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U.S.-Canada Trade Dispute

Last update:  April 26, 2019

Click here to go to view current Special Reports on this website.

Click here for the Abbreviated U.S. Canada Dispute Timeline (in PDF file format).

Click here for the timeline from 1982 to present and recent updates (below this article).

The U.S. Department of Commerce released its preliminary determination in the countervailing duty case against Canadian lumber imports April 25. This 12-page report details its findings. (in PDF file format).

Answers to frequently asked questions in the trade dispute

(The following is an article published in the May 5, 2017 issue of Random Lengths.)

 

Questions on duties answered; preliminary CVD will expire
The preliminary countervailing duty on Canadian softwood lumber shipments to the U.S. has only been in place for a week, and questions about its implementation are multiplying. Random Lengths has consulted with sources on both sides of the border to provide as many answers as possible. Here are the most common queries:

Q. When are Canadian shippers required to begin paying cash deposits on softwood lumber shipments to the U.S.? A: As of April 28, all companies must pay cash deposits to cover the preliminary countervailing duty. According to the ruling from the U.S. Department of Commerce, Canfor, West Fraser, Tolko, and Resolute are not required to pay retroactive duties. Cash deposits for those companies began on shipments that crossed the border on April 28 or later.
All other Canadian shippers must pay the preliminary CVD rate of 19.88% on shipments beginning January 28, or 90 days prior to the CVD order publishing in the Federal Register. J.D. Irving was assessed a retroactive duty of 3.02%.

Q: How long do preliminary duties apply? A: Under World Trade Organization regulations, preliminary CVD cash deposits are collected for four months after the ruling is published, and preliminary AD cash deposits are collected for six months. So in this case, preliminary CVD deposits would be collected until late August. The final CVD determination is currently scheduled for September 6, but could be delayed until early November. If the case is extended, that would delay the final injury ruling from the U.S. International Trade Commission until late December. Under that scenario, there would be a gap from late August until the end of the year when no CVD cash deposits would be collected.

However, if an affirmative anti-dumping duty determination is ruled on June 23, cash deposits on that duty will be collected for a maximum of six months following its publication in the Federal Register. Therefore, if a preliminary AD duty goes in effect in early July, it could be collected until early January 2018.

Q: Who collects the duties on Canadian lumber shipments to the U.S.? A: The U.S. government collects duties, and once the entire process of the investigations and appeals are completed, duties are disbursed into the U.S. Treasury.

Q: Who is required to pay duties that are covered under the CVD, AD investigations? A: Officially, the “importer of record” is the entity required to pay the duty. Despite the connotation of the name, the “importer of record” is usually the Canadian shipper. If both parties in a transaction agree, the buyer in the U.S. could be designated the “importer of record,” but that is rarely the case.

Q: Are all Canadian provinces covered in the CVD investigation? A: Currently, yes. Even though the Maritimes were not included in previous CVD cases or the recently-expired Softwood Lumber Agreement, Commerce did not exclude any provinces in its preliminary CVD determination. Whether provinces such as Nova Scotia, Prince Edward Island, Newfoundland, and Labrador will be excluded is expected to be addressed in the final CVD determination. Commerce has aligned the CVD and AD cases, and a final determination in both is currently scheduled for September 6. However, that date could be extended to early November.

Q: If final CVD and/or AD duties are imposed on Canadian lumber shipments to the U.S., what appeals or challenges can be filed? A: There are two kinds of appeals. One can be filed by Canada or by any private party that participated in the proceeding, claiming that Commerce, in its final AD/CVD determinations, or the International Trade Commission, which rules on injury, acted inconsistently with U.S. law. Normally these cases are heard in the U.S. Court of International Trade, which is a specialized federal district court in New York. Further appeals could be made to the Court of Appeals for the Federal Circuit in Washington, D.C., or rarely to the Supreme Court.

Because the case involves Canada, NAFTA provides that — at the request of any party — all of these cases are decided by special binational panels formed under NAFTA with Canadian and U.S. members.
Another possible type of challenge can be made only by the Government of Canada. It could initiate a dispute in the World Trade Organization in Geneva, Switzerland, alleging that the U.S. breached some obligation in the WTO agreements governing AD and CVD cases.

Q: Is negotiating a new Softwood Lumber Agreement still possible? A: Yes. Whether the duty investigations are still ongoing or final duties have been assessed, the two countries can still negotiate a settlement if both see it is in their best interest. The last SLA was signed in 2006, five years after CVD/AD duties were assessed on Canadian lumber shipments to the U.S.

Q: What specific lumber items are included in the duty investigations? A: For a full list of items included in the scope of the investigations, check with the CVD preliminary determination published by Commerce. A link is posted on our website at www.randomlengths.com. Click on In Depth, then U.S.-Canada trade dispute. View the 12-page report in PDF file format. A full list of items covered is included in Appendix I. Also, this article is available on our website at the above address. Click on In Depth, then U.S.-Canada trade dispute.

1982 to present

Last update:  April 26, 2019

Information about the current U.S.-Canada trade deal

Complete U.S.-Canada Trade Dispute Timeline, from 1982 to present 

A document showing the U.S.-Canada Trade Dispute Timeline, from 1982 to present  (in PDF file format) provides background information year by year on the dispute, covers the process that created the current Trade Agreement, and the results of the agreement since.

Updates for the current year are also added below, on this page.

Archived information about the previous Softwood Lumber Agreement, that expired in October 2015, is at the bottom of this page.


2018

JUNE 2018 — With framing lumber prices racing to record highs, thoughts of the U.S. and Canada negotiating a new Softwood Lumber Agreement fade. Trade officials from both countries, along with Mexico, have been trying to hammer out a new NAFTA Agreement, but that appears unlikely in the short term. Instead, a trade war erupts. Canada releases a list of potential tariffs on U.S. exports, including softwood plywood, as a retaliation for U.S. tariffs imposed on steel and aluminum imports from Canada.

JULY 2018 — The Canadian-based Shake and Shingle Alliance files a request with the U.S. Department of Commerce for a formal scope determination on whether Cedar shakes and shingles should be subject to softwood lumber duties. Meanwhile, the Canadian government confirms that effective July 1, 10% duties will be applied on a number of U.S. products exported to Canada, including softwood plywood.

SEPTEMBER 2018 — Concerns about the future of the Western Red Cedar shake and shingle industry ramp up as Canadian suppliers acknowledge that the U.S. Department of Commerce confirms that shakes and shingles shipped into the U.S. are subject to anti-dumping and countervailing duties.

DECEMBER 2018 — Almost a year after Canada filed appeals to the countervailing and anti-dumping duties against lumber shipments to the U.S., the first NAFTA panel is announced. Canada wins a coin flip and will have three members on the five-person panel, with two Americans. This panel will review the U.S. International Trade Commission’s unanimous decision that the U.S. industry was injured by lumber exports from Canada. Canada also has filed two other NAFTA appeals, along with two cases presented to the World Trade Organization.

2019

APRIL 2019 — A World Trade Organization panel issues a ruling April 9 in the anti-dumping duty case that is described as a split decision, but U.S. officials laud the ruling while Canada mulls an appeal. The WTO panel rules that the U.S. Department of Commerce “acted inconsistently” with an international anti-dumping agreement when calculating dumping margins levied against Canadian companies. However, it approves the U.S. use of a controversial method called “zeroing.” Both countries have up to 60 days to appeal the WTO ruling.


Previous 2006 to 2015

This is archived information about the previous Softwood Lumber Agreement, that ended its nine-year run in October 2015

Answers to frequent questions about the tentative agreement  - This special report in PDF format was transmitted to all Random Lengths EMS subscribers at 4:00 p.m. Pacific Time, May 12, 2006. Other information helpful to understanding the new U.S.-Canada lumber deal is below:

Explanation of the Random Lengths Framing Lumber Composite Price (pdf format) , designed to answer common questions about how the Random Lengths Framing Lumber Composite is calculated.

Items used in the composite, and the monthly averages for the Random Lengths Framing Lumber Composite from 1995 to present, can be found by going to www.rlpi.com > In Depth > Useful Data > Monthly Composite Prices


Canadian Tax Levels

Prevailing Monthly
Price*
Option A1 - Export Charge (Expressed as a % of Export Price) Option B2 - Export Charge
(Expressed as a % of Export Price) with Export Allocation
Over
$US355
No Export Charge
No Export Charge and no volume restraint
$US336-355
5%
2.5% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 34% of Expected U.S. Consumption for the month
$US316-335
10%
3% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 32% of Expected U.S. Consumption for the month
$US315 or under
15%
5% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 30% of Expected U.S. Consumption for the month
*Four-week average of Random Lengths Framing Lumber Composite Price.
1 - Applies to B.C. and Alberta.
2 - Applies to Quebec, Ontario, Manitoba, and Saskatchewan.

 

Monday, October 14, 2019

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