|
Canada Causing Builders to Find New Sources of Lumber
 In a move that could have significant repercussions for the nation’s home builders and American consumers, the Canadian government has indicated that it plans to enter into negotiations with the U.S. that will likely result in new quotas or other border barriers on Canadian softwood lumber shipments.
In response, NAHB plans to help builders seek lumber sources from other countries and to assist builders who want to engage in the use of alternative building materials wherever practical.
This issue is critical because there are not enough trees available in the U.S. to produce the lumber needed for home building. Canadian lumber imports currently constitute about one-third of domestic consumption and are absolutely vital for the construction of affordable new homes and residential remodeling. Imports from other countries accounted for about 5% of the domestic supply in 2005.
Ironically, this renewed push for a negotiated settlement to the cross-border dispute comes on the heels of yet another unanimous ruling by a North American Free Trade Agreement (NAFTA) panel that Canada does not subsidize its industry.
NAFTA panels have repeatedly and unanimously ruled that U.S. lumber producers are not threatened with injury from Canadian softwood lumber shipments. The verdicts call on the U.S. to rescind costly tariffs that harm housing affordability and to refund to Canada the more than $5 billion in duties that have been collected.
Canada Urged to Hang Tough
With U.S. consumers and Canadian lumber producers poised to achieve a decisive legal victory, NAHB has been calling on the Canadian government to hold firm in pursuing its legal challenges and to avoid the political temptation to enter into talks merely to improve strained relationships with its largest trade partner.
“The best way to overturn the duties, achieve free and unfettered access to U.S. markets, and receive a complete refund of the billions of dollars that Canadian firms have paid to date is for Ottawa to continue to pursue its legal cases to their conclusion,” said NAHB Executive Vice President and CEO Jerry Howard.
With Canada apparently electing to abandon this route, Howard said that NAHB is prepared to act accordingly to defend the interests of the nation’s home builders and American lumber consumers.
“From a policy perspective, NAHB will work with the U.S. government to increase the supply of German and Swedish lumber, and we will consider options to import Russian softwood from Siberian forests,” he said. "In addition, we will encourage builders to explore using steel and other building materials and construction techniques.”
Currently, there is an 8.7% countervailing duty on Canadian lumber imports and anti-dumping duties averaging about 2.1%.
The U.S. government imposed countervailing and anti-dumping duties totaling 27% on softwood lumber in May of 2002, charging that Canadian imports represented a “threat” to domestic lumber producers. The percentage was subsequently reduced on two separate occasions but remains above 10%.
U.S. law permits countervailing duties to be imposed only if a foreign supplier is benefiting from subsidies and U.S. producers are being injured or threatened with injury as a result.
Bad Arithmetic
Several NAFTA panel decisions have unanimously determined that the Commerce Department was using flawed calculations to reach the conclusion that Canadian lumber is subsidized. And on Aug. 10, a NAFTA Extraordinary Challenge Committee upheld an earlier NAFTA ruling that found no threat of injury from Canadian imports, a decision that paves the way for the U.S. to refund the billions of dollars of duties that Canada has paid to date.
Although a NAFTA ruling carries the weight of law in Canada, the U.S. and Mexico, the Administration has failed to implement decisions that invalidate the lumber duties and return all duties paid out by Canadian firms.
Nevertheless, the U.S. is expected to exhaust all its legal challenges within the next several months, at which time it will have no alternative other than to roll back the tariffs and refund the billions of dollars in tariffs now held in escrow by the U.S. Customs Service.
NAHB continues to work with its congressional allies to urge the Administration to adhere to its international obligations under NAFTA. Unfortunately, NAHB’s argument on Capitol Hill for free trade in softwood lumber is being severely undermined by the willingness of Canada to return to the negotiating table at this time.
“By embracing the idea of new talks, Ottawa is sending a conflicting message to Capitol Hill — namely that it is somehow guilty of unfair trade despite the unanimous finding of the NAFTA panels that this is not so,” said Howard.
“We stand steadfast in support of Canada’s legal campaign,” he added, “but resolutely oppose any proposed settlement that would restrict lumber shipments into the American market.”
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252.
 Where Are the Top 100 Metropolitan Areas for 2006?
“HousingEconomics Online,” the online publication from the NAHB Economics Group, is your single source for market analysis, forecasts, housing statistics and more. In-depth analysis, detailed Excel tables and overviews are available for all metro forecasts.
To learn more or subscribe to “HousingEconomics Online,” visit www.housingeconomics.com.
 Attend the Spring Construction Forecast Conference in April
Plan to attend NAHB's Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry.
For more information, visit www.nahb.org/cfc.
Give Us Your Perspective on the NAHB Economics Blog
Give your economic perspective on NAHB's economics blog, “Seiders on Housing,” an informal Internet-based forum dealing with economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses. Then let Seiders know what you think.
|
