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<title>$62.5 MILLION IN SOFTWOOD FEES TO BE DISTRIBUTED TO FOUR PROVINCES</title>
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<p><font face="Courier"></font><font face="Univers" size="+2"></font><font face="Univers" size="+2">September 15, 1998 No. 211</font></p>
<p align="CENTER"><font face="Univers" size="+2"><u></u>$62.5 MILLION IN SOFTWOOD FEES TO BE DISTRIBUTED </font></p>
<p align="CENTER"><font face="Univers" size="+2">TO FOUR PROVINCES</font></p>
<p><font face="Courier">International Trade Minister Sergio Marchi announced today that the federal
government has distributed to four provinces $62.5 million collected from fees
paid by exporters of softwood lumber during the second year of the Softwood Lumber
Agreement. The Agreement applies to exports of lumber to the United States which
originate from the provinces of Alberta, British Columbia, Ontario and Quebec.</font></p>
<p><font face="Courier">"Distribution of this money to the provinces fulfils the commitment the federal
government made when we signed the Softwood Lumber Agreement in April 1996," said
Minister Marchi.</font></p>
<p><font face="Courier">Under the Canada-U.S. Agreement on Softwood Lumber, fees are imposed on lumber
exports to the United States when those shipments exceed the annual fee-free
allocation of 14.7 billion board feet. The fees distributed to the four provinces
were collected during the second year of the Agreement. Approximately $7.3 million
has been returned to Alberta, $10.9 million to Ontario, $15.8 million to Quebec
and $28.5 million to British Columbia.</font></p>
<p><font face="Courier">The Canada-U.S. Agreement on Softwood Lumber provides Canadian companies with
secure access to the U.S. market. The value of softwood lumber exports to the
United States covered under the Agreement was $9.3 billion in the second year.</font></p>
<p><font face="Courier"> - 30 -</font></p>
<p><font face="Courier">A backgrounder is attached.</font></p>
<p><font face="Courier">For further information, media representatives may contact:</font></p>
<p><font face="Courier">Leslie Swartman</font></p>
<p><font face="Courier">Office of the Minister for International Trade</font></p>
<p><font face="Courier">(613) 992-7332</font></p>
<p><font face="Courier">Media Relations Office</font></p>
<p><font face="Courier">Department of Foreign Affairs and International Trade</font></p>
<p><font face="Courier">(613) 995-1874</font></p>
<p><font face="Courier">This document is also available on the Department's Internet site:
http://www.dfait-maeci.gc.ca</font></p>
<p><font face="Univers" size="+1">Backgrounder</font></p>
<p align="CENTER"><font face="Univers" size="+1">SOFTWOOD LUMBER AGREEMENT</font><font face="Courier"></font></p>
<p><font face="Courier">Softwood lumber has been an area of trade friction between Canada and the United
States for over 15 years. After lengthy negotiations, Canada and the United States
finalized the Agreement on Softwood Lumber, effective April 1, 1996.</font></p>
<p><font face="Courier"><strong>Benefits</strong></font></p>
<p><font face="Courier">The Agreement provides Canadian exporters with a guarantee against U.S. trade
actions for five years. It includes an unprecedented U.S. government commitment to
dismiss any new petitions for trade action.</font></p>
<p><font face="Courier">The Agreement has enabled Canada's lumber industry to avoid substantial tariffs,
which the U.S. government had been threatening to impose on Canadian exports of
softwood lumber. Those tariffs would have been paid directly to the U.S.
government rather than being retained in Canada.</font></p>
<p><font face="Courier"><strong>Consultations</strong></font></p>
<p><font face="Courier">The 1996 Softwood Lumber Agreement, including export fees, was negotiated in full
consultations with both industry and the governments of the affected provinces.</font></p>
<p><font face="Courier"><strong>Export Fees </strong></font></p>
<p><font face="Courier">In return for the U.S. guarantee against trade actions, Canada agreed that
softwood lumber exports to the United States originating from Alberta, British
Columbia, Ontario and Quebec would be charged an export fee when these lumber
shipments exceeded specific levels. The Agreement states that exports exceeding
14.7 billion board feet per year will be subject to fees, adjusted annually for
inflation, of US$50 per thousand board feet for the first 650 million board feet
and US$100 per thousand board feet for additional quantities. </font></p>
<p><font face="Courier">In 1997-98, export fees on softwood lumber products were levied on 791 million
board feet, or 5.1 percent of the 15.4 billion board feet exported to the United
States under the Agreement. </font></p>
<p><font face="Courier">Revenue collected by the Government of Canada through export fees is distributed
to the governments of the provinces from which the fees were collected, following
adjustments for certain expenses. </font></p>
<p><font face="Courier">Lumber originating from the Maritime Provinces, Newfoundland, Manitoba,
Saskatchewan, and the Territories are exempt from the Agreement. A separate
agreement was reached between Canada and the United States on shipments from the
Maritime Provinces and Newfoundland; this preserves their traditional exemption
from U.S. trade cases.</font></p>
<p><font face="Courier"><strong></strong></font><font face="Courier"><strong>Distribution of Export Fees during the Second Year </strong></font></p>
<p><font face="Courier">For the second year of the Agreement (April 1, 1997 to March 31, 1998), $62.5
million has been distributed to the provinces as follows: $7.3 million to Alberta,
$10.9 million to Ontario, $15.8 million to Quebec and $28.5 million to British
Columbia. These fees cannot be re-transferred by the provinces to individuals or
to firms in the softwood lumber industry.</font></p>
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