Assessment of Quotas, Tariffs and Taxes on the U.S. - Canada Softwood Lumber Dispute - PowerPoint PPT Presentation

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Assessment of Quotas, Tariffs and Taxes on the U.S. - Canada Softwood Lumber Dispute

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... Tariffs and Taxes on the U.S. - Canada Softwood Lumber Dispute ... Types of Dispute Mechanisms. Tariff on all Canadian ... trade dispute, solutions hard ... – PowerPoint PPT presentation

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Title: Assessment of Quotas, Tariffs and Taxes on the U.S. - Canada Softwood Lumber Dispute


1
Assessment of Quotas, Tariffs and Taxes on the
U.S. - Canada Softwood Lumber Dispute
  • Patrick Shannon
  • March 10, 2008
  • ECON 543

2
Background
  • U.S. Canada softwood lumber tariffs since 1840
  • U.S. claims that the Canadian lumber industry is
    unfairly subsidized by the federal and provincial
    governments
  • Stumpage fee is set administratively rather than
    through a competitive auction

3
Types of Dispute Mechanisms
  • Tariff on all Canadian imports to U.S.
  • Quota-regulated tariff on all Canadian imports
    (including tax)

4
Tariff on Imports
  • Different percentage tariffs in the past
  • 2002, U.S. imposed a 27.2 tariff on all Canadian
    imports of softwood lumber
  • Based on a countervailing and antidumping duty

5
Projected Economic Impacts
  • Title Market and Resource Impacts of a Canadian
    Lumber Tariff
  • Author Darius M. Adams
  • Journal Journal of Forestry. 2003, 101 48-52

6
Analysis Method
  • Spatial model to calculate projections of
    production, consumption, prices and trade between
    the U.S. and Canada
  • Accounts for elasticity and price sensitivity of
    the markets
  • Compares projections without and with a tariff

7
Data Source
  • Historical government and industry data
  • Elasticities are based on econometric estimates
    derived from historical data

8
Supply and Demand Projections
9
Market Impacts
10
Global Impact of the Tariff
  • Title A Spatial Equilibrium Analysis of
    U.S.-Canadian Disputes on the World Softwood
    Lumber Market
  • Author Stephen Devadoss et al.
  • Journal Canadian Journal of Agricultural
    Economics. 2005

11
Analysis
  • Spatial equilibrium model to estimate supply and
    demand functions
  • Impacts of the tariff on global prices, demand,
    supply, total trade volume and bilateral trade
    flows
  • Welfare analysis

12
Results
13
Global Trade Impacts
14
Welfare Impacts Producer Surplus
  • U.S. 1.92 billion
  • South America 450 million
  • All other countries negative
  • Canada -932 million

15
Welfare Impacts Consumer Surplus
  • U.S. -2.90 billion
  • South America -366 million
  • European Union 870 million

16
World Welfare
  • Total producer and consumer surpluses are
    negative
  • 27.2 tariff results in -860 million

17
Quota-Regulated Tariff (Export tax)
  • 1996 Softwood Lumber Agreement
  • Quota of 14.7 billion board feet
  • Exports up to 650 million board feet more
    assessed a fee of 50 per 1,000 board feet (mbf)
  • Exports exceeding that tier would be assessed 10
    per mbf thereafter

18
Economic Analysis
  • Author Daowei Zhang
  • Title Welfare impacts of the 1996 United
    StatesCanada softwood lumber (trade) agreement
  • Journal Canadian Journal of Forestry, 31
    19581967.

19
Welfare Impacts 1996 - 2001
20
Welfare Impacts U.S.
  • Producers gain 7.74 billion
  • Consumers loose -12.5 billion
  • Net U.S. loss -4.7 billion

21
Welfare Impacts Canada
  • Producers gain 2.86 billion
  • Treasury gain 226 million
  • Net gain 3.09 billion

22
Conclusions
  • Ongoing trade dispute, solutions hard to find
  • Quota-regulated tariff benefited Canada and U.S.
    producers
  • Global lumber trade
  • World Trade Organization to decide
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