Welfare impacts of the 1996 United States - Canada softwood lumber agreement: an update

This research note provides updated estimates on the market and welfare impacts of the 1996 United States - Canada Softwood Lumber Agreement (SLA). Using the aggregate price model in Zhang (2001), the anticipated change in lumber price is estimated at US$30 (based on 1997 dollars), or 7.4%, on average for the first 4 years under the SLA; this is smaller than the previous estimate. In the fifth year, the price impact was negative because of a decline in lumber demand, oversupply in the United States, and excessive supply from Canada due to the structure and expected expiration of the SLA. The consequent gains to US producers of softwood lumber and the losses to US consumers are reestimated.