CONSUMING INDUSTRIES SAY PENALTY ON SOFTWOOD
LUMBER "VERY TROUBLING"

Washington, DC - Consuming Industries Trade Action Coalition (CITAC) Chairman Jon Jenson said today that the Department of Commerce's preliminary decision to impose import restrictions on Canadian softwood lumber unfairly penalizes American consumers and consuming industries.

On August 10, the Department of Commerce released its preliminary determination that Canadian lumber is subsidized at an average rate of 19.31 percent. Future imports of billions of dollars worth of Canadian softwood lumber are now potentially subject to U.S. countervailing duties.

"The Department of Commerce's preliminary decision is very troubling in several respects," stated Jenson. "Neither the Commerce Department nor the International Trade Commission (ITC) are required to consider the impact on America's consuming industries in their deliberations. Consuming industries may appear before the ITC to describe the potential negative impact of trade restrictions on downstream users, but the ITC and Commerce Department can ignore the damaging consequences."

In testimony before the ITC in April of this year, consumer groups told commissioners they will be forced to import from somewhere else if Canadian softwood is limited by trade restrictions; the southern yellow pine that U.S. companies seek to protect is not a substitute. Lumber consumers also emphasized the harmful impact of restrictions on the more than six million workers employed by downstream industries - many more Americans than could be "protected" by trade restrictions.

According to Jenson, the ruling "perpetuates the 15-year dispute regarding stumpage rates in Canada with no sign of any new thinking about U.S.-Canada lumber trade or any acknowledgement of what lumber consumers in the U.S. need."

Industries dependent on open markets for lumber include, among others, homebuilders, remodelers, lumber dealers, furniture manufacturers, makers of shelving and other home accessories.

According to the American Consumers for Affordable Homes (ACAH), a CITAC-member organization, the extra burden on downstream industries gets passed on to homebuyers. New home prices in this country could be from $2000 to $4000 higher because of the 19.31 percent tariff. That translates into nearly 1.2 million American families' being priced out of the market for a new home.

In July, more than 100 Members of Congress agreed, sending a letter to President Bush urging him to protect workers and consumers who would suffer as a result of trade restrictions on Canadian lumber. According to Jenson, "The United States should ensure that its own consumers are not unduly penalized to satisfy protectionist demands from a narrow group of special interests."

"Finally," Jenson concluded, "we call upon the Department of Commerce to ensure that its decisions and deliberations are fully in concert with U.S. international obligations. The World Trade Organization (WTO) has already issued a ruling on the U.S.-Canada lumber dispute and could go further if the question is not resolved. Any retaliatory measures taken by Canada would create additional hardship for downstream users and American consumers."

Last week the Commerce Department also issued a preliminary determination of "critical circumstances," raising the possibility of retroactive duties in softwood lumber trade, a step Jenson and ACAH say is totally unwarranted and of extremely dubious legality. Lumber shipped to the U.S. is meeting growing demand and already being used for homebuilding.

CITAC is a coalition of companies and organizations, which are committed to promoting a trade arena where U.S. consuming industries and their workers have access to global markets for imports that enhance the international competitiveness of U.S. firms.