NEWS RELEASES

Dec. 14, 2004 (6:00 p.m. EST)

No. 150

SOFTWOOD LUMBER: CANADA DENOUNCES U.S. DEPARTMENT OF COMMERCE DETERMINATION

International Trade Minister Jim Peterson denounced a United States Department of Commerce (DOC) decision to only slightly reduce softwood lumber countervailing duties following its annual administrative reviews.

“I am extremely disappointed by this decision. The United States used a cross-border benchmark for B.C. that has clearly been found illegal by the WTO and the NAFTA,” said Minister Peterson. “We continue to maintain that Canadian softwood lumber is neither subsidized nor dumped, and that it does not threaten to injure the U.S. industry. The duties should be dropped.”

The reviews determined a new countervailing duty rate of 17.18 percent (slightly down from the original 18.79 percent) and a new “all others” anti-dumping duty rate of 4.03 percent (down from the original 8.43 percent), for a total of 21.21 percent.

Under the U.S. duty assessment system, countervailing and anti-dumping cash deposits for shipments made during previous years are assessed and finalized through annual administrative reviews. The new rates issued today establish the assessment rate for shipments made during the period under review. The period of review for the countervailing duty order was May 22, 2002, to March 31, 2003. The period of review of the anti-dumping duty order was May 22, 2002, to April 30, 2003.

Administrative review results also become the new cash deposit rates for future shipments of softwood lumber products to the U.S., regardless of any ongoing challenges. The new rates will take effect once the DOC issues instructions to U.S. Customs, which should happen within the next two weeks.

Canada will be closely examining the administrative review results and consulting with the provinces and industry regarding next steps.

More information on softwood lumber issues is available at http://www.softwoodlumber.gc.ca.

-30-

Backgrounders are attached.

For further information, media representatives may contact:

Jacqueline LaRocque
Director of Communications
Office of the Minister of International Trade
(613) 992-7332

Media Relations Office
Foreign Affairs Canada and International Trade Canada
(613) 995-1874
http://www.international.gc.ca

Backgrounder

U.S. DEPARTMENT OF COMMERCE FINAL RESULTS OF
FIRST ADMINISTRATIVE REVIEWS

On December 14, 2004, the U.S. Department of Commerce (DOC) released the final results in the first administrative reviews of the anti-dumping and countervailing duty orders on softwood lumber from Canada for the period May 2002 to April 2003.

The DOC has determined a final, countrywide countervailing duty rate of 17.18 percent for the period covered by the review. Lumber produced from logs harvested in the Maritime provinces is excluded from the countervailing duty order.

The DOC also determined an “all others” anti-dumping duty rate of 4.03 percent. In addition, the DOC made company-specific findings for the following companies that were investigated during the course of the administrative review: Abitibi Consolidated: 3.12. percent, Buchanan Forest Products: 4.76 percent, Canfor Corporation: 1.83 percent, Tembec Inc.: 10.59 percent, Tolko Industries: 3.85 percent, West Fraser Timber Company Ltd: 0.92 percent, and Weyerhaeuser Company: 8.70 percent.

Under the retrospective U.S. trade remedy system, the DOC conducts annual reviews of anti-dumping and countervailing duty orders. These reviews assess the actual level of dumping or subsidies taking place in a previous period. The duty cash deposits for future shipments will be adjusted to the rates resulting from the administrative review once the determinations are published in the U.S. Federal Register.

The final determinations in these administrative reviews are subject to binding dispute settlement under NAFTA Chapter 19.

The countervailing duty review covered shipments made during the period of May 22, 2002, to March 31, 2003, while the anti-dumping duty review covered shipments made during the period of May 22, 2002 to April 30, 2003.

Unless NAFTA or domestic judicial review of the final determinations is requested, importers of record will be assessed final duties at the rates resulting from the administrative reviews for shipments made during the period of review.

The first administrative reviews of the countervailing and anti-dumping duty orders were initiated on July 1, 2003. Preliminary results were published on June 14, 2004. The DOC found a countrywide countervailing duty rate of 9.24 percent, down from the 18.79 percent found in the May 2002 final subsidy determination from the original investigation. It also found an anti-dumping duty “all others” rate of 3.98 percent, down from the 8.43 percent found in the May 2002 final dumping determination from the original investigation. In making its June 2004 preliminary determination of the countervailing duty order, the DOC used a “Maritimes stumpage benchmark” for determining whether provincial stumpage programs confer a subsidy to Canadian lumber producers. The Government of Canada, together with the provinces, argued for the use of in-province benchmarks instead, and, if such benchmarks are not used, for appropriate revisions to the Maritimes benchmark to reflect market conditions of the specific province being examined.

In the December 14 final results, the DOC used a Maritimes benchmark for all provinces except British Columbia, for which they used U.S. log prices as a benchmark.

Backgrounder

CHRONOLOGY OF KEY EVENTS

April 23, 2001: The United States Department of Commerce (DOC) initiated its countervailing and anti-dumping investigations into imports of softwood lumber from Canada.

April 2, 2002: The DOC published its final affirmative determinations of subsidy and dumping in the Federal Register.

May 2, 2002: The U.S. International Trade Commission (ITC) voted 4 to 0 that the U.S. softwood lumber industry was “threatened” with material injury by reason of imports of softwood lumber from Canada that were found by the DOC to be subsidized and sold in the U.S. at less than fair value.

May 22, 2002: The DOC published the countervailing duty order in the Federal Register. Companies were required to provide cash deposits to the U.S. Customs Service for countervailing and anti-dumping duties.

July 1, 2003: The DOC initiated the first administrative reviews of the anti-dumping and countervailing duty orders.

June 14, 2004: The DOC published the preliminary results of the first administrative review of the countervailing and anti-dumping rates.

December 14, 2004: The DOC published the final results of the first administrative review of the countervailing and anti-dumping rates.

Other key dates

September 10, 2004: The ITC issued a remand determination in the NAFTA injury panel proceeding, determining that lumber imports from Canada do not injure the U.S. industry.

October 12, 2004: The NAFTA Secretariat issued the NAFTA injury panel’s order affirming the ITC’s negative threat of injury determination.