NEWS RELEASES
B.C. STUMPAGE FEES: CANADA-U.S. SETTLEMENT
August 30, 1999 (2:15 p.m. EDT) No. 191
B.C. STUMPAGE FEES: CANADA-U.S. SETTLEMENT
International Trade Minister Pierre S. Pettigrew today announced that he is pleased with the settlement Canada has reached
with the United States in the ongoing softwood lumber dispute over British Columbia's stumpage fee reductions.
In July 1998, the United States requested arbitration over reduced stumpage fees announced by the B.C. government,
claiming that the reduced fees breached the Softwood Lumber Agreement between Canada and the United States. The
dispute was referred to a panel for arbitration, but in the interim, the two countries have negotiated a solution.
"I am pleased that we have reached an agreement, the resolution of which will allow B.C. lumber producers to continue to
perform strongly," said Minister Pettigrew. "Softwood lumber is an important industry that employs thousands of
Canadians, and resolution of this issue will let the industry do business without the unnecessary distraction of trade
complaints."
The Softwood Lumber Agreement does not restrict provincial forest management practices, particularly the right of
provinces to set stumpage fees as they choose. The settlement of the B.C. lumber dispute in no way compromises this
position. The original Agreement is a three-tier quota system that allows Canadian producers to ship a fixed amount of
lumber with no fees. The majority of lumber is shipped without fees. Beyond the first no-fee limit, a lower fee base of
US$52.93 applies, and beyond a second threshold volume, an upper fee base of US$105.86 applies.
The new deal applies only to B.C. lumber exports. For B.C. exporters, a small amount of lumber will be repriced from the
lower rate to the upper rate. Upper rate lumber exports will be limited to 110 million board feet, and a third, extra fee level
of US$146.25 has been added, with no limitation on volume. At current volumes, these changes will affect about 1 percent
of B.C.'s total lumber exports to the United States.
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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
A backgrounder is attached.
Backgrounder
Softwood Lumber Agreement
Softwood lumber has been an area of trade friction between Canada and the United States for over 15 years. After lengthy
negotiations, as well as extensive consultations with stakeholders, Canada and the United States finalized an agreement on
softwood lumber covering the five-year period from April 1, 1996, to March 31, 2001. The Agreement applies to certain
lumber products originating from the four provinces of British Columbia, Alberta, Ontario and Quebec, the dominant
Canadian exporters of lumber to the U.S. market.
B.C. Stumpage Dispute
On January 26, 1998, the B.C. Minister of Forests and the Deputy Minister to the Premier announced that the B.C.
government would be reducing timber stumpage rates to offset an unexpected cost burden on B.C. companies. On May 28,
Premier Clark announced stumpage reductions, effective June 1.
On June 22, the United States requested consultations under the Softwood Lumber Agreement over the fee reductions,
claiming that this change violated the Agreement. On July 28, the United States requested arbitration under the
Agreement's dispute settlement mechanism, and in December 1998 a three-person panel was confirmed. In an address to
the panel, Canada maintained that the revised B.C. stumpage regime was fully consistent with our obligations under the
Agreement.
Chronology of the B.C. Stumpage Dispute
May 28, 1998 B.C. Premier Clark announces stumpage reductions.
June 1, 1998 Stumpage reductions take effect.
June 22, 1998 The United States requests consultations under the Softwood Lumber Agreement.
July 28, 1998 The United States requests arbitration under the Softwood Lumber Agreement.
December 1998 Panel participants are confirmed.
March 18, 1999 An oral hearing is held in Ottawa.
July 8, 1999 The panel proposes August 27 for release of its decision.
August 20, 1999 A tentative deal is reached with the United States.
August 26, 1999 The settlement is signed, and panel proceedings terminate.
The Settlement
In order to expedite this issue, and at the request of the B.C. government and industry, the federal government explored a
negotiated solution with the United States and was able to reach an agreement. The negotiated solution maintains export
allocation levels and does not affect any province other than British Columbia. The Exchange of Letters specifically states
that the settlement is without prejudice to the positions of the parties, that is, it does not limit provincial forestry
management practices in any way. It is seen by the B.C. government and industry as preferable to the uncertainties of the
arbitration panel decision.
Key provisions of the negotiated settlement include the following:
- The fee-free established base (EB) allocations under the Softwood Lumber Agreement will not change.
- A portion of the lower fee base (LFB) allocations will be repriced at the upper fee base (UFB) price.
- An extra fee level of US$146.25 will be established for UFB exports by B.C. companies that are in excess of 110
million board feet.
|
Original Softwood Lumber Agreement
(1999-2000 fees
per thousand board feet) |
B.C. Settlement
(1999-2000 fees
per thousand board feet) |
-
EB - 14.7 billion board feet: no fee
- LFB - 650 million board feet (of which 360 million is
allocated to B.C.-based companies): US$52.93
- UFB: US$105.86
|
- EB: no change
- LFB - 270 million board feet (of the 360 million):
US$52.93
- UFB - 110 million board feet: US$105.86
- Unlimited: US$146.25
|
| 
