U.S. consumer representatives expressed their "total outrage" over the Bush administration proposal asking Canada to put a 32 percent export tax on all softwood lumber imports to the U.S. The U.S. Census Bureau calculations show that such a tax would mostly impact first time and lower income families seeking affordable housing, making as many as 450,000 of them ineligible for mortgages.
"This is totally outrageous," said Susan Petniunas, spokesperson for a 17-member consumer alliance representing more than 95 percent of U.S. lumber consumption. The alliance, American Consumers for Affordable Homes (ACAH) has been working to get free trade in lumber between the U.S. and Canada, ending decades of taxes and import quotas that penalize consumers and affect housing affordability. More than 100 members of the U.S. Senate and House of Representatives have expressed their bipartisan support of ending trade restraints on Canadian softwood lumber in sense of the congress resolutions and letters to President George W. Bush over the last two years.
Yesterday, U.S. Sen. Jon Kyl (R-AZ) issued a floor statement in which he
said: "I urge the administration to base its decision on existing U.S. and international trade law, and I implore the administration to exclude from any settlement provisions that would impose a de facto, foreign country-imposed sales tax on U.S. homebuyers."
Kyl also said that export taxes or artificially set floor prices for lumber provide settlements that "will cause volatility in lumber markets without adequately considering the disadvantages for U.S. consumers."
A handful of U.S. producers, including International Paper, Sierra Pacific, Potlach, and Temple-Inland filed countervail and antidumping petitions with the U.S. Commerce Department last April. In those cases they sought a protection through duties on all softwood lumber. Preliminary determinations by Commerce last fall set those preliminary duties at 32 percent. Consumer groups have vigorously protested these actions.
"Canada has been cleared of U.S. producer allegations of unfair trade several times in the past," Petniunas said. "Canada has never had a better legal case than it does now, and we urge the Canadian government not to give in to U.S. pressure to avoid litigation of the case before NAFTA and the WTO. "From what we have been told, the U.S. wants to set floor prices and a sliding scale of tax levels on pricing of Canadian softwood imports," Petniunas said. "If two companies got together and agreed to fix prices the U.S. Justice Department would not be very happy. Our consumer groups are not pleased with this proposal, either."
"With Commerce to issue final determination numbers next Thursday, and even if they are to be the same 32 percent, we hope Canada will resist any temptation to settle before they are known, and before a final determination is made by the International Trade Commission in May. We feel that, with all of the holes in the U.S. case against Canada, the ITC will be more objective. We also hope they will consider consumer issues as well."
Petniunas also noted that statements made after meetings this week between President Bush and Canadian Prime Minister Jean Chretien "do not reflect the Administrations stated support of free trade, and specifically penalizes our best trading partner to the north. And, it ignores the need for more affordable housing in the U.S."
The U.S. industry has argued that it is injured by the Canadian lumber. During hearings last fall before the International Trade Commission, representatives of homebuilders and lumber yard dealers from every state in the U.S. testified that "a stick is not a stick," and demonstrated that the predominant wood in the U.S., southern yellow pine, is not substitutable for Canadian softwood lumber in framing homes.
Sen. Kyl, in his floor statement addressed the substitutability claim: "Quite simply, Canadian softwood lumber is needed here. It has different qualities than the lumber produced in the U.S. and is used for different purposes. The southern yellow pine produced in the U.S. cannot replace Canadian spruce-pine-fir, which is used by American home builders for interior walls. These homebuilders use U.S. southern yellow pine for decks and flooring because of its strength and ability to accept hard treatment. But if southern yellow pine were used in interior walls, unlike Canadian spruce-pine-fir, it could twist, warp and shrink causing nails to 'pop.' Obviously, this would result in problems for home builders and consumers."
The housing industry, lumberyards, bed frame and other manufacturers employ more than seven million people. ACAH members include American Grassroots Homeowners Alliance, Catamount Pellet Fuel Corporation, CHEP USA, Citizens for a Sound Economy, Consumers for World Trade, Free Trade Lumber Council, International Mass Retail Association, International Sleep Products Association, Leggett & Platt Inc., Manufactured Housing Association for Regulatory Reform, Manufactured Housing Institute, National Black Chamber of Commerce, National Association of Home Builders, National Lumber and Building Material Dealers Association, National Retail Federation, The Home Depot, and the United States Hispanic Contractors Association.