Canada to seek judicial review of latest U.S. decision on softwood lumber duties
U.S. argues Canada's 'stumpage fee' system amounts to unfair subsidies on Canadian lumber
Canada has filed for a judicial review of last month's U.S. Commerce Department assessment of the levies, which International Trade Minister Mary Ng described in a statement as "unfair, unjust and illegal."
Ng framed the move as an effort to escalate the concerns of exporters while encouraging the U.S. to consider a negotiated solution to a dispute that has plagued Canada-U.S. relations for decades.
"We have to continue to explore new ways (to resolve it), because the industry expects us, expects me and expects my government to — (and) so do their workers," she said Tuesday during a cabinet retreat in Charlottetown.
"It would be much, much more preferable that we get to the negotiating table, and let's come together and let's have a deal. But in the meantime, we're going to use all the tools at our disposal to stand up for the industry."
The latest administrative review by the U.S. Commerce Department resulted in a modest decrease in the so-called "all others" combined duty rate, but kept it in place at 7.99 per cent.
U.S. Trade Representative Katherine Tai has said negotiations can only happen once Canada does away with its stumpage fee regime. (Bill O'Leary/The Washington Post/The Associated Press)
In Canada, lumber-producing provinces set so-called stumpage fees for timber harvested from Crown land, a system that U.S. producers — forced to pay market rates — say amounts to an unfair subsidy.
It's not the first time Ng has pushed her U.S. counterparts to help hammer out a solution. But U.S. Trade Representative Katherine Tai has said negotiations can only happen once Canada does away with its stumpage fee regime.
Neither Commerce nor officials in Tai's office responded promptly to media queries Tuesday.
Canada has successfully argued at WTO in the past
"For years, the United States has imposed unfair, unjust and illegal duties on Canadian softwood lumber, hurting Canadian industry and increasing housing costs in both countries," Ng said in her statement.
"Canada is taking the necessary steps to actively defend the interests of our softwood lumber industry and the workers and communities that rely on it."
Canada has successfully argued at World Trade Organization dispute panels in the past that its stumpage-fee system is not a subsidy — which is exactly why the government feels it remains in the right, Ng said.
"I mean, it has ruled exactly that conclusion to Canada, which is why it's so important that Canada continues to defend our interests against these tariffs."
The Commerce Department's fourth administrative review of the duties, announced last month, established a combined rate of 7.99 per cent, only slightly less than the 8.59 per cent established after its previous review.
That decision was cheered by U.S. lumber producers, who say the duties keep the playing field level south of the border and allow the domestic forestry and construction industries to thrive.
Such enforcement "is exactly what must happen for enduring expansion of U.S. lumber manufacturing and availability to meet demand to build more American homes," said Andrew Miller, chairman of the U.S. Lumber Coalition.
"Failure to fully enforce the trade laws would only undermine long-term confidence in expanding U.S. sawmilling capacity and jobs in the American softwood lumber industry."
The U.S. industry "remains open" to a new agreement on softwood lumber, but Canadian producers have yet to agree on a "unified position" that would allow the two governments to negotiate one, the coalition says.
Statement from Minister Emerson on Softwood Lumber Agreement
News Release
August 7, 2007
No. 108
The Honourable David Emerson, Minister of International Trade, today issued the
following statement in response to the announcement by the U.S. of its intention to
request arbitration with Canada under the Softwood Lumber Agreement, which followed
consultations undertaken by both countries on April 19, 2007:
“This announcement stems from differing interpretations of the Softwood Lumber
Agreement by Canada and the U.S. Despite extensive talks with industry, we were not
able to resolve these issues during the consultation phase.
“We will continue to work closely with the provinces and industry to defend Canada’s
interests throughout the arbitration process.
“Since its implementation in October 2006, the Softwood Lumber Agreement has
worked well—providing certainty for industry plus returning over $5 billion in duties to
Canadian softwood lumber producers. Different points of view may arise from time to
time in administering such a complex agreement. It was for this reason that we included
a dispute settlement mechanism in the agreement to facilitate the resolution of
differences.
“We will work closely with the United States to resolve these matters. Canada remains
committed to this agreement and its continued effective operation, and will abide by the
outcome of the dispute settlement process. It is this spirit of goodwill and cooperation
that will allow us to continue to build a stronger, more competitive North America.”
The U.S. announcement relates to a technical interpretation of the Softwood Lumber
Agreement, and a disagreement with respect to certain provincial programs. Following
the filing of a formal request for arbitration, each party will have 30 days to nominate
one arbitrator. Both arbitrators will then jointly choose a tribunal chair before
commencing the arbitration process, which will be conducted under the auspices of the
London Court of International Arbitration (LCIA). The agreement calls on the tribunal to
endeavour to issue its final and binding decision no later than 180 days after the LCIA
appoints the tribunal.
The Softwood Lumber Agreement came into force on October 12, 2006. The
agreement creates a predictable trade environment for Canadian producers. It is a
seven-year agreement with an option to renew for two additional years.
To read the original Softwood Lumber Agreement, visit
http://www.international.gc.ca/eicb/softwood/SLA-main-en.asp.
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For further information, media representatives may contact:
Jennifer Chiu
Press Secretary
Office of the Minister of International Trade and Minister for the Pacific Gateway and
the Vancouver-Whistler Olympics
613-992-7332
Trade Media Relations Office
Foreign Affairs and International Trade Canada
613-996-2000
http://www.international.gc.ca