The Softwood Lumber Dispute Between Canada and The United States
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Case Details:
Case Code : ECON022
Case Length : 14 Pages
Period : 1983-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : -
Industry : Manufacturing (Forest Products)
Countries : USA and Canada
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Introduction Contd...
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Consequently, the Canadian and US governments signed
a Memorandum of Understanding (MoU) in 1986 and the SLA in 1996 in an
effort to resolve the dispute.
However, when the SLA expired, the US DOC initiated countervailing and
antidumping duty determinations. In March 2002, the DOC determined that
Canadian lumber was subsidized and in May 2002, the US imposed 27% duty
on Canadian softwood lumber.
Canadian producers, on the other hand, felt that they were unnecessarily
targeted and labeled the US government's interventions as protectionist. |
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They felt that the US actions were against the spirit of the
Free Trade Agreement (FTA) (Refer Exhibit II for a Brief Note on the Canada-US
Free Trade Agreement) that the two countries had entered into in 1989.
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The Canadian government challenged US actions under
NAFTA,8 at the World Trade
Organization (WTO)9
and in the US federal courts. Even though Canada had taken the matter to
NAFTA and the WTO, it was in favor of resolving the softwood lumber
dispute bilaterally.
After many rounds of discussion, Canada and the US signed a new SLA on
September 12, 2006. Analysts were hopeful that this agreement would
promote a stable trade environment for the softwood lumber industry of
both countries. However, with newspaper reports in early 2007 suggesting
that both sides were uncomfortable with certain clauses in the
agreement, it seemed as though the dispute was going to linger on. |
The Dispute
The softwood lumber row between Canada and the US dates back hundreds of years, but in the 1980s, it emerged as a major trade dispute between the two North American nations. On October 7, 1982, the CFLI filed a petition, alleging that Canadian provinces, mainly British Columbia,10 extended subsidies to local lumber companies by charging low stumpage rates and that the low fees resulted in an unfair trade advantage for these companies...
Excerpts
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