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PPI | Trade Fact of the Week | May 16, 2007
Two-thirds of U.S. Imported Mahogany Comes from Peru


Editor's Notes: The PPI "Trade Fact of the Week" is a weekly email newsletter published by PPI's Trade & Global Markets Project. To sign up for a free subscription, click here. (Just make sure to check the box next to "Trade & Global Markets.")

Original links are included though some may have expired.


The Numbers:

U.S. total goods imports from Peru, 2006: $5.89 billion
U.S. mahogany imports from Peru, 2006: $0.03 billion
... but
U.S. total mahogany imports, 2006: 34,000 cubic meter
U.S. mahogany imports from Peru, 2006: 22,000 cubic meters

What They Mean:

Last week's trade policy accord between House Democrats and the White House, among other praiseworthy things, holds out hope for the survival of the mahogany tree. Native to Central and South America, mahogany is one of the world's highest-priced woods: a cubic meter sells for $1,800 and an entire tree can bring $100,000. (By comparison, a cubic meter of pine goes for about $60.) For three centuries, mahogany's density, color and grain have made it the carpenter's wood of choice in everything from luxury beds and desks to guitar necks and drum walls. Thomas Burling's New York cabinetry firm, for example, used mahogany to build George Washington's first Presidential desk, along with Mount Vernon's dining-hall chairs, and did the same for Thomas Jefferson a few years later.

Without some care, though, a future president might not be able to choose mahogany. The trees mature slowly -- they don't reach their full 120-foot height for more than a century -- and the pace of cutting has already made them "commercially extinct" in Mexico, the Caribbean, and most of Central America. Most of the remaining big stands are in the upper Amazon Basin, across a stretch of forest land spanning Brazil, Bolivia, and Peru. Scientific counts differ, but a rough estimate might be that 10,000 of the oldest and biggest trees are in the Peruvian forests. These seem to be going fast, and the main reason is American buying: the United States' purchase of 22,000 cubic meters of Peruvian mahogany last year, for $32 million, accounted for two-thirds of America's mahogany imports and nearly 40 percent of all world mahogany trade.

A global environmental agreement is supposed to keep the trade at a sustainable level: Since 1995, mahogany exports from all countries have required a permit from the Convention on International Trade in Endangered Species, or CITES. The hope is that these permits will simultaneously limit cutting and provide landowners with a financial incentive to preserve the forests. But environmental groups which study the business find most exported mahogany cut and sold outside CITES guidelines from national parks and tribal reservation lands.

Absent last week's accord, the proposed U.S.-Peru trade agreement would probably have had little impact on the mahogany business. (The United States has no tariff or other limit on mahogany imports.) The House Democrats' innovation is to use the U.S.-Peru trade agreement to make the CITES permitting work. Assuming the agreement passes, by next year imported Peruvian mahogany would be subject to audits to ensure that its harvesting complies with CITES rules, and sellers would have to maintain chain-of-custody papers to make sure the wood came from legal and well-managed concessions rather than national parks, tribal areas, or off-limits forests. Peru will also improve forestry law, for example in concession management and cutting limits, with failures of enforcement subject to dispute settlement.

Further Reading:

The House Democrats -- USTR trade policy accord. See pp 5-6 for mahogany trade, pg. 4 for other trade and environment issues:
http://waysandmeans.house.gov/
news.asp?formmode=release&id=512

The Democratic Leadership Council applauds their work:
http://www.dlc.org/ndol_ci.cfm?kaid=131
&subid=207&contentid=254299

CITES members report on mahogany trade, 2006:
http://www.cites.org/eng/prog/mwg.shtml

The Natural Resource Defense Council, tracking mahogany trade, comments on the reshaped agreement:
http://www.nrdc.org/media/2007/070514.asp

Like many environmentally sensitive products, mahogany accounts for a small fraction of overall trade. By value, mahogany amounted to 0.6 percent of Peru's $5.9 billion in exports to the United States last year. The big money was in metals -- $1.4 billion in gold, $1 billion in copper, $200 million apiece for silver and tin -- along with oil, clothes, and fresh asparagus. This mirrors the overall facts about trade. Total world exports were $14 trillion last year. Especially environmentally sensitive natural resource goods -- $75 billion in fish, mollusks, and crustaceans; $50 billion in wood of various kinds; $10-$15 billion in wildlife and wildlife products -- made up about 1 percent of the total. The FTA page for the Peruvian Foreign Ministry:
http://www.rree.gob.pe/portal/economia2.nsf/
0A8A8AA497527E400525720300708054

And the Mount Vernon historical site discusses George Washington's mahogany chairs. Doesn't say where the wood came from, though:
http://www.mountvernon.org/visit/plan/index.cfm/pid/236/





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