Law, Knowledge, and National Interests in Trade Disputes: The Case of Softwood Lumber

Journal of World Trade

Volumn 34, Issue 2, 2000, Pages 109-130

  Hoberg, George ^a   Howe, Paul ^b  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

^b Inst for Research on Public Policy   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0034396357     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: 10.1023/A:1009014710288     Document Type: Article

References (69)

1. Research for this study was supported by the Hampton Fund at the University of British Columbia. An earlier version of this article was presented at the "Globalization and Its Discontents" conference, Simon Fraser University, 23-24 July 1998.
2. Peter Haas (1993) Knowledge, Power and International Policy Coordination, International Organization 46 (special issue).
3. Judith Goldstein (1996) International Law and Domestic Institutions: Reconciling North American "Unfair" Trade Laws, International Organization 50, 541-564; Kenneth B. Woodside (1995) Institutions for Settlement of Trade Disputes: The Case of the Canada-United States Free Trade Agreement, in David Weimer (ed.) Institutional Design (Boston, Kluwer).
4. Judith Goldstein (1996) International Law and Domestic Institutions: Reconciling North American "Unfair" Trade Laws, International Organization 50, 541-564; Kenneth B. Woodside (1995) Institutions for Settlement of Trade Disputes: The Case of the Canada-United States Free Trade Agreement, in David Weimer (ed.) Institutional Design (Boston, Kluwer).
5. Thomas Boddez and Michael J. Trebilcock (1993) Unfinished Business: Reforming Trade Remedy Laws in North America (Toronto, C.D. Howe); and Andrew Anderson (1995) Seeking Common Ground: Canada-US Trade Dispute Settlement Policies in the Nineties (Boulder, Westview Press).
6. Thomas Boddez and Michael J. Trebilcock (1993) Unfinished Business: Reforming Trade Remedy Laws in North America (Toronto, C.D. Howe); and Andrew Anderson (1995) Seeking Common Ground: Canada-US Trade Dispute Settlement Policies in the Nineties (Boulder, Westview Press).
7. Charles Doran (1996) "Objectivity and Neutrality of Binational Trade Dispute Resolution in North America", Center of Canadian Studies, School of Advanced International Affairs, Johns Hopkins University, August.
8. Kathryn Harrison and George Hoberg (1994) Risk, Science and Politics: Regulating Toxic Substances in Canada and the United States (Montreal and Kingston, McGill-Queen's University Press).
9. For example, see G. Bruce Doern and Brian Tomlin (1991) Faith and Fear: The Free Trade Story (Toronto, Stoddart), esp. Chap. 11.
10. Andrew Anderson, as note 4, above, p. 125
11. Quoted in Certain Softwood Lumber Products (6 May 1993), see note 10, below, p. 46.
12. Certain Softwood Lumber Products from Canada, United States-Canada Free Trade Agreement, Article 1904, Binational Review, USA-92-1904-01, Decision of the Panel (6 May 1993), p. 21.
13. As note 10, above, p. 22.
14. Chevron v. Natural Resources Defense Council, 457 US 837 (1984).
15. For overviews of the case, see Charles Doran (1996) Trade Dispute Resolution on Trial: Softwood Lumber, International Journal 51, no. 4 (Autumn), 710-733; T.M. Apsey and J.C. Thomas (1997) "Lessons of the Softwood Lumber Dispute: Politics, Protectionism, and the Panel Process", manuscript 2 January 1997; Benjamin Cashore (1997) Flights of the Phoenix: Explaining the Durability of the Canada-US Softwood Lumber Dispute, Canadian-American Public Policy 32 (December); and Robert Howse (1998) Settling Trade Remedy Disputes: When the WTO Forum is Better than the NAFTA, C.D. Howe Institute Commentary 111 (Toronto, C.D. Howe Institute).
16. For overviews of the case, see Charles Doran (1996) Trade Dispute Resolution on Trial: Softwood Lumber, International Journal 51, no. 4 (Autumn), 710-733; T.M. Apsey and J.C. Thomas (1997) "Lessons of the Softwood Lumber Dispute: Politics, Protectionism, and the Panel Process", manuscript 2 January 1997; Benjamin Cashore (1997) Flights of the Phoenix: Explaining the Durability of the Canada-US Softwood Lumber Dispute, Canadian-American Public Policy 32 (December); and Robert Howse (1998) Settling Trade Remedy Disputes: When the WTO Forum is Better than the NAFTA, C.D. Howe Institute Commentary 111 (Toronto, C.D. Howe Institute).
17. For overviews of the case, see Charles Doran (1996) Trade Dispute Resolution on Trial: Softwood Lumber, International Journal 51, no. 4 (Autumn), 710-733; T.M. Apsey and J.C. Thomas (1997) "Lessons of the Softwood Lumber Dispute: Politics, Protectionism, and the Panel Process", manuscript 2 January 1997; Benjamin Cashore (1997) Flights of the Phoenix: Explaining the Durability of the Canada-US Softwood Lumber Dispute, Canadian-American Public Policy 32 (December); and Robert Howse (1998) Settling Trade Remedy Disputes: When the WTO Forum is Better than the NAFTA, C.D. Howe Institute Commentary 111 (Toronto, C.D. Howe Institute).
18. For overviews of the case, see Charles Doran (1996) Trade Dispute Resolution on Trial: Softwood Lumber, International Journal 51, no. 4 (Autumn), 710-733; T.M. Apsey and J.C. Thomas (1997) "Lessons of the Softwood Lumber Dispute: Politics, Protectionism, and the Panel Process", manuscript 2 January 1997; Benjamin Cashore (1997) Flights of the Phoenix: Explaining the Durability of the Canada-US Softwood Lumber Dispute, Canadian-American Public Policy 32 (December); and Robert Howse (1998) Settling Trade Remedy Disputes: When the WTO Forum is Better than the NAFTA, C.D. Howe Institute Commentary 111 (Toronto, C.D. Howe Institute).
19. The DOC also investigated LERs in other provinces, but only targeted British Columbia in its ruling.
20. Gordon Ritchie (1997) Wrestling with the Elephant: The Inside Story of the Canada-US Trade Wars (Toronto, Macfarlane Walter & Ross), p. 212.
21. Nordhaus provided numerous documents outlining his arguments. One key report was a theoretical paper: William D. Nordhaus (1992) "The Impact of Stumpage Charges on Prices and Trade Flows in Forest Products", 18 Februrary 1992. Appendix A in "Memorandum Concerning Alleged Stumpage Subsidies and Preferentiality", submitted on behalf of the Government of Canada et al. University of British Columbia, Special Collections and University Archives Division, "Mike Apsey, Canada-US Lumber Trade" collection (hereinafter "Apsey Collection"), Box 31, Tab. 3: Another important Nordhaus document contained empirical analysis: William D. Nordhaus and Robert E. Litan (1992) "Empirical Analysis of the Effect of Stumpage on Timber Harvesting: A British Columbia Case Study", 5 March. Attachment B in "Supplemental Submission" submitted on behalf of the Government of Canada et al., 5 March 1992. Apsey Collection, Box 32, Tab. 3.
22. Nordhaus provided numerous documents outlining his arguments. One key report was a theoretical paper: William D. Nordhaus (1992) "The Impact of Stumpage Charges on Prices and Trade Flows in Forest Products", 18 Februrary 1992. Appendix A in "Memorandum Concerning Alleged Stumpage Subsidies and Preferentiality", submitted on behalf of the Government of Canada et al. University of British Columbia, Special Collections and University Archives Division, "Mike Apsey, Canada-US Lumber Trade" collection (hereinafter "Apsey Collection"), Box 31, Tab. 3: Another important Nordhaus document contained empirical analysis: William D. Nordhaus and Robert E. Litan (1992) "Empirical Analysis of the Effect of Stumpage on Timber Harvesting: A British Columbia Case Study", 5 March. Attachment B in "Supplemental Submission" submitted on behalf of the Government of Canada et al., 5 March 1992. Apsey Collection, Box 32, Tab. 3.
23. Nordhaus, who has been on the Yale faculty since 1967, has served as an economic adviser to President Carter and as Provost of Yale University. He is not a specialist in forestry economics, but has expertise in the economics of natural resources, in particular energy resources.
24. William D. Nordhaus (1992) "The Impact of Stumpage Charges on Prices and Trade Flows in Forest Products", 18 February 1992, p. 10.
25. As note 18, above, p. 11.
26. As note 18, above, p. 11.
27. As note 18, above, p. 21.
28. Professor of Forest Economics, University of California, Berkeley. McKillop is an expert in forest economics specifically. In his report criticizing the Canadian arguments, McKillop suggested that Nordhaus lacked essential sector-specific knowledge: "the obscure and misconceived nature of (Nordhaus's) argument stems from the fact that, understandably, he does not have adequate technical knowledge of the economic sector with which he is trying to deal". (William McKillop (1992) "Critique of the Theory of Timber Supply Put Forward by William D. Nordhaus and Robert E. Litan", 16 April, p. 4. Attachment B in "Pre-Hearing Brief", 21 April 1992, submitted by the Coalition for Fair Lumber Imports. Apsey Collection, Box 34, Tab. 2.)
29. As note 22, above, p. 11.
30. As note 22, above, pp. 9-10.
31. William D. Nordhaus, "Reply to Coalition for Fair Lumber Imports Pre-Hearing Brief of April 21, 1992", footnote 12, pp. 6-7. Attachment A in Section 3, "Respondents' Rebuttal Brief", 27 April 1992, submitted on behalf of the Government of Canada et al. Apsey Collection, Box 35, Tab. 1.
32. Department of Commerce, International Trade Administration, "Redetermination Pursuant to Binational Panel Remand", 17 September 1993, p. 102. Apsey Collection, Box 40, Tab. 3.
33. As note 26, above, p. 100 (emphasis in original).
34. "In the Matter of Certain Softwood Lumber Products from Canada, Decision of the Panel", 6 May 1993, p. 56. Apsey Collection, Box 40, Tab. 2.
35. "In the Matter of Certain Softwood Lumber Products from Canada, Decision of the Panel on Remand", 17 December 1993, Majority Decision, pp. 56-60. Apsey Collection, Box 41, Tab. 3.
36. Senior Fellow in the Economics Studies Programme of the Brookings Institution and Director of the Institution's Center for Law, Economics and Politics. Litan received his law and Ph.D. degrees from Yale University and was the regulatory and energy specialist for President Carter's Council of Economic Advisers.
37. Nordhaus and Litan (1992) "Empirical Analysis of the Effect of Stumpage on Timber Harvesting: A British Columbia Case Study", 5 March.
38. Based on a 95 percent confidence interval.
39. As note 31, above, p. 11.
40. As note 26, above, pp. 113-117.
41. "Canadian Complainants' Joint Brief In Opposition to the Determination on Remand", 12 October 1993, pp. C46-C71.
42. "In the Matter of Certain Softwood Lumber Products from Canada, Decision of the Panel on Remand", 17 December 1993, Majority Decision, p. 60 (emphasis added).
43. As note 36, above, p. 63.
44. As note 36, above, p. 64 (emphasis in original).
45. "In the Matter of Certain Softwood Lumber Products from Canada, Decision of the Panel on Remand", 17 December 1993, Minority Decision, pp. 58-59.
46. Professor of Political Economy at the John F. Kennedy School of Government, Harvard University.
47. Joseph P. Kalt (1992) "Economic Analysis of Canadian Log Export Policy", 21 February, pp. 31-36 and 41-51. Attachment to "Memorandum Concerning the Non-Countervailability of Canadian Log Export Regulations", 21 Februrary 1992, submitted on behalf of the Government of Canada et al. Apsey Collection, Box 31, Tab. 3.
48. Joseph P. Kalt (1992) "Economic Analysis of Canadian Log Export Policy", 21 February, pp. 31-36 and 41-51. Attachment to "Memorandum Concerning the Non-Countervailability of Canadian Log Export Regulations", 21 Februrary 1992, submitted on behalf of the Government of Canada et al. Apsey Collection, Box 31, Tab. 3.
49. "Memorandum Concerning the Canadian Log Export Restrictions Subsidy", 21 February 1992, submitted on behalf of the Coalition for Fair Lumber Imports, p. 19. Apsey Collection, Box 31, Tab. 3.
50. Department of Commerce, International Trade Administration, "Final Affirmative Countervailing Duty Determination: Certain Softwood Lumber Products from Canada", Federal Register 57 (103) 28 May 1992, p. 22612.
51. Kalt, as note 41, above, p. 1.
52. As note 43, above, p. 22614.
53. As note 36, above, p. 94.
54. "In the Matter of Certain Softwood Lumber Products from Canada, Decision of the Panel", 6 May 1993, pp. 166-167.
55. Only one of the two Canadian dissenters from the first panel was on the second panel as well. Thus, only one Canadian panelist actually changed his mind from the first to second panel, although he still maintained, in the second panel ruling, his legal objection to expanding the definition of subsidy to include export restraints (see "In the Matter of Certain Softwood Lumber Products from Canada, Decision of the Panel on Remand", 17 December 1993, Majority Decision, p. 99, footnote 300).
56. As note 48, above, pp. 88-92.
57. Department of Commerce, International Trade Administration, "Predetermination Pursuant to Binational Panel Remand", 17 September 1993, p. 130.
58. See Exhibit J (M.B. Percy, excerpt from Forest Management and Economic Growth in British Columbia), Exhibit O (M. Margolick and R. Uhler, "The Economic Impact of Removing Log Export Restrictions in British Columbia") and Exhibit Q (R. Haynes and D. Adams, "Opening Up Canadian Markets: The Lifting of Export Restrictions") in "Memorandum Concerning the Countervailability of British Columbia Log Export Restrictions", 3 December 1991, submitted on behalf of the Coalition for Fair Lumber Imports. Apsey Collection, Box 25, Tab. 3.
59. See Exhibit J (M.B. Percy, excerpt from Forest Management and Economic Growth in British Columbia), Exhibit O (M. Margolick and R. Uhler, "The Economic Impact of Removing Log Export Restrictions in British Columbia") and Exhibit Q (R. Haynes and D. Adams, "Opening Up Canadian Markets: The Lifting of Export Restrictions") in "Memorandum Concerning the Countervailability of British Columbia Log Export Restrictions", 3 December 1991, submitted on behalf of the Coalition for Fair Lumber Imports. Apsey Collection, Box 25, Tab. 3.
60. See Exhibit J (M.B. Percy, excerpt from Forest Management and Economic Growth in British Columbia), Exhibit O (M. Margolick and R. Uhler, "The Economic Impact of Removing Log Export Restrictions in British Columbia") and Exhibit Q (R. Haynes and D. Adams, "Opening Up Canadian Markets: The Lifting of Export Restrictions") in "Memorandum Concerning the Countervailability of British Columbia Log Export Restrictions", 3 December 1991, submitted on behalf of the Coalition for Fair Lumber Imports. Apsey Collection, Box 25, Tab. 3.
61. Law and Economics Consulting Group, Washington, DC.
62. For a summary, see "Memorandum Concerning the Non-Countervailability of Canadian Log Export Regulations", 21 Februrary 1992, pp. 62-66.
63. As note 46, above, p. 93.
64. Kalt, as note 41, above, p. 26.
65. Dr William F. Finan (1992) "Evaluation of the Relationship Between Log Exports and Prices in British Columbia", 27 April. Attachment A in Section 4 of "Respondents' Rebuttal Brief", 27 April 1992, submitted on behalf of the Government of Canada et al. Apsey Collection, Box 35, Tab. 1.
66. Department of Commerce, International Trade Administration, "Final Affirmative Countervailing Duty Determination: Certain Softwood Lumber Products from Canada", 28 May 1992, p. 22613.
67. This was not the case for all significant legal questions. For instance, in the case of LERs, Canadian parties to the dispute argued that the export limitations of the United States needed to be considered. Despite the powerful national stakes in the issue, and a certain amount of common-sense justice supporting the Canadian position, the Canadian panelists rejected their government's argument because the law on the question was well established.
68. Apsey and Thomas, as note 13, above, pp. 81-83.
69. Doran, as note 5, above.