. As the EU seeks to uphold standards and protect its timber producers, the outcomes of this inquiry could reshape the landscape of the European wood market and redefine engagement strategies for timber buyers and suppliers amidst global trade scenarios.