Softwood Lumber Duties Refunded To Canadian Firms

by Mike Godfrey, Tax-News.com, Washington

03 November 2006

Less than three weeks after the US-Canada Softwood Lumber Agreement came into force, almost $1 billion paid to the United States in duties has been refunded to Canadian companies.

“Just weeks after the Agreement was implemented, our government has delivered on its promise to Canadian softwood lumber companies,” stated David Emerson, Canada's Minister of International Trade.

“The refunds are going out ahead of schedule, and companies can realize the benefits of this agreement," he added.

According to Emerson, approximately $950 million in softwood lumber duty refunds has been disbursed by Export Development Canada (EDC), a body created in order to accelerate the return of softwood lumber deposits to companies that had paid duties to the United States.

Under the terms of the Softwood Lumber Agreement, which came into force on October 12, more than $5 billion in tariffs will be returned to Canadian companies.

The US imposed the tariffs in 2002 in retaliation for supposedly unfair subsidies given to Canadian sawmills by provincial governments which, according to the US, did not charge market rates to harvest timber on government land.

In return for the tax refunds, 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.

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