Impact

Impacts of the SLA – and why it makes sense to end it in 2001

Free Trade  - U.S. and Canadian workers and consumers are fortunate to benefit from one of the most positive trading relationships in the world.  However, softwood lumber is one of the last major commodities subject to trade restrictions due to the 1996 U.S./Canada Softwood Lumber Agreement.  This Agreement is set to expire in March 31, 2001.

Affordable Housing  - Affordable housing continues to be a cornerstone of the "American Dream," yet the Agreement substantially increases the cost of producing new housing or remodeling existing housing, and excludes many Americans from home ownership.  The U.S. Census Bureau estimates that the fees on additional shipments are equivalent to more than $1,000 for the lumber in an average new home.  For every $50 increase in the price of 1,000 board feet of framing lumber, 300,000 potential homeowners are priced out of the housing market. The 1996 U.S./Canada Softwood Lumber Agreement negatively impacts housing affordability and jobs in America.

By changing the tariff classifications (see History) of several key remanufactured wood products used to construct housing, the U.S. Government also has unilaterally expanded the scope of the Softwood Lumber Agreement.  These actions undermine the integrity of international standards that U.S. exporters depend upon, and hurt U.S. consumers.   In the manufactured housing sector, the average price of a home is $43,000; a several hundred-dollar increase in the cost of such a house can determine whether a family can purchase this type of home.

U.S. Jobs  - There are millions more jobs in the U.S. that depend on availability of reasonably priced lumber than there are jobs in domestic lumber production.  Current restrictions on domestic timber harvests mean the U.S. cannot increase lumber output significantly, and the number of jobs in lumber production (about 200,000 for logging and lumber mills combined) will continue to decline. Home builders and their subcontractors provided more than 4.5 million payroll jobs last year.  Producers of secondary wood products, such as trusses, cabinets, and windows that use lumber as an input employed 480,000 in 1998.

Click graph for full size.

Fairness  - Consumers of softwood lumber products are too often excluded from consultations or consideration in the decisions to create barriers to lumber imports.  Even after the large price increases that occurred following implementation of the Softwood Lumber Agreement, the Administration sought to further limit supply.  In addition to the product reclassifications, in August 1999, USTR negotiated an amendment to the Agreement that raised the fees on shipments from British Columbia without ever consulting U.S. home buyers, home builders, or consumers of lumber products.  These stakeholders deserve to be heard.

Product Quality - There are significant differences among types of wood.  The climate in the areas of Canada where logging mainly takes place results in smaller, slower-growing  trees.  The lumber produced from those trees is rarely wider than  2" X 4" or 2" X 6", and is preferred by builders for use as wall studs, because it is less subject to warping.  U.S. forests produce bigger trees and lumber that is stronger and more suitable for joists and rafters. In the case of Southern yellow pine, it is also better suited for pressure-treating.  Builders want to be able to use the material that is best suited to each function in order to produce a quality product at an affordable price.  The Softwood Lumber Agreement makes that more difficult.   It would not be possible to meet our housing needs without imports and it therefore makes no more sense for us to restrict imports of lumber than to self-impose an embargo on oil imports, for example.

Economic Efficiency - Although the U.S. is a net importer of lumber, U.S. companies export over a billion dollars worth of logs and lumber per year.  The products that are exported are generally of higher value than those that are imported. It would be wasteful and counter-productive to pursue policies that try to use only domestic lumber for home building, rather than to enjoy the advantages of global trade.

Conclusion

The U.S./Canada Softwood Lumber Agreement should be allowed to expire on March 31, 2001 without extension or renewal.

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