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NAHB Works to Soften the Blow of New Lumber Pact
Five days after U.S. Trade Representative Susan Schwab and Canadian Trade Minister David Emerson signed a softwood lumber accord establishing a complex system of quotas and new tariffs artificially boosting prices during periods of normal or weak demand for the building material, NAHB formally instituted new policy to help builders once the pact goes into effect.
On Sept. 17, the NAHB Board of Directors approved a resolution during its fall meeting in Salt Lake City that calls on the association to “work with the U.S. government, governments of other countries and industry to promote additional opportunities for NAHB members to obtain access to high-quality, stable and affordable supplies of lumber and other key building materials.”
The resolution also calls on the U.S. Congress and the Bush Administration to eliminate all artificial economic trade barriers that discourage the use of imported or alternative building materials in the marketplace and urges NAHB to investigate how it can help builders access new technologies, innovations in home construction and alternative building materials that will provide consumers with more affordable housing.
“Canadian import duties on lumber raise costs that harm my business and my buyers,” said Buddy Hughes, president of Hughes Construction Co. in Lexington, N.C. and a past president of the North Carolina HBA. “As a result, I’ve been working with the Research Center over the years and have been able to find alternative wall systems and steel floor systems. It’s good to see that NAHB is continuing to address this issue.”
To implement the new policy, NAHB is working to increase imports from Europe. Next month, NAHB Immediate Past President David Wilson and Executive Vice President Jerry Howard will travel to Russia to meet with industry representatives, establish contacts with producers and identify any policy barriers to increasing the volume of imports from their current level. A similar trade mission is planned later this fall to Sweden.
In addition, the NAHB Research Center is promoting the use of steel, cement, engineered wood products and other alternative building materials wherever practical.
The new seven-year lumber pact, which is expected to be ratified by the Canadian parliament shortly and take effect as early as next month, includes a six-month clause enabling the U.S. or Canada to terminate the agreement after it has been in force for 18 months, and would cap Canadian lumber imports at 34% of the U.S. market.
The bilateral agreement would require both countries to end all litigation efforts and would eliminate current duties now totaling about 11% on softwood lumber shipments to the U.S. It also calls for the U.S. to return $4 billion in duties to Canada and retain $1 billion, half of which would go to the domestic lumber firms that originally brought suit against their Canadian competitors.
If the pact were in effect today, Canadian lumber producers would be paying duties of 15% — the maximum stipulated — because current prices are well below the $315 per 1,000 board feet threshold that is part of the complicated system of export taxes and quotas based on market prices.
Under the pact, softwood lumber shipped into the U.S. will be traded freely as long as the price remains above $355 per 1,000 board feet. When prices fall below that threshold, Canadian imports will be subject to a combination of export taxes ranging from 5%-15% and volume limits.
 Attend the NAHB Construction Forecast Conference
Don't miss NAHB's fall Construction Forecast Conference for the latest economic news about the housing industry. Join NAHB on Oct. 25 for the Construction Forecast Conference — Fall 2006 in Washington, D.C.
If you can't attend in person, sign-up for the Webcast.
To register for either, visit www.nahb.org/cfc.
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