Commerce Department Implements U.S.–Canada Lumber Accord
Following the signature in September of an accord between the United States and Canada that settles a trade dispute over softwood lumber, and its entry into force on October 12, 2006, the Commerce Department has taken steps to implement the agreement.
On October 12, 2006, Secretary of Commerce Carlos M. Gutierrez announced that the Commerce Department had taken steps to implement the 2006 softwood lumber agreement between the United States and Canada. The accord, which was signed on September 12, 2006, in Ottawa, Canada, and entered into force as a result of an exchange of letters between the United States and Canada, ended a long-standing trade dispute with the largest trading partner of the United States.
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| At the signing of the U.S.–Canada softwood lumber agreement in Ottawa, Canada, on September 12, 2006 (left to right): U.S. Ambassador David H. Wilkins, U.S. Trade Representative Susan Schwab, Canadian Minister of International Trade David Emerson, and Canadian Minister of Industry Maxime Bernier.
Antidumping and Countervailing Duty Orders Revoked
Consistent with the agreement, the Commerce Department rescinded the ongoing antidumping (AD) and countervailing (antisubsidy) duty (CVD) administrative reviews, which provide for the annual calculation of AD and CVD rates, and revoked the AD and CVD orders on softwood lumber from Canada. Dumping occurs when a foreign producer sells a product in the United States at a price that is less than fair value, which is often the producer’s sales price in the country of origin (or home market) or its cost of production. Foreign governments subsidize industries when they specifically provide financial assistance to benefit the production, manufacture, or exportation of goods.
Duties Refunded by Customs
The Commerce Department also instructed U.S. Customs and Border Protection to refund to known importers all AD and CVD duties collected on softwood lumber from Canada, except when a court order prevents it, and to cease collecting those duties on future imports. Because letters from domestic producers indicate that the companies would not be harmed by Canadian imports while the agreement’s provisions are observed, the Commerce Department will not initiate an AD or CVD case on softwood lumber from Canada while the agreement is in effect.
“Finding a durable solution for the long-standing dispute over softwood lumber trade is an important achievement for both the United States and Canada. With this issue behind us, we can focus on expanding opportunities in our commercial relationship, which is already the largest bilateral trade relationship in the world,” said Gutierrez in announcing those actions. “U.S.–Canadian trade results in trillions of dollars that flow across our borders, creating jobs in both countries and stimulating economic growth. As we implement this agreement, I will work to ensure that our greater relationship grows and prospers.”
End of Litigation
Under the terms of the agreement, critical pieces of the litigation about trade in softwood lumber will come to an end, and unrestricted trade will occur in favorable market conditions. When the lumber market is soft, as it is currently, Canadian exporting provinces can choose either to collect an export tax that ranges from 5 to 15 percent as prices fall or to collect lower export taxes and limit export volumes. The agreement also includes provisions to address potential Canadian import surges, to provide for effective dispute settlement, to distribute the AD and CVD deposits currently held by U.S. Customs and Border Protection, and to discipline future trade cases.
Committee to Oversee Future Implementation
The agreement establishes the binational Softwood Lumber Committee, which is composed of U.S. and Canadian government officials. The committee will oversee the implementation of the agreement, which includes supervising working groups that are established to address specific issues. The working groups will address technical issues as they arise under the agreement, such as the accuracy of the data used to determine the level of taxes and limits on Canadian exports. One working group will also develop substantive criteria and procedures for establishing whether a region in Canada uses market-determined timber pricing and forest management systems, which could exempt that region’s softwood lumber from the agreement’s export measures. The Commerce Department will play a significant role in the Softwood Lumber Committee and the working groups.