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    President Bush Urged to Intervene in Commerce Decision Imposing 19.3 Percent Duties on Canadian Lumber Imports

    10/02/2001
    on 10/2/01.

    Citing its harmful effects on housing consumers, lumber-dependent industries and the overall economy, President George W. Bush was urged today to intervene in a preliminary decision by the Commerce Department to impose countervailing duties of 19.3 percent on softwood lumber imports from Canada.
    According to the alliance of American Consumers for Affordable Homes (ACAH), a 15-member organization that represents over 95 percent of the domestic consumption of lumber in the U.S., in a letter to the President, said that the duties could reduce GDP from 0.05 to 0.11 percent at a time when GDP growth was last reported to be only 0.3 percent. (Letter follows.)
    "The Commerce Department is considering additional anti-dumping duties of up to 39 percent, which could further reduce the GDP," said Susan Petniunas, ACAH spokesperson. "We urge President Bush to assess this situation, and factor in how Commerce's preliminary determination is negatively impacting the housing sector and other lumber-dependent industries that provide jobs for more than 7 million workers and accounts for 5 percent of the nation's GDP."
    Softwood lumber imports from Canada account for some 35 percent of U.S. softwood lumber consumption. It is primarily used in framing for homes, including manufactured housing. The supply of softwood lumber in the U.S. has continued to decline over the past 20 years, and much of the supply has been prevented from logging since it is on public lands.
    A handful of U.S. producers, led by International Paper, Sierra Pacific, Potlatch and Temple Inland, along with southern landholders, petitioned Commerce to impose the duties when the U.S./Canada Softwood Lumber Agreement expired in April. That agreement put quota restrictions on the amount of lumber imported into the U.S. Commerce subsequently issued a preliminary ruling on August 10 that put the 19.3 percent duty in place on Canadian softwood lumber imports.
    "Expiration of the quota agreement was a positive development for home builders, lumber dealers, and consumers of lumber products, and specifically for affordable housing in America," Petniunas said. "However the countervailing duty is nothing more than a 20 percent federal sales tax being imposed on homebuyers.
    This, and any additional anti-dumping duties could add thousands of dollars to the cost of a new home. This would be especially problematic for families seeking to purchase their first home, and for the elderly looking for more affordable housing, and for the elderly looking for more affordable housing. According to U.S. Census Bureau calculations, the additional cost of these duties could price as many as a half million families out of the mortgage market."
    The ACAH letter to President Bush said: "The Commerce Department action is even more troubling when you compare it to your Administration's strong free trade position on many other global issues. Supporting this strong free trade position are over 100 Members of the U.S. House of Representatives and Senate. Representing all political spectrums, these lawmakers are calling for open lumber markets between the U.S. and Canada."
    The U.S. economy would have contracted in the second quarter without the growth in housing investment.
    "With the fragile nature of our economy, and the importance of the housing sector, ACAH is asking the President to confer with Secretary Evans and reverse the Commerce Department's egregious preliminary decision, and to move our two countries to free trade under NAFTA," Petniunas said.
    A similar appeal was made recently by two ACAH member organizations, Manufactured Housing Institute and Manufacturing Housing Association for Regulatory Reform, pointing out that the cost of a manufactured home has increased by as much as $2,000 since the duties were imposed. The average cost of a manufactured home is $43,600. The manufactured housing builders rely on softwood lumber from Canada since southern yellow pine does not have the characteristics required for this type of construction.
    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. More than 7 million workers are associated with the consumers of lumber and outnumber lumber-producing workers by 25 to 1 in the United States.
    ACAH members include 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.

    The following is the text of the letter:

    The Honorable George W. Bush October 1, 2001
    President of the United States
    The White House
    1600 Pennsylvania Ave., NW
    Washington, DC 20500

    Dear President Bush:

    We are writing on behalf of the Alliance of American Consumers for
    Affordable Homes, a 15-member organization that represents over 95% of the
    domestic consumption of lumber in the U.S. Expiration of the U.S./Canada
    Softwood Lumber Agreement was a positive development for home builders,
    lumber dealers, and consumers of lumber products.

    However, on August 10, 2001, the Commerce Department announced that it
    would impose a 19.3% countervailing duty on Canadian softwood lumber
    imports, which account for some 35% of U.S. softwood lumber consumption.
    This could reduce U.S. Gross Domestic Product (GDP) from 0.05% to 0.11% at
    a time when GDP growth is only 0.3%. The Commerce Department is
    considering additional anti-dumping duties of up to 39%, which could
    further reduce the GDP. We urge you to assess this situation, and factor
    in how Commerce's preliminary determination is negatively impacting the
    housing sector, one of the only strong segments of our economy, and one
    which accounts for 5% of the GDP.

    In particular, a 19.3% countervailing duty and an additional anti-dumping
    duty could add thousands of dollars to the cost of a new home. This would
    be especially problematic for families seeking to purchase their first
    home, and for the elderly looking for more affordable housing.

    The Commerce Department action is even more troubling when you compare it
    to your Administration's strong free trade position on many other global
    issues. Supporting this strong free trade position are over 100 Members
    of the House of Representatives and Senate. Representing all political
    spectrums, these lawmakers are calling for open lumber markets between the
    U.S. and Canada through H. Con. Res. 45 and S. Con. Res. 4.

    We urge that you confer with Secretary Evans and reverse the Commerce
    Department's egregious preliminary decision as it continues its review of
    countervailing and anti-dumping petitions. These actions can only have a
    negative impact on our nation's fragile economy, which is so reliant on a
    strong housing sector.

    Sincerely,

    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.

    CC: Commerce Secretary Evans
    Treasury Secretary O'Neill
    Ambassador Zoellick, U.S.T.R.

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