{"id":684,"date":"2011-04-06T17:52:02","date_gmt":"2011-04-07T01:52:02","guid":{"rendered":"http:\/\/www.woodinnovation.org\/?p=684"},"modified":"2011-04-06T17:52:02","modified_gmt":"2011-04-07T01:52:02","slug":"research-update-central-american-free-trade-agreement-and-wood-products-exporting","status":"publish","type":"post","link":"https:\/\/sim.sbio.vt.edu\/?p=684","title":{"rendered":"RESEARCH UPDATE: Central American Free Trade Agreement and Wood Products Exporting"},"content":{"rendered":"
Scott Lyon, M.Sc. Candidate<\/address>\n
Virginia Tech<\/address>\n
swlyon@vt.edu<\/a><\/address>\n

The process of establishing the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) began in 2006 in El Salvador, Guatemala, Honduras and Nicaragua, Dominican Republic in 2007, and in Costa Rica in 2009.\u00a0 This region is the 14th<\/sup> largest export market for U.S. products (USEAC 2011).\u00a0 CAFTA-DR will phase out tariffs between the U.S. and Central American countries within 15-20 years (USDA FAS 2009). \u00a0Some tariffs were immediately duty free after the trade agreement took effect (USDA FAS 2009). \u00a0The trade agreements help to expand market opportunities and allow companies to compete in the global market (USEAC 2011). \u00a0From 2006 to 2008, the export of wood products from the Appalachian region to Central America increased by 51% (Figure 1).\u00a0 Furniture exports to Central American increased by 43% from 2006 to 2007(Figure 1). \u00a0The rise in exports from the Appalachian region to Central America may be a result of the establishment of CAFTA-DR. \u00a0Due to unstable financial markets, tighter credit limits, and increase freight rates global exports of Appalachian wood products and furniture decreased in recent years (Figure 1; VDACS 2008). \u00a0To increase sales the Appalachian region needs to increase product competiveness by expanding export markets and improving product promotion (Wang et al. 2010).<\/p>\n

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Figure 1. Appalachian region exports of wood products and furniture to Central America (US Department of Commerce. Trade Stats Express 2010)<\/figcaption><\/figure>\n

The CAFTA-DR may help increase exports of wood products from the Appalachian region.\u00a0 \u00a0A 1996 study on the North American Free Trade Agreement (NAFTA), Prestemon (1996) found that lumber and plywood were to gain the most from free trade out of all wood products being exported.\u00a0 Hardwood lumber exports were expected to increase from 45-120% as a result of NAFTA (Prestemon 1998).\u00a0 It is important for Appalachian forest products companies to identify Central America as a potential export market.<\/p>\n

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Companies from the Appalachian region new to exporting must have their products categorized by the Harmonized System (HS), which is required by customs authorities.\u00a0 To receive a product duty rate, companies must provide the product number required by the importing country or a \u201cSchedule B number\u201d assigned by the U.S. International Trade Commission.\u00a0\u00a0 This number is required to determine if the product qualifies under the Free Trade Agreement.\u00a0 These numbers can be obtained from the Schedule B Search Engine on the U.S. Census Bureau\u2019s website (USEAC 2011).<\/p>\n

Appalachian forest products companies looking to expand their markets into Central America should contact the U.S. Commercial Service in Central America.\u00a0 This service helps companies conduct successful business in Central America by providing promotion of products and services and protection of U.S. business interests overseas (USCSCA 2011).<\/p>\n

Literature Cited<\/strong><\/p>\n