The American Homeowners Grassroots Alliance (AHGA), which represents the 70 million U.S. homeowners, today called on President George W. Bush's special softwood lumber trade envoy to urge the President to cancel duties imposed by the Department of Commerce that will deepen the recession and prevent hundreds of thousands of American families from buying homes. Those duties amount to a 32 percent federally imposed sales tax on homebuyers and other consumers. The special envoy, former Montana Governor Marc Racicot, was appointed to try to find a solution to a major softwood lumber trade dispute between the U.S. and Canada.
"This tax will raise the cost of an average home $1,000, making homeownership unaffordable to nearly a half million families who are seeking to buy homes. AHGA believes the U.S. Commerce Department has bowed to pressure from a handful of large U.S. lumber producers like International Paper, along with a few forest land owners," said Beth Hahn, President of AHGA.
Governor Racicot, who has become the chief U.S. negotiator on the issue, is expected by many to continue pushing Canada in negotiating sessions this week in Toronto to impose a "temporary" tax on consumers or face continued Commerce Department tariffs affecting U.S. consumers. The administration has been pressuring Canada to make reforms of policies it says amount to subsidies. However, those policies were previously challenged through NAFTA and the WTO procedures and were, each time, found legal.
"Ironically, the U.S. has made the subsidy allegations at a time when our government reports to the WTO that it provides more than $600 million in federal subsidies to its timber producers, and that hundreds of millions more are provided by federal forestry management and through state subsidies and incentives," Hahn added. "These companies are already heavily subsidized by U.S. taxpayers, and should learn to compete rather than seek more taxes that will ultimately be paid by those same consumers.
"AHGA strongly supports President Bush's efforts to lower trade barriers and enact fast track trade negotiating authority," Hahn said. "In every country some business sectors will win and others will lose. However, consumers in every country will benefit from free trade. The solution is not to reward inefficient business sectors with more protection and subsidies, but to offer programs to help displaced workers adjust to temporary unemployment and find new jobs as the President and Congressional leaders have advocated in their economic recovery proposals," Hahn said.
At issue are 19.3 percent countervailing duties and 12.6 percent antidumping duties that have been imposed on all Canadian softwood lumber imports. The duties were imposed based on allegations by a few U.S. producers who claim they have been injured by the imports, which account for about 35 percent of softwood lumber consumption in the U.S. The duties are considered preliminary, but are being collected until a final determination is made sometime in the spring. The countervailing duties expire Dec. 15, but could be re-imposed next spring. Antidumping duties however will continue until a final determination expected in May.
"These duties ignore the fact that the U.S. timber industry is not able to satisfy domestic needs for softwood, and never will," Hahn said. "Over the past several years, the U.S. government has expanded its efforts to protect our own forests, saving these wonderful natural resources for future generations. However protecting U.S. forests also inevitably makes us more dependent on imports. Therefore, American home builders and consumers must have access to affordable and available Canadian lumber to build homes. Auburn University studies showed that Canadian timber growing and harvesting practices are, in most instances, much more friendly to the environment than those of U.S. timber companies."
Hahn said that the ultimate victims of the duties are first time homebuyers and seniors who need affordable housing. Economists have said that, based on U.S. Census Bureau calculations, the duties add more than a $1,000 to the cost of a new home and price nearly a half million U.S. families out of the housing market since that amount prohibits them from qualifying for a mortgage. "We are in a recession and this is a time when we need affordable homes and to not damage the housing sector which remains the only part of our fragile economy that continues to support the GDP," she added.
AHGA is a member of American Consumers for Affordable Homes (ACAH), an alliance of 17 consumer and business groups whose mission is to promote free trade policies that enhance affordable housing. ACAH is opposed to any new trade restraints between the two countries in any form, even as a bridging agreement, export or import tax, that hurt U.S. consumers and the economy.
ACAH represents consumers and companies who account for approximately 95 percent of softwood lumber use in the U.S. ACAH members include American Homeowners Grassroots Alliance, 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 Association.