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Lumber Studs Fuel US-Canada Dispute

November 9, 1997

WASHINGTON (AP) _ When are building studs not studs?

Apparently, when Canadian timber companies drill holes in them and send them south, around stiff U.S. tariffs and duties on imported lumber.

The holes are drilled in the 2x4s and 2x6s to accommodate plumbing and electrical wiring. Under a U.S. Customs Service ruling, the holes also transform the studs into finished or value-added products that are not subject to most tariffs set in the U.S.-Canada Softwood Lumber Agreement.

Canada exported 17.8 billion board feet of softwood lumber to the United States last year, mostly undrilled, which already amounted to 35 percent of the lumber used for homes and in other construction.

And imports shot up by 185 percent since February’s Customs ruling.

The ruling delighted American home builders. They say the cheaper Canadian lumber it produced could shave $2,000 from the price of a typical single-family home.

On the other hand, U.S. timber companies, which contend that Canada already heavily subsidizes its lumber industry, are crying foul.

The anguished timber industry says the predrilled 1-inch holes are really loopholes, allowing their Canadian competitors to skirt the intent of the 1986 agreement and subsequent international panel rulings.

``We say a stud is a stud,″ said Scott Shotwell of the Coalition for Fair Lumber Imports, a Washington-based timber lobby whose clients include Georgia-Pacific, Temple-Inland, International Paper, Potlatch and others.

``It doesn’t matter if there is a hole in it. Its use is the same. The price is the same. The building code treats it the same. Studs are studs.″

Sen. Richard Shelby, R-Ala., is challenging the Customs Service decision on the timber industry’s behalf. He wrote language into the agency’s 1998 budget attaching strings to a $2 million allotment for enforcing the lumber agreement.

Until Congress can act, the Shelby amendment says, Customs should stop enforcing any ruling that eliminates tariffs for lumber ``because it has been drilled or otherwise subject to minor processing.″

Home builders say Shelby’s move is out of line and could undermine an international trade agreement.

``It doesn’t have the force of law, but it is kind of a threat,″ said Michael Carliner, vice president of the National Association of Home Builders. ``The people at the Customs Service are interpreting it as a threat. If they don’t bend, they might have the money taken away.″

Customs Service spokeswoman Pat Coss said only that the ruling is under review.

Among lawmakers siding with the home builders and urging Customs not to change its stance on the predrilled studs are Sen. Rod Grams, R-Minn., a former home builder himself, and Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance subcommittee on trade.

A reversal ``would create a dangerous precedent,″ Grams wrote acting Customs Commissioner Samuel Banks.

Home builders maintain the predrilled studs are significantly different from the undrilled ones. ``Having the hole, in our view, precludes it from being used for anything else,″ Carliner said.

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