A summary report issued (today) by the Cato Institute's Center for Trade Policy Studies calling for the end of the U.S./Canadian Softwood Lumber Agreement adds to a growing chorus of U.S. consumers, businesses and other independent voices who say that the pact has resulted in higher lumber prices and harmed U.S. consumers. Members of the U.S. House of Representatives and Senate are also on record in calling for the termination of the agreement when it is scheduled to expire on March 31, 2001.
The Softwood Lumber Agreement (SLA) places restrictive limits on the amount of softwood lumber, used mostly in home construction, which can be imported from Canada. The Cato report, entitled, "Nailing the Homeowner - The Economic Impact of Trade Protection of the Softwood Lumber Industry," refutes a long list of myths that have been used by some U.S. producers to block imports.
"A significant finding in the Cato report is that the U.S. consumer is the real victim of the SLA, resulting in a 20 to 35 percent hidden surcharge on the cost of lumber in a new home," said Susan Petniunas, spokesperson for the ad-hoc alliance, American Consumers for Affordable Homes. "The report concludes that it is unacceptable to have an agreement like the SLA penalize consumers."
Petniunas applauded the Cato report as "providing a thoughtful third-party and independent analysis of the issues surrounding the SLA."
The report says: "The best policy course is to simply let the SLA expire and not impose any new barriers." Concurrent resolutions in the U.S. House and Senate calling for the agreement to end have been endorsed by a growing list of congressional cosponsors.
The Cato report says that after controlling for the effect of the strength of the economy, overall inflation and changes in timber supplies, "lumber prices are higher by between $50 and $80 per thousand board feet as a consequence of attempts to protect the U.S. softwood lumber industry." Cato's economic analysis says that these higher prices result in the addition of $800 to $1,300 to the cost of a new home.
The Cato report notes that while softwood lumber producers claim that jobs would be in jeopardy without protection from Canadian wood, the number of workers in the lumber-using sectors outnumber logging and sawmill workers by 25 to 1. "The protectionist arguments in favor of the SLA is thus tantamount to saying that the commercial interests of a portion of one small industry outweigh those of many, much larger industries - not to mention the interests of millions of American home buyers."
The Cato Institute was founded in 1977. It is a non-partisan public policy research foundation in Washington, D.C., "dedicated to broadening policy debate consistent with the traditional American principles of individual liberty, limited government, free markets, and peace."
ACAH represents more than 95 percent of the purchasers and users of softwood lumber in the U.S. Its members include: Abitibi-Consolidated, CHEP Equipment and Pooling Systems, Citizens for a Sound Economy, Coalition for Indian Housing and Development (formerly the National American Indian Housing Council), Consumers for World Trade, Free Trade Lumber Council, Home Depot, International Mass Retail Association, the National Association of Home Builders, the National Lumber and Building Material Dealers Association, and the National Retail Federation.
The Cato report is available at http://www.freetrade.org/pubs/pas/tpa-
The ACAH web site provides more information on this issue at http://www.acah.org.