2006 Softwood Lumber Agreement

Surge and Export Charge Rate

Annex 7A of the Softwood Lumber Agreement defines the Random Lengths Composite to be used to set the tax rate in each month as: "the most recent four-week average of the weekly framing composite prices available 21 days before the beginning of the month" .

The tax rate to be charged in a month is determined based on the level of the industry standard Random Lengths Framing Lumber Composite Price.  As shown in the following table, when the Random Lengths Composite is above $US355/mbf there is no export charge, and the export charge rises as the Random Lengths Composite falls.

Export Volume Monitoring

The following link is to the Federal Foreign Affairs and International Trade Canada (DFAIT) website where provincial statistics on lumber exports are updated daily.  The table also shows the surge limit for each region for the current month.  For October, the monthly surge limit is adjusted to reflect the fact that the agreement was implemented part way through the month on October 12.

SOFTWOOD LUMBER EXPORTS REPORT

There is a five day period at month end when export statistics may change due to data corrections.

British Columbia Surge Limits

Surge Limits can currently be calculated for the months below.  The data to make a month's calculation is generally available about two weeks before the month beginning.

British Columbia Monthly Surge Limits, million board feet

* Export levels are based on export permit data and are subject to change.

Background on Surge Provisions and Calculations

Under the export tax option chosen by British Columbia in the 2006 Softwood Lumber Agreement (SLA2006), there is provision for a retroactive penalty amounting to 50% of the applicable tax rate if exports during a month are greater than 110% of a defined market share.

The Coast and Interior regions of British Columbia are treated separately under the agreement.  Exporters report the “Region of Origin” of the primary mill for lumber they ship so that exports are allocated to the appropriate region for surge and quota calculations (details).

The surge limit for each region is calculated based on defined market shares of Expected US Consumption.  Each region's market share is laid out in the Agreement in Annex 8.

Expected US Consumption is a 12 month rolling average of US consumption, 3 months lagged, and adjusted by monthly seasonal adjustments as laid out in Annex 8 of the Agreement.  For example, the Expected US Consumption for calculating the November 2006 surge limit is based on US consumption data for August 2005-July 2006.

The federal government Department of Foreign Affairs and International Trade (DFAIT) has committed to publish lumber statistics daily on their website.

BC Market Share in SLA 2006

Source: Annex 8 of SLA 2006