SOFTWOOD LUMBER IMPORTS FROM CANADA: HISTORY AND ANALYSIS OF THE DISPUTE (CRS Report for Congress)
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| Release Date |
Feb. 2, 2001 |
| Report Number |
RL30826 |
| Report Type |
Report |
| Authors |
Ross W. Gorte, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
Summary:
Softwood lumber imports from Canada have been of concern to U.S. lumber producers for many
years because of questions about Canadian government timber pricing policies. In 1996, the United
States and Canada reached a 5-year agreement on restrictions -- a fee on lumber imports from four
Canadian provinces in excess of the specified quota -- that expires on March 31, 2001. Resolutions
and bills have been introduced in recent Congresses that, had they been enacted, would have
restricted lumber imports from Canada or eliminated the basis for restricting those imports. The
107th Congress may also consider legislation on this issue.
U.S. lumber producers argue that they have been injured by subsidies to their Canadian
competitors. Stumpage fees (for the right to harvest trees) charged by the provinces are asserted to
be subsidized (priced at less than their market value). In Canada, provincial government timberlands
dominate the supply system, with long-term leases to private firms to assure stable timber supplies,
and with timber priced administratively to assure financially feasible production. Private
timberlands dominate the U.S. supply system, with competitive bidding to allocate and price most
public timber. The use of administered prices by the provincial governments opens the possibility
that the Canadian system results in transfers to the private sector at less than the fair market value.
Major differences in tree species, sizes, and grades, in measurement systems, in requirements on
harvesters, in environmental protection, and in other factors, however, make comparisons difficult,
controversial, and generally inconclusive.
Canadian log export restrictions are also asserted to be subsidies, because the restrictions assure
more supply (less competition for timber) for Canadian producers. Evidence from the U.S. Pacific
Northwest, where private logs can be exported but public timber cannot, indicates a substantial price
differential, with higher prices for exported logs. However, Canada has recently challenged as
GATT violations the U.S. trade law provisions that include export restrictions as subsidies.
Injuries to U.S. lumber producers have also been difficult to establish decisively. Canada's
share of the U.S. lumber market has risen substantially, from less than 7% in the early 1950s to more
than 35% in the mid-1990s. Under the 1996 agreement, the quantity of imports has continued to
rise, but the market share has been relatively stable. In the past two years, the dispute has also
included whether certain softwood products are modified construction lumber subject to the 1996
restrictions (the U.S. view) or are specialty products outside the agreement (the Canadian view). The
impact of import restrictions on domestic lumber prices is not easily estimated, but supply/demand
theory suggests that restrictions would put upward pressure on U.S. lumber prices.
Other factors are also important. The persistence of the dispute may reflect tensions between
increasingly free-trade U.S. policies and protection from imports available under U.S. trade law.
Also, probable differences in environmental protection complicate cross-border comparisons.
