388 



the Tongass is exactly that issue, and it is my understanding that 

 one of the two mills that we are talking about is owned by the Jap- 

 anese and all of that product goes to Japan and of the second mill, 

 which is owned by Louisiana Pacific, I understand, about 70 per- 

 cent of the product from that mill goes to the Pacific and a great 

 percentage of that goes to Japan. So, we have coming cut of the 

 Tongass program, a lot of the timber is going directly to the Japa- 

 nese. Is that your understanding as well? 



Governor Cowper. Yes, that is correct. 



Senator Wirth. Now, it is very difficult, I think, for the Ameri- 

 can public to understand why the American public, the American 

 taxpayer, is subsidizing a program for the Japanese at a time in 

 which the United States has an enormous trade deficit. At a time 

 at which the Japanese are doing phenomenally well financially, 

 why is it that the American public is subsidizing a program for the 

 Japanese consumer? 



I am sure that there is someplace a very good answer to this or 

 maybe these are just the tides of history that have moved by us. I 

 was wondering if you all looked at that in the Southeast Confer- 

 ence and discussed that issue — there is no reason that you would — 

 or maybe this is an issue we deal with on the whole context of our 

 trade relationships with the Japanese. 



Governor Cowper. Well, Senator Wirth, I think that most people 

 at least in Alaska view that subsidy, to the extent that we admit it, 

 as a subsidy to the industry in Southeast Alaska and not to the 

 Japanese consumer. They are the buyers of timber; they are indeed 

 the buyers of most of our commercial fish harvest here in Alaska 

 as well. 



We think if the price of the timber were raised, they would look 

 elsewhere. They are looking for a market priceSthat is acceptable 

 to them, as they would for any type of product. I do not see that as 

 a direct subsidy to them, although I certainly understand how you 

 make that connection. There is no question about the fact that 

 they are subsidiaries in mills, and the business interests that they 

 own in connection with the timber industry in Southeast Alaska 

 benefit from the current situation. We think, however, in the bal- 

 ance that it is more important to maintain jobs for Southeast 

 Alaska residents than to worry about whether there is an effective 

 subsidy to the Japanese consumer. 



Senator Wirth. So, technically what that says is that the eco- 

 nomics of these two mills do not work by themselves, that the mar- 

 ketplace that we hear so much about does not allow Alaskan 

 timber to compete, without the subsidy; if the Japanese were 

 paying market prices, they would go elsewhere. Is that correct? 



Governor Cowper. Well, Senator, I would not know, I am not 

 going to stake my mind and reputation on that statement. We 

 know what we hear. We know what we are told by the industry 

 and by others. I think that the result of conversations that we have 

 had, not only from the industry here in Southeast Alaska and from 

 the Japanese, but from other citizens of the state, leads us to make 

 this proposal for a compromise. 



Senator Wirth. I appreciate that, and the reason I raised this 

 issue was not to wave the Texas flag but just to say it is within the 

 context of a deep concern of the American public about our eco- 



