U.S. Presses Canada on Softwood Lumber

(American Shipper)

The United States on Friday requested consultations with Canada under the 2006 Softwood Lumber Agreement (SLA) regarding alleged unfair under-pricing of timber harvested from public lands of British Columbia.

The consultations provide an opportunity for the United States and Canada to exchange views and attempt to resolve their differences. If the matter cannot be resolved this way, then either the United States or Canada may request arbitration.

“The decision to move to consultations is intended to emphasize the importance of resolving this matter,” said U.S. Trade Representative Ron Kirk, in a statement.

To the United States, it appears that British Columbia is providing softwood lumber producers a low-cost input for their products and circumventing the SLA export measures. Read more here.

Related: Canada Says U.S. Softwood Complaint Unjustified (Reuters)

U.S. Softwood Lumber Imports Could be Subject to New Assessments

(World Trade Interactive)

U.S. Importers and domestic manufacturers of softwood lumber would be hit with a new assessment under a Department of Agriculture proposal to boost this struggling sector. The proposed Softwood Lumber Research, Promotion, Consumer Education and Industry Information Order aims to strengthen the position of softwood lumber in the marketplace, maintain and expand markets for softwood lumber and develop new uses for softwood lumber within the U.S. These efforts would respond to what USDA calls “one of the worst markets in history” for softwood lumber. Read more here.

USTR Confirms Sept. 1 Date for Eliminating Import Duty on Canadian Softwood Lumber

(World Trade Interactive)

The Office of the U.S. Trade Representative has issued a notice confirming that as of Sept. 1 it will stop collecting an additional 10% import duty on certain softwood lumber products from the Canadian provinces of Ontario, Quebec, Manitoba and Saskatchewan. The U.S. has collected this duty since April 2009 to remedy Canada’s breach of certain obligations under the 2006 Softwood Lumber Agreement. That step followed Ottawa’s refusal to comply with a February 2009 arbitral tribunal decision that Canada should collect this charge itself.

In recent months, however, the government of Canada had adopted measures to address the SLA violations and has agreed to collect the 10% export charge, effective with respect to softwood lumber products with a shipment date of Sept. 1 or later. Canada will collect this charge until the total of the amounts collected under the U.S. import duty and the Canadian export charge is equal to C$68 million. Because USTR has determined that these measures satisfactorily grant the rights of the U.S. under the SLA, it is removing the additional 10% import duty, effective with respect to imports with a shipment date of Sept. 1 or later.

U.S. Weighs New Canada Softwood Complaint – Kirk

(Reuters – Emma Ashburn and Roberta Rampton)

The United States is weighing lumber producers’ complaints that Canada is not living up to its end of a softwood lumber trade deal, and will announce its decision on what to do in the next month, Trade Representative Ron Kirk said on Friday.

After touring a Maine paper mill and meeting with state labor leaders, Kirk told reporters he is “acutely aware of the concerns” with competition from Canadian lumber companies, something he said he discussed with Canada’s Trade Minister Peter Van Loan two weeks ago.

“We have spent the last eight months or so digging into this, doing our fact-finding to make a determination (on) exactly the right way forward,” Kirk said during a conference call. “We do expect to make some announcement on our intentions within the next 30 days or so on that,” said Kirk. Read more here.

Coalition for Fair Lumber Imports Reiterates Concerns Regarding Changes to British Columbia’s Interior Stumpage Pricing System

(PRNewswire)

The Province of British Columbia has begun to implement changes to its pricing system for public timber which are likely to permanently lock in recent timber pricing abuses that are in direct violation of the U.S.-Canada softwood lumber trade agreement. The Coalition for Fair Lumber Imports maintains that correcting and remedying B.C. stumpage pricing abuses that were, and continue to be, in violation of the SLA is essential to preserving the integrity of the trade agreement.

“British Columbia’s abusive stumpage pricing practices have been harmful to the entire North American lumber industry outside Interior B.C.,” said Steve Swanson, chairman of the Coalition and president of the family-run Swanson Group in Oregon. “But these abuses have been a lifeline thrown to the B.C. industry by the provincial government, so it is not surprising that the B.C. industry spokesperson, Mr. John Allan, believes all is well under the SLA. However, all is not well when B.C. has been violating the SLA for the last three years. The Coalition will continue to press for full retroactive compliance with the SLA,” stated Mr. Swanson. Read more here.

USTR Considers Removing Import Duties on Canadian Softwood Lumber

(World Trade Interactive)

The Office of the U.S. Trade Representative is inviting comments by June 14 on the possible modification or removal of import duties on Canadian softwood lumber.

In March 2008 an arbitral tribunal determined that Canada had breached certain obligations under the 2006 Softwood Lumber Agreement, and in February 2009 the tribunal issued a remedy award requiring Canada to collect an additional 10% export charge on softwood lumber shipments from Ontario, Quebec, Manitoba and Saskatchewan until a total of C$68 million was collected. Canada did not comply, however, and USTR responded by imposing 10% duties on imports of softwood lumber products subject to the SLA from the affected provinces. These duties are to remain in place until the U.S. collects $54.8 million, the U.S. dollar equivalent of C$68 million at the time.

According to USTR, the government of Canada is now taking steps toward adopting legislation requiring the collection of an additional 10% charge on subject exports. If the proposed bill becomes law (which could happen as soon as mid-June) and USTR finds that it satisfactorily grants the rights of the U.S. under the SLA, the import charges may be modified or terminated. USTR is therefore seeking public comments on the possibility of such action.

Natural Resource Subsidies [eg Softwood Lumber]

(WTO – Matthew S. Yeo, Steptoe & Johnson LLP)

One important point of intersection between natural resources and the multilateral trading system concerns the treatment of natural resource subsidies under the WTO Agreement on Subsidies and Countervailing Measures. Many countries retain sovereign ownership of natural resources and allow commercial enterprises to exploit these resources under different types of compensation arrangements. The commodities that are thereby produced, or downstream products that are manufactured from those commodities, may become the target of anti-subsidy disciplines (such as countervailing duties) if there is an allegation that the government provided the natural resources on subsidized terms. What, then, does it mean for a government to provide a natural resource subsidy?

The resolution of this question has important implications for international trade in natural resources and products that are produced with natural resource inputs. Countries that pursue economic development and diversification through the exploitation of sovereign natural resources may find that their exports become subject to countervailing duties in other countries or to an action under Part III of the SCM Agreement. One of the longest-running trade disputes in history, the softwood lumber dispute between the United States and Canada, is fundamentally a dispute about natural resource pricing. In addition, the question of how countries should price natural resources to avoid anti-subsidy disciplines is closely related to how a country should price natural resources to promote conservation and sustainable yields. Read more here.

Taxes on Canada Lumber Exports to U.S. to Drop

(Reuters – Allan Dowd)

Lumber prices have recovered enough to allow Canadian forestry firms to begin paying a lower export tax on softwood shipments to the United States starting in May, British Columbia officials said on Friday. Data released on Friday showed the North American lumber price over the past four weeks has averaged $325 per thousand board feet, high enough to reduce the tax rate paid by Western Canadian sawmills to 10% from 15%.

It marks the first time that lumber prices have been high enough to allow for a tax rate reduction since the taxes were imposed under the 2006 U.S.-Canada Softwood Lumber Agreement, British Columbia Forests Minister Pat Bell said. Major lumber producers in British Columbia and Alberta include West Fraser Timber, Canfor, Tolko Industries, and International Forest Products.

Eastern-headquartered producers include Tembec and Domtar, which recently announced it was selling its mills to newcomer Eacom Timber Corp. Sawmills in Central Canada, whose exports are subject to a combination of export taxes and shipment quotas, will see the tax rate drop to 3% from 5% and quota restrictions ease slightly. Read more here.

U.S. Lumber Law Falls Short, GAO Says

(Journal of Commerce Online – R.G.Edmonson)

Questionable data clouds oversight in U.S.-Canada trade

Congressional legislation has done little to assure the federal government that U.S. and Canadian softwood lumber traders are playing by rules established by a 2006 bilateral agreement, the Government Accountability Office reported. The 2006 Canada-U.S. softwood lumber agreement was intended to settle years of quarreling over Canadian lumber exported to the United States.

Some U.S. importers – U.S. home builders in particular – benefited from the low-cost lumber imports, but U.S. producers complained they were being undercut, and accused Canadian provincial governments of illegally subsidizing lumber production. The 2006 agreement set quotas on Canadian softwood lumber, and required the government to collect a fee from exporters. Read more here.

U.S. to Continue Duties on Canadian Lumber after Tribunal Rejects Lump Sum Payment

(World Trade Interactive)

The Office of the U.S. Trade Representative indicated this week that the U.S. will continue to impose a 10% duty on imports of softwood lumber from four Canadian provinces after an international tribunal rejected Ottawa’s attempt to remedy a violation of the 2006 Softwood Lumber Agreement by making a lump sum payment to Washington. The duty was imposed in April but USTR did not indicate how much longer it will remain in effect.

Under the SLA, which aimed to resolve a long-running dispute between the two countries, Canada agreed to impose export measures on shipments of softwood lumber products to the U.S. When the prevailing monthly price of lumber is above $355 per thousand board feet (MBF), Canadian lumber exports are unrestricted. When prices are at or below $355 per MBF, each Canadian exporting region is subject to either an export tax with a soft volume cap or a lower export tax with a hard volume cap, and these measures become more stringent as the market price declines. The SLA includes an adjustment mechanism to ensure that the export volume caps are calculated appropriately under rapidly changing market conditions.

Read more here.

Statement from Minister Day on Softwood Lumber Tribunal Ruling

(Minister of International Trade)

The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today [Monday] issued the following statement on the decision of the London Court of International Arbitration Tribunal that Canada did not cure its breach of the Softwood Lumber Agreement:

“We are disappointed that the Tribunal did not accept Canada’s proposed solution to cure the breach. We continue to believe that our offer to pay $46.7 million was fair. However, there is no further route for appeal.

“The Government will comply with the Tribunal’s decision, as we remain committed to the success of the Softwood Lumber Agreement. This agreement has brought stability and has returned nearly $5 billion to the industry. This is a complex matter. We are reviewing the decision and consulting with the provinces to determine how best to move forward.”

The Tribunal’s decision states that the compensatory adjustments to Canada’s export charges must be imposed until the amount of $68.26 million identified by the Tribunal in its ruling on February 26, 2009, has been collected.

The breach is related to the use of the adjustment factor in the calculation of the volume of exports to the United States. Canada applied the adjustment factor to some provinces beginning July 2007, but the Tribunal said that we should have applied it beginning January 2007.

The 2006 Softwood Lumber Agreement ended a long-standing dispute that had resulted in years of punishing duties against Canadian exports. Through the Agreement, $4.5 billion US in duties collected by the U.S. was returned to Canadian companies, bringing a significant infusion of capital into the industry and benefiting workers and communities across Canada.

$1B for Pulp Firms Threatens Trade Fight

(Winnipeg Free Press – Julian Beltrame, The Canadian Press)

The federal government has extended a $1-billion lifeline to Canada’s struggling pulp and paper industry in an effort to match billions of dollars in subsidies available to U.S. rivals. But the irony is that the effort may have the effect of touching off another costly and protracted trade fight with the United States over whether Canada is unfairly subsidizing its forestry industry.

The government’s announcement Wednesday was quickly followed by a release from the notoriously litigious U.S. Coalition for Fair Lumber Imports, which labelled the program an unfair subsidy. “To the extent that the subsidy goes to corporate groups that produce softwood lumber, this likely constitutes a violation of the U.S.-Canada Softwood Lumber Agreement,” said the group’s chairman Steve Swanson in a release.

Trade Minister Stockwell Day said the Canadian program is designed to level the playing field with the U.S., adding that the government has sought legal advice to ensure it does not contravene the agreement. “I would suggest anyone on the U.S. side who thinks this is not compliant with (the softwood agreement) needs to look in the mirror,” he told reporters late Wednesday. Read more here.

U.S. Levies 10% Softwood Customs Duty

(Bertrand Merotte — Globe & Mail)

The United States is slapping 10 per cent customs duties on four Canadian provinces on imports of softwood lumber products, saying Canada has failed to correct a breach of the softwood trade deal between the two countries.

U.S. Trade Representative Ron Kirk said in a news release that the duties will remain in place until such time as the U.S. has collected $54.8-million (U.S.).

“We regret that Canada has chosen not to meet its commitments and has made this action necessary,” Mr. Kirk said in a statement.

An offer from Canada of $36.66-million last month was not considered to have fixed the breach identified by a trade tribunal in February, according to the U.S. trade office. Read more here.

Canadian Offer to Remedy Lumber Pact Violation Rejected

(World Trade Interactive)

U.S. Trade Representative Ron Kirk announced April 3 that the U.S. will not accept an offer by Canada that seeks to remedy a violation of the 2006 Softwood Lumber Agreement. According to a USTR press release, an international tribunal determined that Canada must collect an additional 10% export charge on softwood lumber shipments from its eastern provinces until about $54.8 million has been collected.

Because Canada did not take this action by the March 28 deadline, the USTR states, the U.S. is now within its rights to impose customs duties on softwood lumber imports from Canada in an amount not to exceed the additional export charges. However, the USTR is still reviewing its options and plans to decide soon on an appropriate course of action.

Senator Seeks Import Duties on Canadian Softwood Lumber

(World Trade Interactive)

Sen. Olympia Snowe, R-Maine, is asking the Office of the U.S. Trade Representative to immediately increase import duties on Canadian softwood lumber products due to an alleged violation of the 2006 Softwood Lumber Agreement. Canadian officials say there is no violation, however, and a February statement from USTR itself suggests that may in fact be the case.

In February an international tribunal ordered Canada to provide a compensatory remedy for a violation of the SLA that resulted in more shipments to the U.S. than were allowed. USTR said at that time that Canada had some flexibility in determining what precise remedy to impose but had only 30 days to take action. If that deadline were not met, USTR said, Canada would have to collect an additional 10% export charge on softwood lumber shipments from its eastern provinces until $54.8 million was collected. If neither of these measures was taken the U.S. would be entitled to impose the additional charges itself. Read more here.

U.S. Claims Victory in Lumber Case Against Canada

(Reuters)

An international tribunal has ruled for the United States in a dispute with Canada over a softwood lumber deal struck in 2006, the U.S. Trade Representative’s Office said on Thursday.
The decision requires Canada to fix its breach in the agreement within 30 days, acting U.S.

Trade Representative Peter Allgeier said in a statement. Ottawa also must collect an additional 10% export charge on softwood lumber shipments from Eastern Canadian provinces until C$68.26 million ($54.8 million at current exchange rates) has been accumulated, he said.

“We are pleased with the tribunal’s decision,” Allgeier said. “This dispute settlement proceeding is now at an end. We look forward to Canada working quickly to cure the breach.”

Canadian officials said they were disappointed with the ruling and would discuss with Canadian industry and provinces how to implement it. Read more here.

CBP Continues Inspection of Canadian Firewood; New Commercial/Personal Certificate Required

(CBP)

U.S. Customs and Border Protection continually inspects loads of firewood coming from Canada into the United States to prevent the entry of unwanted guests – the six-legged variety.

Despite CBP’s ongoing inspection efforts, the threat of invasive species hitchhiking in wood shipments across the US-Canadian border remains. Effective December 15, for commercial shipments and January 1, 2009 for noncommercial or personal shipments, hardwood firewood must be accompanied by either a treatment certificate or a treatment label certifying that the wood was heat treated to a core temperature of 71.1º Celsius for 75 minutes. The requirement can be found in Title 7, Code of Federal Regulations, 319.40-7(c). Without this proof of treatment, travelers will be turned back to Canada to dispose of their hardwood firewood. Hardwoods generally include: oak, beech, ash, maple, cherry and certain other varieties.

Softwood firewood, such as pine, may enter without treatment but it must be free of pests. It must also have written certification, a requirement which varies according to the type of wood and origin. If inspection at the border reveals plant pests, or if certification is lacking, travelers may have to take the firewood back to Canada. Read the complete press release here.

U.S. Timber Coalition Says B.C. Violating Softwood Deal with Pine Kill Wood

(The Canadian Press)

A U.S. forest industry lobby group is accusing the B.C. government of using the province’s pine forest beetle kill epidemic to violate the U.S.-Canada Softwood Lumber Agreement.

The U.S.-based Coalition for Fair Lumber Imports says B.C. timber is being sold for as little as 25 cents per cubic metre and the cheap wood is being used to produce softwood lumber products that are being sold in the United States. Coalition spokesman Steve Swanson says in a statement that while the entire North American forest industry is struggling during a worldwide economic downturn, British Columbia is virtually giving away its taxpayer-supported natural resource.

The U.S. coalition says the 25-cent B.C. wood can sell for up to $20 a cubic metre in the states.

Neither B.C. Forests Minister Pat Bell or a spokesman for the provincial forest industry were immediately available for comment.

Earlier this week, Canada’s slumping forest industry asked Ottawa for a relief package that adds up to about $600 million over five years.

CBP Demanding Return of AD/CV Duty Revenues Distributed under Byrd Amendment

(World Trade Interactive)

U.S. Customs and Border Protection is demanding that U.S. companies return within 30 days certain distributions of antidumping and countervailing duty revenues they received under the Continued Dumping and Subsidy Offset Act. Earlier this year a U.S. federal appeals court ruled that the CDSOA (the so-called Byrd Amendment), which required CBP to distribute AD/CV duty revenues to affected U.S. producers, did not apply to imports from Canada and Mexico. As a result, CBP is now seeking the repayment of tens of millions of dollars in AD/CV duties assessed on products imported from those two countries that were distributed in 2003, 2004 and 2005.

The Coalition for Fair Lumber Imports wrote to CBP December 4 urging the agency to withdraw these letters or at least extend the compliance date by 60 days “to enable the Executive Branch to reconsider the demand for repayment.” The letter asserted that the repayment requests are improper because CBP represented to the Court of International Trade that repayment would be inappropriate and the CIT rejected a request that repayment be required, stating that “[w]hen the government grants or distributes money to parties, those parties have some right to rely on that money they receive.” The coalition added that the timing of CBP’s repayment requests, amid “the depths of the nation’s worst building and housing crises in decades,” could not be more harmful.

CBP: No Rounding of Quantities under U.S.-Canada Softwood Lumber Agreement (SLA 2006)

(CBP)

Under the U.S.-Canada softwood lumber agreement of 2006, CBP is charged with working with the Canadian government to reconcile the export permit data collected by Canada with the entry summary data collected by CBP. The results of the quarterly reconciliations are closely scrutinized by several trade groups and reviewed by other U.S. government agencies. Therefore, it is important that the reconciliations’ results show data that is as consistent as possible.

As such, we are requesting that importers do not round the quantities reported on the 7501, but instead report out to two decimal places. This will ensure that, when U.S. quantities are converted into board feet, they will more closely match the quantities reported to Canada.

We appreciate your attention to this matter.

Questions regarding the softwood lumber agreement requirements can be directed to the International Coordination Branch, Office of International Trade attention Ms. Heather Sykes at 202-863-6099.