Canada–United States softwood lumber dispute
British Columbia, the major Canadian exporter of softwood lumber to the United States, was most affected, reporting losses of 9,494 direct and indirect jobs between 2004 and 2009.
The prices charged to harvest the timber (stumpage fee) are set administratively, rather than through the competitive marketplace, the norm in the United States.
This requirement precludes imposition of countervailing duties on government programs, such as roads, that are meant to benefit a broad array of interests.
[7] Under the preliminary terms, the United States would lift countervailing and anti-dumping duties provided lumber prices continue to stay above a certain range.
The SLA establishes a dispute settlement mechanism based around the London Court of International Arbitration (LCIA), a nongovernmental institution.
[10] While the DoC made this claim, the United States International Trade Commission (USITC) believed that these Canadian imports did in fact hinder U.S.
The panel of three Canadians and two Americans found that the DoC's determination could not be supported by substantial evidence; which was a controversial decision, because the vote was along national lines, and the majority decision was based on the concept that U.S. law required the Department of Commerce to not only establish the existence of a subsidy, but also prove that the subsidy benefited the Canadian lumber industry.
Under its terms, Canadian lumber exports to the United States were limited to 14.7 billion board feet (34.7 million cubic meters) per year.
[13] In addition, the U.S. industry for the first time brought an anti-dumping claim, arguing Canadian lumber companies were also engaged in unfair price discrimination.
On August 11 of that same year, the Appellate Body issued a final ruling with respect to U.S. anti-dumping duties (WTO Dispute 264).
[17] In the meantime, because of an adverse WTO decision, the USITC reopened the administrative record, pursuant to a special provision in U.S. law, and issued a new affirmative threat of injury determination in December 2004.
That same year, another NAFTA Chapter 19 panel reviewed a determination made by the USITC that the U.S. lumber industry was under a threat of injury due to Canadian imports.
In September 2005, a U.S. lumber industry associate filed suit in the U.S. Court of Appeals for the District of Columbia Circuit, challenging the constitutionality of the NAFTA Chapter 19 dispute settlement system.
On November 24, 2005, the U.S. Commerce Department announced it would comply with a separate NAFTA panel's order to cut a 16 percent duty on Canadian softwood lumber imports for now.
After initial opposition from several large Canadian lumber concerns, the Harper government, without specifying how many companies endorsed it, was confident that there would be enough support to culminate the deal.
In August 2006, Prime Minister Stephen Harper brought the new deal to Parliament for discussion and a possible confidence vote.
On September 7, Bloc Québécois Leader Gilles Duceppe endorsed the softwood lumber deal, effectively neutralizing any chance of an election coming out of a non-confidence vote.
[18] Five days later, Canadian International Trade Minister David Emerson, along with U.S. counterpart Susan Schwab, officially signed the deal in Ottawa.
[8] On February 26, 2009, the LCIA announced its ruling in the second arbitration case: Canada was in breach of the softwood lumber agreement as a result of its failure to properly calculate quotas from January to June in 2007.
[29][30][31] The arbitration body ordered that sawmills in the provinces of Ontario, Quebec, Manitoba, and Saskatchewan pay an additional ten percent export charge (up to $68.26 million).
And some producers in Saskatchewan have expressed a desire to switch to the Option A system used in BC and Alberta, which assesses a larger tax but has no quota restrictions.
The growing trend of Canadian ownership of US mills is driven by the potential for a lumber trade conflict, by timber availability and lower labour costs in the US.
The US Lumber Coalition is emphatic that, should negotiations fail, its legal standing to petition the US Commerce Department to file a new case is secure.
[32] Canada's international trade minister, Chrystia Freeland, said that "what we have committed to is to make significant, meaningful progress towards a deal—to have the structure, the key elements there a 100 days from now".
[34] On April 24, 2017, U.S. Commerce Secretary Wilbur Ross said his agency will impose new anti-subsidy tariffs averaging 20 percent on Canadian softwood lumber imports, a move that escalates a long-running trade dispute between the two countries.
[35] The duties are on the five firms: West Fraser Mills, Tolko Marketing and Sales, J. D. Irving, Canfor Corporation, and Resolute FP Canada.
To remain in effect, however, the duties need to be finalized by Commerce and then confirmed by the U.S. International Trade Commission after an investigation that includes testimony from both sides.
[38] By November 2017, the U.S. International Trade Commission decided to levy heavy countervailing and anti-dumping duties on lumber imports, citing that the U.S. industry has been harmed by unfair practices.
Canada immediately lodged a legal challenge to the decision under NAFTA's Chapter 19 dispute settlement mechanism,[40] with an official statement declaring that it was "unfair, unwarranted, and troubling.
On March 4, 2021, the U.S. Department of Commerce announced the notice of initiation of its Third Administrative Review (AR3) of the softwood lumber countervailing and anti-dumping duty orders.
