The American Homeowners Grassroots Alliance (AHGA), which represents the nation's 72 million homeowners, applauds the Senate Finance Committee for holding this hearing on softwood lumber trade with Canada. AHGA supports free trade and opposes tariffs and other restrictions that raise the price of homes and products used by homeowners and other consumers. This policy is in the best long-term interest of the US and other countries, and results in the greatest benefit to homeowners and other consumers in all countries. The fast changing world economy will continue to shift competitive advantages from industry sectors in one country to those in another. The solution to the inevitable challenges of worker displacement and corporate profitability challenges that result is the extension of unemployment benefits passed in the Senate last week and an expansion of trade adjustment assistance. AHGA supports strengthening trade adjustment assistance programs, in particular by expanding funding for worker retraining so displaced workers can qualify for employment in growing industries.

AHGA is concerned that recent proposals by the U.S. Commerce Department would effectively impose an indirect tax averaging $1,000 on many new homes built in the U.S. and would substantially increase the cost of home additions and other remodeling projects. The tax will be in the form of 12 percent to a 32 percent tariff on Canadian softwood lumber, a primary building component of new homes. A 15% tax on lumber that was implemented in 1986 cost consumers about $900 million. The U.S. Census Bureau estimates that the fees on additional shipments under the current proposal would total more than $1,000 for the lumber in an average new home. If the tariffs are imposed U.S. homes will become less unaffordable, especially to the most vulnerable first time buyers who account for a substantial portion of the nation's annual 1.6 million new home sales. The tax would price a half million of those families out of the market and would make home additions and other remodeling projects unaffordable for many more homeowners.

AHGA strongly opposes the tariffs. Most affected will be first time new home homebuyers and those who would otherwise barely qualify for home ownership. Their purchases will be delayed until their earnings increase. In the meantime they will lose the opportunity to build equity in a home they could have owned. While other will still be able to buy a home, they will be paying interest for 30 years on the $1,000 home price increase resulting from the tariff. The increase in cost for lumber in home additions and other remodeling projects would also increase substantially, and many of the nation's 70 million homeowners would pay the price.

AHGA is opposed to the implementation of tariffs and other restrictive border measures because they deny the dream of home ownership to millions of Americans and because they will prolong the current recession. From an employment standpoint the tariffs could also contribute to layoffs in the construction industry and its suppliers. We urge members of the Committee to ask Commerce Secretary Evans to ensure that the Administration protects U.S. consumers and ask U.S. Ambassador Robert Zoellick not to include, in his negotiations with Canada, any provision that would impose a lumber-related tax, quota, or other government-mandated cost increase on U.S. consumers.

We urge members of the committee to resist pressure from large U.S. timber companies that support the lumber tariffs. Those companies currently receive large subsidies from the U.S. government. While AHGA is sympathetic to potential job losses in that sector, the tariffs would only shift job losses to the home building and supply sector. They would also deny home ownership to many more Americans, raise ownership costs to many others, and undermine principals of free trade that benefit homeowners and other consumers.

The American Homeowners Grassroots Alliance (AHGA) is a national bipartisan advocacy organization representing the nation's 70 million homeowners. AHGA believes that policies that encourage and protect home ownership are in our national best interest. Those policies encourage and sustain the maintenance of a strong and broad middle class, build a sense of community and responsibility, and facilitate investment in homes, which are the largest, most universal savings/equity-building vehicle for most Americans. AHGA's positions and more information about the organization are available at AmericanHomeowners.org. The American Homeowners Foundation's section of the website also contains free educational materials to help homeowners and future homeowners buy, sell, remodel, and finance their homes.

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