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Consumers Hopeful Significant Changes Occur in Canadian Lumber Deal; With Current Prices, Duties Will Be At Peak When Agreement Starts

American Consumers for Affordable Homes , - August 28, 2006

-- Groups charge government with failing to consider impact on affordable housing; duties
will increase volatility in the U.S. lumber market -- U.S. Government failed to live up to its NAFTA and WTO international treaty agreements when it lost its cases defending illegally imposed duties
-- Consumers urge Administration to reverse proposal to hand out half-billion in illegally collected duties to a small portion of U.S. lumber producers
-- Legality questioned in Bush Administration creating a discretionary half-billion fund for unnamed programs without any Congressional oversight

WASHINGTON, Aug. 28 /PRNewswire/ -- Consumer groups in the U.S. today said that they are hopeful that the Canadian Parliament will still force significant changes in the proposed agreement on softwood lumber imports from Canada. Specifically, American Consumers for Affordable Homes (ACAH), representing more than 95 percent of U.S. lumber consumption, expressed concerns over the volatility that will be caused by the proposed new duty system that amounts to price fixing. It would make higher than the free market if prices are low, putting an unnecessary tax burden on consumers. Today, lumber prices are at $297 per thousand board feet, which would trigger duties of 15%. This is especially troublesome at this time when the U.S. is witnessing a dramatic decline in housing starts.

"We are extremely concerned that the U.S. government wants to force volatility into the domestic housing market as it is facing a downturn by proposing the unwise schemes in this bad deal with Canada," said Susan Petniunas, spokesperson for ACAH.

Petniunas added that ACAH is shocked at the creative accounting system the Administration has designed to force Canadian companies to pay a billion dollars of duties collected since 2001 back into two funds a half-billion dollars each in duties collected since 2001. Half would be paid out to a small portion of the U.S. industry, giving them the ability to buy up smaller competitors or force them out of business. She said that this action also will add to the instability of the domestic market.

The other half-billion dollars will go to a discretionary fund that the Administration can use as it sees fit for what it calls "meritorious programs". The funds apparently will be off-budget and not have any Congressional oversight, and doled out any way the Bush Administration wants. "If there is any legal basis for this creative way to circumvent the U.S. Treasury -- which we do not believe there is -- and the two governments want to force Canadian firms to contribute a percentage of the illegally collected duties into these two funds, we would urge the government to spent the entire billion dollars on affordable housing, specifically focused on rebuilding the Gulf Coast," Petniunas said.

She pointed out that even within the past week the U.S. again lost one of its appeals on the procedure used to calculate dumping duties in the WTO, and that the Administration had failed to succeed in its cases against Canada in both the WTO and NAFTA. Canada has proven that it does not subsidize its industry, that there is no threat to the U.S. industry from Canadian imports, and that there is no evidence of dumping, yet Canada is willing to sign a deal that can be interpreted as "guilty as charged" while the U.S. thumbs its nose at its treaty obligations.

Petniunas said, "No rational Canadian company will ever use the NAFTA dispute process again if Canada agrees in this deal that it has given up its right to get all illegally collected duties back."

Petniunas pointed out that, based on U.S. Census Bureau data, duties on lumber price as many as 300,000 families out of the housing market since that small amount prices them out of a mortgage. The duties also have impacted a wide range of other industries using Canadian softwood lumber, such as truss manufacturers, pallets, cabinets, furniture and box springs, manufactured housing, as well as lumber wholesalers and retailers.

Members of ACAH include: American Homeowners Grassroots Alliance, Catamount Pellet Fuel Corporation, CHEP International, C. J. Hodder Lumber Company, Consumers for World Trade, Free Trade Lumber Council, Furniture Retailers of America, The Home Depot, International Sleep Products Association, Manufactured Housing Association for Regulatory Reform, Manufactured Housing Institute, National Association of Home Builders, National Black Chamber of Commerce, National Lumber and Building Material Dealers Association, National Retail Federation, Retail Industry Leaders Association, and the United States Hispanic Contractors Association.

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