Is the Softwood Lumber Agreement Part of Nafta

August 1, 2023

The Softwood Lumber Agreement (SLA) is a trade agreement between the United States and Canada that regulates the export of softwood lumber products from Canada to the United States. Despite its close association with the North American Free Trade Agreement (NAFTA), the SLA is not technically part of NAFTA.

NAFTA, which went into effect in 1994, established a free trade zone between the United States, Canada, and Mexico. The agreement eliminated most tariffs on goods traded between the three countries, and has been credited with boosting economic growth and job creation in the region.

However, the SLA predates NAFTA and was initially signed in 1986. The agreement was designed to address concerns on both sides of the border regarding the import and export of softwood lumber, which is used primarily in the construction industry.

The SLA sets limits on the amount of softwood lumber that can be exported from Canada to the United States, and imposes tariffs when those limits are exceeded. The agreement also includes provisions for resolving disputes between the two countries related to the export of softwood lumber.

While the SLA and NAFTA are separate agreements, they are closely related, and changes to one agreement can have a significant impact on the other. For example, when NAFTA was renegotiated in 2018, the US and Canada agreed to remove a dispute resolution mechanism from the SLA that had been a point of contention between the two countries for many years.

In conclusion, while the Softwood Lumber Agreement is not technically part of NAFTA, it is an important trade agreement between the United States and Canada that governs the export of softwood lumber products. Understanding the relationship between these two agreements is important when analyzing the impact of trade policy on the North American economy.