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US House Natural Resources Committee passes compromise Lacey Amendment
The International Wood Products Association (IWPA) indicated that House Resolution (HR)
1497 on the Lacey Act amendment, which was supported by IWPA, was unanimously passed by the House Natural Resources
Committee. The amendment provides ¡®innocent owner¡¯ protection and limits the ¡®foreign law requirements¡¯ to
natural resources law only. The penalty for accidental paperwork errors was reduced to USD250, instead of the
previous proposal of USD10,000. The bill has yet to pass in the Senate, and Senator Ron Wyden (Democrat
¨COregon) has proposed his own version of the amendment. IWPA continues to work with
Congressional parties to encourage the Senate to use amended language contained
in HR 1497.
Peru FTA passes in US House of Representatives
The IWPA reported on a recent vote to pass the Peru Free Trade Agreement in the House, by a
vote of 285 to 132. IWPA noted that the FTA includes an annex on illegal logging, which
requires full compliance with CITES regulations, particularly for the CITES listed species of
bigleaf mahogany (CITES Appendix II) and Spanish cedar (CITES Appendix III). The FTA has yet to pass in the
U.S. Senate.
Canada outpaces US residential furniture market
During the past two decades, the Canadian market for residential furniture performed better than the American
market for residential furniture, despite the fact that the US economy outperformed the Canadian economy in most
years. Between 1995 and 2007, the American furniture market (at retail prices) grew by 82% but the Canadian
market grew by 141%. In 2007, the gap has been further magnified due to the economic slowdown and of the US
housing market.
At the present time, the strength of the American economy is uncertain. GDP growth has been declining continuously
from its peak in the 1st quarter of 2006 and growth this year will be only
around the 1.9% mark. This is the lowest rate since 2003 (1.8%) and compares to 2.9% last
year. While experts expect a modest GDP improvement next year, the rate is not likely to
surpass 2.5%.
Personal income growth is an important force driving furniture consumption. Income growth in
the US stood at 6.6% last year, up from 5.9% the year before. However, in conjunction with less robust employment growth in 2007,
personal income growth may slow down to about 6.2% this year and below the 5% mark in 2008. After
eliminating the impact of inflation and taxes, the growth rate of real disposable income will be even less, only about
3.0% this year and 2.7% in 2008.
Growth of American consumer spending stood at 3.1% last year. Due to sagging consumer
confidence, it will lag behind the growth of personal income. While this year¡¯s
growth may drop only moderately to about 2.8%, the decline in 2008 may be more pronounced and reach an
anticipated level of 2.3%.
The durable consumer goods market is subject to fluctuations. In 2006, American spending on
durable consumer goods was 3.8% ahead of the previous year and is expected to continue at
the same rate in 2007. However, the 2008 annual rate is likely to fall to 1.5%.
Residential construction remained a strong sector of the American economy until the middle of
2006. Thereafter, the market went into a tail-spin. In value terms, last year
showed a drop of 4.6% compared to 6.6% growth the previous year. The housing market remains oversupplied
and is predicted to suffer another hefty decline of 15.7% this year and a further decline of about
8.7% in 2008. In volume terms, this translates to 2.07 million new housing
units in 2005, 1.81 million last year, an expected 1.42 million in 2007 and only 1.32 million next year.
In line with growth of disposable income, furniture consumption in the US rose at a rate of 6.9%
in 2006, up from 4.7% the year before. This year may experience a painful slowdown to an
anticipated rate of only 2.2%. This would bring the market value to about US$86.4 billion this
year compared to US$84.5 billion last year. Growth for 2008 may be at the same slow speed,
lifting the market to about US$88.3 billion.
Canada¡¯s economy was strong in 2006, progressing at a rate of 2.8%. Nevertheless, GDP
growth has slowed in 2007, advancing at an estimated rate of 2.5%. Personal
income rose at a healthy pace of 6.1% in 2006. In conjunction with the US slowdown, it decelerated to about
5.0% this year. In view of the promised income tax cuts by the government, growth is likely to
stay at this pace in 2008.
The Canadian residential housing market advanced by 2.1% on a value basis in 2006, down from 3.5% the year
before. However, the market is saturated now and demand is waning. We predict
a 1.6% growth rate this year and only 0.9% in 2008. Nevertheless, the Canadian residential
construction industry will still show a modest positive growth. However in unit terms, residential
housing starts in Canada are also declining. In 2006, Canadian housing units amounted to
228,000 in 2006, 215,000 in 2007 and are expected to only reach 190,000 in 2008.
Canadian consumer spending is an important positive force contributing to the economy¡¯s overall growth and
rose at an annual rate of 4.0% during the past two years. Due to the slowing
economy a growth rate of 3.9% is anticipated in 2007 and 3.2% in 2008.
Expenditures for durable consumer goods (which includes furniture) are quite buoyant. Growth
will likely come in at a healthy 7.9% this year up from 7.1% in 2006. However,
as consumer confidence is declining, experts predict that durable consumer good sales to advance by only
3.7% next year and possibly as low as 3.0% in 2009.
The Canadian furniture market (at retail prices) has been advancing continuously since the third quarter of 2002.
Growth stood at 9.4% in 2006. A slowdown to 5.3% growth is expected in 2007 and 5.6% growth is expected
in 2008. The size of the Canadian furniture market in 2006 stood at C$ 11,078 million (evaluated at retail prices).
Experts anticipate that market valuation will reach approximately C$ 11,667 million this year and climb to
C$ 12,324 million in 2008.
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