Overvalued Dollar Threatens U.S. Paper Industry

The overvalued dollar is seriously affecting the U.S. forest products industry’s global competitiveness, resulting in loss of domestic market share, dramatically lowered exports, plant closings and job losses, according to W. Henson Moore, president and CEO of the AFPA. He made this address during the annual Paper Week program.

“The dollar is overvalued by 25-30 percent, a 16-year high,” Moore noted. “This is our number one issue, without question. It imposes a de facto tariff of 25-30 percent on U.S. producers selling into foreign markets, and enables foreign suppliers to outsell us in the domestic market.”

Moore cited figures showing that in the 1997-2000 period, U.S. consumption of paper and paperboard products grew by 3.5 million tons, but imports captured more than 90 percent of that growth. Moreover, the U.S. trade deficit in paper and paperboard products ballooned from $273 million in 1997 to $3.8 billion last year.

In the last five years, U.S. paper companies have closed 72 mills and lost more than 32,000 jobs. “Unless exchange rates are fixed pretty soon, and equilibrium is restored, the U.S. paper industry will not have the capacity to challenge our competitors and retake these lost markets.”

Moore called on a variety of steps to help remedy the situation. Some of the steps include the following: a call on the Administration to adopt a public stance that the U.S. will not support an ever-higher value of the dollar beyond a sound level that is consistent with the economy’s underlying competitiveness.

Also, the AFPA asks that the government work with its trading partners at the G-8 meetings in June to address trade and currency imbalances as it did with the Plaza Accord of 1985. The U.S. must also confront countries that manipulate their currencies for commercial gain – Japan being a prime example.