Twelve U.S. Senate and two House leaders today sent a letter to President George W. Bush and Commerce Secretary Don Evans urging them to overturn duties on Canadian lumber imports imposed by the Commerce Department that are harming consumers, the housing industry and the overall economy at a time when the nation is struggling to avert a recession.
At the end of October, the Commerce Department issued a preliminary ruling imposing average anti-dumping duties of 12.6 percent which, when added to the 19.3 percent countervailing duty Commerce imposed in August, amounts to a 32 percent federal sales tax on American lumber consumers.
Commenting on the countervailing duty alone, the congressmen said, "This could reduce U.S. Gross Domestic Product (GDP) by at least 0.05 percent to 0.11 percent at a time when the U.S. economy contracted 0.4 percent in the third quarter." The Senate and House members declared that tacking on an additional 12.6 percent in anti-dumping duties "will further harm consumers by increasing housing costs even more."
Signing the letter were: Don Nickles (R-Okla.), Charles E. Grassley (R- Iowa), Richard J. Durbin (D- Ill.), Jim Bunning (R- Ken.) Jon L. Kyl (R- Ariz.), Evan Bayh (D- Ind.), Jeff Bingaman (D- N.M.) Chuck Hagel (R- Neb.), James M. Inhofe (R- Okla.) Jack Reed (D- R.I.), Peter G. Fitzgerald (R- Ill.),Richard G. Lugar (R- Ind.).
Also signing the letter were Rep. Jim Kolbe (R-Ariz.) and Rep. Steny Hoyer
(D- Md.), lead sponsors of House Concurrent Resolution 45, which has 90 House Members as co-signers, calling for an end to trade restraints on Canadian softwood lumber.
More than six million American workers involved in lumber-dependent businesses, including home builders, remodelers, lumber dealers and workers in industries such as wood pallet manufacturers, window frame and bed makers, depend on a steady, reliable supply of softwood lumber for their livelihood. 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 U.S.
"Enacting new trade barriers that drive up the cost of housing and all kinds of wood products for millions of consumers and workers in lumber- dependent industries at a time when the economy is struggling to stay afloat makes absolutely no economic sense," said Susan Petniunas, spokesperson for the American Consumers for Affordable Homes (ACAH), a 17-member alliance of consumer and business groups fighting trade restraints on softwood lumber from Canada that harm U.S. consumers.
In their letter to President Bush and Secretary Evans, the members of Congress pointed out that consumers, particularly those that are first-time homebuyers and senior citizens seeking less expensive retirement homes or manufactured housing, will bear the brunt of what amounts to a hidden federal sales tax on essential framing lumber for housing.
"Uncertainty created by the lumber tariffs results in increased price volatility in the market as companies attempt to make provisions to incorporate what amounts to a 32 percent tax imposed by the Commerce Department on the price of lumber," the lawmakers said. "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 five percent of GDP."
The U.S. lawmakers added that the countervailing and anti-dumping duties were inappropriate and should not be implemented since they are "contrary to the Administration's stated position for free trade and the position of more than 100 members of the House of Representatives and Senate that are sponsors of H. Con. Res. 45 and S. Con. Res. 4 that call for no new trade restraints and free lumber trade to benefit U.S. consumers and affordable housing."
The members of Congress concluded their letter by urging President Bush to "consult with Commerce Secretary Evans and reverse this preliminary decision as Commerce continues its review of countervailing and anti-dumping petitions. Consumers must be considered in this issue. Consideration also must be given to the negative impact that the proposed duties are having on our nation's economy, which is so reliant on a strong housing market."
Petniunas applauded the letter and said that consumers deserve to be considered strongly in resolving this issue. "It is important to end trade restraints on Canadian lumber. This would benefit consumers and housing affordability," she said. "It is time for free trade under NAFTA. Any duty or limitations, including negotiated deals or so-called bridge agreements, end up as a tax on U.S. consumers."
Recently the National Hispanic Contractors Association, an organization with 130,000 member firms in the U.S., made a similar appeal to members of Congress, pointing out that: "We also are appealing to our U.S. producers to support their customers and to end these senseless turf battles between our two countries. We should be working together to expand the market for wood, and compete against the growing use of wood substitutes, such as steel."
A similar appeal was made by the Manufactured Housing Institute and Manufacturing Housing Association for Regulatory Reform, pointing out that 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.
Harry Alford, president and CEO of the National Black Chamber of Commerce, last week 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," he said. "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."
The trade restraints are actions taken by the Commerce Department based on petitions from a handful of U.S. producers, led by International Paper, Sierra Pacific, Potlatch and Temple Inland, along with southern landholders, who 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. over a five-year period.
ACAH has been fighting the trade restraints and supporting ending such actions that ultimately only affect and harm U.S. consumers and homebuyers while benefiting only a small number of U.S. lumber producing companies. ACAH represents 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.