Glossary of terms used in the softwood lumber agreement between the Government of Canada and the Government of the United States of America ("The Agreement")

NOTE: For ease of reference, this glossary provides general definitions of certain terms used in relation to the Softwood Lumber Agreement Between the Government of Canada and the Government of the United States of America. For more precise legal definitions of these and other terms please refer to Article XXI of the Agreement.

Agreement in Principle: The agreement reached between Canada and the United States on April 27, 2006, setting out the basic terms of the agreement resolving the dispute between Canada and the United States over trade in softwood lumber products. The agreement in principle was the basis for the legal text agreed upon on July 1, 2006.

Anti circumvention: See “Circumvention.”

Anti dumping (AD) duty: A duty or import tax imposed to counteract the sale of goods in a foreign market at prices below those charged for comparable sales in the home market or that are below the cost of producing the goods. International trade agreements, such as the WTO Anti dumping Agreement, set out the specific criteria that must be met if a party to an agreement is to legally impose and maintain an anti dumping duty.

Associated persons: Two or more legal entities not dealing with each other at arm’s length.

Board foot: The volume of lumber equal to a one inch-thick board 12 inches in width and 12 inches in length. When calculating board feet nominal sizes are assumed. Lumber prices are typically measured per one thousand board feet.
CBSA: The Canada Border Services Agency.

Circumvention: Action that offsets the commitments set out in the Agreement. Anti circumvention provisions in the Agreement require that neither party take any action to circumvent or undermine its commitments under the Agreement.

CIT: The United States Court of International Trade.

Conversion factor: The value used to convert lumber volumes measured in square and/or cubic metres to board feet.

Countervailing duty (CVD): A duty or import tax imposed to protect an industry from injury or a threat of injury caused by subsidized imports from other countries. International trade agreements, such as the WTO Agreement on Subsidies and Countervailing Measures, set out the specific criteria that must be met if a party to an agreement is to legally impose and maintain a countervailing duty.

CRA: The Canada Revenue Agency.

CVD order: The U.S. countervailing duty order regarding certain softwood lumber products from Canada published in the U.S. Federal Register on May 22, 2002.

Dumping: The sale of goods in a foreign market at prices below those charged for comparable sales in the home market or that are below the cost of producing the goods.

Effective date: The date on which the Agreement enters into force.

Export price: The price on which any applicable export charges are levied. The calculation of the export price for a given shipment will vary depending on whether the exporter is a primary manufacturer, an independent remanufacturer or a remanufacturer that is not independent.

Free on Board (FOB): The value consisting of all charges payable by a purchaser, including those incurred in the placement on board the conveyance for shipment but not including the actual shipping charges.

Forest policy management: The laws, regulations and policy decisions that provincial governments use to administer forests on provincial Crown lands.

Importer of record: For the purpose of U.S. law, importers of record (IORs) are the legal entities that have imported Canadian softwood lumber products into the United States since May 22, 2002, the date from which importers have been required to pay anti dumping and/or countervailing duties. Payment of duties will continue to be required until this agreement enters into force. It is the IORs that are legally entitled to the refund of the duty deposits. The majority of IORs are Canadian.

Independent manufacturer of remanufactured softwood lumber: A Canadian manufacturer of remanufactured softwood lumber that does not hold Crown tenure rights and, after entry into force of the Agreement, has not acquired standing timber directly from the Crown, and is not an “associated person” with respect to a tenure holder or any entity that has acquired standing timber directly from the Crown.

Initialling: By initialling the legal text, Canada and the United States are signalling the completion of negotiations.

Market pricing system (MPS): The system used by British Columbia to determine prices charged for standing timber sold from Crown lands. The MPS uses the results from auction sales to ensure that the prices of Crown timber harvested under long term tenures are market-based. The MPS was introduced for the B.C. Coastal Region on February 29, 2004, and for the B.C. Interior Region on July 1, 2006.

MBF: Thousand board feet.

Remanufactured softwood lumber products: Softwood lumber products that are produced by reprocessing lumber inputs by subjecting such inputs to one or more of the following: a change in thickness; width; length; profile; texture; moisture; grading; or joining together by finger jointing, or other processes that produce components, semi finished and/or finished softwood lumber products.

Signing: By signing the Agreement, Canada and the United States are committing to observe the terms agreed to by both parties.

Surge mechanism: When border measures apply, regions that have selected Option A are subject to an export charge that increases in steps from 5 percent to 10 percent to 15 percent as the price of lumber falls below US$355, US$335 and US$315 per thousand board feet, respectively. This export charge is increased by 50 percent if a particular region’s exports exceed 110 percent of its allocated share. Specifically, if the surge mechanism is triggered, an export charge of 5 percent will be increased to 7.5 percent; an export charge of 10 percent will be increased to 15 percent; and an export charge of 15 percent will be increased to 22.5 percent. The allocated share is based on the region’s average share of Canadian exports to the U.S. during calendar years 2004 and 2005.

Tenure holder: A person who holds specific rights to harvest timber in a Crown/public forest.

Third country mechanism: The legal text includes a provision whereby any applicable export charges are reduced if: (1) the share of the U.S. market accounted for by imports from countries other than Canada has increased by more than 20 percent compared with the same period in the previous year; (2) the share of the U.S. market accounted for by imports from Canada has decreased compared with the same period in the previous year; and (3) U.S. domestic producers’ share of the U.S. market has increased compared with the same period in the previous year. If the third country mechanism is triggered, export charges will be reduced by five percentage points or, if the export charge is 5 percent or less, the charge will be reduced to zero.

USCBP: United States Customs and Border Protection.

USDOC: The United States Department of Commerce.

USTR: The Office of the United States Trade Representative.

WTO: The World Trade Organization.