Welfare impacts of the 2006 United States – Canada Softwood Lumber Agreement

Abstract

In this paper, we evaluate the market and welfare effects of the 2006 United States (U.S.) – Canada Softwood Lumber Agreement (SLA 2006) based on a U.S. import demand model for Canadian softwood lumber. We find that SLA 2006 reduces the U.S. lumber imports from Canada by 7.78% in the months when export taxes took effect. The welfare analysis based on a partial equilibrium framework shows that U.S. lumber producers gained $1.6 billion and U.S. consumers lost $2.3 billion in 9 years under SLA 2006.