Hailing it as a major victory for housing affordability and millions of American consumers who are feeling the pinch of near-record lumber prices, the National Association of Home Builders this month said that a North American Free Trade Agreement panel decision clears the way to remove burdensome tariffs on Canadian timber.
Countervailing and anti-dumping duties totaling more than 27 percent have been in place since May of 2002. Of all the NAFTA and World Trade Organization court rulings against the tariffs that have emerged since then, the verdict represents by far the most significant development because if the U.S. can’t prove its contention that Canadian lumber shipments threaten the domestic industry, it must remove the duties it imposes on lumber from Canada.
“For the third time, NAFTA has unequivocally ruled that Canadian lumber imports present no harm to the domestic industry,” said Bobby Rayburn, president of NAHB and a home and apartment builder from Jackson, Miss. “We call on the Administration to refrain from any further legal maneuvers or delays and allow this decision to be implemented within 10 days, as ordered by the NAFTA panel. This would rescind the 27 percent levies on Canadian lumber and end the hidden tax imposed on American homebuyers and renters.”
Twice previously, NAFTA had determined that the domestic lumber industry’s threat of injury allegations were baseless and contrary to law. In each instance, the case was remanded back to the U.S. International Trade Commission.
In a strongly worded decision, the NAFTA panel clearly indicated that it had grown weary of the ITC’s attempts to prove that U.S. lumber interests were harmed by competition from their northern neighbor.
The NAFTA panel of three Americans and two Canadians unanimously concluded that the ITC was “simply unwilling to accept this (NAFTA) panel’s review and has consistently ignored the authority of this panel in an effort to preserve its finding of threat of material injury. “
The panel ordered the ITC “to make a determination consistent with the decision of this panel that the evidence on the record does not support a finding of threat of material injury” and to make that determination within 10 days.
Although the panel noted that the U.S. had no new evidence to back the claims of injury and that it “would be an exercise in futility to further review the case,” the U.S. could still appeal the ruling to an extraordinary challenge committee.
“Such an action would merely be a delaying tactic,” said Rayburn, who noted that NAFTA’s extraordinary challenge provisions are only meant to be used for matters of gross misconduct, for which there is no legitimate claim in this case.
With the price of framing lumber now at $473 per 1,000 board feet, according to Random Lengths - up more than 40 percent from the beginning of the year and approaching the all-time high of $519 recorded in 1994 - Rayburn noted that the NAFTA decision could not have come at a better time.
“Rising building material costs, led by lumber, have added $5,000 to $7,000 to the cost of constructing an average new home,” he said. “The duties have artificially boosted lumber prices and have helped line the pockets of domestic producers at the expense of U.S. consumers. NAFTA has unambiguously ruled that this case has no merit. “Therefore, the Administration should prevent this case from dragging out any further and allow these punitive duties to disappear.”