The US–Canada softwood lumber trade dispute: what we know and what we need to know

The softwood lumber trade dispute between the US and Canada is the largest and longest lasting dispute between the two countries. This paper reviews both this dispute and the published studies that examine its effects. We first summarize the recent history of the dispute and the arguments of different parties to facilitate an understanding of its complicated context. We then review the literature, focusing on empirical assessments of the US trade restriction impacts and pointing out some of the weaknesses in previous studies. We argue that there remains a strong need for improved analysis of the issue, and suggest that it is constructive for future work to use an expanded list of variables, to take not only the structural econometric approach but also the nonstructural time-series one, and to examine short-term and long-term policy alternatives.