Softwood Lumber Agreement

SOFTWOOD LUMBER AGREEMENT was a 5-year agreement, effective 1 Apr 1996, between the US and Canada regulating the export of Canadian softwood lumber to the US, which in 1996 accounted for 19% ($4.7 billion) of BC's international exports. This dispute began in 1866, with the end of the first Canada–US free trade agreement, and has reappeared at various times since. This dispute is of great concern to the BC FOREST INDUSTRY, which sells about 60% of its lumber exports in the US. The dispute has been continuous since 1982, when US lumber interests sought to restrict Canadian access to US lumber markets because of perceptions that provincial forest policies had the effect of subsidizing Canadian producers. After Canada endured a series of duties and export taxes, extensive negotiations led to signing of the 1996 agreement limiting lumber exports from BC, Alberta, Ontario and Quebec to 14.7 billion board ft annually. The agreement specified that shipments above that level would incur an escalating export fee, which would be adjusted annually for inflation. The initial agreement expired in 2001 and negotiators from the two countries were unable to reach a new one. The Americans imposed tariffs on Canadian timber and the two countries entered a long period of often acrimonious negotiations in which Canadian politicians and industry representatives argued that the US was using bullying tactics and not living up to its international commitments. Finally, in July 2006, a tentative deal was reached by which Canadian companies received back about 80% of the value of the tariffs that had been imposed. Although there was significant opposition in BC and the rest of Canada to the new agreement, it was eventually agreed that it was the best deal that could be expected and in October 2006, it was signed into law. See also FOREST POLICY.