Building trade

That faint rumbling heard yesterday wasn’t, for a change, thunder, but the sound of the Customs Service striking a blow for common sense as it hammered a little reality into Canadian lumber mills and American home builders.

Yesterday, July 1, was the day Customs closed a tiny but exceediningly silly loophole in international trade law by reclassifying Canadian 2x4s — framing studs — with a measly hole or two drilled in them as raw lumber and not as finished wood products. This small gesture could return as much as $1 million a day in lost business to U.S. sawmills, including mills in Maine.

This saga of calling something what it isn’t started with the 1996 U.S.-Canada Softwood Lumber Agreement, which was intended to allow American mills to compete fairly with heavily subsidized Canadians as it met the free-trade demands of NAFTA. The agreement placed a quota and tariffs on raw Canadian lumber but left processed, finished products open to free trade.

It wasn’t long, though, before Canadian mills and, more importantly, American home builders (who like cheap lumber and who have friends in Congress) noted that the definition of finished product perhaps was just fuzzy enough to allow a stud that had spent all of 30 seconds under a drill, ostensibly to accommodate wiring, to be considered the equal of a door, a window frame, a kitchen cabinet or anything else that had undergone substantial craftsmanship.

So in February 1997, Customs caved into the pressure exerted by the American Association of Home Builders, their champion being Sen./home builder Rod Grams of Minnesota, and changed framing lumber from a raw material subject to tariff to a tariff-free finished product. Imports of Canadian lumber immediately shot up three-fold, at American mills’ expense.

Another group of senators, with Maine’s Olympia Snowe in the fore, saw this absurdity for what it was and early this year began urging Customs to undo this mistake — to not make such a big deal out of nothing, which, after all, is what a hole is. The home builders kicked up a mighty fuss, warning that the loss of their friendly little break would drive up to cost of the average new home by $2,000. Of course, no one could remember seeing the cost of the average new home dropping by $2,000 when they won their little break.

Customs issued a preliminary ruling on the reclassification of framing lumber as a raw material subject to tariff in April and, after withstanding substantial whining from builders, made it official this week. It’s a small thing, of no great importance to anyone outside of the sawmill business, but that’s how sensible trade policy is built — one stud at a time.