The Bush Administration's actions imposing crushing duties of at least 32 percent on Canadian lumber imports will harm millions of U.S. consumers and lumber-dependent workers, housing affordability and the fragile economy, according to the American Consumers for Affordable Homes (ACAH).
On Oct. 31, the Commerce Department imposed average anti-dumping duties of 12.6 percent on Canadian lumber imports, which, when added to the 19.3 percent countervailing duty imposed by Commerce in August, amounts to a 32 percent federal sales tax on American lumber consumers. Representatives of ACAH, a group of 16 consumer and business groups whose mission is to promote free trade policies that enhance affordable housing, slammed the Commerce action as "unacceptable protectionism that hurts U.S. consumers."
"It is unconscionable that the Bush Administration would allow these protectionist measures at a time when the President said, only last week, that he intended to 'tear down walls' that create barriers to free trade," said Susan Petniunas, spokesperson for the ACAH.
"The U.S. economy shrank 0.4 percent in the third quarter, and would have fallen even further without the housing sector's 1.9 percent net growth. Enacting new trade barriers that will harm housing, at a time when this industry has been propping up the economy, makes absolutely no sense," Petniunas said.
ACAH opposes any trade restraints on Canadian softwood lumber, essential to the U.S. housing market and a wide range of products including bed frames, wooden pallets, and pellets for fuel.
"A 32 percent lumber tariff on Canadian imports could add up to $1,500 to the cost of an average home," said Bobby Rayburn, vice president/secretary of the National Association of Home Builders and a home builder from Jackson, Miss. "While $1,500 is not a huge percentage of a cost of a home, it is still big money to most Americans. Consider the facts: A full 14 percent of American families today -- 13.7 million households -- have 'critical housing needs,' meaning that they spend more than half of their income on housing or live in seriously substandard conditions. The homeownership rate for African Americans, Hispanics and young households -- among the fastest growing demographic sectors
-- stand at least 20 points below the national average of 68 percent. And higher lumber prices just don't hurt home buyers, they raise the costs for renters and home owners seeking to remodel their homes."
Harry Alford, president and CEO of the National Black Chamber of Commerce, called upon the Bush Administration to "reverse these preliminary decisions before greater damage occurs to the economy and consumers. NBCC is leading an effort to build a million new affordable homes to assist low to moderate income families throughout the U.S. These efforts would be significantly harmed if these trade restraints remain in place, or a new deal is negotiated to limit lumber supply. These actions pose a grave threat to those families' dreams of home ownership."
Alford noted that the duties would add a billion dollars to the cost of the million homes, or significantly reduce the number of homes that could be built in the next five years. Numerous studies show the importance of home ownership to families and their communities. Communities with low ownership are inherently less prosperous, less stable, and suffer disproportionate share of social ills, including higher crime rates, illiteracy, and unemployment. Affordable housing is essential for America."
"For more than a decade, the Coalition for Fair Lumber Imports, a lobby group representing a handful of U.S. lumber producers, has spent millions of dollars to appease their stockholders by blocking competition with Canada, at the expense of market stability, consumers, and affordable housing," said Gary Donnelly, president of the National Lumber and Building Material Dealers Association, which represents more than 8,000 independent lumber dealers in the U.S. "That coalition is unwilling to admit that the U.S. producers have a technology lag in their mills and a forest policy that has dramatically shut off access to federal and state forests. Putting a federal tax on the back of consumers and homebuyers will not modernize their member's mills or open up the forests. This is the time we need to encourage homebuilding and remodeling, not hinder it."
The Home Depot, which has stores throughout the U.S. and Canada, echoed the concerns. "We want to provide the lowest prices for our customers," said Stephen P. Conwell, global product merchant, lumber. "This can only be accomplished through free and open lumber trade between the U.S. and Canada." The Home Depot is a member of the International Mass Retail Association that made an appeal last week to U.S. Trade Ambassador Robert Zoelleck to refrain from negotiating new restrictions on Canadian Softwood Lumber. IMRA President Robert J. Verdisco told the ambassador that "the imposition of any kind of taxes, whether they are as a result of U.S. trade remedy laws or a negotiated settlement could wreak havoc on the nation's housing sector.
Approximately 35 percent of the softwood lumber consumption in the U.S. comes from Canada.
Petniunas pointed out that the duties will not only harm housing affordability by raising the cost of new site built or manufactured housing, but they could also effectively prevent an additional hundreds of thousands of American households from being able to qualify for a home mortgage. "Many of these are first-time homebuyers and seniors moving to more affordable housing."
Consumers for World Trade (CWT) Executive Director Robin Lanier said: "While we have deep concerns about the U.S. trade remedy process, at least Canadian producers have an option of pursuing an international review through the North American Free Trade Agreement and the World Trade Organization. Canada should resist any negotiated deal and pursue these remedies if the U.S. persists in trying to impose punitive new taxes on consumers."
Late this summer, a bipartisan group of House and Senate members sent a letter to President Bush, along with House and Senate resolutions signed by more than 100 congressional members, urging the President 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.
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.
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 Association.