Geneva - U.S. Trade Representative Susan C. Schwab today joined Canada's
International Trade Minister David L. Emerson, both attending World Trade
Organization talks, in announcing that the United States and Canada have agreed
on the text of an agreement on softwood lumber. The text incorporates and builds
on the basic terms announced on April 27, 2006. The 80-page agreement, initialed
today, was reached after intense negotiations over the last several weeks and
reflects a balance of concessions made by both countries to resolve a two-decade
"The resolution of this long standing dispute with our largest trading
partner is another achievement for the President's broad trade agenda," said
Ambassador Schwab. Ambassador Michael Wilson, Canada's chief negotiator, and his
team have done a tremendous job of bringing this difficult process to a
conclusion. In March, President Bush and Prime Minister Harper made clear the
importance they attached to this effort, and I am delighted we could reward
their confidence with this agreement."
"I am very pleased that we have reached an agreement with Canada to resolve
the long-standing softwood lumber dispute," said Commerce Secretary Carlos M.
Gutierrez. "This agreement resolves concerns on both sides of the border and
allows us to focus on the larger positive trade relationship binding our two
countries. We have an enormous trade relationship with Canada, with hundreds of
billions of dollars of US exports flowing north across the border."
Key provisions of the agreement follow those of the April 27 basic terms. The
United States and Canada will end all litigation over softwood lumber. The
agreement provides for unrestricted trade when prices are over $355 per Thousand
Board Fee (MBF), a condition that has existed for significant portions of the
past several years. When prevailing prices are less than $355 per MBF, Canadian
exports will be subject to a combination of export charges or volume limits that
increase in steps the lower the market drops, with the maximum export charge at
15% when prices fall below $315 per MBF.
Of the estimated $5 billion in duties collected since 2002, most will be
returned to Canadian interests. A total of $1 billion will remain in the United
States. The U.S. lumber companies that brought the trade complaints against
Canada will receive $500 million. In addition, $450 million will fund
meritorious initiatives to include projects such as community assistance for
timber-reliant communities, assistance for low-income housing and disaster
relief, sustainable forestry practices, and other forestry initiatives. The
remaining $50 million will be used to establish a binational industry council,
with an advisory board composed of representatives from the Canadian and U.S.
lumber industries. The council will seek to strengthen and further integrate the
North American lumber industry.
The Agreement contains various forward-looking provisions. It establishes an
18-month process to develop substantive criteria for Canadian policy reforms
that could exempt provinces from export charges and quotas and provides the
basis for a long-term resolution of the dispute.
The agreement also includes provisions to address potential import surges
from Canada, provides for effective dispute settlement, requires extensive
information exchange and define special treatment for low- and high-value
The agreement initialed today will undergo a legal review with signatures
expected in August. No U.S. legislation is required, but the Canadian Parliament
must approve the export charge system after it returns in September. Entry into
force is expected in the fall.
On April 27, USTR and Canada's Department of International Trade announced
that the United States and Canada agreed on the core terms of a softwood lumber
Under the terms of the agreement initialed today, the United States and
Canada will end all litigation over softwood lumber and provide for unrestricted
trade in the favorable market conditions the industries have enjoyed for the
last several years. When the lumber market is soft,
Canadian exporting provinces can choose to pay an export tax that ranges from
5 to 15 percent as prices fall. Canadian provinces also have the
option to pay lower export taxes and limit exports below their average levels
over the past five years.
The agreement will also include provisions to address potential Canadian
import surges, provide for effective dispute settlement, distribute
the duties currently held by the United States, and discipline future
subsidies and trade cases.