U.S. builders support Canada in lumber war

A legion of U.S. homebuilders traveled to Canada on Wednesday to give Canada their backing in a months-old dispute over exports of Canadian softwood lumber to the United States. The builders, who say they represent 95 percent of U.S. lumber users and consumers, met International Trade Minister Pierre Pettigrew, who has said he will not give way in the acrimonious spat now on the verge of a full-blown trade war. "I think the greater voice of U.S. consumers is certainly going to help us find a long-term solution to this difficult issue that we've been having for a very long time, and it's going to demonstrate to Americans that there's a very high price the U.S. producers are asking,'' Pettigrew said.

Canada, whose softwood exports total about C$10 billion ($6.6 billion) per year and which supplies one-third of the U.S. lumber market, wants free trade in softwood, which is used in homebuilding. But U.S. producers say Canadian wood is subsidized because of the way logging rights are administered and paid for. They have launched countervailing and anti-dumping duty actions that have yet to be decided by the U.S. Commerce Department. The dispute over the softwood erupted on March 31 with the expiry of the five-year Canada-U.S. Softwood Lumber Agreement which had limited Canadian exports to 14.7 million board feet. Backing Canada's position, the U.S. buyers of Canadian lumber say U.S. industry is unable to fill demand and, that Canadian wood is so much cheaper it reduces the cost of each house built by $1,000.

"To have a very competitive price, you can't have a bunch of tariffs and embargoes and all that kind of stuff. To that end, what we're trying to do is to get rid of something other than free trade,'' said Gene Ormond, vice president of government affairs for Home Depot. He said a lack of access to Canadian lumber would affect his business as a whole. "Not only do we not sell that stick of lumber, then we don't sell the nails that hold that lumber together, then we don't sell the hammers to drive the nails,'' Ormond said. A bipartisan group of U.S. senators this week stepped up pressure on the Bush administration to impose retroactive duties on Canadian softwood lumber, claiming shipments were up nearly 25 percent in April and May after the expiration of the import quota established in the agreement.

U.S. producers had feared a "wall of wood'' would flood their market following the agreement's expiry, although Canada denies this has happened. Canada meanwhile said this week it will ask the World Trade Organization to issue a ruling that could force Washington to refund any duties it imposes on Canadian timber imports. Mike Fritz, chair of the 9,000-member National Lumber Building and Material Dealers Association, said U.S. producers cannot provide a substitute for Canadian wood sought by consumers. "We can buy what they produce, but they don't produce enough to supply the entire industry throughout the country. So consequently we need what our neighbor can graciously offer to us,'' Fritz said.