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Once the pact is implemented, 99% of US trade with Canada will be dispute free

WASHINGTON, DC – 09/13/06 – US and Canadian officials have signed a softwood lumber agreement (SLA) that aims to end a two-decade trade dispute and enhance the competitiveness of the North American lumber industry.

At issue was the US claim that Canada was subsidizing its lumber producers by not charging them market interest rates to cut lumber on government land.
 
In retaliation, the US had been collecting tariffs on Canadian exports.

As part of the seven-year SLA, the US and Canada will end all litigation over trade in softwood lumber and unrestricted trade will occur in favorable market conditions.

When favorable conditions in the lumber market do not exist, Canadian exporting provinces can choose either to collect an export tax that ranges from 5% to 15% as prices fall or to collect lower export taxes and limit export volumes, according to the Office of the US Trade Representative.

The SLA also will include provisions to address potential Canadian import surges, and provide for effective dispute settlement, the USTR said.

Once the SLA is implemented, 99% of US trade with Canada will be dispute free.

Another provision of the SLA requires that $450 million of the approximately $5.3 billion in deposits that have been collected under the anti-dumping (AD) and countervailing duty (CVD) orders on Canadian softwood lumber be used to advance meritorious initiatives in the US.

These funds, the USTR said, will be dedicated to assistance for timber-reliant communities; low-income housing and disaster relief, and the promotion of sustainable forest management practices.

Of the remaining funds, $50 million will be used to establish a bi-national working group to discuss policy reforms.
 
In addition, approximately $4.3 billion will be returned to the importers of record and $500 million will be disbursed to the US Coalition for Fair Lumber Imports, an alliance of large and small independent sawmills.

The Washington, DC-based lobbying group, understandably, praised the signing of the agreement.

    Coalition Chairman Steve Swanson commented, "As with any negotiated settlement, the agreement text represents a compromise on the part of both countries, and we have real reservations about a variety of provisions of the settlement text.”

According to Swanson, “Neither side got all of what it wanted, but both sides got what they needed to move forward in a positive and constructive manner. On balance, the agreement is in the interest of US sawmills and their workers."

She added that the US is fully committed to the SLA and hopes that agreement, which is currently expected to have a shelf-life of at least seven years to nine years, will lead to a lasting lumber trade solution.

“In fact, it is our sincere hope that the processes that will be established under the agreement will lead to a permanent solution to a problem that has too long been a distraction in our relationship,’ she said.

“We have an historic opportunity and we need to grab it.”

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