Publication Number: 3419

Report Title: International Economic Review: Lumber in North America: The Calm Before the Storm?; The Effects of Foreign Direct Investment on the U.S. Economy; Mexican Sugar and U.S. Sweeteners

Author's name(s): Thomas Jennings, Michael Ferrantino, Magdolna Kornis

Date Published: April 2001

Report Description/Introductory Text: “Lumber in North America: The Calm Before the Storm?” details the history leading up to the March 2001 expiration of the U.S.-Canada Softwood Lumber Agreement. Supporters and opponents in each country include lumber producers, legislators, environmentalists, consumer spokespersons, and trade policy analysts. The relative peace of the last five years is likely to be followed by more division on the bilateral front.

“The Effects of Foreign Direct Investment on the U.S. Economy” notes how both U.S. direct investment abroad and foreign direct investment in the United States (“outbound” and “inbound” FDI, respectively) continue to grow steadily, and explores the effects of such investment on U.S. wages, employment, imports, exports, and productivity. Both types of investment are associated with increases in international trade and with R&D expenditures. Fears that outbound FDI depresses the U.S. wage structure are not supported by available evidence, while inbound FDI creates upward pressure on wages, particularly in services.

The sweetener trade battle between the U.S. and Mexico is illustrated in “Mexican Sugar and U.S. Sweeteners.” Mexico turns to NAFTA to resolve its dissatisfaction with the U.S. tariff rate quota for sugar, while U.S. exporters of high-fructose corn syrup sweeteners and the U.S. Government turn to NAFTA and the WTO to challenge the legality of the steep antidumping duties Mexico imposed on imports of this product. The controversial “side letter” on sugar trade remains at the root of this sugar dispute.

Topics Covered: USITC, lumber, softwood, U.S.-Canada Softwood Lumber Agreement, Softwood Lumber Agreement (SLA), U.S. foreign direct investment (FDI), outbound investment, inbound investment, North America Free Trade Agreement (NAFTA), tariff rate quota (TRQ), sugar sweetners, high-fructose corn syrup (HFCS), WTO DisputeSettlement Body (DSB)

Countries: United States, Canada, Mexico, Brazil, Dominican Republic

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