Head of U.S. homebuilders backs stand on agreement.

(The following letter to Frank Dottori, president of Tembec, was dated Jan. 12, 2004)

Dear Mr. Dottori:

On behalf of the 215,000 members of the National Association of Home Builders (NAHB), I am writing to thank you for your company's out-spoken opposition to the proposed framework for a negotiated interim lumber agreement recently offered by the United States, based on proposals from U.S. lumber producers.

As you know, this proposal contains strict volume restrictions on U.S. imports of softwood lumber from Canada. Any measures to limit lumber import volumes are bad and bad economic policy, and are not in Canada's or the United States' national interest.

Given Canada's strong cases before the World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) panels, which have already produced significant victories, NAHB has continued to urge your government hold firm in the face of pressure to negotiate a bad deal. It is important that Canadian provincial and federal officials hear how the recently proposed lumber framework for a negotiated interim agreement will hurt Canadian lumber producers.

Although presented as a temporary measure, the likely effect of the proposed framework would be to reduce production and employment in Canada, creating a long-term handicap for the Canadian economy. There is no guarantee that changed circumstance reviews by the Department of Commerce will produce a favorable outcome, or even fair treatment.

NAHB and other groups representing lumber-dependent industries and consumers will continue to vigorously support efforts to eliminate barriers to imports of lumber from Canada. Our efforts have already had a significant impact on the political balance regarding lumber trade, and have neutralized much of the support in Congress for the U.S. lumber producers' position. Those in Canada who are prepared to accept the quota proposal have underestimated the extent of this shift.

As you may be aware, NAHB member firms are involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. NAHB is affiliated with more than 800 state and local home-builders associations throughout the United States.

Importantly, there is not a sufficient quantity of softwood timber available domestically in the U.S. to fill the needs of the homebuilding industry. Furthermore, builders recognize that lumber from Canada is qualitatively different from much of the lumber produced in the U.S. In the absence of adequate supplies of lumber from Canada, builders will be forced to rely on imports from other countries and on alternative materials. On the other hand, if Canada is successful in removing trade barriers through litigation, as well as policy reforms that eliminate the pretexts for countervailing duties, there will be increased opportunities for growth in the U.S. market for Canadian lumber.

Quotas serve to increase volatility in lumber prices. With most new homes presold for fixed prices, the risk of unanticipated lumber price spikes, as well as concerns about availability and quality, will create a strong incentive for builders to switch from lumber to alternative materials and construction techniques.

Again, I thank you for your company's opposition to the recently proposed framework for a negotiated interim agreement, and urge continued support for free trade in softwood lumber between Canada and the United States.

Best regards,

Letters to the Editor

Northern Ontario Business welcomes letters to the editor. Letters will be edited for length and libel and should be no more than 500 words. Please include your name, address and phone number. Send letters to:

The Editor, Northern Ontario Business, 158 Elgin St. S., Sudbury, Ont. P3E 3N5 or by fax to 705-673-9542 or by e-mail to sari@nob.on.ca

James R. Rayburn

President-Elect (U.S.) National Association of Home Builders