News

FOR IMMEDIATE RELEASE

DATE: April 17, 2000

U.S. Consumer Groups Ask Trade Representative to End, and Not Extend or Renegotiate Softwood Lumber Agreement Between US and Canada When It Expires in March 2001

FOR IMMEDIATE RELEASE 

For further information, contact

Susan Petniunas, 703-379-6778

www.acah.org

· American Consumers are forced to pay higher costs for homes, pricing more than 300,000 families each year out of the market because of the Agreement

· Consumers have been excluded in softwood lumber trade discussions, and must be involved in any future discussions

WASHINGTON (DC) April 17, 2000 — American Consumers for Affordable Homes (ACAH), an alliance that represents more than 95 percent of softwood lumber consumption in the United States, today said it has submitted comments to the U. S. Trade Representative (USTR) urging that the U.S. not renew, extend or renegotiate the 1996 Softwood Lumber Agreement (SLA) with Canada.

"This trade agreement between the U.S. and Canada, which expires in 2001, has had a significant negative impact on U.S. consumers, homebuyers, homebuilders, and related business sectors," said Susan Petniunas, ACAH spokeswoman.

The Alliance submitted comments on the SLA in response to a request from the USTR. "The SLA benefits a few American companies at the expense of taxpayers, consumers, and businesses whose best interests would be better served through free trade in lumber."

"The few companies making up the U.S. lumber lobby have one goal — to limit the import of Canadian wood in order to keep prices artificially high and boost the value of their uncut timber lands," Petniunas said.

Bob Mitchell, president of the National Association of Home Builders (NAHB), said: "First-time home buyers are finding it more difficult to find affordable housing as the economy slows and mortgage rates increase. That is why eliminating the SLA is of vital importance today. This would help stabilize lumber markets and lower the cost of housing for thousands of Americans."

According to the NAHB, the SLA adds an average of $1,000 to the price of every home built. For every $50 increase in the price of 1,000 board feet of framing lumber, the U.S. Census Bureau calculates that more than 300,000 households are priced out of the market. Many of these are first-time homebuyers, with lower incomes. "The SLA is responsible for excluding an entire segment of the population from home ownership," Petniunas said.

In addition to the harm the SLA does to consumers, the ACAH filings with USTR cited four other reasons to end the agreement:

The U.S. Government has excluded representatives of consumer groups from discussions regarding lumber trade. Petniunas said that consumers were excluded from discussions that lead to the current agreement, and were excluded from discussions that expanded the scope of the agreement last year, adding even further costs to consumers. "U.S. consumers do not approve of some of the domestic lumber industry lining its pockets at their expense," she said. "Consumer interests must be given at least the same status as those special interests that have been profiting from the deal."

 

It is not appropriate for the United States to use the SLA, a back room deal, as a ‘remedy’ for alleged subsidies to the Canadian lumber industry. "Artificial quotas only injure consumers, and if the domestic lumber industry can demonstrate that it has been injured by foreign imports there are existing remedies that it should pursue, specifically a countervailing duty process under existing law, or through the World Trade Organization dispute resolution process. The SLA is an extralegal substitute for existing legal remedies." Petniunas said. In two prior countervailing duty actions against Canada by the U.S., Canada has been proven to not subsidize its industry.

Even assuming it was appropriate for the U.S. industry to seek a remedy to ‘level the playing field,’ the SLA is a one-sided deal that tilts that playing field solely in favor of the few large companies that seek to manage trade and competition, and injures consumers, the ACAH submission says.

The charge by some U.S. interests that allege Canada is not focusing on environmental concerns in forestry is fictitious. "Canada has a very strong record of positive environmental protection, and environmental groups in Canada play a strong role in working with the industry to achieve conservation objectives," Petniunas said." Trade restrictions are not the way to achieve environmental objectives. An existing NAFTA procedure through the North American Commission on Environmental Cooperation ("CEC"), is an appropriate mechanism. The CEC was established by the North American Agreement on Environmental Cooperation to complement NAFTA and addressed forest conservation issues as early as 1995. This organization is particularly well-suited to the role of creating a cohesive North American environmental framework and to deal with environmental disputes."

"This was a bad idea at inception, and has only gotten worse," said Tom Ross, chair of the National Lumber and Building Material Dealers Association (NLBMDA), and an owner of lumberyards in Iowa. "It is not managed trade, it is mismanaged trade. The SLA is contrary to our independent lumber dealers’ commitment to helping people build affordable housing."

Gene Ormond, vice president, government relations, The Home Depot, said: "The SLA impacts the cost of affordable housing in America by increasing the cost of lumber used for housing construction and remodeling purposes. Home Depot is dedicated to keeping costs down so even more people can live their dream of owning their own home. Home Depot's objective is to provide its customers with low cost, quality products."

"The Agreement (SLA) has caused lumber prices to rise as a result of quotas and the recent reclassification of many wood products," Petniunas said. "This creates a volatility in the supplier market, to the retailer, and finally to the customer."

Robert J. Verdisco, president, International Mass Retail Association, explained that recent decisions regarding remanufactured wood products as part of the SLA excluded consumers. "Consumers, both retailers and the final consumer, must be included in any further debate on the SLA," Verdisco said. "Consumers were not consulted when the SLA was developed and have been hurt as a result. Consumers offer a great deal of knowledge on how trade restrictions will hurt them and (they) should be heard."

Consumers for World Trade president, Doreen L. Brown, said: "Lumber is a major commodity that is directly linked to the cost of housing. Any barrier to trade in lumber raises the total cost of a home and puts home buying beyond the reach of many consumers. Hurt the most are lower income Americans, first-time homebuyers and the elderly on fixed income because a higher percentage of lumber is used in lower priced housing than in more expensive homes."

"The people who are ultimately hurt by this agreement are not only the first time home buyers, but also low-income populations who are easily priced out of the housing market," said Christopher D. Boesen, executive director of the National American Indian Housing Council.  "Native Americans are in a crisis situation when it comes to housing.  Lower costs for construction mean more Native Americans in proper homes."

"The (current) SLA is based on the assumption that Canada’s stumpage practices and log export restrictions constitute countervailable subsidies," Petniunas said. "This assumption does not withstand analysis. There are established procedures in both U.S. and international law if such subsidies were ever to threaten injury to the U.S. lumber industry."

Even if it can be argued that the Canadian government supports its lumber industry, the United States government does the same, according to Petniunas.

"The United States provides extensive assistance in the form of subsidies to its own lumber industry, including some of the same companies that sought the SLA in the first place," she noted. "Subsidies are provided to U.S. forest product companies by state, local and county governments in addition to federal subsidies." The Alliance’s USTR submission referenced the official U.S. government report to the WTO in 1998, the latest year available, in which the U.S. claims that it provides more than $600 million in annual subsidies to the U.S. forestry industry, and makes note of other subsidies that are not quantifiable.

Many of these programs play important roles assisting local communities, workers, and companies, but they are exactly the type of programs that the U.S. Department of Commerce investigates and frequently countervails, even if they are general programs used by many different businesses, or programs for the benefit of workers. It would be very imprudent for USTR to expose these useful American programs to attack in order to benefit a few powerful lumber companies at the expense of millions of U.S. consumers.

ACAH’s submission to USTR also said that allegations that Canada is not sensitive to the environment are false.

"The Canadian federal and provincial governments and the Canadian lumber industry have embraced the goal of sustainable forestry," the Alliance said. "For example, Ontario has conducted an exhaustive environmental assessment of its Crown lands, passed the Crown Lands Sustainability Act in 1994, and produced a Forestry Accord between industry and key environmental players."

The ACAH and other groups opposing the SLA aren’t the only recent attacks on the agreement. The SLA has drawn attention from government officials, including U.S. Representatives Jim Kolbe (R-AZ) and Steny Hoyer (D-MD) who introduced House Congressional Resolution 252 calling for the expiration of the SLA, and that it not be renewed or extended. Already, more than 90 House members have become cosponsors to the bi-partisan resolution.

Former U.S. Special Trade Ambassador Peter Scher wrote the Canadian Minister for International Trade last fall, saying that "both the governments of the United States and Canada should get out of the business of regulating lumber trade, and, therefore, we are not inclined to support an extension of the Softwood Lumber Agreement."

ACAH participants include Citizens for a Sound Economy, Consumers for World Trade, Donohue, Free Trade Lumber Council, The Home Depot, International Mass Retail Association, Manufactured Housing Institute, National Association of Home Builders, National Lumber and Building Material Dealers Association, National American Indian Housing Council, and the National Retail Federation.

Click Here for Text of ACAH USTR Submission