NEWS RELEASES

August 10, 2001 (1:45 p.m. EDT) No. 117

STATEMENT BY THE HONOURABLE PIERRE PETTIGREW

ON U.S. DECISIONS ON SOFTWOOD LUMBER

The U.S. Department of Commerce today issued its preliminary determination of subsidy in its countervailing duty investigation of softwood lumber from Canada. The Department of Commerce found that Canadian softwood lumber exports to the U.S. were subsidized by 19.31 percent. The U.S Department of Commerce also found that Canadian softwood lumber was exported to the U.S. above the allowable 15 percent threshold resulting in a finding of "critical circumstances." This means that Canadian softwood exporters will be required to post bonds retroactively to mid-May 2001.

These two decisions by the U.S. Department of Commerce have no basis in fact or in law. Given the documentation supplied by Canadian governments and industry refuting the allegations of subsidy and the export monitoring data provided on Canadian softwood lumber, the finding of subsidy and the methodology used by the U.S. to determine critical circumstances reflect a protectionist approach.

Canadian softwood lumber exports to the U.S. are not subsidized by federal and provincial programs. In the previous cases over the past 20 years, U.S. industry has not been able to sustain its subsidy and injury allegations against Canada. As the provinces have increased their stumpage rates, among other elements, since the previous investigation, the U.S. preliminary determination is not sustainable.

Regarding critical circumstances, the Department of Commerce ignored the fact that there are no export subsidies in this case. U.S. Census Bureau import data show that Canadian shipments have only increased by 11.3 percent during the second quarter of 2001 compared with the same quarter in 2000.

The Department of Commerce reached its conclusion by ignoring compelling evidence to the contrary: the U.S. Government ignored factors such as the growth of the U.S. housing market, increased U.S. demand and consumption of lumber, strong lumber prices and U.S. production.

The Government of Canada will continue to defend the rights of the Canadian softwood lumber industry. We have anticipated that the U.S. government could go this route and together with industry, and the provinces, we are prepared for the legal battle. We will continue to consult closely with industry stakeholders and provincial governments to determine next steps. In fact, I will be discussing this issue with my provincial counterparts early next week.

This is not going to be easy for Canadian workers and for American consumers. But I stand by our industry's competitiveness and the need for free trade.

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For further information, media representatives may contact:

Sébastien Théberge

Office of the Minister for International Trade

(613) 992-7332

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874