U.S. Builders Seek New Lumber Sources in Chile
September 9, 2016
U.S. home builders completed four days of talks with Chilean government, trade and industry officials that are geared toward increasing exports of softwood lumber and other wood products to America.
"The meetings with more than 100 Chilean lumber-producing companies, trade organizations and government officials were extremely productive," said Jerry Howard, executive vice president of the National Association of Home Builders (NAHB). "We support opening up competition in the U.S. lumber market because we know that it will benefit American families who want to buy homes and U.S. builders who are seeking a steady supply of affordably priced lumber."
The talks covered several areas, including establishing contacts among Chilean producers and American buyers and identifying and dealing with any policy barriers to increasing the volume of Chilean exports from their current level.
NAHB made contacts with two of the three largest Chilean lumber producers and a number of other smaller producers who all indicated that they will work together with their government to help increase exports. In addition, NAHB was able to meet with Swedish lumber producers in Chile, who expressed an interest in continuing conversations about increasing lumber exports to the U.S. and building a stronger relationship.
The meetings in Chile come at a time when the U.S. and Canada are in discussions over a new softwood lumber trade agreement between the two nations. Though U.S. home builders would ideally prefer to purchase all of their softwood lumber and wood products from domestic producers, America today does not have the domestic capacity to meet its demand for lumber. Canada is by far the largest exporter of softwood lumber into the U.S. The latest three-year average share of Canadian imported lumber in the U.S. market is 28 percent.
A nine-year softwood lumber agreement between the U.S. and Canada that established a system of fees and quotas on Canadian imports to the U.S. that were triggered in response to changes in the market price of softwood lumber expired last October. The two nations are now engaged in a one-year "cooling off" period—meaning no trade disputes can be filed by either country regarding softwood lumber imports—until October 12.
Since the 1980s, numerous disputes have disrupted trade patterns, leading to unnecessary cost increases for industries such as home building that rely on softwood lumber, and straining U.S. relations with its neighbor to the north. This shortsighted political stalemate has left the American housing sector in the lurch, according to the NAHB.
As U.S. and Canadian negotiators discuss the parameters of a new agreement, NAHB believes that it must be mindful of the U.S. housing market to ensure American consumers have access to a stable, dependable and affordable lumber supply.
Though Chile currently holds just 1.22 percent of the U.S. lumber market, NAHB sees great potential for growth because the two nations have a free trade agreement.
"As the U.S. housing recovery continues to pick up steam, the demand for softwood lumber will grow," said Howard. "This is why expanding lumber trade with Chile can benefit both nations. Chile would have the opportunity to increase its exports and market share to the United States, while U.S. industries such as housing that depend on a reliable supply of softwood lumber would be able to meet the housing needs of American consumers and to keep lumber and housing affordable."