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The purpose of this Notice is to advise exporters of softwood lumber to the United States that a settlement has been reached between Canada and the United States over the B.C. Stumpage dispute. The settlement of the dispute and amendment of the Softwood Lumber Agreement affect lumber first manufactured in B.C. and exported to the United States. There are no changes for lumber first manufactured in other provinces.

On June 1, 1998, the B.C. Forest Ministry reduced stumpage rates charged in the province. As a result, the United States invoked the dispute settlement provisions of the Softwood Lumber Agreement and, when consultations failed to resolve the dispute, requested formation of an Arbitration Panel. Canada held a stakeholders meeting in January 1999 with representatives from industry and government in the 4 covered provinces to discuss Canada's defense. Between January and June 1999, Canada and the United States presented submissions and counter-submissions to the Arbitration Panel. These were followed by oral hearings. On August 26, 1999 Canada and the United States exchanged letters which settled the matter by amending the Agreement and terminating the dispute. The settlement is strongly supported by the B.C. Government and the industry.

The August 26, 1999 settlement of the B.C. stumpage dispute provides for the following amendments for years four and five of the 1996 Agreement:

3.1 In Year Four (April 1, 1999 - March 31, 2000)

3.2 In Year Five (April 1, 2000 - March 31, 2001)

4.1 In order to implement the amendment, an amount equal to 25% of each B.C. company's Year 4 LFB allocation for lumber first manufactured in B.C. will be re-priced. This portion will be moved into a "446" account created for each company. A company's total allocation will not be affected by this adjustment; however, the 25% transferred to the "446" account will be re-priced at the R-LFB rate of US$105.86 per thousand board feet.

4.2 Companies that have shipped in excess of 75% of their BC-LFB by the time of implementation shall be given the option of having permits for these excess shipments cancelled and re-issued at either the EB level (if the company has EB remaining) or at the R-LFB (re-priced LFB) fee level of US$105.86 per thousand board feet or at the Trigger Price Bonus level (if available). (see 7.0 Notification below).

4.3 Re-priced LFB will remain with the company to which the LFB was originally allocated and the total allocation for each company will not be affected by this adjustment. The company may utilize, transfer, or return the R-LFB, subject to the standard rules applying to softwood lumber, as well as the additional rules below:

Companies with an LFB allocation for lumber first manufactured in B.C. will receive an additional EICB number in the "446" range for R-LFB. Transfers from this "446" account will only be allowed to other "446" accounts to companies located in all provinces. All transfers will be routed through the EICB.

When an exporter gives notice of return of a portion of its export level allocation, it may choose to return the LFB portion using either LFB, R-LFB or a combination of the two in addition to a portion of their EB. Utilization of 1999-2000 EB, LFB plus R-LFB allocations and the returned portion will be taken into account in determining each company's EB, LFB plus R-LFB allocations for the 2000-2001 allocation year.

A letter was sent to companies who have been allocated LFB for lumber first manufactured in B.C. in Year 4 and have utilized more than 75% of its LFB allocation. These companies will have a number of options for returning the 25% of the LFB which in turn will be deposited in each company's "446" account. An "options form" was included with the above noted letter. B.C. export level holders should complete and return the form to the Export and Import Controls Bureau (EICB) by facsimile at 613 944-2170 no later than close of business September 7, 1999. If the company expresses no preference within the specified time frame, the EICB will cancel LFB permits and replace them at the EB fee level. If no EB remains in the company's account, the EICB will replace them at the R-LFB fee level.

For companies who had 25% or more of B.C. origin LFB remaining in their accounts, the LFB was automatically transferred to the "446" account.

For further information please contact the Softwood Lumber Division (EPS), Trade Controls Policy Division, Export and Import Controls Bureau, Department of Foreign Affairs and International Trade at the co-ordinates listed below or Dennis Seebach, Deputy Director, telephone number (613) 944-4797.