Softwood Lumber Dispute Case Study

Introduction
The softwood lumber dispute is one of the largest and longest trade disputes between the United States and Canada. The dispute actually represents a number of disagreements due to different lumber production in Canada and US and how trade is affected between the two nations. The disagreement began in the early 1980s, when US lumber producers complained to the US Department of Commerce about the unfair production of Canadian lumber and it is still a talking point in today’s negotiations and a solution for this problem doesn’t seem to be imminent and practical. At the heart of this long-lasting softwood lumber dispute is United States' claim that the Canadian government is unfairly subsidizing the Canadian lumber industry and helping …show more content…
Continued Dumping and Subsidy Offset Act of 2000). This legislation instructed Commerce that all of the duties that are collected for a particular good be distributed to the US injured companies that filed the complaint that they lost some of their revenues and profits. This was a clear violation of the international trade law and the WTO ruled that as not “permissible under the said agreement”. Thus, WTO indicated to Canada and other US trading partners (Japan, European Union, etc.) to impose retaliatory subsidies in response. After the enormous pressure from WTO, the Byrd Amendment was repelled in 2005. When the treaty ceased in 2001, the U.S. industry allegedly identified federal and provincial stumpage and export controls, five federal programs, and 22 provincial programs as sources of subsidies. Furthermore, it was determined that Canadian softwood posed a threat of injury to the U.S. industry. Thus, Commerce and decided to charge 27.22% of duties due to alleged subsidy and dumping. Canada and individual Canadian companies applied to NAFTA and the WTO for review of various parts of Commerce’s determinations. In 2004, after an immense pressure from Canada, NAFTA and WTO, Commerce conducted its first annual review of their duties and, in its preliminary finding, lowered all of them significantly; among other decisions, it set total duties of only 9.24%. However, when the final review was published in December, the traditional U.S. benchmark had been applied to the B.C. coastal lumber industry, resulting in an increase of the total CVD to more than 17%. Canada was furious at this point, and it decided to cancel the negotiating meeting scheduled for January 2005 in Chicago. Lastly, the NAFTA panel made a decision that Canada is not subsidizing its lumber industry and engaging in any anti-dumping practices. The Canadian

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