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Softwood Dispute: Taxing Canada's sovereignty?

Canada and the United States are the world's largest trading partners, but there's one thing they've never agreed on: softwood lumber. The dispute dates back hundreds of years, but in the 1980s it turned nasty. The U.S. has slapped billions of dollars of fines on Canadian wood, jeopardizing thousands of jobs. The dispute raises serious questions about trade, sovereignty, and the real nature of Canada-U.S. relations.

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The Canadian government calls it "the best deal we could get under the circumstances." Rather than fork over billions in duties to Americans at the border, the federal government has agreed to collect a 15 per cent export tax on softwood exports, keeping the money in Canada. But the deal gives American officials a say in any changes to the tax policy. As we see in this clip, Canadian media think Canada has sold its sovereignty down the river.
. On Dec. 30, 1986 Canada began negotiations with the U.S. that culminated in a Memorandum of Understanding (MOU). Canada agreed to collect a 15 per cent export tax on softwood exports to the United States, which replaced the 15 per cent duty being charged by the U.S. The MOU also allowed provincial governments to change the way they priced wood and eventually eliminate the duty. (They did so, and in 1991 Canada terminated the MOU.)

. The MOU was widely criticized by opposition politicians in the first question period of the fall legislature. Liberal leader John Turner accused the government of "caving in," and wondered if steel or the Auto Pact would be next on the chopping block. New Democratic Party leader Ed Broadbent accused the government of sabotaging future negotiations, saying that by voluntarily raising our prices "we've already lost our case."
Medium: Television
Program: The Journal
Broadcast Date: Jan. 2, 1987
Guest(s): Ed Broadbent, Robert de Cotret
Host: Barbara Frum, Paul Griffin
Duration: 8:53

Last updated: September 18, 2013

Page consulted on December 30, 2014

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