U.S. Agrees to Transfer Collection of 10% Softwood Lumber Duty to Canada
In their recent meeting1, U.S. Trade Representative Kirk and Canadian Minister of International Trade Peter Van Loan agreed to transfer to Canada collection of the 10% additional customs duty that the U.S. currently imposes on softwood lumber products imported from the Canadian provinces of Ontario, Quebec, Manitoba and Saskatchewan.
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Canada Expected to Begin Collecting 10% Duty on September 1, 2010
According to USTR sources, the two sides are completing steps to coordinate this transfer, and they hope the change will become effective September 1, 2010.
Canada notes in a press release that once it starts collecting the 10% additional duty, the revenue collected will stay in Canada and be distributed back to the four provinces.
U.S. Has Been Collecting 10% Duty Since April 2009, Due to Canada’s Inaction
The U.S. has imposed this 10% additional duty on imports of softwood lumber products from the four Canadian provinces since April 2009, due to Canada’s breach of the 2006 Softwood Lumber Agreement (SLA) and various arbitral tribunal decisions.
Specifically, in March 2008, an arbitral tribunal determined that Canada had breached its SLA obligations regarding certain export measures and in February 2009, issued a remedy award requiring Canada to collect an additional 10% export charge on softwood lumber shipments from the four provinces until $54.8 million (or $68 million Canadian dollars) was collected.
However, Canada did not collect the additional export charge and instead offered to directly pay the U.S. government a lesser amount of $36.66 million, which the USTR determined denied U.S. rights under the SLA. The U.S. then in April 2009 imposed the 10% additional duty on imports of softwood lumber products from the four provinces. A second arbitral tribunal agreed with the U.S. action.
(According to USTR sources, they believe that over half of the $54.8 million has now been collected by U.S. Customs and Border Protection.)
1On July 22, 2010, the two sides met to discuss the SLA, regulatory cooperation that will aid small businesses, the WTO Doha round, and the operation of the U.S.-Canada Government Procurement Agreement. The two Ministers have agreed to meet twice yearly to build the bilateral relationship and address issues more quickly and efficiently.
(See ITT’s Online Archives or 04/08/09 and 09/30/09 news, (Ref: 09040805) and (Ref: 09093015), for BP summaries of the U.S. imposing the additional 10% duty and the second tribunal agreeing with the U.S. action.
See ITT’s Online Archives or 05/28/10 news, 10052831, for BP summary of USTR seeking comment on the possible removal or reduction of the 10% additional duty as Canada was taking steps to impose the 10% charge itself.)
(USTR press release, dated 07/22/10)