The Timber Industry
What is perhaps the most contentious trade dispute in modem history has been ongoing between the United States and Canada since the early 1980s over the dumping of government-subsidized Canadian timber into the U.S. market. The matter was already a crisis before NAFTA, but turned into a scandal that uniquely highlighted the trade agreement's destruction of national sovereignty after NAFTA took effect in 1994.
Beginning as early as 1982, U.S. timber producers charged that Canadian lumber was trading at artificially low prices in the U.S. market because Canadian timber is mostly owned by provincial governments that set stumpage prices at artificially low levels resulting, essentially, in a subsidy to the Canadian timber industry. To offset the subsidy, the U.S. assessed tariffs against Canadian lumber.
In 1991 a review of U.S. tariffs was conducted by a panel convened under the authority of the Canada-U.S. Free Trade Agreement (the precursor to NAFTA). That panel found against the United States, as would NAFTA courts convened under Chapter 19 of the later agreement. The Commerce Department finally settled on a tariff of 10.8 percent in 2005. But in March of 2006, the NAFTA panel again found in Canada's favor, stating that Canadian subsidies were too small to be of any consequence, even though, according to the Coalition for Fair Lumber Imports, "Canada's lumber subsidies are destroying the U. …