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To: Frank Pembleton who wrote (93692)	8/14/2001 8:33:48 AM
From: Frank Pembleton	Respond to of 95453

Wood duty could hit U.S. homes 'Tariff will have huge impact on U.S. economy' Peter Morton Financial Post WASHINGTON - The punitive duty on Canadian softwood lumber imports imposed by the United States could hurt an already "fragile" U.S. economy, says Bob Nardelli, chief executive of retail chain Home Depot Inc. "Consumer confidence is on a knife's edge," Mr. Nardelli told a home improvement conference in Chicago. "It's a fragile time to be raising prices." Mr. Nardelli's view was echoed by a new economic study that suggested the softwood decision could push the tottering U.S. economy even closer to a recession, while proving to be a huge windfall for the U.S. lumber industry. Daowei Zhang, an associate professor of forest economics at Auburn University in Alabama, said the import duty, retroactive to May, will add between US$250 and US$400 to the average US$169,000 cost of the 1.6 million new homes built in the United States each year. That means as many as 104,000 fewer homes will be built but will generate up to US$800-million in revenue for U.S. producers, who are expected to simply pass along increases. "Given that home building is the only bright spot in the economy, the tariff will have a huge impact on the U.S. economy -- and begin right away," he said yesterday. Mr. Zhang, whose work has been quoted by U.S. consumer and home building groups fighting new tariffs, said the impact of the new duty will increase U.S. lumber prices by 6.9% and clip between 0.13% and 0.25% from U.S. economic growth, now hovering near a recession level of 0.7%. Even if the U.S. economy starts to rebound later this year, the impact of the tariff will be to "rub salt on the wounds," he said. Future prices of lumber soared yesterday after the U.S. Commerce Department ruled on Friday the new preliminary duties would be imposed Aug. 20 and made retroactive to May. The Commerce Department agreed with the U.S. lumber industry that there had been a surge of subsidized Canadian lumber after a five-year export agreement expired in March. Prices are now 52% higher than they were at the beginning of the year. In addition, Barron's reported in its Up & Down Wall Street column that Doug Kass, hedge fund manager for Seabreeze Partners, said U.S. home sales "will decline with sudden sharpness" as a result of the punitive duty. The comment prompted Standard & Poor's SuperCap Homebuilding Index to fall 5.6%, its biggest decline since April, 2000. The effects of the decision may be felt beyond the housing industry. Michael Carliner, chief economist at the U.S. National Association of Home Builders, said American cabinet and furniture makers will face even stiffer competition from Canada because of rising U.S. prices and the expected drop in Canadian prices. "U.S. manufacturers will be at a competitive disadvantage with their counterparts in Canada and that may lead even more to move their operations to Canada," he said. The U.S. Coalition for Fair Lumber Imports, a Washington-based group that signed up 75% of U.S lumber producers to its complaint, has long challenged the claim from U.S homebuilders and consumer groups that punitive import duties would have a serious impact on housing starts. "The increase in lumber costs amortized over a 30-year mortgage will be negligible," said Deborah Regan, spokesman for the group. She said the price impact of the preliminary duty -- a final ruling is expect in late September -- is only between a third to a half of the total duty. More importantly, she said, the duty will mean that "efficient mills in the United States can compete with inefficient mills in Canada." The ruling last week from the Commerce Department only represents a small part of the complaint launched by the coalition in April when the 1996 Softwood Lumber Agreement expired. That agreement capped duty-free Canadian imports at 14.7 billion board feet, representing about 35% of the U.S. market and $10-billion a year in revenue to Canadian exporters. The 19.3% duty represents the subsidy the Commerce Department claims is built into Canadian lumber prices because timber subsidies given to Canadian producers by provincial governments that control 95% of Canadian timber. The ruling last week exempted the Atlantic provinces since timber there is sold at auction, similar to the United States. The coalition is also looking for another duty of 38% to offset what is says is Canadian lumber being dumped at illegally low prices in the United States That preliminary ruling may come as early as September and could lead to a tax of over 75%. nationalpost.com

To: Frank Pembleton who wrote (93692)	8/14/2001 9:39:52 AM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 95453

Hi frank, The economic slowdown will reduce jewellery demand, and that decline will be aggravated by particular economic problems in some countries, said Jill Leyland, the senior economic adviser to the council. Some concerns here that the jewelry demand is required to maintain the supply/demand imbalance. *Mais il faut définitivement que la demande se maintienne (particulièrement celle des secteurs (bijouterie/joaillerie),* Demand needs to keep up, especially in the jewellery sector. Message 16203559 And jewellery spelled in Brit/Cdn format :o) Real job time :o( regards Kastel