U.S. CONSUMERS BIG LOSERS IN LUMBER TALKS

WASHINGTON, April 26 - In a development that could harm housing
affordability and American consumers, the U.S. and Canada have
entered into negotiations to press for an immediate settlement to
the cross-border softwood lumber dispute.

"The two governments are apparently seeking to enact quotas that
would restrict Canadian softwood lumber shipments into the U.S.
and to institute a graduated export tax that would raise lumber
prices and create significant volatility in the marketplace,"
said Jerry Howard, executive vice president and CEO of the
National Association of Home Builders (NAHB). "Such market-distorting
trade restrictions would be completely unjustified following
four years of litigation that has proved the Canadian lumber
industry is not subsidized and does not constitute a threat to
domestic producers."

Noting that the proposed framework seems geared toward meeting a
political resolution that is acceptable to Washington and Ottawa
rather than addressing practical economic concerns, Howard said:
"It is certainly no coincidence that the talks deliberately
exclude several key stakeholders in the debate - most notably, U.S.
consumers, who stand the most to lose."

North American Free Trade Agreement (NAFTA) panels have
repeatedly and unanimously ruled that U.S. lumber producers are not
threatened with injury from Canadian softwood lumber shipments. The
verdicts call on the U.S. to rescind costly tariffs that harm
housing affordability and to refund to Canada the more than $5
billion in duties that have been collected.

Although a NAFTA ruling carries the weight of law in Canada, the
U.S. and Mexico, the Administration has failed to implement
decisions that invalidate the lumber duties and return all duties
paid out by Canadian firms.

This issue is critical because there are not enough trees
available in the U.S. to produce the lumber needed for home building.
Canadian lumber imports currently constitute about one-third of
domestic consumption and are absolutely vital for the
construction of affordable new homes and residential remodeling. Imports
from other countries accounted for about five percent of the
domestic supply in 2005.

"For an Administration that espouses free trade, there is no
logical reason to ignore repeated NAFTA rulings and to engage in
one-sided negotiations that would provide a massive subsidy to the
U.S. timber industry at the expense of millions of American
consumers," said Howard.

The U.S has until tomorrow to file a last-ditch extraordinary
challenge on a NAFTA verdict that found that Canadian lumber is
not subsidized and compels the Administration to eliminate its
countervailing duty order.

Even if the U.S. files this final appeal, it is almost certain
to lose, at which time the Administration would have no
alternative other than to adhere to its international obligations under
NAFTA and implement decisions that invalidate the lumber duties.

Should the U.S. and Canada agree to a settlement resulting in
new trade barriers that were to limit Canadian lumber shipments
into the U.S., NAHB will help builders seek lumber sources from
other countries and to assist builders who want to engage in the
use of alternative building materials wherever practical.

"From a policy perspective, NAHB will work with the U.S.
government to increase the supply of German and Swedish lumber, and we
will consider options to import Russian softwood from Siberian
forests," he said. "In addition, we will encourage interested
builders to explore using steel and other building materials and
construction techniques."