EclectEcon

Who would think that the production of chopsticks would cause resource depletion? Apparently the Chinese gubmnt is sufficiently concerned about the possibility that they are slapping a 5% tax on the export of chopsticks. From the Trono Globe and Mail [thanks to Lori and Lisa for the pointer]:

Walk into any Japanese noodle shop or restaurant and chances are you'll be eating with a pair of disposable wooden chopsticks from China. But not for long.

In a move that has cheered environmentalists but worried restaurant owners, China has slapped a 5-per-cent tax on the chopsticks over concerns of deforestation.

The move is hitting hard at the Japanese, who go through a tremendous 25 billion sets of wooden chopsticks a year: about 200 pairs per person. Some 97 per cent of them come from China.

Chinese chopstick exporters have responded to the tax increase and a rise in other costs by slapping a 30-per-cent hike on chopstick prices, with a planned additional 20-per-cent increase pending.

The price hike has sent Japanese restaurants scrambling to find alternative sources for chopsticks, called waribashi in Japanese.

"We're not in an emergency situation yet, but there has been some impact," said Ichiro Fukuoka, director of the Japan Chopsticks Import Association.

A pair of waribashi that used to cost a little over ¥1, or about 1 cent, now goes for ¥1.5 to ¥1.7. The rising costs of raw wood and transportation because of higher oil prices have also contributed to the rise, industry officials said.

But pretty soon, some fear Japan won't even be able to get expensive chopsticks from China: Japanese newspapers Mainichi and Nihon Keizai reported that China is expected to stop waribashi exports to Japan as early as 2008.

To minimize the impact, Japanese importers now buy more bamboo chopsticks and are considering new suppliers, including Vietnam, Indonesia and Russia, said Mr. Fukuoka.

Supporters of environmental causes see the new Chinese tax as a chance to get rid of disposable chopsticks, which have been linked to deforestation and a wasteful lifestyle.

Let's get this straight. Is there a market failure that has led to the over-exploitation of forests to produce chopsticks in China? It is more likely that the only failure here is gubmtn failure, not market failure.

If forests were privately owned, the owners, anticipating future shortages, would start raising prices and reforesting the lands. But if the forests in China are state-owned, exploitation decisions are more likely to be made by civil servants who have less of a stake in maintaining the forests than would dirty rotten running-dog capitalists. So to counter the bureaucratic incentive to produce more chopsticks for export, the gubmnt has now decided to intervene some more and tax the export of the chopsticks.

And, in Japan, customers who have benefited for years from China's policy of subsidizing and "dumping" chopsticks on the world market must now face up to the reality of having to pay world prices for their chopsticks.

True story (related digression): back in the 1950s, I was in a Chinese restaurant in Los Angeles and thought it ironic that the chopsticks there had were stamped "Made in Japan". How times have changed since the opening of trade with China and with the changes in economic conditions in the two countries.