U.S. to Impose 10% Additional Duty on Certain Softwood Lumber Products from Canada Effective April 15, 2009
U.S. Trade Representative Kirk has announced that the U.S. will impose an additional 10% duty on imports of certain softwood lumber products of Canada, whose Region of Origin is Ontario, Quebec, Manitoba, or Saskatchewan, in response to Canada's failure to cure its breach of the 2006 Softwood Lumber Agreement between the U.S. and Canada (SLA 2006) or provide the monetary compensation determined by a SLA arbitral tribunal.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Implemented as Part of a Section 301 Determination
The additional duties will be implemented as part of the USTR's initiation of a Section 301 investigation - and simultaneous determination of action - regarding Canada's breach of the SLA 2006. Hearing requests are due by April 20, 2009, and written comments on this determination are due by May 11, 2009.
10% Additional Duty Rate Begins April 15th
USTR states that the additional 10% ad valorem duty rate is scheduled to be effective for subject softwood lumber products from Canada entered for consumption or withdrawn from warehouse for consumption on or after April 15, 2009.
New Chapter 99 Tariff Number and U.S. Note
The USTR will amend the Harmonized Tariff Schedule to add a new tariff number, 9903.53.01, indicating that if the softwood lumber products are a product of Canada, or originating goods of Canada under the terms of HTS General Note 12 (NAFTA), and are described in new U.S. Note 13 (see below), whose Region of Origin is Ontario, Quebec, Manitoba, or Saskatchewan, they are subject to the additional duty.
New U.S. Note 13 to HTS Subchapter III of Chapter 99 describes the softwood lumber products subject to this action as classified under HTS 4407.10.01, 4409.10.10, 4409.10.20, 4409.10.90, 4418.90.25, and 4418.90.4605, and any softwood lumber, flooring, and siding described in the note (see note for details).
USTR sources state that the scope of new U.S. Note 13 is identical to the scope of SLA 2006.
Post Entry Amendments Cannot be Used
According to the USTR, the procedures set forth in U.S. Customs and Border Protection's test program for post entry amendments (PEAs) may not be used to submit amendments regarding entries affected by this action.
Additional Duty to Remain in Place Until U.S. Collects $54.8 Million
These duties will remain in place until such time as the U.S. has collected $54.8 million, which is the U.S. dollar equivalent of the amount awarded by the tribunal, based on the exchange rate at the time.
(Canada offered U.S. $36.66 million as a remedy to cure the breach in the SLA 2006 identified by the tribunal, but the U.S. rejected Canada's offer on April 2, 2009. (See ITT's Online Archives or 04/06/09 news, 090406993, for BP summary.)
Background
In February 2009, a tribunal operating under the auspices of the LCIA (formerly the London Court of International Arbitration) issued its decision on a remedy in the softwood lumber arbitration in which Canada was found to have breached the SLA by failing to calculate quotas properly during the first six months of 2007, resulting in a greater level of shipments from Canada than were allowed under the SLA, a failure which exacerbated already difficult market conditions. In that decision, the tribunal determined that Canada must cure the breach by March 28, 2009.
The LCIA tribunal also determined that, as an appropriate adjustment to compensate for its breach, Canada must collect an additional 10% ad valorem export charge on softwood lumber shipments from Eastern Canadian provinces until CDN $68.26 million has been collected. (Based on the exchange rate at the time of the award, the U.S. dollar equivalent is $54.8 million).
On March 27, 2009, Canada informed the U.S. that it did not intend to adopt any export measure, and instead its only action would be to make a monetary payment to the U.S.
(See ITT's Online Archives or 03/02/09 news, 09030230, for BP summary of USTR's announcement of the Tribunal's decision.)
USTR contact - John Melle (202) 395-9448
USTR press release (dated 04/03/09) available at http://www.ustr.gov/Document_Library/Press_Releases/2009/April/United_States_Imposes_Tariffs_On_Softwood_Lumber_From_Four_Canadian_Provinces_Due_To_Canadas_Failure_To_Comply_With_The_Softwood.html
Draft USTR Section 301 notice and annex (to be published in Federal Register), available to the right of the press release.