Essay On Trade Dispute

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This section includes a brief history of the trade dispute. It is very important to mention that exchange rate played a crucial role in these disagreements, but they will be explained in details later in the paper. It all started in the year 1982, when the US lumber lobbyists submitted a petition to the US Department of Commerce regarding the unfair practices in Canada; especially to investigate the stumpage systems in British Colombia, Alberta, Ontario and Quebec. Hence, they claimed their sales and profits diminished and that they were injured; so they required from Commerce to impose countervailing duties. In the following year, petition was dismissed on the ground that the stumpage fees were not specific to any industry or …show more content…

Thus, countervailing duties of 6.51% were imposed on lumber imports from all provinces in Canada7. Immediately after, Canada appealed to the Canada-U.S. Free Trade Agreement (FTA) about the US the determination of subsidy, injured firms and putting countervailing duties on their lumber. The panels ruled in favor of Canada repeatedly and asked the United States to refund the duties. However, the US delayed in refunding the duties and was planning to do another round of subsidizing investigation; Canada yet again signed a five year MOU treaty, officially called the Softwood Lumber Agreement (SLA), in 1996. This was again done to provide stability in the lumber industry. During this year, the US refunded the past collected duties. Under this agreement, Canada imposed a fixed tax on softwood production above a specified volume. This was particularly difficult for the British Colombia coastal forest industry, resulting in layoffs and closures.
There were even further difficulties between the Canada – US relations when the US passed the Byrd Amendment (officially entitled the U.S. Continued Dumping and Subsidy Offset Act of 2000). This legislation instructed the US Commerce that all of the duties that were collected for a particular good be distributed to the US injured companies that filed a

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