The compromise of embedded liberalism, American trade remedy law, and Canadian softwood lumber: Can't we all just get along?

Abstract

The long‐running U.S.‐Canada softwood lumber dispute has always involved basic disagreements over forest policy, the protectionist impulses of a disgruntled U.S. forest sector, and the perceived vindictiveness of U.S. trade law applied to one of America's closest allies and its largest trading partner. The public debate about this dispute has tended to characterize it as an anomaly in an increasingly integrated and liberalized North American marketplace. However, the softwood dispute is much more than a single, seemingly intractable, trade irritant. Softwood is also a microcosm of the broader debate over public policy in an age of globalization. At the heart of this debate is the so‐called “compromise of embedded liberalism” whereby public policy has been shaped to help alleviate some of the negative effects of trade and capital market liberalization. Preserving this “compromise” has become increasingly problematic for the development of public policy and for maintaining support for additional liberalization. Domestic trade remedy laws, despite their negative impact in sectors like softwood, have always been a part of this “compromise.” This paper argues that the global rise in popularity of trade remedy law is part of the struggle for public policy to preserve the “compromise” and that, properly shaped within the World Trade Organization, could yet emerge as an important tool for preserving support for additional liberalization.