Remember the North America Free Trade Agreement? It's been touted as lowering prices on all kinds of goods from both north and south of the border by eliminating tariffs and other negative tax incentives.

But I bet you didn't know that an agreement between the United States and Canada has been overriding NAFTA by restricting the importation of softwood lumber, resulting in higher construction prices for everything from room additions on single-family houses to highways and mammoth municipal projects.

Fortunately, U.S. Sens. Don Nickles (R-OK), Jon Kyl (R-AZ), Joseph Lieberman (D-CT), Bob Graham (D-FL), Charles Grassley (R-IA), and Richard Lugar (R-IN) have introduced a bipartisan concurrent resolution calling for the termination of the U.S./Canada Softwood Lumber Agreement of 1996 (SLA) when it expires on April 1, 2001.

This resolution mirrors a U.S. House resolution introduced in February by Reps. Steny Hoyer (D-MD) and Jim Kolbe (R-AZ).

The SLA was signed in 1996 to restrict lumber shipments from Canada to the United States. It is opposed by a broad-based group of consumer and trade organizations and companies representing more than 95 percent of softwood lumber consumption in the nation.

“It is time for this agreement to end,” Nickles said. “This agreement is clearly hurting more Americans than it is helping.”

According to Nickles, the restriction of finished lumber for framing homes and remodeling has artificially raised the average cost of a new home by $1,000. So imagine the impact on larger-scale construction projects, which undoubtedly have their price tags increased by thousands and even millions of dollars.

The SLA has also created swings in lumber supply and prices, according to the National Association of Home Builders (NAHB).

“The lumber agreement is bad for the economy,” said Robert Mitchell, president of the NAHB. “Since its adoption in 1996, the quota on duty-free lumber shipped from Canada to U.S. markets has contributed to wild swings in the supply and price of lumber. It is not uncommon to see lumber prices rise 40 to 50 percent within a matter of months. The agreement should be dumped as soon as possible.”

The lumber industry is equally eager to do away with the restrictions under the SLA.

“The Canadian quota agreement was presented as managed trade, but it has been mismanaged trade and worse,” said Tom Ross, chairman of the National Lumber and Building Material Dealers Association. “We are enthusiastic about the concurrent resolution to end mismanaged trade and return to the American public free-trade market conditions.”

According to the National Retail Federation (NRF), retailers also have been damaged by the SLA.

“Citizens for a Sound Economy believes that American consumers benefit from free trade,” said Aaron Lilly, policy analyst for the organization.“ (NAFTA) promised free trade among the member nations. However, softwood lumber, essential for housing and many other construction projects, fell through the cracks, and continues to be subject to protectionist quotas through 2001.

“Although only the president can assure that these quotas stop after 2001, this Sense of the Congress sends a strong message that the best policy for all Americans is one which realizes the promise of NAFTA and brings free trade to all industries and lowers costs for all consumers,” Lilly added.

So despite whatever measures taken by Congress to eliminate the softwood importation quota, only the president can take action to eliminate the SLA. Let's hope he makes affordable construction part of his “legacy.”

Published: May 11, 2000

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Lesley Hensell covers commercial real estate and financial issues for Realty Times. Based outside of Dallas, Lesley works with high-tech and real estate clients as an independent marketing and public relations consultant. She also writes for several publications, including the Dallas Morning News. E-mail Lesley at: lhensell@earthlink.net