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U.S. Consumer Groups Urge Bush to Reverse Commerce Decision Imposing High Federal Sales Tax on Canadian Softwood Lumber Imports

on 10/31/01.

The Commerce Department's preliminary decision today to impose anti-dumping duties averaging 12.58 percent on Canadian softwood lumber imports into the U. S. is "nothing more than a federally imposed sales tax on lumber essential for the U.S. housing sector," according to the American Consumers for Affordable Homes (ACAH). The 16-member ACAH alliance, which represents approximately 95 percent of the softwood lumber use in the U.S., called on President George W. Bush to intervene and reverse the decision.
"Imposing these new duties is a serious mistake that harms consumers and further threatens our already fragile economy," said ACAH spokesperson Susan Petniunas. "With the 12.58 percent anti-dumping duties added to the 19.3 percent countervailing duties imposed in August, the Bush Administration has said 'no' to affordable homes, and 'yes' to a new 31.88 percent federal tax on lumber that could price as many as a million families out of qualifying for mortgages."
Commerce Secretary Don Evans announced the preliminary decision to assess antidumping duties, claiming that Canadian forest producers were selling softwood lumber to the U.S. market for less than normal value. Margins for the six lumber producers selected by the Commerce Department to participate in the investigation ranged from 5.94 percent to 19.24 percent, resulting in an average rate of 12.58 percent. This average rate of 12.58 percent will be applied to imports of Canadian softwood lumber from all other producers.
Softwood lumber is used primarily for framing in new homes, in manufactured housing and a range of products such as bed frames, wood pallets, windows and doors. Approximately 35 percent of the softwood lumber consumption in the U.S. comes from Canada.
"This action, which is counter to the stated Administration objectives of opening markets and expanding free trade, could reduce U.S. Gross Domestic Product (GDP) by at least 0.05 percent to 0.11 percent at a time when most economists and analysts agree that the U.S. economy is already experiencing negative growth," she added. "Punishing the housing market now, at a time when this sector has played such a key role in keeping the economy afloat throughout the year, makes absolutely no economic sense."
Petniunas pointed out that the duties are expected to add thousands of dollars to the cost of a new home or manufactured housing, and would make it impossible for an estimated million families to qualify for mortgages to buy a new home. "Many of these are first-time homebuyers and seniors moving to more affordable housing," she said.
The Manufactured Housing Institute and Manufacturing Housing Association for Regulatory Reform sent a letter to members of Congress in September pointing out that the countervailing duty alone has increased the cost of a manufactured home by up to $ 2,000. The average cost is $ 43,600. Manufactured housing builders, as do most home builders, rely on softwood lumber from Canada since southern yellow pine does not have the characteristics required for this type of construction, and because U.S. production can not meet their needs.
"U. S. consumers deserve free trade without any new trade restraints," said Petniunas. "We were hopeful that a fair process at Commerce would end up considering consumer interests as more significant than those of a small number of U.S. protectionist companies that want to penalize consumers who ultimately pay the cost. Unfortunately, Commerce has not considered the impact of these trade actions on consumers, or even more importantly, on the U.S. economy."
"We believe that a careful analysis will show that there is no factual basis, other than pure political pressure from a handful of U.S. forestry companies, for Commerce to impose what will amount to a federal tax on all lumber used in homebuilding in the U.S. This penalizes consumers and hurts housing affordability," Petniunas added. "It is time for free trade under NAFTA.
Any duty or limitations, including negotiated deals or so-called bridge agreements, end up as a tax on U.S. consumers."
Consumer groups believe that the duty levels calculated in these preliminary determinations will ultimately be reversed because they are not warranted in this case, and Petniunas called on the Canadian government to stand firm in opposing them.
More than 100 Republican and Democratic members of the U.S. Congress jointly sent a letter to President Bush this summer urging him to assure that the Administration will protect the interests of consumers and workers from potentially onerous duties being requested by U.S. lumber producers seeking to limit the amount of lumber imported from Canada.
Last week, the International Mass Retail Association, appealed to U.S. Trade Ambassador Robert Zoellick to end efforts to negotiate more trade restraints on Canadian softwood lumber, and to consider consumer needs and interests for the best quality products at the lowest cost for homebuilding and remodeling.
Approximately six million U.S. workers are involved in lumber-using businesses, including home builders, remodelers, lumber dealers, and workers in industries such as wood pallet manufacturers, window frame and bed makers These professionals, who produce a broad array of wood products for millions of American consumers, outnumber lumber-producing workers by 25 to 1 in the United States.
The ACAH is an alliance of 16-organizations, representing approximately 95 percent of softwood lumber use in the U.S. ACAH members include Catamount Pellet Fuel Corporation, CHEP USA, Citizens for a Sound Economy, Consumers for World Trade, 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 action.


SOURCE American Consumers for Affordable Homes

CONTACT: Susan Petniunas for ACAH, +1-703/535-5738