Impact of Globalization and Policy Change on United States Softwood Lumber Trade

Abstract

To examine the effects of global economic integration, public policy, and other factors on US softwood lumber trade, a demand and supply system for both exports and imports is estimated with panel data sets. We find that the combined impact of trading price and exchange rate before 2003 has made foreign lumber products much cheaper than those manufactured domestically. Furthermore, domestic economic conditions and production capacity strongly affect the exports and imports of both the United States and its trade partners. Also, the US federal harvest reduction policy and the Asian financial crisis influenced both export and import markets. All of these suggest the need for more integrated market analysis and strategic business thinking.