Softwood Lumber Agreement

The World Trade Organization (WTO) agreement includes a dispute settlement mechanism; It may be requested that a WTO panel be set up to determine whether a country`s actions are compatible with WTO agreements. Canada has appealed the AD and CVD investigations. In the United States, where demand for wood exceeds what local mills can provide, housing construction and other industries depend on Canada for stable and predictable access to quality products. The 2006 Softwood Lumber Agreement (SLA), which provided stability and predictability to industry on both sides of the border, expired on October 12, 2015. On the other hand, the major industrial organizations in the United States do not want to renew the treaty. The executive director of the U.S. coalition on wood Zoltan Van Heyningen expressed his disapproval of the current format of the agreement. One reason is the changing cost of wood, which the United States says is not reflected in the cost of B.C. The U.S. Wood Coalition points out that if negotiations fail, it is certainly legally entitled to file a petition with the U.S. Department of Commerce to file a new case.

This time, the Department of Commerce`s determination was reviewed by a binational organization organized as part of the Canada-U.S. Free Trade Agreement (CUSFTA), the predecessor of the North American Free Trade Agreement. Prior to the signing of NAFTA, the DoC`s decision would have been reviewed by the U.S. State Court of International Trade, but under the CUSFTA, Canada had the opportunity to have it reviewed by a binational body and they chose that option. The panel of three Canadians and two Americans found that the DoC`s determination could not be supported by substantial evidence; It was a controversial decision because the vote was along national borders, and the majority vote was based on the idea that U.S. law required the U.S. Department of Commerce not only to establish a subsidy, but also to prove that the subsidy was beneficial to the Canadian wood industry. The U.S. Congress then amended the law to explicitly declare that there was no “impact test.” In addition, the United States stated that two of the participants on the Canadian panel had conflicts of interest and led them to an extraordinary challenge committee.

Again, this committee was divided according to national lines. The Softwood Lumber agreement expired on October 12, 2015. Canadian conifer lumber producers now have free access to the U.S. softwood market.

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