U.S. and Canada Reach Final Agreement on Softwood Lumber Dispute (Expected to Enter into Force this Fall)
According to a press release from the United States Trade Representative (USTR), the U.S. and Canada have agreed on the text of an agreement on softwood lumber. The text incorporates and builds on the basic terms announced on the April 27, 2006.
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(See ITT's Online Archives or 05/02/06 news, 06050205, for BP summary of the April 27, 2006 U.S. and Canada agreement on core terms to end the lumber dispute.)
All Litigation to End; Export Charges, Limits, if Benchmark Price Exceeded
The press release states that key provisions of the agreement follow those of the April 27 basic terms. The U.S. and Canada will end all litigation over softwood lumber. The agreement provides for unrestricted trade when prices are over $355 per Thousand Board Fee (MBF), a condition that has existed for significant portions of the past several years. When prevailing prices are less than $355 per MBF, Canadian exports will be subject to a combination of export charges or volume limits that increase in steps the lower the market drops, with the maximum export charge at 15% when prices fall below $315 per MBF.
Most Collected AD/CV Duties to be Returned
According to the press release, of the estimated $5 billion in antidumping (AD) and/or countervailing (CV) duties collected since 2002, most will be returned to Canadian interests. A total of $1 billion will remain in the U.S. The U.S. lumber companies that brought the trade complaints against Canada will receive $500 million.
In addition, $450 million will fund meritorious initiatives to include projects such as community assistance for timber-reliant communities, assistance for low-income housing and disaster relief, sustainable forestry practices, and other forestry initiatives. The remaining $50 million will be used to establish a binational industry council, with an advisory board composed of representatives from the Canadian and U.S. lumber industries. The council will seek to strengthen and further integrate the North American lumber industry.
Agreement Addresses Potential Import Surges, etc.
According to the press release, the Agreement contains various forward-looking provisions. It establishes an 18-month process to develop substantive criteria for Canadian policy reforms that could exempt provinces from export charges and quotas and provides the basis for a long-term resolution of the dispute.
The agreement also includes provisions to address potential import surges from Canada, provides for effective dispute settlement, requires extensive information exchange and defines special treatment for low-value and high-value products.
Agreement Expected to Enter Into Force in Fall 2006
The press release states that the agreement, which was initialed on July 1, 2006, will undergo a legal review with signatures expected in August 2006. No U.S. legislation is required, but the Canadian Parliament must approve the export charge system after it returns in September 2006. Entry into force is expected in the fall.
USTR press release (dated 07/01/06) available at http://www.ustr.gov/Document_Library/Press_Releases/2006/July/US,_Canada_Reach_Final_Agreement_on_Lumber_Dispute.html