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U.S.-Canada Accord Would Put Lumber on Shaky Ground
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The U.S. and Canada should shun political expediency regarding a lumber accord and reach an agreememt that addresses housing affordability, NAHB believes. | Seeking to meet a political deadline on a managed trade softwood lumber agreement that would create a complicated system of border taxes and quotas, U.S. and Canadian negotiators are rushing into a settlement that will harm American consumers and housing affordability for the next several years, according to NAHB.
“Canada is recklessly pushing to have a deal inked in time for Prime Minister Stephen Harper's visit to the White House on July 6, a move that could have huge long-term ramifications for the lumber market,” said Jerry Howard, executive vice president and CEO of NAHB.
Observing that the proposed framework would last for at least seven years and as many as nine, Howard said that NAHB’s analysis indicates the pact could increase and destabilize prices and lead to bottlenecks as Canadian producers fight for limited market share and to supply shortages as firms delay shipments in anticipation of a change in duties.
Howard said it is imperative for the two governments to shun political expediency and move to reach an accord that addresses housing affordability concerns.
Reps. Jim Kolbe (R-Ariz.), Steny Hoyer (D-Md.) and other members of Congress on June 12 sent a letter to President Bush noting that the current framework would destabilize the marketplace by allowing Canadian provinces to choose between a tax and a quota.
“While we would prefer neither a tax nor a quota, choosing between the two will create further uncertainty in the marketplace,” the letter states. “The agreement also puts in place a ‘surge’ mechanism that stops lumber imports from Canada when they reach a certain level. Both provisions will contribute to volatility in the marketplace, which is an enormous problem for home builders and lumber dealers and will add burdensome costs to affordable housing for those who are least able to pay.”
In addition, as currently drafted, the proposed framework document provides no incentive or means for Canadian softwood lumber companies to exit from the terms of the agreement.
“This will keep prices high and, thus, increase housing costs,” lawmakers told the White House.
Such an outcome would only exacerbate the growing affordability problem that has been recently identified in studies by the Joint Center for Housing Studies of Harvard University and others.
“Affordability pressures are now spreading, with median house prices in a growing number of large metros exceeding median household incomes by a factor of four or more,” the Harvard study says.
“The best solution to resolving this dispute and to achieve free trade is for Canada to press forward with its legal cases before NAFTA and the U.S. Court of International Trade,” said Howard.
Since the Canadians have apparently abandoned this course, Howard said that NAHB is taking several actions to safeguard the interests of its members and their customers.
“First, we continue to urge the U.S. and Canada to address issues that affect lumber consumers as the two governments move to finalize an agreement. Second, if a deal results in new trade barriers that limit Canadian lumber shipments into the U.S., NAHB will help builders obtain a reliable supply of lumber at a reasonable cost by facilitating increased imports from Europe. And finally, NAHB is promoting the use of steel and other alternative building materials wherever practical,” Howard said.
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252.
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