Trade issues mount in Canada-US bilateral relations

Significance The potato ban is one of several issues in which, when seen from Ottawa, US policy looks less neighbourly that many in the United States might assume. Although Prime Minister Justin Trudeau has made much of his relationship with President Joe Biden, Canadians are increasingly aware of these irritants in bilateral relations. Impacts An escalation in retaliatory tariffs is possible over the next few years, with damaging effects for both economies. Ottawa is likely to seek a new agreement on softwood lumber duties before the end of the Biden administration. The chance of a rupture in the section of a Canadian pipeline that runs through Michigan may rise if legal disputes delay action. Washington has made little effort to consult with Ottawa over policy towards China and this is unlikely to change.

Effects on Global Forests and Wood Product Markets of Increased Demand for Mass Timber

This study evaluated the effects on forest resources and forest product markets of three contrasting mass timber demand scenarios (Conservative, Optimistic, and Extreme), up to 2060, in twelve selected countries in Asia, Europe, North America, and South America. Analyses were carried out by utilizing the FOrest Resource Outlook Model, a partial market equilibrium model of the global forest sector. The findings suggest increases in global softwood lumber production of 8, 23, and 53 million m3 per year by 2060, under the Conservative, Optimistic, and Extreme scenarios, respectively, leading to world price increases of 2%, 7%, and 23%, respectively. This projected price increase is relative to the projected price in the reference scenario, altering prices, production, consumption, trade of forest products, timber harvest, forest growth, and forest stock in individual countries. An increase in softwood lumber prices due to increased mass timber demand would lead to the reduced consumption of softwood lumber for traditional end-use (e.g., light-frame construction), suggesting a likely strong market competition for softwood lumber between the mass timber and traditional construction industries. In contrast, the projected effect on global forest stock was relatively small based on the relatively fast projected biomass growth in stands assumed to be regenerated after harvest.

Verbal Aggression Between Allies: Canada in Donald Trump’s Trade War Rhetoric

The article explores Donald Trump’s protectionist rhetoric relating to bilateral trade relations between Canada and the U.S. In particular, it presents how Trump’s isolationist economic platform evolved into trade war rhetoric and how this rhetoric affected Canada. To that end, the article analyzes President Trump’s statements and policies regarding the renegotiations of NAFTA, his administration’s tariff policies relating to imports of Canadian softwood lumber, steel and aluminum, and Trump’s opinions published in social media, mainly on Twitter. It also takes a comparative look on Donald Trump’s and Justin Trudeau’s ideological profiles to explain Trump’s lack of sympathy and hardline rhetoric against Canada.

Cutting of Round Timber with Heart Rot to Structural Lumber

Softwood lumber is widely used for the manufacture of load-bearing structures. However, the quality of round timber for lumber manufacturing has been deteriorating recently. The average diameter of round timber entering sawmills is constantly decreasing, and heart rot is common in large-diameter round timber. This is due to the fact that more and more conifers in the forest are being affected by heart rot. The rot infestation is related to the deterioration of the ecological situation caused by environmental pollution. As a rule, the removal of rot occurs at the stage of round timber harvesting. Therefore, during harvesting, most of the wood with heart rot continues to remain in the forest. In addition to littering the area, it continues to infect sound wood. At the same time, together with the wood affected by rot, the sound sapwood, which has good strength characteristics, is also removed. A method for processing round timber with heart rot into elements of load-bearing structures is proposed. In particular, a technological scheme for manufacturing I-beams from such timber has been developed for low-rise house construction. Corner elements are produced as a result of cutting round timber and removing heart rot by milling. The corner elements are dried in clamped state using special devices. Then they are glued together to obtain beams with a cross-section in the form of an I-beam. A set of equipment for the processing round timber with heart rot was selected. The paper presents the results of calculating the costs for organizing the production. The effectiveness of the technological project is evaluated using the method of discounted cashflows by the following indicators: net present value, profitability index, and discounted payback period. The assessment results confirm the effectiveness of the production organization of load-bearing structures made of round timber affected by heart rot. The processing of wood that remains in the forest into elements of building structures not only increases the wood reserves for construction, but also creates conditions for improving the ecological situation in forest areas. For citation: Toropov А.S., Byzov V.Е., Toropova Е.V., Sergeevichev А.V., Sazanova E.V. Cutting of Round Timber with Heart Rot to Structural Lumber. Lesnoy Zhurnal [Russian Forestry Journal], 2021, no. 6, pp. 160–172. DOI: 10.37482/0536-1036-2021-6-160-172

Whether Zeroing is Consistent with the "Fair Comparison" Requirement in Article 2.4 of the Anti-Dumping Agreement? Take United States - Final Dumping Determination on Softwood Lumber from Canada - Recourse to Article 21.5 of the DSU(WT/DS264/AB/RW) by Canada as an example

This article takes the World Trade Organization’s dispute over the final dumping ruling (Article 21.5 of the DSU) (WT/DS264/AB/RW) of United States — Final Dumping Determination on Softwood Lumber from Canada as an example and analyses Article 2.4 of the Anti-Dumping Agreement Requirements for “Fair Comparison". It also analysed The Consistency of Zeroing under the Transaction-to-Transaction Comparison Methodology with Article 2.4 of the Anti-Dumping Agreement.

‘Two Roads Diverged in [Soft]wood’ Targeted Dumping, Differential Pricing Methodology, and Zeroing: US – Canada Anti-Dumping in Softwood Lumber

The United States and Canada have a long-standing series of disputes over softwood lumber that until now have focused on alleged subsidies and countervailing duties (CVDs). The United States changed things up this time around and the US Department of Commerce (USDOC) found dumping after applying the Differential Pricing Methodology to softwood lumber from Canada. The panel found that the USDOC erroneously aggregated export price differences when applying the differential pricing methodology (DPM), but departed from the WTO Appellate Body's previous ruling in US–Washing Machines regarding the use of zeroing and the inclusion of differential prices under Article 2.4.2 of the Anti-Dumping Agreement. To date, the United States and Canada have not been able to resolve the long-standing softwood lumber dispute, and this time the focus shifts from subsidies and countervailing duties to anti-dumping duties. It remains to be seen what happens in this specific dispute on appeal – if, and when, the WTO Appellate Body starts to function again. It will also be interesting to see whether this panel decision encourages parties to argue for, and future panels to permit departures from, Appellate Body rulings with which they disagree.

Softwood lumber trade and trade restrictions: gravity model.

A gravity trade model can be used to determine the effects of policy on bilateral trade flows. The gravity model is initially explained and then used to determine the effect that U.S. tariffs have on softwood lumber (SWL) imports from Canada, using information from the 2006 Softwood Lumber Agreement. Quarterly data for seven Canadian and three U.S. regions for the period 2007-2017 are used to estimate a gravity model of SWL trade. The model is subsequently expanded to include Japan and China as separate regions, and then as a combined China-Japan region. The model is estimated using OLS and a Poisson Pseudo-Maximum-Likelihood method for trade quantity and value. Findings indicate that: (1) the imposition of a countervailing and/or anti-dumping duty usually has a negative effect on Canada's physical exports, but not in all cases; (2) the value of softwood lumber trade decreases by 26% on average under a tax/tariff compared with no duties; (3) the tax/tariff has a smaller but still significant impact on Canadian exports when China and Japan are included, as SWL exports are diverted from the U.S.; and, not surprisingly, (4) duties affect the value of lumber exports to a much greater extent than quantity.

Modeling bilateral forest products trade.

The focus in this chapter is on the development of mathematical programming models used to model bilateral forest products trade. Theoretical outlines are provided of a multi-region, single product trade model and of an integrated, multi-region, multi-product trade model. The objective function and constraints are described mathematically, while the analysis takes into account horizontal and vertical chains and the need to calibrate the model using observed trade flows. Data sources are discussed, and the GAMS code is provided for the uncalibrated and calibrated versions of the model. The Canada-U.S. softwood lumber dispute is the raison d'être for much applied work in modeling forest products trade, especially on Canada's side. In this chapter, we examine several spatial price equilibrium (SPE) trade models that are currently used to investigate the implications of trade barriers imposed on Canadian exports of softwood lumber to the United States. The reason we consider bilateral trade is so that we can determine the impacts of trade restrictions on various regions in North America. We begin in the next section by specifying a general but vertically integrated SPE trade model.

Canada-U.S. softwood lumber dispute: background.

In this chapter, we examine the importance of softwood lumber production to Canada's economy and provide a brief history of the Canada-U.S. softwood lumber dispute and its resolution on various occasions using U.S. countervailing and anti-dumping duties, export taxes or various types of quota regimes, including tariff rate quotas. The construction of excess supply and demand functions is explained, as are the gains from trade. This helps inform the modeling approaches that are identified in later chapters.