1. Softwood Lumber Dispute Canada vs. USA

2. Brief Introduction Since 1982 Canada and the USA have been involved in four softwood lumber disputes British Columbia which accounts for 50 % of all softwood lumber export, is the prime target The latest dispute began when the five year Softwood Lumber agreement expired in April 2001

3. Background On International Trade Rules Through agreements in WTO countries have agreed to lower trade restrictions against each other In general countries have agreed to not impose new tariffs or quotas But there are exemptions: Anti-dumping duties to offset countries selling at unfair low price Countervailing duties to offset government subsidies Emergency trade restrictions to safeguard domestic industries

4. Current Dispute 2001-Present… After the agreement ended in March 2001, US Coalition for fair trade lumber imports filed a countervailing duty petition and antidumping petition against Canadian softwood lumber British Columbia has followed a two-track approach: Litigation: The government has defended their its program during sessions with the WTO and NAFTA Negotiation: The government has actively participated in discussions with the US government about possible policy changes

5. Economic Effects Softwood lumber is BC largest export article, and in many communities forestry is the primary income In 2003 softwood lumber exports totalled $ 5.3 billion. Shipments to US accounted for 69 % During the two first years of the duties imposed, BC producers paid about $ 2 billion CAD, roughly $ 85 million a month BC’s sawmill industry have experienced layoffs, and temporary and permanent shutdowns. High North American lumber prices in the first half of 2004 have partially offset the negative effects of the duties and the exchange appriciation

6. Conclusion Optimism in winning legal cases, increased efficiency in lumber production, and higher lumber prices, have allowed the BC industry, in aggregate, to maintain its production despite the 27 % duty. If lumber prices fall, combination of the appreciation of the CAD, or uncertainty in the legal disputes as they stretch out, may cause reduced lumber production in BC

7. Sources www.for.gov.bc.ca/softwood