June 25,2003

Grassley: Quotas in Softwood Lumber Trade Would Hurt Consumers


To: Reporters and Editors
Re: Potential softwood lumber agreement
Da: Wednesday, June 25, 2003

Sen. Chuck Grassley, chairman of the Committee on Finance, made the following commenton his preferences for a resolution of the softwood lumber dispute.

“The Commerce Department recently released a policy paper designed to move Canadatoward a more market-based system of selling its timber. This policy paper provides guidelines thatthe Canadian provinces can adopt if they want to get out from under the trade law cases.

“I want to express my support for the aims of this policy paper. I’ve long been a strongadvocate of free markets and the expansion of free trade. The dispute over softwood lumber that has plagued relations between the United States and Canada deserves a proper end. Implementing appropriate market reforms seems like the right formula.

“I’m disturbed to hear that the Administration may be willing to accept an interimarrangement, before the reforms are undertaken, that would include the imposition of a quota-basedsystem much like the Softwood Lumber Agreement that expired in 2001. I oppose any quotaarrangement because it’s the most distortive market measure that could be introduced. A lot ofpeople would agree with that.

“The American consumer ends up paying the price for this type of arrangement. That’s thewrong result. A quota likely would cause lumber prices to increase as supplies diminish. Higherlumber and construction costs would do nothing to prevent economic anxiety. An April 2003 reportby the International Trade Commission on Wood Structural Building Components discussed thenegative affects caused by the Softwood Lumber Agreement, including two-tiered pricing andgaming of the system. The housing and construction markets are two of the strongest sectors of theAmerican economy. Introducing a lumber quota could put a big damper on their growth. It’s thewrong approach. I support an end to the softwood lumber dispute, but I can’t support an end thatwould hurt the American consumer.”