The United States allege that Canada is breaching the North American Free Trade Agreement (NAFTA) by subsidizing their Softwood Lumber Industry. Canada claims that, according to its national guidelines, this is untrue. The two Nations have been disputing this issue since before the first Canada-American Free Trade Agreement (FTA) was put into effect on January 1st 1989. The FTA is exactly what its name describes it to be, an agreement that guarantees trade across borders without imposed tariffs. It also states that countries cannot offer subsidies because it gives an industry an unfair advantage over their counterparts in the competing countrie(s). The United States have alleged that Canada's Softwood Lumber is subsidized in an effort to protect their own softwood lumber industry from foreign competition, and has no legal basis according to Canada-America FTA, or its current equivalent, the NAFTA.
Canadian counterparts of softwood lumber in the U.S. say that Canadian lumber is being subsidized. Though the Canadian government does not offer the softwood lumber industry monetary assistance, it does offer them an advantage that American suppliers do not get: the stumpage fee policy. Stumpage "fees are actually royalties that the public collects when logging takes place on its land. They include the cost of the government's monitoring of forest activities, the replacement of harvested trees and conduct of forest research- [pg 24 - News in Review]. In the U.S. there are 200 million hectares of forested land, 64% of which are privately owned, compared to Canada where there are 417 million hectares of forested land, 6% of which are privately owned, while the remaining 94% percent are Crown land . American Loggers feel that they are disadvantaged because the land that they harvest on is privately owned and the cost to rent/buy the land is determined at open auction. As for the remaining 72 million hectares of forested land that is not privately owned in the U.