U.S. to Initiate Arbitration Proceedings on Canada's Implementation of 2006 Softwood Lumber Agreement
The Office of the U.S. Trade Representative (USTR) has issued a press release announcing that the U.S. will initiate arbitration proceedings under the 2006 Softwood Lumber Agreement (SLA 2006) and that the USTR is working with the Commerce Department to take additional measures to monitor Canadian compliance with the SLA.
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(The SLA 2006 entered into force on October 12, 2006 replacing U.S. antidumping (AD) and countervailing (CV) duty orders on certain softwood lumber products from Canada with either: (1) a Canadian export tax, (2) a lowered Canadian export tax combined with limited export volumes, or (3) unrestricted trade, depending on market conditions.)
U.S. Alleges Canada Failed to Adjust Export Caps, Apply Surge Mechanism, Etc
According to the USTR, the U.S. is initiating arbitration proceedings to compel Canada to fulfill its SLA 2006 obligations relating to export volume caps, proper application of the import surge mechanism, and anti-circumvention.
USTR states that since January, Canada has been required under the SLA 2006 to make a downward adjustment to the export volume caps for the Eastern provinces and for British Columbia (BC) and Alberta, but that Canada only made the downward adjustment for the Eastern provinces in July and has yet to make any adjustment for BC and Alberta.
Additionally, the USTR notes that Quebec and Ontario have put in place several assistance programs that violate SLA 2006's anti-circumvention provisions including several grant, loan, loan guarantee, and tax credit programs, as well as "forest management" programs and programs that promote wood production.1
U.S. is Seeking Arbitration as Consultations Failed, Decision in Approx. 8 Months
The USTR states that as the U.S. attempts to resolve Canada's alleged non-compliance through consultation have not been successful, it is initiating arbitration proceedings as provided for under the SLA 2006.
After arbitration is requested, there is an approximately two-month process to select arbitrators, and the arbitral tribunal should issue its award within six months of its appointment, making it roughly an 8 month process.
(See ITT's Online Archives or 09/14/06 and 10/18/06 news, 06091410 and 06101805, for BP summaries of the signing of SLA 2006 and its entry into force, respectively.
See ITT's Online Archives or 10/18/06, 10/19/06, 10/23/06 and 11/13/06 news, 06101840, 06101925, 06102310, 06111307, for BP summaries of the International Trade Administration's (ITA's) revocation of the AD and CV duty orders as required under the SLA 2006, U.S. Customs and Border Protection's (CBP's) interim rule establishing special entry requirements under SLA 2006, additional CBP instructions regarding SLA 2006, and CBP's updated SLA 2006 implementation instructions, respectively.
See ITT's Online Archives or 04/24/07 news, 07042410, for BP summary of CBP's issuance of a frequently asked questions (FAQ) document.)
1 These Quebec and Ontario assistance programs were not the subject of this (first) arbitration proceeding.
USTR press release (dated 08/07/07) available at http://www.ustr.gov/Document_Library/Press_Releases/2007/August/United_States_to_Request_Arbitration_Challenging_Canadas_Implementation_of_the_2006_Softwood_Lumber_Agreement.html