(Sankei: November 4, 2015 – p. 10)
The Ministry of Agriculture, Forestry and Fishery (MAFF) decided on November 3 to subsidize lumber producers to brace for the removal of tariffs on imported plywood and lumber following the enforcement of the Trans-Pacific Partnership free trade pact. The subsidy program, along with expenses to boost the competitiveness of the domestic forestry industry, will be earmarked in a supplementary budget for fiscal 2015. Japan’s lumber self-sufficiency rate has been on a recovery path. The government aims to promote the use of domestic lumber to maintain the momentum.
The subsidy program is aimed at extending financial support to lumber factories and builders to help them upgrade their equipment and facilities on the condition that they increase the use of domestic lumber and boost output in accordance with the targets set by local authorities.
MAFF also seeks to request funds to improve lumber-related infrastructure, which includes the consolidation of forestland owned by multiple people to make it more efficient to conduct thinning and build strip roads.
According to the TPP agreement, Japan will remove its 2-10% tariffs on plywood and lumber products, which are mainly imported from Malaysia and Canada, in the 11th to 16th year after the enforcement of the trade pact. MAFF predicts that the TPP will have a limited impact on domestic forestry, given that the rates are not as high as those imposed on agricultural products and that the government will be able to exercise safeguards against a surge in imports.
But anxieties are building within the forestry industry that demand for domestic lumber may fall following the removal of the tariffs. It is also becoming increasingly important to boost the competiveness of the industry, as the number of people working in the sector is on the decline. Under such circumstances, MAFF found it necessary to extend financial support through the supplementary budget.
After World War II, the government promoted the planting of forests, which have now grown to the utilization stage. Coupled with this, demand for wood has been on the rise, driven by the construction of wood-fired biomass power plants. Last year, Japan’s lumber self-sufficiency rate recovered to the 30% range for the first time in 26 years. The government seeks to increase the rate to 50% by 2020. (Slightly abridged)