Countervailing duties can be used to offset the effects of foreign export subsidies, but often
they are nothing more than thinly disguised protection.Discussions in Canada about countervailing duties are often related to the
long-standing dispute regarding Canada’s softwood lumber exports to the
United States. The U.S. government’s frequent claim is that Canadian
provincial governments provide a subsidy to domestic lumber producers
by charging low stumpage fees—the fees paid by the companies to cut trees
on Crown land. For many years the United States imposed a 27 percent
tariff on imports of Canadian lumber; it was later replaced by export
restrictions imposed by the Canadian government. But this issue shows
no signs of being resolved. The United States continues to argue that
Canadian provincial governments provide subsidies through low
stumpage fees; Canadian governments continue to argue that low
Canadian costs reflect our comparative advantage in softwood lumber.