The 2006 U.S.-Canada Softwood Lumber Trade Agreement (SLA): In Brief

Summary

Softwood lumber imports from Canada have been a persistent concern to Congress for decades. Canada is an important trading partner, but lumber production is a significant industry in many states, and the U.S. lumber producers are a powerful economic influence. U.S. lumber producers claim that they are at an unfair competitive disadvantage in the domestic market against Canadian lumber producers because of Canada’s timber pricing policies. This has resulted in five major disputes (so-called “lumber wars”) between the United States and Canada since the 1980s.

Tension between the United States and Canada over the softwood lumber trade has been persistent. Both countries have extensive forest resources, but they have different population levels and development pressures. Vast stretches of Canada are still largely undeveloped, while relatively fewer areas in the United States (outside Alaska) remain undeveloped. These differences, among others, have contributed to different forest management policies between the two countries.

For decades, U.S. lumber producers have argued that they have been injured by subsidies to their Canadian competitors. U.S. producers have attributed Canadian subsidies to lost market share and lost revenue. In the United States, the majority of the timberlands are privately owned; private markets dominate the allocation and pricing of timber, although federally-owned forests are regionally important. In Canada, forests are largely owned by the provincial governments and leased to private firms. The provinces establish the price of timber through a stumpage fee, a per unit volume fee charged for the right to harvest trees. U.S. lumber producers argue that the stumpage fees charged by the Canadian provinces are subsidized, or priced at less than their market value, providing an unfair competitive advantage in supplying the U.S. lumber market. Directly comparing Canadian and U.S. lumber prices is difficult and often inconclusive, due to major differences in tree species, sizes, and grades; measurement systems; requirements for harvesters; environmental protection; and other factors.

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