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US Imports for Canadian Softwood Lumber in the Context of Trade Dispute: A Cointegration Approach

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In this paper, we examine US imports of softwood lumber from Canadian provinces that are covered under various trade restriction measures between the two countries, and from the rest of the world, including other Canadian provinces that are not subject to the trade restriction measures and other countries. Using the cointegration framework, we find that in the long run, housing/construction activity and the US domestic lumber prices have a positive impact, while imported Canadian lumber prices had a negative impact on the quantity of US lumber imports from the covered provinces. In the short run, the last two lumber trade restriction measures, high Countervailing Duty and Anti-dumping Duty from August 2001 to September 2006, and the latest Softwood Lumber Agreement of 2006 from October 2006 to March 2012 (the latest data available), reduced the US imports of softwood lumber from the covered provinces by −12.8% and −11.2%, respectively.

Keywords: Canadian softwood lumber imports; cointegration; imperfect substitute; softwood lumber agreement; softwood lumber war

Document Type: Research Article


Publication date: October 15, 2013

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