Background - Canada-United States Softwood Lumber Trade
The softwood lumber industry is an important sector in the Canadian economy, supporting thousands of jobs in communities across Canada and creating many positive spin-off effects in related industries and services. Natural Resources Canada's Canadian softwood lumber industry webpage provides detailed information on the industry's role in our economy.
Canada's modern, efficient, environmentally sustainable lumber companies have the potential to serve markets at home and around the world. In the United States, where demand for lumber exceeds what domestic mills can supply, housing and other sectors have come to rely on Canada for stable, predictable access to quality products.
Despite the U.S. market's dependence on imported lumber, over the past four decades, the United States lumber industry has frequently sought U.S. government restrictions on Canadian softwood lumber imports through the application of U.S. countervailing (CVD) and anti-dumping (AD) duty laws. These laws allow the imposition of import duties when the U.S. government deems that its domestic industry is threatened by material harm or is materially harmed by subsidies in the exporting country (countervailing duties), or when it deems that the U.S. industry is threatened by material harm or is materially harmed by imported products sold at prices that are lower than the cost of production or lower than prices in the country of origin (dumping).
Canada has in the past successfully challenged U.S. duties under the dispute resolution provisions of the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA), and before United States courts. These U.S. actions nevertheless harmed Canada and its industry while they were underway, namely through the time and costs associated with the legal challenges and the protracted imposition of duties.
In addition, the softwood lumber industry has experienced a number of periods during which trade was managed through agreements between the two countries. Most recently, Canada and the United States signed the 2006 Softwood Lumber Agreement (SLA) on September 12, 2006. This Agreement put the 2001-2006 trade dispute to an end. The SLA, which came into force on October 12, 2006 for an initial seven-year term, with a provision for a two-year extension, saw the return of more than $5 billion in duty deposits by U.S. authorities to Canadian companies. The Agreement promoted a stable and predictable trade environment for the softwood lumber industry and maximized benefits to Canadian industry, its workers and their communities. With the strong support of industry and provinces, Canada and the United States agreed to extend the SLA for an additional two years, to October, 2015. This extension was signed on January 23, 2012, and was ratified by both countries on April 20, 2012.
The SLA expired on October 12, 2015. The United States government and industry agreed to not undertake new countervailing or anti-dumping duty investigations against Canadian softwood lumber products for one year following the expiry of the SLA. This one-year period expired on October 12, 2016.
In November 2016, the United States softwood lumber industry requested the initiation of AD and CVD investigations, which led to the imposition of duties on Canadian softwood lumber products from early 2017 to present. Canada is actively challenging these unjustified and unwarranted duties under the dispute resolution provisions of the WTO, NAFTA and Canada-United States-Mexico Agreement (CUSMA).
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