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US Starts Trade Investigation Against Canadian Lumber

by Scott Hamilton, Tax-News.com, Washington

20 December 2016

On December 16, the US Department of Commerce (Commerce) announced that it has initiated antidumping duty (AD) and anti-subsidy countervailing duty (CVD) investigations concerning Canadian softwood lumber product imports, valued at USD4.5bn in 2015.

The US International Trade Commission (ITC) is scheduled to take its preliminary decision on whether there is a reasonable indication that imports of softwood lumber products from Canada are materially injuring the US industry on or before January 9, 2017.

If the ITC determines that there is such a reasonable indication, the investigations will continue, and Commerce is scheduled to make its preliminary CVD determination in February 2017 and its preliminary AD determination in May 2017. AD margins are alleged at between 20.12 and 53.08 percent.

The petition to Commerce from the US lumber industry alleged that Canadian provincial governments, which own the vast bulk of Canada's timberlands, provide standing trees to Canadian softwood lumber producers for an administered fee that is far below the market value of the timber, as well as a number of other subsidies and tax incentives.

Under the 2006-2015 US-Canada Softwood Lumber Agreement (SLA), Canada agreed to impose certain export measures on softwood lumber products when the price of lumber fell below a certain level, and not to circumvent those measures by, for example, providing grants or other benefits to softwood lumber producers. Negotiation of a replacement trade agreement proved impossible during the one-year "standstill period" that was added on to the SLA after its expiry.

US lumber producers have been able to file a trade dispute with Commerce since October 12 this year, following expiry of the SLA and the standstill. It is not known whether the negotiations on a new agreement between the United States and Canada are to continue, but it is seen likely that, after the eventual imposition of ADs and CVDs, the dispute will end up at the World Trade Organization.

TAGS: tax | tax incentives | law | anti-dumping | agreements | manufacturing | trade disputes | Canada | United States | import duty | trade

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