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.