Softwood Lumber

Canadian government owns almost 94 % of the forestry land. softwood lumber is the one of the biggest export products of Canada valuing at 8.6% of total exports. Canadian softwood lumber is sold to united stated below the production cost. Due to market distortions in Canada encourage the government to overproduction of lumber, uneconomic decisions by lumber producers, and dumping of lumber in us. The US markets were bombarded with profit loss due to the cheap lumber from Canada; therefore the start of lumber dispute began. There has been numerous of disputed for almost 20 years. United States is saying that Canadian government is promoting unfair production of lumber. While on the other hand, Canadian is denying that statement. The softwood lumber dispute was one of the biggest events, which devastated the Canadian economy. An Overview of the softwood Lumber Dispute The softwood lumber dispute is a controversial topic in Canada history effecting both Canada and the United States. The history of the softwood lumber dispute between Canada and the United States has lasted for almost 20 years. The softwood lumber dispute affected British Columbia greatly due to the job loss in lumber industry. softwood lumber made up most of the exports in BC. The Canadian economy is completely dependent

on the US for the exporting. The trade dispute is just the start of event which can occur all around the world. This dispute was mainly based on softwood timber fees, regarding the amounts that were being charged to companies, who exported lumber. In fact many people in the U.S. saw this as a threat to their economy because the Canadian stumpage fees were too low. The U.S. wanted Canadian lumber producers and the provincial government to sell the softwood lumber at market prices. Resulting in the U.S. to charge tariffs on imported Canadian softwood .This power struggle between Canada and the United States over softwood lumber has had a huge impact on the economy. A country often puts tariffs on imported goods in order to protect their economy. Taking this into consideration that Canadian softwood is cheaper than American lumber due to the currency rate. Therefore, the Americans were buying the cheaper lumber from Canada. If America did impose the tariffs, the state of the lumber industries would have been devastating. Nonetheless, by imposing these tariffs, America had the idea that the Market would be able to eliminate the advantage of foreign products. In long term, the effects would be destructive to the economies in both countries. Relevant Trade Agreements Canada is occupied with many divisions such as the B.C. Lumber Trade Council and the Free Trade Lumber Council. Both these divisions share different views on the softwood lumber dispute. In fact, the B.C. Lumber Trade Council hesitates to start a dispute with U.S. due to overwhelming costs. On the other hand, the Free Trade Lumber council, the lumber producer from Quebec and Ontario, wants to dispute against United States. The Canadian government had a similar belief as the Free Trade Lumber council about the free trade in softwood lumber market. In conclusion, after many disputes, the Canadian and United States government agreed upon softwood lumber agreement in order to resolve the disagreement. In the agreement, Canada was allowed tariff free exports to United States only 14.7 billion boards per year produced by provinces such as British Columbia, Alberta and Ontario. Under this agreement, after the