U.S. Shenanigans Threaten to Unravel Canada Timber Pact
In a development that could hold negative repercussions for housing affordability, the U.S. government may be attempting to squeeze even more concessions from Ottawa less than four months after a trade pact governing softwood lumber imports from Canada took effect, according to NAHB.
“In what appears to be a bid to put new pressure on the Canadian government to consider even more onerous concessions that would further harm its lumber industry and hurt American consumers in order to make a handful of major U.S. lumber producers happy, Washington seems to be alleging that Ottawa is trying to subsidize its lumber industry through lower utility rates,” said Jerry Howard, executive vice president and CEO of NAHB.
The two nations concluded a seven-year deal last fall that imposes an export tax of 15% on lumber at current prices, which essentially helps domestic producers at the expense of U.S. consumers by artificially boosting lumber prices during periods of normal or slow demand.
U.S. Trade Representative Susan Schwab on Feb. 15 cast doubt on the viability of the long-term treaty, testifying before the Senate Finance Committee that the “deal with Canada is threatened by provincial governments.” A published report said that Washington is apparently alleging that reduced electricity rates in Ontario is providing an unfair trading advantage for Canadian lumber producers.
“If it is true that the U.S. is willing to go out on a limb to say that lower utility rates in Ontario pose an unfair advantage to Canadian lumber producers, then the Canadian government ought to reasonably conclude that the U.S. is not committed to honoring this agreement and is looking for any excuse to re-open the accord to achieve even more favorable terms for domestic lumber producers,” said Howard.
Such a development would almost surely bode poorly for the Canadian industry and American consumers alike, he noted.
“The current agreement is bad for American home builders and consumers because it will increase volatility in supply and prices," said Howard. “Further attempts at tampering will only exacerbate this situation. If the U.S. is seeking any pretext to charge that Canada is cheating, perhaps it is in the best interests of Ottawa to look at exercising its options to withdraw from this agreement.”
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252.
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NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into the middle of the year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.