Canadas Sovereignty and Its Dependence on US Markets Essay

Canadas Sovereignty and Its Dependence on US Markets - Essay Example But there are number of exceptions in WTO which allow trade restrictions to continue including: Anti-dumping duties to offset countries/companies selling unfairly at a low Price. Countervailing duties to offset government subsidies Emergency trade restrictions designed to "safeguard" domestic industries. In May 1992 DOC ruled that both Canadian stumpages and log export restraints (LER) in British Columbia1 represented countervailable subsidies and set the countervailing duty (CVD) at 6.51% i.e., 2.91% for stumpage and 3.6% for LER (Hoberg, Howe, p.4).In September 1993 DOC ruled again that both stumpage rates and LER conferred subsidies and increased CVD to 11.54% based on adjustments on certain technical calculations.Both the governments signed the Softwood Lumber Agreement (SLA) that came into effect from April 1, 1996 to March 31, 2001 (Ragosta and Clark, 2000). According to this agreement an export fee of $50 per thousand board feet (MBF) on softwood lumber exports in excess of 14.7 billion board feet (BBF), $100/MBF on exports in excess of 15.35 BBF (Howard, 2000). It seemed all right with the settlement but behind the scene both the governments were not satisfied. After the expiration of SLA Bush government imposed 12.58% anti-dumping duty (ADD) in October 2001 (Ying, Baek, 2002). Canadian government decided to take the legal and political battle with the US. The US side is represented by Coalition for Fair Canadian Lumber Imports (CFCLI). In Canada two associations, British Columbia Lumber Trade Council (BCLTC) and Free Trade Lumber Council (FTLC) decided to fight the legal battle with the... As the discussion stresses political sovereignty means protecting the country’s political and diplomatic rights by taking appropriate decisions in the country’s best interests. The softwood lumber dispute between Canada and the US is a test to the Canadian sovereignty. From decades Canadian industries were dependent on the US market. Most of the Canada’s products were exported to the US markets. The US also depends on Canada for oil and natural gas. This paper declares that Canadian industries were very much dependent on the US markets in case of export of softwood lumber. This reliance on US markets of Canadian industries is becoming a biggest threat to Canadian sovereignty. The reason for the above condition is Canada is heavily dependent on US. Thus Canada is becoming vulnerable to trade actions taken by the US industry. Due to this dependency US made the laws that will result in their favor. To solve export of softwood lumber dispute both the countries formed binational panels. In this panel half of them represents the US and the remaining half represents Canada. There would be no creation or application of new laws, but apply the importing country’s law. Here the importing country is the US. The trade actions taken by the US predated Canada-US Free Trade Agreement (CUSTA). Under the influence of these actions by the US softwood lumber industry and US federal government the price on crown timber was decided. Though th e decision of this dispute went in favor of Canada, it was overpowered by legislative changes in the US.