US And Canada Sign Softwood Lumber Agreement

by Glen Shapiro, LawAndTax-News.com, New York

14 September 2006

US Trade Representative Susan C. Schwab on Tuesday met with Canada’s Minister for International Trade, David Emerson to sign the US-Canada Softwood Lumber Agreement.

On July 1, 2006, Schwab and Emerson initialed the text of the Softwood Lumber Agreement. Since July 1, the United States and Canada have engaged in a legal review of the Agreement’s text and a discussion of certain clarifications to the text.

Under the terms of the Agreement, the United States and Canada will end all litigation over trade in softwood lumber and unrestricted trade will occur in favorable market conditions. When the lumber market is soft, 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.

The agreement also includes provisions to address potential Canadian import surges, provide for effective dispute settlement, distribute the antidumping and countervailing (anti-subsidy) duty deposits currently held by the United States, and discipline future trade cases. The Agreement additionally establishes a bi-national working group to discuss provincial policy reforms.

With respect to the disbursement of duty deposits, the Agreement requires that $450 million be disbursed to promote meritorious initiatives in the United States. Such initiatives include assistance for low income housing and disaster relief, assistance for timber-reliant communities, and assistance in the development of forest management practices to promote sustainable forestry.

In addition, $500 million will be disbursed to the Coalition for Fair Lumber Imports, the petitioners in the underlying dispute, and $50 million will be disbursed to a bi-national industry council.

Speaking with regard to the signing of the agreement on Tuesday, the USTR announced that:

"This is a great day – a day that is a long time in the making – and which many people understandably thought would never come."

"With this signing and implementation of this landmark agreement, we hope to bring to a close over 20 years of litigation – and the market instability and political tension that have often accompanied it."

"To reach this agreement, both sides had to compromise and make hard choices - and there is still much work to be done to bring the agreement into force. But once it is operational, this will be a good agreement for the United States, for Canada, and for the relationship between our two countries."

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