U.S. shocks Canadian forest companies
Drops claim that Canadian lumber is subsidized
Gordon Hamilton, Vancouver Sun
Published: Saturday, October 07, 2006
The U.S. government shocked Canadian forest companies Friday by agreeing to drop its five-year-old claim that Canadian lumber is subsidized and being dumped on the American market, paving the way for the speedy return to Canadian sawmillers of $4.2 billion US in duties.
In return, Canada has agreed to abandon claims that the U.S. illegally imposed the duties, in a case now before the U.S. Court of International Trade. The U.S. is to revoke the duties Oct. 12, the new date for the agreement to come into effect.
International Trade Minister David Emerson announced the amended deal late Friday afternoon, saying both governments are ready to implement the seven-year softwood lumber agreement Oct. 12. The original terms of the agreement already accepted by both governments -- including giving the Americans a $1 billion US chunk of the $5.2 billion US in duties already collected -- still stand.
"This agreement ends years of costly litigation and brings new economic certainty to those companies and workers across Canada whose livelihoods depend on the softwood lumber industry," Emerson stated.
Details of what the two countries agreed to are contained in an Oct. 6 order from the U.S. Court of International Trade. The court states that "the United States Department of Commerce will revoke in their entirety the underlying anti-dumping and countervailing duty orders on softwood lumber from Canada."
That surprise move stunned industry leaders here and has trade lawyers working throughout the Thanksgiving weekend trying to figure out what it all means.
But some sawmillers are already saying this latest wrinkle in the trade dispute is a strong Canadian win as it preserves five years of hard-won victories by Canada before both the World Trade Organization and NAFTA.
"The U.S. has agreed to come to the party," said B.C. lumberman David Gray, co-chair of the Free Trade Lumber Council.
Gray said because the U.S. has withdrawn its claims of subsidy and dumping, all but one of the lawsuits that have been tying up implementation of the softwood lumber agreement are now moot.
But Canada does not give up the legal precedents it achieved through five years of fighting the Americans, he said.
"This solves the litigation problem and it keeps our precedents alive. So when they screw us next time, they are going to have to do something different," Gray said.
John Allan, president of the B.C. Lumber Trade Council, was more cautious in his assessment, saying the two governments have found a way around the tangle of lawsuits that were holding up implementation of the agreement. The association's lawyers will be working over the weekend reviewing the implications, he said.
"This has all been a surprise to everybody," Allan said.
Providing no further hurdles surface, a 15-per-cent border tax will go into effect Oct. 12 on Canadian lumber, ending a period of chaos and plummeting lumber prices that began when Canada and the U.S. signed the agreement Sept. 12 but were unable to find an easy way to implement it.
Allan said the industry on both sides of the border is concerned about the chaos in the marketplace.
"I imagine that many companies will in due course prefer to see some early stability than later," he said. "But over the weekend we will be reviewing these legal changes."
Some lumber remanufacturers, who fear the agreement will make them uncompetitive with their U.S. counterparts, now have had their legal cases wiped out by Friday's agreement, said Russ Cameron, of the Independent Lumber Remanufacturers Association.
"We now have an injunction against nothing," he said of a flurry of injunctions filed over the summer by remanufacturers in an attempt to derail the agreement. "I think we are done for."
Industry analyst Mark Bishop, of RBC Capital Markets said Friday's announcement is likely to precipitate extensive shut-downs of Canadian sawmills.
Canadian mills have been shipping everything they can across the border before the 15-per-cent duty comes into effect. The lumber is unsold but sitting in reload centres in the U.S. The huge unsold inventory is a major factor in the collapse of lumber prices.
"We need to see widespread mill closures pretty quickly."
Bishop said the Friday agreement goes a long way to smoothing over the bumps in implementing the Sept. 12 deal but it does not resolve them all. One company, Terminal Forest Products, still has a law suit active in the U.S. under Chapter 11 of NAFTA.
"It's not a slam dunk," Bishop said, referring to the uncertainty that remains around the Chapter 11 suit.
Source: The Vancouver Sun
canada.com
Drops claim that Canadian lumber is subsidized
Gordon Hamilton, Vancouver Sun
Published: Saturday, October 07, 2006
The U.S. government shocked Canadian forest companies Friday by agreeing to drop its five-year-old claim that Canadian lumber is subsidized and being dumped on the American market, paving the way for the speedy return to Canadian sawmillers of $4.2 billion US in duties.
In return, Canada has agreed to abandon claims that the U.S. illegally imposed the duties, in a case now before the U.S. Court of International Trade. The U.S. is to revoke the duties Oct. 12, the new date for the agreement to come into effect.
International Trade Minister David Emerson announced the amended deal late Friday afternoon, saying both governments are ready to implement the seven-year softwood lumber agreement Oct. 12. The original terms of the agreement already accepted by both governments -- including giving the Americans a $1 billion US chunk of the $5.2 billion US in duties already collected -- still stand.
"This agreement ends years of costly litigation and brings new economic certainty to those companies and workers across Canada whose livelihoods depend on the softwood lumber industry," Emerson stated.
Details of what the two countries agreed to are contained in an Oct. 6 order from the U.S. Court of International Trade. The court states that "the United States Department of Commerce will revoke in their entirety the underlying anti-dumping and countervailing duty orders on softwood lumber from Canada."
That surprise move stunned industry leaders here and has trade lawyers working throughout the Thanksgiving weekend trying to figure out what it all means.
But some sawmillers are already saying this latest wrinkle in the trade dispute is a strong Canadian win as it preserves five years of hard-won victories by Canada before both the World Trade Organization and NAFTA.
"The U.S. has agreed to come to the party," said B.C. lumberman David Gray, co-chair of the Free Trade Lumber Council.
Gray said because the U.S. has withdrawn its claims of subsidy and dumping, all but one of the lawsuits that have been tying up implementation of the softwood lumber agreement are now moot.
But Canada does not give up the legal precedents it achieved through five years of fighting the Americans, he said.
"This solves the litigation problem and it keeps our precedents alive. So when they screw us next time, they are going to have to do something different," Gray said.
John Allan, president of the B.C. Lumber Trade Council, was more cautious in his assessment, saying the two governments have found a way around the tangle of lawsuits that were holding up implementation of the agreement. The association's lawyers will be working over the weekend reviewing the implications, he said.
"This has all been a surprise to everybody," Allan said.
Providing no further hurdles surface, a 15-per-cent border tax will go into effect Oct. 12 on Canadian lumber, ending a period of chaos and plummeting lumber prices that began when Canada and the U.S. signed the agreement Sept. 12 but were unable to find an easy way to implement it.
Allan said the industry on both sides of the border is concerned about the chaos in the marketplace.
"I imagine that many companies will in due course prefer to see some early stability than later," he said. "But over the weekend we will be reviewing these legal changes."
Some lumber remanufacturers, who fear the agreement will make them uncompetitive with their U.S. counterparts, now have had their legal cases wiped out by Friday's agreement, said Russ Cameron, of the Independent Lumber Remanufacturers Association.
"We now have an injunction against nothing," he said of a flurry of injunctions filed over the summer by remanufacturers in an attempt to derail the agreement. "I think we are done for."
Industry analyst Mark Bishop, of RBC Capital Markets said Friday's announcement is likely to precipitate extensive shut-downs of Canadian sawmills.
Canadian mills have been shipping everything they can across the border before the 15-per-cent duty comes into effect. The lumber is unsold but sitting in reload centres in the U.S. The huge unsold inventory is a major factor in the collapse of lumber prices.
"We need to see widespread mill closures pretty quickly."
Bishop said the Friday agreement goes a long way to smoothing over the bumps in implementing the Sept. 12 deal but it does not resolve them all. One company, Terminal Forest Products, still has a law suit active in the U.S. under Chapter 11 of NAFTA.
"It's not a slam dunk," Bishop said, referring to the uncertainty that remains around the Chapter 11 suit.
Source: The Vancouver Sun
canada.com