West Hill Collegiate Institute - International Business

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U.S Actions Against Canadian Softwood Lumber 1991

Source: Softwood Dispute: Canada drops its export tax

Image result for canada us softwood lumber dispute

  • Ashley Algoo
  • Aakshana
  • Reshma Deonarine

7 Comments

  1. Part 1:
    Softwood lumber has a variety of objects it could be used for. Some of which includes structural buildings, furniture, millwork (moldings, doors and windows), paper production and or various types of boards, such as MDF.
    Softwood lumber has been an ongoing dispute between Canada and the United States which began in the early 1980s. Over the time, the trade disputes have been categorized in different eras commonly indicated as Lumber I. Lumber II, Lumber III and Lumber IV.
    The problems that caused this huge dispute were the Provincial/Territorial Stumpage fees, Allegations of Canadian Dumping, and Canada’s Multi-Jurisdictional Forestry Management System.
    1991 was the year where the Canada-U.S. Memorandum of Understanding on Softwood was coming to an end. On October 4th, 1991, the U.S. Trade Representative initiated a “Section 301”2 investigation of Canadian softwood lumber exports. The USTR was determined to withhold or extend the entries of imports of softwood lumber until the investigation by Commerce was completed. This resulted in the Canadian softwood lumber to be subjected to duties up to 15% depending on the province of origin. These duties were made to give a chance to the final subsidy and injury determination in the investigation. It was applied to entries filed after October 4th, 1991.
    On December 20th, 1991, the International Trade Center was determined to find a reasonable indication that the domestic industry was threatened with material injury by the subsidized imports from Canada. During this time, U.S. petitioners added Canadian log export restrictions as the subsidy counteracted. This was due to the fact that Canada submitted a request stating that the liquidation of entries imposed be the U.S. were the opposite of what was required for the conditions of “Article 5.1” imposed in October.

    http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/section05-3.aspx?lang=en
    . (2013, May 01). Retrieved November 02, 2017, from http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/section05-3.aspx?lang=en
    http://www.mapleleafweb.com/features/canada-us-softwood-lumber-dispute
    (n.d.). Retrieved November 02, 2017, from http://www.mapleleafweb.com/features/canada-us-softwood-lumber-dispute

    https://www.wto.org/english/tratop_e/dispu_e/gatt_e/91lumber.pdf
    United States – Measures Affecting Imports of Softwood Lumber from Canada [PDF]. (2009, July 08).
    https://www.wto.org/english/tratop_e/dispu_e/gatt_e/91lumber.pdf

    http://www.uslumbercoalition.org/doc/dispute_history.pdf
    Broen, J. (2016, November 30). U.S. – Canada Lumber Trade Dispute: A Brief History [PDF].
    http://www.uslumbercoalition.org/doc/dispute_history.pdf

  2. Part 2:
    The CBC Digital Archives I had watched was “Canada drops its softwood export tax”, this video was released on September 3rd, 1991. The story revolved around the controversial export tax that was in favor of the American lumber lobby. From the tax imposed five years ago at that time, Canada decided to drop its 15% export tax of softwood lumber, this was the effect of the deal that the U.S. decided not to put its own tax on Canadian lumber. Correspondingly, the U.S. lumber industry complained that Canadian firms were subsidized because Canadians payed lower logging fees. With all things considered U.S. trade representative Carla Hills stated that she would “urgently review Canada’s decision, and is considering all options including imposition of a U.S. import tax”. This did not change the mind of Canadians, just as when Deputy Prime Minister Don Mazankowski said “it’s time for normal business practices” leaving the U.S. to retaliate.
    http://www.cbc.ca/archives/entry/softwood-dispute-canada-drops-its-export-tax
    (2017, March 09). Retrieved November 02, 2017, from http://www.cbc.ca/archives/entry/softwood-dispute-canada-drops-its-export-tax

  3. Part 3:
    The Lumber II that took place in 1986-1987 had two major events happening at that time. The US Department of Commerce had become more aggressive towards the trade law. Also, the Coalition for Fair Lumber Imports had taken a toll on Canadian softwood lumber. In 1986, an investigation was done on the Canadian stumpage programs by the US, only to come out with the results of unfair subsidies. Canadian softwood lumber imports then had been taxed a 15% tariff. This was similar to my topic of the U.S actions against Canadian softwood lumber in 1991. During that time there was also a 15% tax placed on the Canadian softwood lumber. Both these events were based on the tension that arises from both Canada and the U.S. Although the Canadian softwood lumber was taxed, they used this as an advantage. Money was collected by the exporting taxes, and was kept in the country. In this sort of situation I wouldn’t have expected the taxes to open an opportunity for the Canadian softwood lumber. I believe past events in 1986-1987 might have a reoccurring pattern in future softwood lumber disputes for example creating opportunities for either Canada or the U.S.

  4. U.S. Actions Against Canadian Softwood Lumber
    PART ONE
    the softwood lumber dispute between the US and Canada has been an ongoing issue since 1982, to the present day. it rooted from American companies in Canada, more specifically, British Columbia, who requested the government look into the stumpage fees that they were to pay in order to keep their companies in Canada. softwood lumber is a valuable resource to the US, especially since many houses in the US are made with Canadian lumber. it is also used for paper production, millwork, etc. however, these fees weren’t investigated until 1986, and Canada and the US negotiated a deal in which Canada agreed to collect 15% levy on any of the exporting lumber. the US then had Canada sign a Memorandum of Understand (MOU), which stated this agreement. Canada later decided to close the deal and get rid of it.

    CITATION: Lumber I to IV: History of the Canada-U.S. Softwood Lumber Dispute. (n.d.). Retrieved November 03, 2017, from https://lop.parl.ca/content/lop/ResearchPublications/tips/tip134-e.htm

  5. PART TWO

    the video I watched was the one from 1991, about how Canada dropped its tax on the softwood. the video explains how the US argued that the provincial stumpage fees were unreasonable and cost a lot. it also explains the negative effect doing changing the policy had on the towns in the province these duties occurred. for example, in British Columbia, the cut cost 7000 jobs, therefore decreasing the employment rate. it also explains how the fees cost so much, and with the stronger Canadian dollar, this resulted in the lumber being expensive in the US. this had a negative effect be it decreased our shares in the market from 1/3 to 1/4.
    Canada drops it’s softwood export tax – CBC Archives. (2017, March 09). Retrieved November 03, 2017, from http://www.cbc.ca/archives/entry/softwood-dispute-canada-drops-its-export-tax

  6. PART ONE:
    Topic: U.S Actions Against Canadian Softwood Lumber 1991
    The memorandum increasingly became viewed by some provinces, in particular British Columbia, as infringement of provincial sovereignty. Pressure grew within Canada to eliminate the Memorandum and federal government unsuccessfully attempted to negotiate its termination with the US government. Canada ended practice of imposing a 15 per cent charge on softwood exports to the US. An investigation of provincial/ territorial stumpage fees by the US department of Commerce. In 1992, the department imposed a 6.15 per cent countervailing duty on Canadian softwood lumber. This led to a number pf legal battles between Canada and the United States under the Canada-US Free Trade Agreement. That same year, Canada and the United States agreed to implement a consultative process on softwood lumber trade to eliminate any further trade disputes.
    https://edc.trade/canada-lumber/?campaign=937759154&device=c&keyword=+canada%20+us%20+softwood%20+lumber&adposition=1t1&creative=223302726668&gclid=Cj0KCQjwyvXPBRD-ARIsAIeQeoEoEoQh1fO3txfDS653kvnxf2oaJuDGakgWZ7ru5XiRue_XfpOhQsgaAtuKEALw_wcB
    http://www.mapleleafweb.com/features/canada-us-softwood-lumber-dispute.html

  7. PART TWO:
    Watching the CBC video clip on Canadian Softwood lumber is about how the Canadian provinces have spent time working towards implementing forestry system acceptable to the American, rendering the tax unnecessary. In the clip it shows that the national the announcement enrages the U.S lumber industry, which threatens immediate retaliation. In 1992 the U. S international trade commission decided Canadian subsidies injured American producers and levied a 6.5 per cent duty on Canadian lumber.
    http://www.cbc.ca/archives/entry/softwood-dispute-canada-drops-its-export-tax

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