CANADIAN CUSTOMS ARTICLES

December 7, 2005

The following article is excerpted from the 7 December 2005 edition of “globeandmail.com”.

A routine accounting review has persuaded the United States to do what years of legal challenges and fiery rhetoric could not -- dramatically lower the punishing duties on Canadian softwood lumber.

In a decision that will save Canadian lumber companies roughly $600-million a year, the U.S. Commerce Department said yesterday it was nearly halving its 20-per-cent duty. And unlike the seemingly endless litany of legal rulings dating to 2002, those savings will be enjoyed within days, or as soon as the new rate is published in the official U.S. Federal Register.

Ottawa and the Canadian lumber industry hailed the move as an indication the United States is running out of options in the wake of a string of legal setbacks….

Canada's Minister of International Trade, Jim Peterson, said the Bush administration is finally listening to Canada's "strong" appeals…. The U.S. lumber industry was quick to point out the new lower rate was due almost entirely to the stronger loonie, which lessens the impact of the alleged Canadian subsidies, and not a sudden change of heart by the Bush administration about whether Canada illegally props up its lumber industry. Nor does the decision affect the contentious issue of who pockets the roughly $5-billion in duties collected by the United States since the dispute began in May of 2002…. "The real focus of this case is not the duties going forward," argued Toronto trade lawyer Lawrence Herman. "It's the return of the $5-billion. That's a lot of money and that's where the battle is joined."

The Commerce Department reviews all duties levied by the United States each year to assess whether they are at appropriate levels. The net effect of the review of the softwood lumber file is to cut the combined U.S. duty on Canadian lumber to 10.8 per cent from 20.2 per cent. The new combined rate is made up of an 8.7 per cent countervailing duty (to offset alleged Canadian subsidies) plus an average 2.1 per cent anti-dumping duty (to offset alleged selling of product below normal value).

The Bush administration did not explain how it calculated the new lower numbers. But in a "fact sheet," the Commerce Department insisted that Canadian lumber companies continue to enjoy illegal subsidies and to sell their products far too cheaply in the United States….