Province specific impacts of the 2006 United States-Canada Softwood Lumber Agreement: A seemingly unrelated regression approach
Based on monthly data from January 1988 to October 2015, we estimate a system of U.S. softwood lumber import equations by using Seemingly Unrelated Regression (SUR) approach.
The effects of the 2006 Softwood Lumber Agreement in most of the provincial lumber export equations, are found to be statistically insignificant.
BC, the largest exporting province to the U.S., saw its exports to the U.S. being reduced by 4% under SLA 2006. Similarly, SLA 2006 was able to restrict lumber shipments to the U.S. from QC by about 7%, and from ON by about 6%. However, SLA 2006 is found to be ineffective to serve its purpose in the lumber shipments from AB and MB, as the SUR coefficient estimates associated with SLA 2006 data are statistically insignificant.
The lowest impact of SLA 2006 [compared to previous duties] on BC may be explained by the rapidly surging overseas market in the last decade.
Thus, SLA 2006 did not cause any significant trade diversion from SLA-covered provinces to non-covered provinces. Furthermore, the different export performance from various SLA-covered provinces could be related to their export opportunities to other countries, their timber resource endowment and supply, and their choice of different options under SLA 2006.
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