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United States And Canada Sign A Two-Year Extension Of The 2006 U.S.-Canada Softwood Lumber Agreement

Washington, D.C. – Today United States Trade Representative Ron Kirk and Canadian Minister for International Trade Ed Fast signed a two-year extension of the 2006 U.S.-Canada Softwood Lumber Agreement (SLA), so that the Agreement will be in effect through October 12, 2015.

“The Softwood Lumber Agreement is very important for U.S. producers, particularly when both sides of the border are facing weak demand,” said Ambassador Ron Kirk. “Trade agreements are about providing a predictable and fair environment for conducting international trade. The 2006 U.S.-Canada Softwood Lumber Agreement has provided just that for both producers and consumers.” Ambassador Kirk added, “The Administration’s record on softwood lumber demonstrates our steadfast commitment to ensuring fair trade that benefits American businesses and workers. Today, I am pleased to extend this agreement and those benefits for an additional two years.”

Today’s action extends the SLA with no changes. The United States is pleased to have agreed with Canada to extend the SLA well before its initial expiration date, to ensure predictability and stability in the sector. The U.S. intends to consult with Canada before the extended expiration date on whether a further extension is in the interest of both countries.

BACKGROUND

The SLA entered into force on October 12, 2006 and was set to expire on October 12, 2013. Article XVIII of the agreement contemplated extension stating: “the SLA 2006 shall remain in force for 7 years after the Effective Date and may be extended by agreement of the Parties for an additional 2 years.” As part of the SLA, the United States agreed to cease imposing antidumping and countervailing duties upon softwood lumber from Canada. In exchange, Canada agreed, among other things, to apply export measures – export charges and volume limitations – to shipments of softwood lumber from Canada to the United States when the price of softwood products falls below a certain level.

The SLA provides for arbitration to resolve disputes between the United States and Canada regarding the interpretation and implementation of the Agreement. Under the SLA, arbitration is conducted under the rules of the LCIA (formerly the London Court of International Arbitration), and there is no appeal from the decision of the tribunal. The United States has brought three disputes under the SLA to ensure its proper implementation. In the first dispute, a tribunal found that Canada failed to calculate quotas properly for exports from certain areas of Canada during the first six months of 2007, and found that Canada must impose an additional CN$68.26M in export duties on softwood lumber as compensation. Canada notified that the full amount was collected and ceased applying the additional duties in July 2011. In the second dispute, a tribunal found that certain provincial programs in Quebec and Ontario provided a benefit to Canadian softwood producers in breach of the SLA, and found that Canada must impose an additional US$59.4 million in export duties on softwood lumber from Quebec and Ontario as compensation, which Canada began imposing on March 1, 2011. The third dispute, which is ongoing, concerns the apparent under-pricing of valuable public timber in the Interior region of British Columbia.