A group representing more than 95 percent of the domestic consumption of lumber in the United States today urged the Senate Finance Committee to "protect the interests of U.S. consumers" by asking the Bush Administration to interpret pending cases involving softwood lumber trade with Canada in a "fair, factual, and unbiased manner."
The Alliance of American Consumers for Affordable Homes (ACAH), an ad hoc group of 17 national organizations, called for free trade of softwood lumber between Canada and the U.S. in a written statement presented to the Senate Finance Committee.
"Any level of trade restraint on lumber harms U.S. consumers and the national economy," explained Susan Petniunas, ACAH spokesperson. "While we applaud the Administration for attempting to reach a long-term durable solution for trade between the two countries, we are greatly concerned by recent actions taken by the Commerce Department."
Petniunas indicated that Commerce announced in August it would impose a 19.3 percent countervailing duty on Canadian softwood lumber imports. Two months later it announced it would tack on an additional 12.6 percent in duties for anti-dumping.
"These claims of subsidy (the basis for the Commerce Department's action) remain unsubstantiated even though U.S. industry had brought numerous cases," pointed out Robert Verdisco, president, International Mass Retail Association, an ACAH member. "The U.S. has never been able to prove in a neutral forum, such as U.S. courts, a NAFTA tri-national panel or at the World Trade Organization that Canada's forest policies constitute a subsidy, as defined by the General Agreement on Tariffs and Trade."
Yet, the Commerce stance is hurting U.S. consumers and the economy, according to ACAH.
"Imports from Canada represent approximately 35 percent of the softwood lumber used by U.S. consumers," Petniunas reported. "These actions create harm for potential American homeowners and the American economy. As the Administration strives to strengthen the economy, it must remember that the housing sector represents one of the strongest and most important segments of our economy."
"Home building and remodeling account for two-thirds of lumber consumption in the U.S.," said Bobby Rayburn, vice president and treasurer, National Association of Home Builders, an ACAH member. "Lumber accounts for a larger share of the cost of a home than any of the other materials used by homebuilders. Each one dollar increase in the price of framing lumber per 1,000 board feet adds about $20 to the price of an average new home."
U.S. consumers and lumber-dependent industries are already experiencing the harmful effects of these trade restrictions, according to ACAH.
"The preliminary decisions on lumber tariffs have resulted in increased price volatility in the market, forcing U.S. purchasers to make provisions to incorporate what amounts to as much as a 32 percent tax imposed by the Commerce Department," said Petniunas.
"It is estimated that the Preliminary Determinations by the Commerce Department could add as much as $1,000 to the price of a new home, thus excluding nearly one-half million U.S. households from mortgage eligibility," Petniunas continued.
Additionally, the Commerce Department actions conflict with other steps by the Bush Administration to promote free trade, according to the ACAH.
"Just last month President Bush, while speaking to the Organization of American States, indicated he would seek a free trade accord with the countries of Central America," Petniunas reported. "To encourage free trade with Central America while instituting protectionist tariffs with Canada -- our best trading partner in this hemisphere -- simply does not make sense."
ACAH today called the Commerce Department's action nothing more than a "tax increase on housing."
"ACAH opposed implementing tariffs and other potentially restrictive border measures because they cause artificial price increases and volatile swings in the lumber market, which hurts housing affordability and U.S. purchasers of lumber," Petniunas said. "These types of actions are simply a tax increase on housing."
"We urge that the Senate Finance Committee protect the interests of U.S. consumers and lumber-dependent industries that employ seven million workers by requesting that the Administration interpret pending trade cases in a fair, factual, and unbiased manner," ACAH wrote in its testimony. "Moreover, it is imperative the Administration exclude any provision that would impose a tax, quota or other government-mandated cost increase on U.S. consumers in negotiations with Canada."