West Hill Collegiate Institute - International Business

Established in 2012, by Daniel Shafransky and Raymond Ahmad


Softwood Dispute: Canada claims victory at WTO

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  • Neesa Sarju
  • Mitali Mistry
  • Zoe Verheggen



    Canada has claimed victory in its softwood-lumber dispute with the US after a panel ruling involving NAFTA. Canada urging to receive some sort of victory set a high demand of a quick repayment of billions of dollars in penalties picked up by the Americans. The United States however has responded intending to continue imposing high tariffs in addition to negotiate with Canada. Later the panel had dismissed the U.S claiming that an earlier NAFTA ruling in favour of Canada had violated the rules. After accusations on Canada towards them subsidizing its lumber industry, the tariffs were then imposed.

    Most U.S. timber is harvested from private land at market prices, but in Canada, the government owns 90 percent of the timberland and charges fees for logging. The fee goes towards the maintenance of the forestry areas. Since then, we have lost around $4 billion in punitive tariffs. In addition to costing thousands of individuals of jobs etc. That being said, The Trade officials of Canada believes that they could win victory over the WTO because they claim that Canadian producers are unfairly subsidized, however they know that the United States still have options outside the Free trade agreement. In conclusion these officials strongly believe that a negotiated solution is in the best interests for both the U.S and Canada as well as a litigation will not solve the conflict and/or resolve this dispute.

    Article- https://www.iatp.org/news/canada-claims-victory-in-dispute-with-us-about-softwood-lumber-tariffs



    This video clip from the The National, Canadian celebrations can be premature. The World Trade Organizations also known as the (WTO) is an international organization dealing with the trade between countries. The rules of the WTO are based on the general agreements on tariffs and trade. With that being said the WTO believed that United States Of America is wrong to impose more duties on Canadian softwood lumber as it has cost Canadian softwood lumber disputers billions of dollars and thousands of Canadian workers to loose numerous jobs. However this organization had agreed with Canada in the softwood dispute ensuring that they doe not subsidize its lumber industry. Canada is not afraid to act and refuse any further negotiations as they believed that they must be paid back by the US. From this video we can see that some mill owners believe that this is all part of the US’s strategy to force them to resign from this business, disregarding international law and push them out of business.

    video reference – https://www.youtube.com/watch?v=W4kQ3FbnEB8

  3. PART I

    The Canada- U.S softwood lumber dispute has been around since the 1980s. In 2005 the dispute over repayment of duties had come to surface which began a new issues inside of the long lasting dispute itself. This dispute came about when there were contradictory rulings between NAFTA and the WTO panels which brought out more disputing over whether or not the USA had to repay billions of dollars that they had collected from softwood duties. Canada and the US being on opposing sides of this argument, Canada saying that the US must return billions of dollars that they had gotten from duties of imported Canadian softwood lumber. While the US was saying that Canada should ultimately return to the bargaining table before any kind of deal was made about returning any repayment of duties. The US had announced that they would be ignoring the decision made by the 2005 NAFTA Extraordinary Challenge committee and would continue to use WTO for their case, which lead to Canada cancelling its meeting to speak with the US about the softwood dispute on January 2005. The US making it clear that they would not be satisfied until the Canadian system moves towards a fully market-driven system. This dispute put a lot of tension between the two countries, Canada saying that the free trade agreement could fall apart in the US did not honour the ruling to return $5 billion dollars that have been collected since 2002. Canada willing to give up its major trading partner if these requests are not met by the US.

    Work Cited List
    The Canada-US Softwood Lumber Dispute | Mapleleafweb.Com, http://www.mapleleafweb.com/features/canada-us-softwood-lumber-dispute.html#2001.

    Web.b.ebscohost.com. (2017). Harper would trade up; Tory leader says if U.S. doesn’t play ball on softwo…::http://web.b.ebscohost.com/ehost/detail/detail?vid=8&sid=f6d4c868-01e0-4e27-893d-8732ee1df23d%40sessionmgr120&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=1C191C193493855753&db=rch [Accessed 3 Nov. 2017].

    “Lumber I to IV: History of the Canada-U.S. Softwood Lumber Dispute.” Library of Parliament, lop.parl.ca/content/lop/ResearchPublications/tips/tip134-e.htm.

    In the audio clip I listened to the speaker was talking about how there is a lot not to like about the lumber dispute but the one positive as it seems right now is that the money is being returned back to Canada from the US. Although the money will not be returned to Canada right away but $5 billion will be returned in the long run. Canada is trying to get these funds returned as quick as possible which means that canadian taxpayers are paying for the funds for now since the canadian government is trying to return the money back to those who have lost it. Since it takes the US a long time to be able to pay back the money in full. Canadian taxpayers overall will be taking the risks but will benefit in the end due to some people not collecting their money from what the US returned. Yet hopefully this will help put the dispute behind both countries.

    Work Cited
    “Softwood Dispute: A controversial agreement – CBC Archives.” CBCnews, CBC/Radio Canada, 9 Mar. 2017, http://www.cbc.ca/archives/entry/a-controversial-agreement.

    • Part 3
      In my opinion, the Canada-U.S lumber dispute in 2005 was unreasonable. The billions of dollars that the U.S owes from the softwood duties should be payed because it is unfair the amount of how much Canada should gave them in duties. This is also unreasonable due to the fact that U.S is creating some problems between the Canada which can destroy the perfect bond that NAFTA was keeping. U.S should pay back Canada their 5 billion dollars because it can create a lot of conflict between other trades that NAFTA is handling, and its morally wrong to not pay back Canada their share.
      by: Barathe

  4. 2005 Dispute Over Repayment of Duties followed by 2006 Softwood Lumber Agreement
    PART I
    The softwood lumber industry is a significant asset to the Canadian economy; it provides job opportunities across the country, as well as benefits large services and industries. The 2006 softwood lumber agreement was signed on September 12, 2006 by the international trade minister, David Emerson, and representative of the U.S, trade, Susan Schwab. Both Canada and the U.S. agreed for an initial 7-year term which was officially effective on October 12th of the same year, and further included a provision for a 2-year extension. This agreement was said to return millions, in not billions held in the collateral of the States. This renewable agreement recommended that the U.S. return approximately $4 billion of the $5 billion in penal duties composed through Canadian lumber producers. The remaining $1 billion will be to aid the communities impacted due to this agreement. Thus, the U.S. agreed to not only return the $4.5 billion in duties it inherited since 2002, as well as eradicate anti-dumping duty orders on Canadian softwood lumber. New investigators against Canadian softwood lumber were also denied by the U.S. following this agreement. Although, if we go back to 2005, dispute over repayment of duties, much of this is what Canada and the U.S. once disputed over. In 2005, the contradictory ruling of the World Trade Organization and the North American Free Trading Agreement panels imposed further disagreements about U.S. repaying the billions of dollars due to softwood duties it has collected from Canada. Canada agreed that the U.S. must pa back the amount they charged on imports of Canadian softwood lumber. However, the U.S. imposed that Canada must attend to the bargaining table before they discuss any controversy with repayment of duties. 2005 NAFTA Extraordinary Challenge Committee decision was chosen to be ignored by the U.S., thus Canada dismissed scheduled talks on softwood lumber. Lastly, August 2005, the World Trading Organization concluded that Canadian softwood lumber had established a threat toward the U.S. market.

    Work Cited List:
    Government of Canada, Global Affairs Canada, Deputy Minister of International Trade, Communications Bureau (International Trade), Outreach and E-Communications Division. “Background – Canada-United States Softwood Lumber Trade.” GAC, 25 July 2017, http://www.international.gc.ca/controls-controles/softwood-bois_oeuvre/background-generalites.aspx?lang=eng.
    “Softwood Dispute: A controversial agreement – CBC Archives.” CBCnews, CBC/Radio Canada, 9 Mar. 2017, http://www.cbc.ca/archives/entry/a-controversial-agreement.
    The Canada-US Softwood Lumber Dispute | Mapleleafweb.Com, http://www.mapleleafweb.com/features/canada-us-softwood-lumber-dispute.html#2001.

    Simon Potter, representative of the Quebec Forest Industry from the law firm McCarthy Tetro, states that the $4 billion that was inherited by the U.S. in softwood lumber duties between 2001 to 2006, must be sent out in the next two to three years or made arrangements for so that the industry receives about 80% of their money as early as possible. Canada is leaning toward the second option of making an agreement, due to the Canadian government already announcing that he will buy out the 80% of claims from the industries, and then wait for the U.S. to pay its debt. The Canadian government believes that the Canadian companies should get a hold of their money as soon as possible because “they are in need of it.” But the question is: who pays it? Canadian taxpayers are largely at risk, for the following years, for increasing taxes. Although, taxpayers may also benefit from those enterprises who go bankrupt or are irresponsible. To conclude, the industries and the Canadian government strives to move on from this dispute as soon as possible.

    Work Cited List:
    “Softwood Dispute: A controversial agreement – CBC Archives.” CBCnews, CBC/Radio Canada, 9 Mar. 2017, http://www.cbc.ca/archives/entry/a-controversial-agreement.

    2002 tension between Canada and the U.S. in regard to the softwood lumber dispute is much like the 2005 dispute over repayment of duties. There was much tension between Canada and the U.S. between 2001 to 2006 regarding this dispute, and I agree that it was worth the disagreement. Canada wanted for the U.S. to repay the billions of dollars that was inherited through duties they charged on Canadian softwood lumber, and the U.S. sought for Canada to bargain with them first. I agree that this is a controversial situation because you have two powerful countries feuding over billions of dollars. This may impact their economy or jobs immensely. It is right for the Canadian government to ask for the repayment of duties, however, it is also not wrong for the U.S. government to voice his opinion, and insist for a discussion with the government of Canada. In the end, it is the federal government of both countries that must come to some common ground, so that the citizens of their country are not harshly affected.

  6. There was much tension between Canada and the U.S regarding this dispute. However with all that has occurred between these two nations. Canada had claimed billions from their next door neighbour that was inherited through the penalties charged on the Canadian softwood lumbier. The U.S would not discontinue their negotiations. With this feud over billions of dollars, this carries many negative impacts on both the citizens and the industry, forcing them out of jobs and opportunities. I agree that Canada should demand for the repayment of duties, however as Mitali says it is also not wrong for the U.S to voice their opinion as they are also a dominant nation. Canada regaining their repayments of billions lost is gaining a bit of victory, however they are also not winning as they will not get the payment until a couple years. Lastly it is the federal governments duty to come to one conclusion that will benefit both nations and keep the softwood lumber industry at peace and running smoothly while the citizens are not immensely affected and hopefully these two nations can put this behind them although it may be difficult.

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