Pre June 2001 News Release - For Historical Reference
SOFTWOOD LUMBER COUNTERVAILING DUTY TRADE CASE UPDATE
Countervailing Duty/Anti-Dumping Petition
On April 2, 2001, the Coalition for Fair Lumber Imports (the Coalition), representing the U.S. lumber industry, filed a petition with the U.S. Department of Commerce requesting countervailing duty and anti-dumping investigations. (The April 2, 2001 news release and backgrounder provide information on countervailing and anti-dumping cases, include an estimated timetable, and a brief history of past lumber trade disputes.)
In the petition, the Coalition calculated a countervailing duty subsidy rate of about 40 per cent and an anti-dumping rate of about 30 per cent. The subsidy rate was calculated for all provinces except the Maritimes; the anti-dumping rate would apply to producers in all provinces.
For B.C., the Coalition alleged that stumpage and log export controls provided subsidies to lumber producers, and calculated a subsidy rate based on cross-border (B.C./Washington State) comparisons of stumpage rates (effectively combining the stumpage and log export allegations). The Coalition also identified a number of other programs as subsidies for the Department of Commerce to investigate further: parts of FRBC, the Job Protection Commission, a BC Rail program, the Forest Science Program, Skeena Cellulose among others.
The products being investigated are softwood lumber, flooring and siding – the same products covered by the just-expired Softwood Lumber Agreement.
The anti-dumping petition alleged that Canadian lumber producers were selling below cost in the U.S. market. The petition presented alternative alleged dumping margin calculations ranging from 22.5 per cent to nearly 73 per cent based on a number of different pricing comparisons, constructed and estimated costs.
Next Steps
The Coalition’s petition was the first step in a trade case. Over the past 20 days, the Canadian government (in co-operation with the provinces, industry and legal counsel) has held consultations with the Department of Commerce on a range of factual, procedural and legal issues. On April 23, the Department of Commerce decided to initiate countervailing duty and anti-dumping investigations.
In initiating the investigation, the Department of Commerce did not accept all of the petitioners allegations. In the case of British Columbia, the Department of Commerce has determined not to investigate B.C. Rail; the Ministry of Forests’ Forest Science Program; or the allegations pertaining to (a) alleged cost-mitigation for landscape unit planning and identified wildlife initiatives; (b) the proposed international communications program regarding B.C. forest practices; and (c) the allegations concerning the Ministry’s toleration of timber theft. In addition, the scope of the investigation into FRBC has been narrowed.
Concurrent with this decision, the International Trade Commission – another U.S. agency - will begin its review of the injury side of the case. It will make its preliminary determination on injury about May 17; the Department of Commerce will make its preliminary determination on subsidy in late August (or in mid-June if the department decides against the extended timetable that a complicated case would warrant).
Prior to its preliminary determination, the Department of Commerce will require the Ministry of Forests and other agencies to complete questionnaires. The questionnaires, expected at any time, will be far-reaching and comprehensive, require response within fairly short deadlines and be subject to subsequent on-site verification by the Department of Commerce.
Following the department’s preliminary determination, companies will have to post bonds in an amount equal to the preliminary subsidy on their lumber shipments to the U.S. There is a possibility of retroactivity:
• If the Department of Commerce determines that “critical circumstances” exist, the bonding requirement could be imposed retroactively 90 days from the date of the department’s preliminary determination.
• If the Department of Commerce denies the extended timetable for the case and finds “critical circumstances”, bonding requirements could be retroactively imposed to the April 2nd petition by the Coalition.
These are both Department of Commerce decisions.
Ministry Preparations
For several years, the U.S. law firm of Akin, Gump, Strauss, Hauer & Feld has been retained as the Government of B.C.’s trade counsel. Along with staff from the ministry and other government ministries and agencies, Akin Gump are preparing the legal and factual arguments for B.C. on stumpage, log exports and other issues on the subsidy side of the case.
Representatives of Akin Gump may work with Ministry of Forests region or district staff during these preparations. As well, there are several surveys and other information-gathering exercises underway – licensees may be contacted by Akin Gump, Price WaterhouseCoopers or others.
An exclusion process, for companies (mainly remanufacturers) that feel they should be exempted from the countervailing duty case, is being developed with the federal government, provincial governments and the Department of Commerce. The ministry will establish an exclusions office, when the process to request an exclusion has been finalized.
Further updates will be provided as the case unfolds.
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Reference # 2001:064 *
Released on Apr 27, 2001 *
Region Province Wide *
Category Economics and Trade
Contact
Eric Kristianson
250-387-8467
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