NEWS RELEASES
CANADA AGREES IN PRINCIPLE TO SETTLEROUGHER HEADED LUMBER DISPUTE
October 6, 2000 (4:20 p.m. EDT) No. 252
CANADA AGREES IN PRINCIPLE TO SETTLE
ROUGHER HEADED LUMBER DISPUTE
International Trade Minister Pierre Pettigrew today announced that Canada has reached an agreement in
principle to settle the rougher headed lumber dispute under the Canada-U.S. Softwood Lumber Agreement.
The settlement proposed by the United States entails an additional 72.5 million board feet of fee-free lumber
shipments to the U.S. to be used by March 31, 2001, in return for Canada agreeing to withdraw arbitration
proceedings under the Agreement.
"We believe that this agreement in principle will provide relief to companies that have been adversely affected
by the unilateral U.S. Customs Service reclassification of rougher headed lumber," said Minister Pettigrew. "It
also brings certainty to those firms exporting this lumber product to the United States from now to the end of
the Agreement."
Rougher headed lumber is typically roughened on one or more sides to appear rough-sawn or rustic and is
primarily used for fascia and trim applications. The dispute originated in early 1999, when the U.S. Customs
Service unilaterally reclassified the products under the quota requirements of the Agreement. Canada invoked
dispute settlement proceedings in June 1999. The resolution of the dispute does not prejudice Canada's view
that the U.S. acted unilaterally to extend the scope of the Agreement. The agreement in principle is subject to
Canadian regulatory approvals.
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A detailed backgrounder is attached.
For further information, media representatives may contact:
Sylvie Bussières
Office of the Minister for International Trade
(613) 992-7332
Media Relations Office
Department of Foreign Affairs and International
Trade
(613) 995-1874
Backgrounder
On March 10, 1999, U.S. Customs published a notice proposing to revoke its 1992 and 1994 rulings that state
that rougher headed lumber (RHL) falls under HTSUS 4418 and to reclassify it into HTSUS 4407. RHL board is
roughed on one or more sides to appear rough-sawn or rustic and is primarily used for fascia and trim
applications. The U.S. Customs' reclassification of RHL, effective August 9, 1999, unilaterally placed this
product under the scope of the 1996 Canada-U.S. Softwood Lumber Agreement. As a result, RHL shippers
were required to obtain export permits and pay export permit fees where necessary to ship these products to
the U.S.
Canada invoked the dispute settlement provisions of the Agreement in April 1999. When consultations failed to
resolve the dispute, Canada initiated arbitral proceedings pursuant to the Agreement on June 9, 1999.
There had been a strong preference on the part of the B.C. industry, which accounts for about 95 percent of the
Canadian RHL production, to seek a settlement that would preclude the political and economic consequences
of a Panel ruling. To this end, representatives of the B.C. Lumber Trade Council and the U.S. Coalition for Fair
Lumber Imports held discussions to seek a settlement of the dispute.
On July 27, 2000, Canada was informed by the Office of the United States Trade Representative that the
United States wished to discuss the possibility of a settlement, based on the results of the industry-to-industry
discussions. After careful consideration of advice and comments from Canadian lumber producers and
provincial governments on the proposed settlement, the Government of Canada determined that, subject to
regulatory approvals, the acceptance of the proposed settlement would be in the country's best interest.
The Government of Canada will be inviting qualified rougher headed lumber producers to complete a
questionnaire which would assist the government in determining the proper allocation of the additional 72.5
million board feet of fee-free quota.
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