Oct. 9 (Bloomberg) -- Homebuilders in the U.S., concerned that an agreement between the U.S. and Canada to manage the lumber trade might lead to shortages and price increases, began meetings in Russia today intended to secure new import sources.

Russia, which has more than one-fifth of the world's forested land, might join with a group of European countries to increase exports to the U.S. in the face of likely declines in lumber trade from Canada, said Jerry Howard, chief executive of the National Association of Homebuilders.

The ability of Canadian companies to export lumber ``is going to be severely curtailed,'' Howard said in an interview from Moscow. Canada provides about one-third of the U.S. lumber used in housing construction each year. Imports from Europe grew to about 5 percent of consumption last year.

In addition to more imports, the association of more than 235,000 builders and remodelers said it is researching ways to use other construction materials such as cement and petitioning to open up more U.S. forest land for logging.

``As this agreement became more and more a reality, our members told us to be active in terms of what we could do,'' Howard said.

The group's concerns stem from a similar trade agreement worked out by the U.S. and Canada in the 1990s. After an agreement to limit trade was put in place in 1996, lumber prices surged to more than $450 per 1,000 board feet, near a record high. Under the terms of that accord, Canada could ship 14.7 billion board feet to the U.S. duty free each year; amounts greater than that were subject to increasing tariff rates.

Litigation

After years of litigation following the expiration of that agreement in 2001, the U.S. and Canada negotiated a new accord to limit trade earlier this year. That agreement goes into effect on Oct. 12, and would allow companies such as Vancouver-based Canfor Corp. to recover about $4.3 billion in duties that the U.S. began collecting in 2002. It will also mean a new export-tax regime on Canadian lumber sent to the U.S.

In the wake of that agreement, lumber prices have fallen to their lowest price in more than three years on speculation Canadian suppliers are boosting shipments before the export tax go into effect.

Howard says that recent drop in prices illustrates the need for homebuilders to prepare for a potential spike in prices in the future. Increasing imports from Russia and countries such as Sweden is one way to do that, he said.

Russia has more forests than any other country on the planet, with forested land covering more than a billion hectares, according to the U.S. Forest Service.

Russia is already exporting lumber to Japan, China and Europe: Russia's forests provide 5 percent of export earnings and 2 million jobs, the U.S. Forest Service said.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

Last Updated: October 9, 2006 12:25 EDT