NAHB President Rayburn and Canadian Officials on Lumber Dispute - 2/9/2004 - International Real Estate

NAHB President Rayburn Tells Canadian Officials to Stay the Course in Lumber Dispute

With Canada mulling over possibly resuming lumber trade talks with the U.S., NAHB President Bobby Rayburn traveled to Ottawa on Feb. 5 to inform top government officials in that country that any proposed settlement involving quotas would harm American home builders and buyers, and would be detrimental to the interests of Canadian provinces and lumber firms.

In talks with Canadian Trade Minister Jim Peterson and members of Parliament, Rayburn urged the Canadian government to reject any proposed quota settlement to resolve the cross-border trade dispute over lumber and to vigorously pursue its legal challenges now pending before the World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) panels.

“Given Canada’s recent victories before the WTO and NAFTA panels, the best way to overturn the current 27% lumber 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 see its legal cases through to their conclusion,” said Rayburn.

The Canadian government rejected a proposed deal last month that would have capped Canada’s duty-free share of the U.S. market at 31.5% and imposed a punitive $200 per 1,000 board feet tariff on shipments above that level. Canada’s share of the U.S. market topped 34% last year.

“We are strongly opposed to the idea of a negotiated settlement for the sake of expediency that institutes quotas, tariffs or other restrictive border measures because they would restrict lumber supply and harm consumers by causing artificial price increases and volatile swings in the lumber market,” said Rayburn.

He also noted that such an arrangement would pit province against province and producer against producer in a desperate battle for market share and also give the U.S. lumber industry unprecedented say in the management of Canadian forestry practices.

Rather than caving in to political pressure to negotiate a bad deal, Rayburn told Canadian officials that their best recourse is to pursue the government’s legal cases before the WTO and NAFTA panels, which are scheduled to issue definitive rulings later this year.

“All of the duties are likely to be eliminated because the NAFTA panel has already found that the ‘threat of injury’ ruling was faulty,” he said, noting that most independent analysts agree that the panel will once again rule that Canadian lumber does not pose an injury threat to U.S. producers.

Under the U.S. legal system, a decree by a NAFTA appeals panel has similar force to a U.S. court ruling. In the lumber case, three separate NAFTA panels have considered different aspects of the U.S. action and found that the duties were not properly imposed. When the legal challenges run their course, the U.S. government will have no alternative than to roll back the tariffs and refund all duties paid out by Canadian firms.

Officials from Home Depot and the National Lumber and Building Material Dealers Association accompanied Rayburn on his Ottawa trip, which also included a visit with Paul Cellucci, U.S. ambassador to Canada.

The U.S. delegation called on Ambassador Cellucci to urge the U.S. government to oppose any type of settlement agreement that includes quotas or tariffs and to seek policies that reflect the interests of consumers, builders and other U.S. businesses that depend on lumber imports. Rayburn delivered the same message in a recent letter to U.S. Under Secretary for International Trade Grant Aldonas.

Canadian federal officials were also told that they have several allies south of the border.

Congressional resolutions supported by scores of lawmakers in the Senate and House are calling for “free trade regarding softwood lumber between the U.S. and Canada” and a “fair and expeditious review” by the WTO and NAFTA panels.

On Dec. 10, Rep. Jim Kolbe (R-AZ), the chief sponsor of the House resolution, denounced the proposed quota settlement.

“This latest announcement represents an attempt to subvert NAFTA’s rules-based system and trump the WTO’s process by luring Canadian producers into a managed trade framework,” Kolbe charged. “Rather than instituting protectionist measures, the best way to achieve free lumber trade between the U.S. and Canada is to include all stakeholders in trade discussions, and to allow for the cases that would invalidate the current tariffs — which are now before the WTO and NAFTA panels — to move forward without delay.”

NAHB, along with other U.S. industries that use softwood lumber, will continue to urge the Bush Administration to abide by the WTO and NAFTA rulings, and to allow the cases to proceed expeditiously.

“We stand steadfast in support of Canada’s legal campaign and resolutely oppose any settlement agreement that would restrict lumber shipments into the U.S. market,” said Rayburn.