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Trade Commission Urged to Focus on Consumers in Taking Action Related to Duties on Canadian Softwood Lumber

on 12/5/02.

- Senate Finance Committee asks ITC to examine building component
industry competitiveness, effect of tariffs and other border measures
on U.S. home building industry and homebuyers
- Hidden federally imposed 27 percent sales tax through duties imposed
on lumber from Canada places undue burden on new homebuyers, other
users of lumber
WASHINGTON, Dec. 5 /PRNewswire/ -- American Consumers for Affordable Homes (ACAH) today called on the U.S. International Trade Commission (ITC) to focus on how border taxes, quotas, price controls and other trade distorting measures, particularly the 27 percent duties recently imposed on Canadian lumber imports, are hurting consumers.
The ITC today held hearings on the competitiveness of the U.S. structural building components industry, which includes structural beams, arches, trusses and other wood products needed for home construction. In response to a request for this assessment by Senators Max Baucus (D-Mont.) and Charles Grassley (R-Iowa) and the Senate Finance Committee, the ITC has surveyed home builders, lumber dealers and other interested parties on the market for U.S. wood for structural building components and non-wood substitutes, and its impact on U.S. production and housing construction. The Senate request for the study was issued under Section 332 of the Tariff Act of 1930.
In connection with the study, Senators Baucus and Grassley also directed the ITC to examine the effect of tariffs and other border measures on the domestic home building industry and U.S. homebuyers. The most significant of these is the 27 percent countervailing and anti-dumping duties on Canadian lumber imports imposed by the U.S. Commerce Department last spring
"While we believe this study can provide useful information about lumber users, we hope that the ITC also will take into consideration the burden placed on consumers forced to pay the 27 percent duties on Canadian lumber imports," said Susan Petniunas, ACAH spokesperson. "The impacts are not just on lumber users; the current duties amount to a federally imposed sales tax on new home construction, remodeling and other applications for lumber. It is a tax on home buyers and home owners."
Petniunas pointed out that even though current lumber costs have dropped, the duties add to the instability and volatility of the housing market. "Without trade-distorting border taxes or other interferences such as quotas, the cost of lumber would be dictated by the free market, allowing for longer term stability," she added. "Removal of border taxes benefits lumber dealers, home builders and, ultimately, consumers and the economy."
The review is a new and separate action from the countervailing and anti-dumping duty investigation conducted by the Department of Commerce and the ITC earlier this year. Following the investigation, the Senate Finance Committee will receive a report next April on the impact of imports on the domestic users of lumber, including homebuilders, lumber dealers, and manufactures of building components. The investigation also gives the ITC an opportunity to assess the true impact of the 27 percent tariffs on U.S. consumers.
According to Petniunas, these duties are particularly devastating for consumers because the U.S. cannot produce sufficient lumber to meet its needs. Approximately one-third of its lumber for building homes must come from imports, primarily from Canada. "The 27 percent countervailing and anti-dumping duties imposed on finished lumber for framing homes and remodeling, can increase the average cost of a new home by as much as $1,000," she said. "Based on information from the U.S. Census Bureau, that additional $1,000 prevents as many as 300,000 families from qualifying for home mortgages."
The impact on workers in the building trades and lumber-using jobs is another important factor that the ITC should consider in its investigation. Approximately six million U.S. workers are involved in lumber-using businesses, including homebuilders, remodelers, lumber dealers, and such industries as window, pallet and bed makers. "Workers associated with the consumers of lumber outnumber lumber-producing workers by 25 to 1 in the United States," Petniunas said.
More than 100 members of the U.S. House and Senate have signed resolutions or written letters to President Bush over the past year, indicating their support for free trade in lumber, and urging no new taxes or penalties on consumers.
This past summer, the World Trade Organization found that the Department of Commerce action imposing preliminary countervailing duties more than a year ago on Canadian softwood lumber imports was contrary to U.S. obligations under U.S. trade rules and should be overturned.
Similar WTO challenges have been made by Canada on the final countervailing and anti-dumping duties imposed last spring. Challenges to the U.S. tariffs are also pending before dispute panels convened under the North American Free Trade Agreement.
ACAH is an informal alliance opposed to any border measures or quotas on Canadian lumber imports Its members, who represent more than 95 percent of the domestic consumption of lumber, include American Homeowners Grassroots Alliance, Catamount Pellet Fuel Corporation, CHEP International, Citizens for a Sound Economy, Consumers for World Trade, Free Trade Lumber Council, Fremont Forest Group Corporation, 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.