Province specific impacts of the 2006 United States-Canada Softwood Lumber Agreement: A seemingly unrelated regression approach

In this paper, we evaluate effects of the 2006 U.S.-Canada Softwood Lumber Agreement (SLA 2006) in U.S. lumber imports from Canadian provinces. 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 approach. The results reveal that SLA 2006 had a negative impact on softwood lumber shipments to the U.S. from British Columbia, Ontario, Quebec, and Saskatchewan, and no effect on those from SLA-exempted provinces. Thus, SLA 2006 did not provide an opportunity for trade diversion from SLA covered provinces to exempted provinces.