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An Evaluation of Canadian and U.S. Policies of Log and Lumber Markets

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  • Devadoss, Stephen

Abstract

The recent lumber trade war between Canada and the United States deals with Canadian stumpage policies, Canada’s log export controls, and U.S. retaliatory duty. This study determines the appropriate level of U.S. countervailing duty (CVD) by employing a vertically interrelated log–lumber model. The theoretical results show that the U.S. CVD can be greater (will be less) than the Canadian subsidy for a vertically related log–lumbermarket (for lumber market only). Empirical results support the theoretical findings in that the U.S. CVD for the log–lumber market (lumber market alone) is 1.55 (0.91) times the Canadian subsidy.

Suggested Citation

  • Devadoss, Stephen, 2008. "An Evaluation of Canadian and U.S. Policies of Log and Lumber Markets," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(1), pages 1-14, April.
    • Handle: RePEc:ags:joaaec:45517
    DOI: 10.22004/ag.econ.45517
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    References listed on IDEAS

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    1. Giancarlo Moschini & Karl D. Meilke, 1992. "Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 951-961.
    2. Jean-Thomas Bernard & Luc Bouthillier & Jérôme Catimel & Nancy Gélinas, 1997. "An Integrated Model of Québec-Ontario-U.S. Northeast Softwood Lumber Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 987-1000.
    3. Irwin, Douglas A., 2003. "The optimal tax on antebellum US cotton exports," Journal of International Economics, Elsevier, vol. 60(2), pages 275-291, August.
    4. Joseph P. Kalt, 1988. "The Political Economy of Protectionism: Tariffs and Retaliation in the Timber Industry," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 339-368, National Bureau of Economic Research, Inc.
    5. Robert E. Baldwin, 1988. "Trade Policy Issues and Empirical Analysis," NBER Books, National Bureau of Economic Research, Inc, number bald88-2, March.
    6. Roy Boyd & Kerry Krutilla, 1987. "The Welfare Impacts of U.S. Trade Restrictions against the Canadia n Softwood Lumber Industry: A Spatial Equilibrium Analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 20(1), pages 17-35, February.
    7. Harris, Ben & Devadoss, Stephen, 2005. "Why did the Byrd Amendment Not Fly at the WTO?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(2), pages 1-19.
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    Cited by:

    1. G. Cornelis van Kooten, 2014. "Is Free Trade the End All Be All? The Case of Log Exports," Working Papers 2014-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    2. Parajuli, Rajan & Sarangi, Sudipta & Chang, Sun Joseph & Hill, R. Carter, 2016. "The United States-Canada softwood lumber trade: An actual versus optimal export tax," Forest Policy and Economics, Elsevier, vol. 73(C), pages 112-119.
    3. Zhai, Jun & Kuusela, Olli-Pekka, 2022. "Incidence of domestic subsidies vs. export taxes: An equilibrium displacement model of log and lumber markets in Oregon," Forest Policy and Economics, Elsevier, vol. 135(C).
    4. van Kooten, G. Cornelis, 2014. "Benefits and costs of impeding free trade: Revisiting British Columbia's restrictions on log exports," Journal of Forest Economics, Elsevier, vol. 20(4), pages 333-347.

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