Press Release

August 9, 2004

Dear Editor:

In a story that has escaped widespread reporting, a large number of U.S. exporters are currently facing escalating tariffs from the European Union (EU) that threaten to slow the U.S. economic recovery.

On March 1, 2004 the EU imposed retaliatory tariffs on more than 160 U.S.-made wood and paper products.  These tariffs began at 5 percent, and have continued to increase by 1 percent each month, currently standing at 9 percent.  This essentially amounts to a 9 percent tax on these U.S. products being sold in Europe.  An additional 9 percent essentially prices these American products out of the European market.  We are losing market share.  And once lost, that market share is virtually impossible to recover.

Less demand for our products overseas means fewer jobs for our workers at home.  American wood and paper products manufacturers have closed more than 220 wood and paper mills and have laid off more than 120,000 workers in the last 6 years.  A decrease in demand will only exacerbate that trend.

Congress has the opportunity to end these tariffs simply by repealing the Foreign Sales Corporation/Extraterritorial Income (FSC-ETI) tax regime.  In 2001, the World Trade Organization ruled that FSC-ETI was an illegal export subsidy.   The EU was thus allowed to impose their tariffs as long as FSC-ETI remained in U.S. law.  As soon as FSC-ETI is repealed, the EU will eliminate the tariffs.

Both the U.S. House and Senate have overwhelmingly passed bipartisan legislation to repeal FSC-ETI.  Unfortunately, those bills have become mired in Congressional infighting and election year politics wholly unrelated to FSC-ETI.  Congress needs to put the fighting behind them and do what is right, namely repeal FSC-ETI and allow our companies to compete on a level playing field.            

Sincerely,

Cory T. Ridenhour

Executive Director

Missouri Forest Products Association