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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Excerpts
Reasons for the Dispute
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US lumber producers argued that the price paid by
Canadian lumber companies by way of stumpage fee was much lower than
what US lumber companies paid. In the US, around 42% of the forestland
was publicly owned and timber sourced from these public lands was
auctioned. In Canada, however, almost 90% of the timberlands were owned
by provincial governments. The government allocated the land through a
variety of leases and set the price of the timber through "administered
pricing," with some adjustments made to reflect changes in the market
prices of lumber. The market-determined prices of softwood lumber in the
US were higher than the administered prices in Canada... |
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An Agreement To End The Dispute
In April 2006, Canada and the US, after negotiations, announced that they had
arrived at a draft agreement to resolve the lumber dispute. The draft agreement
included the return of about 80% of the duties that the US had collected on
lumber imports (US$4 billion of the US$5 billion collected) since May 22, 2002.
Stephen Harper (Harper), Prime Minister of Canada, said, "Canada's bargaining
position was strong; our conditions were clear; and this agreement [draft]
delivers. It's a good deal that resolves this long-standing dispute and allows
us to move on. We have a deal that defends Canada's national interests and helps
Canadian communities and workers."...
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A Never-Ending Dispute?
Although the Canadian government appeared to be satisfied with the SLA,
lumber companies in Canada were still not completely happy with the
agreement. Major lumber industry associations in British Columbia,
Alberta, Ontario and Quebec continued to express their dissatisfaction
with the agreement. They were critical of the clause that allowed the US
to keep US$1 billion of the US$5 billion collected as duties. They were
also concerned about the export fee that they would have to pay if they
exceeded their monthly quotas... |
Exhibits
Exhibit I: US imports of Softwood Lumber from Canada
Exhibit II: The Canada-US Free Trade Agreement
Exhibit III: United States Duty Rates on Imports from Canada
Exhibit IV: Preliminary Antidumping Duty Margins of Canadian Lumber Companies
Exhibit V: Final Countervailing Duty Rate and Final Antidumping Duty Margins of
Canadian Lumber Companies
Exhibit VI: Domestic Demand, Capacity, Exports and Imports of Softwood Lumber of
US and Canada: 1996-2006
Exhibit VII: British Columbia Export Charge Rate of Softwood Lumber between
October 2006 and May 2007
Exhibit VIII: Demand Forecast for US and Canadian Softwood Lumber
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