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Softwood Lumber from Canada Again Subject to AD Duties

Wednesday, June 28, 2017
Sandler, Travis & Rosenberg Trade Report

The International Trade Administration announced June 26 its preliminary affirmative dumping determination on softwood lumber from Canada. As a result, the ITA will instruct U.S. Customs and Border Protection to require AD cash deposits on entries of subject goods at the preliminary dumping margins, which range from 4.59 percent to 7.72 percent. These measures will be imposed retroactively 90 days for companies subject to the “all others” rate, for which the ITA preliminarily found that critical circumstances exist.

The ITA has also preliminarily determined that certain softwood lumber products certified by the Atlantic Lumber Board as being first produced in the provinces of Newfoundland and Labrador, Nova Scotia, or Prince Edward Island from logs harvested in these three provinces should be excluded from the scope of this investigation as well as the companion countervailing duty investigation. However, since this is a preliminary determination CBP will continue to collect AD and CV cash deposits on imports from these provinces. Previously the ITA announced preliminary CV duty deposit rates of 3.02 percent to 24.12 percent.

Further, the ITA found that the petitioner substantiated its allegation that a particular market situation may exist resulting from distortions caused by an increased demand for lumber by-products and will investigate the alleged distortions. This is the ITA’s second use of its authority under section 504 of the Trade Preferences Extension Act of 2015 to address market distortions in the production of foreign goods and to calculate dumping margins that more accurately account for the pricing practices of foreign exporters.

The Canadian government responded to the AD duty announcement by vowing to “vigorously defend Canada’s softwood lumber industry.” Over the years Ottawa has won a number of cases before NAFTA and WTO tribunals against U.S. AD and CV duties on Canadian softwood lumber, and officials said they expect to prevail in any future such litigation as well.

In the meantime Canadian officials have said they are considering measures that could be imposed in response to the “unfair and punitive” U.S. duties, such as a ban on shipments of U.S. thermal coal to Asia through ports in British Columbia or CV duties on various U.S. exports. However, both sides have said they are willing to pursue a negotiated settlement like the one that put the long-running dispute on hold for a decade before expiring in late 2015.

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