Good Riddance to Costly Tariffs

Most Americans are unaware that decisions affecting national trade policy can have a direct impact on housing affordability. They probably don't know that for the past three years, millions of new homebuyers and other consumers of wood products have been paying a hidden tax for softwood lumber products.

Fortunately, an Aug. 31 decision by a North American Free Trade Agreement panel has cleared the way for the removal of the burdensome tariffs on Canadian timber - as long as the Bush administration refrains from any further legal maneuvers or delays.

This unfortunate chapter in U.S. trade policy that has cost American taxpayers more than $2.6 billion to date can be traced back to May of 2002, when the U.S. government -- at the behest of domestic lumber producers who were seeking to boost profits and shield their industry from legitimate competition -- slapped 27 percent tariffs on softwood lumber imports from Canada.

Of the many anti-tariff court rulings by NAFTA and the World Trade Organization that have occurred since then, this latest verdict is the most significant by far. In essence, it states that there is no evidence to support the contention that Canadian lumber shipments threaten the domestic industry and calls on Washington to immediately repeal the levies.

There is no legal justification for the costly duties under U.S. law, which requires a demonstrated threat of injury for them to be imposed. The decision is a victory for housing affordability and millions of American consumers who are feeling the pinch of near-record lumber prices.

Protectionist measures are bad economic policy that stifle growth and harm consumers by artificially inflating prices. It's no coincidence that the price of framing lumber, the principal component in home construction, is up more than 70 percent since the duties went into effect. Tariffs wreak havoc by distorting the market, creating huge volatility in lumber prices and raising costs for homebuyers and other consumers and producers of wood products.

There are not enough trees available for harvesting in the U.S. to fill the demand for lumber to build American homes. This means imports are absolutely vital to maintaining a healthy housing market and to meeting the growing demand for affordable housing.

The NAFTA panel, which is composed of three Americans and two Canadians, unanimously reached its verdict that the domestic lumber industry's threat of injury allegations were baseless and contrary to law after two similar rulings had been contested by Washington.

In a strongly worded statement and emphatic declaration of finality, the panel concluded that it "would be an exercise in futility" to further review the case.

With the end game in sight, domestic lumber producers are desperate to keep the case alive so that the duties remain in effect and continue to line their pockets at the expense of U.S. consumers.

Rising building material costs, led by lumber, have added $5,000 to $7,000 to the cost of constructing an average new home. NAFTA has unambiguously ruled that this case has no merit. Therefore, the Bush administration should prevent this case from dragging out any further and allow these punitive duties to disappear.

Bobby Rayburn President, National Association of Home Builders