NEWS RELEASES

March 17, 2006 (12:40 p.m. EST)
No. 23

NAFTA PANEL AFFIRMS CANADIAN SOFTWOOD LUMBER NOT SUBSIDIZED

International Trade Minister David L. Emerson today welcomed a NAFTA panel decision that affirms the U.S. Department of Commerce’s (DOC) finding—and Canada’s long-standing position—that Canadian softwood lumber production is not subsidized.

“Resolving the softwood lumber dispute is my top priority,” said Minister Emerson. “Today’s panel decision will strengthen our position as we move forward on the softwood lumber file.”

“We will be working with the provinces and industry toward a resolution that is in Canada’s best interest,” added the Minister.

On November 22, 2005, the DOC complied with the NAFTA subsidy panel’s earlier instructions and issued a determination that found that softwood lumber was subsidized at a de minimis level (0.80 percent). Under U.S. law, a de minimis subsidy finding means that countervailing duties cannot be imposed.

The countervailing duty rate currently being paid by Canadian exporters is 8.70 percent.

It is estimated that Canadian softwood lumber companies have paid over $5.2 billion

(US$4.5 billion) in countervailing duties and anti-dumping duties, of which approximately $3.7 billion (US$3.2 billion) are countervailing duties.

Canada will continue to work with the United States to ensure that it respects its NAFTA obligations and that the issue is resolved as soon as possible.

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

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A backgrounder is attached.

For further information, media representatives may contact:

Jennifer Chiu
Press Secretary
Office of the Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics
(613) 992-7332

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

Backgrounder

CHRONOLOGY OF KEY EVENTS: CANADA’S NAFTA CHALLENGE OF THE U.S. DEPARTMENT OF COMMERCE’S FINAL COUNTERVAILING DUTY DETERMINATION

April 2, 2001: The United States Department of Commerce (DOC) initiated its countervailing duty investigation of Canadian softwood lumber.

March 22, 2002: The DOC made a final affirmative countervailing duty determination and imposed an 18.79 percent duty on Canadian softwood lumber imports.

April 2, 2002: A binational panel was established under NAFTA Chapter 19 to review whether the DOC’s final affirmative countervailing determination is contrary to U.S. law.

August 13, 2003: The NAFTA panel issued its first report and instructed the DOC to correct its original countervailing duty determination.

January 12, 2004: The DOC released its countervailing duty remand determination and found a new subsidy rate of 13.23 percent. The DOC’s remand determination was subsequently challenged by Canada.

June 7, 2004: The NAFTA panel issued its second report and again instructed the DOC to issue a determination consistent with U.S. law.

July 30, 2004: The DOC issued its second remand determination and found a new subsidy rate of 7.82 percent. The DOC’s remand determination was subsequently challenged by Canada.

December 1, 2004: The NAFTA panel issued its third report and again instructed the DOC to issue a determination consistent with U.S. law.

January 24, 2005: The DOC issued its third remand determination and found a new subsidy rate of 1.88 percent. The DOC’s remand determination was subsequently challenged by Canada.

May 23, 2005: The NAFTA panel issued its fourth report and again instructed the DOC to issue a determination consistent with U.S. law.

July 7, 2005: The DOC issued its fourth remand determination and found a new subsidy rate of 1.21 percent. The DOC’s remand determination was subsequently challenged by Canada.

August 10, 2005: The NAFTA Extraordinary Challenge Committee in the threat of injury case issued its decision unanimously rejecting U.S. claims and affirming the NAFTA panel’s ruling that the United States had no basis on which to find that the U.S. lumber industry was threatened by imports of Canadian softwood lumber.

October 5, 2005: The NAFTA panel issued its fifth report and again instructed the DOC to issue a determination consistent with U.S. law.

October 28, 2005: The DOC filed a motion with the NAFTA panel requesting clarification of the panel’s October 5, 2005, instructions. The DOC also sought permission to file its remand determination 10 days after having received clarification from the panel.

November 16, 2005: The NAFTA panel denied the U.S. request for clarification, reiterated its October 5 instructions and ordered the DOC to issue a new determination by November 23, 2005.

November 22, 2005: The DOC issued its fifth remand determination and found a de minimis subsidy rate of 0.80 percent.

December 19, 2005: The Coalition for Fair Lumber Imports challenged the DOC’s finding.

March 17, 2006: The NAFTA panel affirmed the DOC’s finding that Canadian softwood lumber production is not subsidized.