TED Case Studies

CHRISTMAS TREE TRADE DISPUTE

Shaken and Stirred: U.S. Exports of Christmas Trees to Mexico Engulfed in Debate, While New Opportunities Abound in Japan

I. Identification

1. The Issue

U.S. sales of Christmas Trees abroad to Mexico and Japan is growing at a feverish pitch. There has been recent controversy, however, over sales to Mexico and the requirement placed on U.S. firms to shake their trees prior to shipment. Furthermore, U.S. growers contend that the cost of shaking equipment is hampering their ability to compete in Mexican market. U.S. Christmas Trees have been known to carry harbor insects, according to Mexican officials, and they are concerned about intorducing new bugs into the habitat. The story with Japan is quite different. In the island nation, U.S. growers have tapped a relatively unexplored market for one of the unique icons of Western tradition. Taken together, Japan and Mexico combined spend millions of U.S. dollars on real Christmas Trees last year. U.S. growers hope sales will increase more in the coming years, but the trouble in Mexico 'has 'em shaking their heads.'

2. Description

While historians place the first Christmas tree in Alsace, in 1521, the custom took centuries to catch on in America.

The modern holiday, with trimmings like trees and gifts and carols, became popularized by the British royalty in the mid-1800s, although the United States didn't really get caught up in the whole business until about 1890, when Dec. 25 became a legal holiday.

Soon after Christmas trees caught on, artificials arrived on the scene. The U.S. Patent office lists patents for no less than 700 fake trees, including the aluminum tree invented in 1959 by two Chicago men, Clarence Reece and Nathan Paul. (The Herald--Glasgow. "Tree Trade Puts on Glitter." December 12, 1998. Page 8.)

"Mexico has emerged as the largest foreign market for U.S. grown Christmas trees. Exports to the United States' NAFTA partner have exploded in recent years." (Journal of Commerce, 11/18/94). Furthermore, out of the total U.S. production of Christmas trees (about 34-35 million), approximately 500,000 to 750,000 were sent to Mexico. (Ibid). (See figure 1).

Many reports have surfaced claiming that Mexican Bureacrats make it difficult for U.S. exporters to sell much wanted Christmas trees to the Mexican people. Mexico, a Catholic nation of 95 million people, does not indigenously produce their own Christmas trees. American growers, nominally beset by a glut of the seasonal evergreens, hoped that the North American Free Trade Agreement would allow access to the Mexican market. This rosey scenario has been tainted, though, in recent years as one U.S. exporter explains. "We would dearly love to see these trees go to Mexico. There's all kinds of demand, lots of people approaching us to buy our trees. But the Mexicans have made it impossible this year." Figure 1. Christmas Tree sales to Mexico have increased since 1977.

US Christmas tree producers criticize Mexico's fairly new rule requiring that christmas trees sent to Mexico must be shook in order to dislodge bugs. Mexico has targeted two types of trees in particular, the Douglas fir and the Scotch pine (both pictured in this report). Many growers, however, contend that the cost of shaking equipment they are now forced to purchase hampers their ability to compete in the Mexican market. Many growers have had to invest in certain machines to shake the furs, costing anywhere betwen $100 to $500 dollars. "Mexico has become the biggest export market. They take a tremendous number of trees, but they also put on restrictions," said Greg Reed, sales manager for Alpine evergreen Co. in Port Orchard, WA. (Journal of Commerce, 11/18/94).

Shaking the trees has led many U.S. Christmas Tree exporters to shake their collective heads in amazement. "It's all political. They [Mexico officials] do things in retaliation for political reasons," one U.S. exporter said. (Ibid.) He and other growers believe that "tree shaking requirement is retaliation for U.S. pest standards on Mexican tomatoes." (Ibid.) Treatment and inspection have made it possible to certify trees from suspect regions as being free of the gypsy moth and other pests and diseases. However, in a major departure from an earlier agreement, Mexican officials reversed their earlier stance by deciding not to honor the phytosanitary certificate issued by plant quarantine inspectors in Canada and the United States. The certificate essentially provides a clean bill of health to a good tree, and the measure is accepted by many countries. Northern growers said they did not learn until this fall that the Mexican government would no longer accept the certificate.

The gypsy moth (pictured below) problem did not prevent Mexican brokers from buying trees grown in pest-free areas of the U.S. Pacific Northwest. But even those growers complained of the further problem of "hassling" and "needless delays" at the hands of low-level Mexican border officials, who decide if the trucks loaded with highly perishable trees pass muster. "These are not trained entomologists," said Arlene Frelk, a Wisconsin grower. "You're completely at the mercy of someone who sees a Christmas tree once a year."

A Christmas tree industry representative in the Pacific Northwest, who asked not to be named in one recent article, complained of time-consuming roadside disputes over paperwork as well as orders to unload the fragile yuletide shipments for what are literally shakedowns of the trees to detect dropping pests, if any. He and other growers made allegations of another kind of problem: "border officials with their hands out," in one account, and "rampant under-the-table payments" in another. "I've never paid anybody. Maybe that's why we have problems. We haven't caught on to what the system is," Frelk said. "I didn't even ship this year. I just backed off. I got burned too bad last year."

As they seek explanations for the impasse, Canadian and U.S. growers said they thought it unlikely that the Mexican government is protecting a domestic Christmas tree industry: There isn't much of one. A spot check in Mexico City by Washington Post correspondent Tod Robberson found most Christmas trees for sale to be from Canada or Oregon -- and fetching Toronto and Washington prices. Mexico's strict policies to combat deforestation have led to a small market in illegally cut home-grown Mexican Christmas trees, but one merchant, Raymundo Gomez Mota, told Robberson that "they try to sell them as if they're Canadian." "It's easy to tell which ones are from Mexico," Gomez Mota added, pointing to a limp and threadbare frond. Dawson, the Canadian plant quarantine official in charge of Christmas trees, said a new round of plant quarantine negotiations will be held in late January to determine what procedure Mexico will accept in 1995 to allow their import. But he acknowledged that the issue might be bigger than, well, Christmas. "If there are political or other reasons behind their not accepting the trees, then all the negotiations in the world will never change things," Dawson said. "Then it becomes political, and plant quarantine is out of it: It's turned over to Foreign Affairs for a trade-barrier type situation."

Recently, Japan has been importing Christmas trees from the United States and other suppliers. Christmas trees cultivated in the Pacific Northwest most often are exported to the island nation. Selling Christmas trees to the Japanese is often a difficult task, because the Japanese mainly prefer the tiny bonsai variety, rather than the usual 8 foot Christmas tree.

Following recent marketing successes of such American 'traditions' and pastimes such as McDonald's and the sport of Golf, U.S. exporters have found that the Japanese have embraced the christmas tree as well. "It's going to be their interpretation of our tradition," says Bruce Prenguber, assistant director of the Western U.S. Agricultural Trade Association, based in Vancouver, WA. A recent shipment of about 700 Noble firs is one of the first intended for sale to Japanese customers, rather than U.S. military personnel. Exporters estimate that most of the trees probably will end up in hotel lobbies and restaurants. (Sylvia Weiland Nogaki. "Xmas Export: Growers Hope Japanese Take to Trees." The Seattle Times, November 19, 1991, Page B1.)

Christmas trees aren't entirely foreign to Japan. A few trendy Japanese buy Japanese-grown Christmas trees, which "tend to be small and scrawny," says Patricia Steinhoff, director of the Center for Japanese Studies at the University of Hawaii. (Ibid.) Usually, they hang a dozen or so ornaments on them. And it's not uncommon in Japan to simply buy the Christmas tree display, ornaments and all, and haul it home, Steinhoff says. Even though few Japanese are Christians, they celebrate Christmas as a non-religious holiday, buying special Christmas cakes at the bakery and holding sometimes rowdy parties on Christmas Eve. In the future, growers who want to sell to Japan may concentrate on growing 2- or 3-foot-tall trees, small enough to sit on a table. "People simply aren't going to buy a 7- or 8-foot tree," Steinhoff says. "There wouldn't be any place to sit." (Ibid.)

3. Related Cases

There are approximately 23 TED cases related to Mexico, and six cases in particular dealing with tree trade: Mexico Mesquite Tree Trade, Mexican Deforestation, (although the new environmental movement against deforestation does not include Christmas Trees), Otomi Mexico Environment in History, and finally, Chiapas Uprising and Trade.

There are also two cases dealing with tree infestation: Mexican Apple Exports, and Mexican Cherry Exports.

The Tomato Case is also relevant, as many U.S. Christmas Tree exporters believe that tree-shaking requirement is retaliation for U.S. pest standards on Mexican tomatoes.

Although the controversy surrounding Christmas Tree trade does not directly involve Japan, there are some important case studies to look at if you are interested: Japanese Cedar Trees, and U.S.-Japan Apple Dispute.

Finally, also see the following relevant cases: Nematode Pine Trade Dispute, Med Fly Fruit and Trade, Avocado Dispute, Chilean Grape Contamination, and finally, Beetle Trade.

4. Draft Author:

Date: SPRING 1999, Christopher Visser

II. Legal Clusters

5. Discourse and Status:

DISagree and In Progress.

The environmental movement against deforestation does not include Christmas trees.

Although no formal law has been invoked, the issue could be taken up under the GATT MFN law which states that trade concessions to one country shall be offered to all countries. This dispute may fall under NAFTA provisions. This formal procedure has not taken place.

6. Forum and Scope:

WTO and Multilateral, or NAFTA and Regional

7. Decision Breadth:

Two: (U.S. - Mexico)

8. Legal Standing:

Treaty.

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: North America.

b. Geographic Site: Western North America.

c. Geographic Impact: Mexico.

10. Sub-National Factors:

No.

11. Type of Habitat:

Temperate.

IV. Trade Clusters

12. Type of Measure:

Import Standard.

13. Direct v. Indirect Impacts:

Direct. U.S. growers and exporters of Christmas Trees are still able to sell their goods on the world market despite Mexico's tree-shaking requirement.

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: Yes, Trees.

b. Indirectly Related to Product: No.

c. Not Related to Product: No.

d. Related to Process: Yes. Infestation.

15. Trade Product Identification:

Christmas Trees.

16. Economic Data

(I am in the process of retrieving current economic data from the Global Trade Information Association and the National Christmas Tree Association.)

17. Impact of Trade Restriction:

Medium.

18. Industry Sector:

Wood.

19. Exporters and Importers:

U.S. and Mexico

Case Exporter: U.S.

Case Importer: Mexico and Japan

Leading Exporters (U.S.$): Approximately $5.9 billion dollars per year to Mexico.

Leading Importers (U.S.$):

V. Environment Clusters

20. Environmental Problem Type:

Infestation and, possibly deforestation.

21. Name, Type, and Diversity of Species

Name:

Type:

Diversity:

22. Resource Impact and Effect:

Meduim and Product.

23. Urgency and Lifetime:

Medium to Low and 1-2 years.

24. Substitutes:

Like products, mainly including artifical or synthetic trees.

VI. Other Factors

25. Culture:

Yes.

26. Trans-Boundary Issues:

No.

27. Rights:

No.

28. Relevant Literature

Davies, John. "Export Boom Lights Up Western Yule Tree Sales." Journal of Commerce. December 17, 1993, Page 1.

DiBenedetto, William. "Mexican Yule Rule Shakes Up US Tree Growers." Journal of Commerce. November 18, 1994. Page 1.

"Forests Need More Care," Daily Yomiuri, (15 May 1995).

The Herald (Glasgow). "Trees Trade Puts on Glitter." December 12, 1998. Page 8.

Jameson, Sam . "The Pacific Rim: Trees, Trade and The Environment." Los Angeles Times. June 21, 1985, Page 3.

Kitabatake, Yoshifusa. "What Can Be Learned from Domestic and International Aspects of Japan's Forest Resource Utilization?" Natural Resources Journal , (Fall, 1992): 855-881.

MacDougall, A. Kent. "Solemn transition; Worldwide Costs Mount as Trees Fall." Los Angeles Times. June 14, 1987, Page 1.

___________________. "Man's Dominant Raw Material; The Vansihing Forests; Need for Wood Forestalled Conservation." Los Angeles Times. June 17, 1987, Page 1.

Nectoux, Francois and Yoichi Kuroda. Timber From The South Seas. (WWF Internaitonal Publication, 1989).

Nogaki, Sylvia Weiland. "Xmas Export: Growers Hope Japanese Take to Trees." The Seattle Times, November 19, 1991, Page B1.

Statistics Bureau, Management and Coordination Agency. Japan Statistical Yearbook. (Tokyo, Japan Statistical Association, 1994).

Trueheart, Charles. "The Christmas Tree That Couldn't Go South; Canadian, U.S. Growers Complain That Despite NAFTA, Mexico Is Raising Barriers." The Washington Post, December 22, 1994, Page A34.

Varley, H. Paul. Japanese Culture. (Honolulu, The University of Hawaii Press, 1984).

---

RETURN TO TOP

EXPLORE FURTHER:

About the TED Projects	TED Cases	Research Projects	Issue Papers	Sort Cases	AU Homepage	Email Author