Congressional Resolutions Urge Bush: End 27 Percent Federal Tax On Canadian Lumber Imports Essential for Homes, Other Uses

Congressmen Jim Kolbe (R-AZ) and Steny

H. Hoyer (D-MD) have introduced an updated concurrent resolution calling on

President George W. Bush to pursue discussions with the Canadian Government to

“promote open trade between the United States and Canada on softwood lumber,

free of trade restraints that harm consumers.”

The resolution aims to:

ensure a competitive North American market for softwood lumber;

ensure free trade regarding softwood lumber between the U.S. and Canada;

ensure all stakeholders are included in trade discussions of softwood

lumber, a reference that specifically includes consumers who ultimately

pay the increased costs of protectionist tariffs;

and calls for a fair and expeditious review by independent World Trade

Organization (WTO) and North American Free Trade Agreement (NAFTA)

panels.

It also urges the U.S. government to abide by the decisions of these

international trade agreements to which the U.S. has subscribed. A similar

resolution has been introduced in the Senate.

The WTO found this summer that the Department of Commerce action imposing

countervailing duties a year ago on Canadian softwood lumber imports should be

overturned, and is in violation of international trade rules. The U.S. has

also recently suffered a major set-back in the WTO when it ruled that the Byrd

Amendment that allows the U.S Government to pay duties it collects to

“injured” U.S. companies in a countervail dispute is also a violation of

international trade rules.

Similar WTO challenges have been made by Canada on the antidumping duties

and other aspects of the long-standing trade dispute between Canada and the

U.S.

The House resolution, H. Con. Res. 454, similar to one introduced in the

Senate (S. Con. Res. 135) in August and supported by 12 members of the Senate,

asks the Bush Administration not to intervene to impede the current challenges

by Canada in the WTO and North American Free Trade Agreement (NAFTA) to

determine whether the U.S. countervailing and antidumping duties are legal

under international trade rules. The resolutions ask that the process move

expeditiously so that this issue can be resolved under international trade

rules.

“Softwood lumber is essential for building quality, affordable homes in

the United States,” said Cong. Hoyer. “Its price and availability have a

major impact on the U.S. economy, workers and consumers. The U.S. home

building industry employs approximately 6.5 million people.” Hoyer noted that

this compares to more than 25 jobs in the consumption of lumber for each job

in U.S. forestry production.

In May, the U.S. Commerce Department imposed massive countervailing and

antidumping duties, equal to 27 percent of the product’s volume, on softwood

lumber. That decision was based solely on the hypothetical “threat of injury”

with no proof of real injury to the U.S. forestry industry by Canadian

imports.

The duties are harming U.S. consumers, according to ACAH spokesperson

Susan Petniunas. “The final 27 percent countervail and antidumping duties

imposed last May on finished lumber for framing homes and remodeling, may

increase the average cost of a new home by as much as $1,000,” she said.

Based on information from the U.S. Census Bureau, that additional $1,000

prevents as many as 300,000 families from qualifying for home mortgages.”

Cong. Kolbe said that the duties “are penalizing home buyers and other

U.S. lumber consumers. It is wrong to penalize consumers when there is no

significant proof that there has been any damage to the U.S. industry by the

Canadian imports. This dispute has been going on for more than 20 years. The

U.S. consumer suffers, while the U.S. government and industry have never been

able to prove that the imports harm our domestic industry.”

The duties are opposed by a broad-based alliance of consumer groups, trade

organizations, and companies that represent more than 95 percent of U.S.

softwood lumber consumption, American Consumers for Affordable Homes (ACAH).

“The duties amount to a federally imposed 27 percent sales tax on

first-time homebuyers and on seniors seeking to reduce home costs in

retirement,” said Petniunas. “Consumers’ interests should be a major factor

considered by the Administration, and we appreciate the members of the House

and Senate urging President Bush to do so,” Petniunas said. “These duties

hurt our ability to provide affordable housing, and jobs within lumber

consuming industries.”

Because there are not enough trees available to produce framing lumber for

home building in the U.S., Canadian lumber imports are absolutely vital for

the construction of affordable new homes, and to make improvements on existing

homes in America. The U.S. relies on Canada and other sources for

approximately 37 percent of the lumber it needs.

Led by International Paper, Potlatch, Plum Creek, Sierra Pacific, Temple

Inland and a group of southern landowners, the Coalition for Fair Lumber

Imports filed petitions with the U.S. Commerce Department more than a year ago

alleging that domestic lumber producers had been harmed by Canadian softwood

lumber imports and asking for countervailing and antidumping duties.

“Since 1981, some of the large U.S. producers and landowners have

periodically charged Canada with subsidizing its lumber industry, and they

have consistently lost when Canada has appealed preliminary decisions,”

Petniunas said. “The summer WTO ruling, that there is no illegal subsidy of

lumber by Canada, continues to show that the U.S. actions are not based on the

facts. We believe the Commerce Department will continue to get failing grades

from on-going WTO and NAFTA reviews of their actions over the past year. The

madness should end, and the administration should sue for free trade in lumber

with Canada.”

Similar resolutions were introduced in the U.S. House and Senate last year

and also in the last session of Congress urging free trade on Canadian lumber.

H. Con. Res. 45 and S. Con. Res. 4 garnered more than 110 sponsors earlier in

the session. Members of the U.S. House and Senate also have written letters

to President Bush over the past three years opposing any trade restrictions on

Canadian lumber and indicating their support for free trade in lumber between

the U.S. and Canada.

“It’s time for our trade policy to reflect fairness to all of the

stakeholders, including consumers, specifically in discussions about trade in

lumber,” said Sen. Don Nickles (R-OK), lead sponsor of the Senate resolution.

American Consumers for Affordable Homes (ACAH) represents more than

95 percent of U.S. softwood consumption. Industries that depend on lumber as

an input and that oppose import restrictions include: manufacturers of

value-added wood products, lumber dealers, manufactured and on-site home

builders, and remodeling contractors. These industries employ more than

6.5 million workers, 25 to one when compared with those in the forestry

industry.

ACAH members include: American Homeowners Grassroots Alliance, Catamount

Pellet Fuel Corporation, CHEP International, Citizens for a Sound Economy,

Consumers for World Trade, Fremont Forest Group Corporation, Free Trade Lumber

Council, The Home Depot, International Mass Retail Association, International

Sleep Products Association, Leggett & Platt Inc., Manufactured Housing

Association for Regulatory Reform, Manufactured Housing Institute, National

Association of Home Builders, National Black Chamber of Commerce, National

Lumber and Building Material Dealers Association, National Retail Federation,

and the United States Hispanic Contractors Association.