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A Legal History of the Softwood Lumber Dispute (in a Nutshell)

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In every close economic relationship, trade frictions will inevitably occur. The trade relationship between the United States and Canada is no exception. The two-decade long, Canada–U.S. softwood lumber dispute undoubtedly has been the most prominent, if not the most irritating, trade friction of all. The heart of the dispute is the different views in Canada and the United States as to what constitutes a countervailable government subsidy and the proper methodology for determining the amount of such a subsidy when one is found to exist. In the latest round in the softwood lumber dispute, Softwood Lumber IV, Canada and the United States have engaged in a series of parallel dispute settlement proceedings under North American Free Trade Agreement (NAFTA) and at the World Trade Organization. Canada insists that it has won the latest softwood lumber dispute by virtue of an Aug. 2005 decision by a NAFTA Extraordinary Challenge Committee. The United States is equally insistent that the matter remains open by virtue of the International Trade Commission (ITC)s injury determination issued in 2004. With both sides in the Softwood Lumber dispute taking a hard line, such an environment is hardly conducive to the negotiation of a mutually agreeable settlement between the parties. A negotiated resolution of a legal dispute is always better than a litigated one.

Keywords: Extraordinary Challenge Committee; North American Free Trade Agreement Chapter 19; Softwood Lumber; World Trade Organization

Document Type: Research Article

Affiliations: Kevin C. Kennedy, Professor of Law, Michigan State University College of Law, East Lansing, MI—Phone: (517) 432-6896; kenne111@law.msu.edu., Fax: (517) 432-6801

Publication date: August 1, 2006

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