$87 MILLION IN SOFTWOOD FEES TO BE DISTRIBUTED TO FOUR PROVINCES
February 18, 1998 No. 31
$87 MILLION IN SOFTWOOD FEES TO BE DISTRIBUTED TO FOUR
PROVINCES
International Trade Minister Sergio Marchi announced that the Federal government
will distribute $87 million in export fees collected under the softwood lumber
agreement to the provinces of Ontario, Quebec, British Columbia, and Alberta. Mr.
Marchi made this announcement to provincial and industry members during the
National Softwood Lumber Advisory Committee meeting on
February 17.
"Distributing this money honours the commitment we made to the provinces in 1996
when we signed the softwood lumber agreement," said Minister Marchi.
Under the Canada-U.S. Agreement on Softwood Lumber, export fees are levied on
Canadian companies exporting softwood lumber above their fee-free allocations.
The fees distributed to the four provinces today represent fees collected during
the first year of the agreement. Approximately $9.8 million dollars will be
returned to Ontario; $35.5 million to Quebec; $36.3 million to British Columbia;
and $5.4 million to Alberta.
"We continue to work closely with the provinces and industry associations on the
ongoing implementation of the softwood lumber agreement. This is an excellent
example of the constructive
co-operation that exists between the provinces and the federal government," said
the Minister.
The Canada-U.S. Agreement on Softwood Lumber provides Canadian companies with
secure access to the U.S. market at a minimal cost. The value of softwood lumber
exports to the U.S. covered under the agreement have increased from $7 billion in
1995 to 8.6 billion in 1996, to 9.4 billion between January and November 1997.
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A Backgrounder is attached.
For further information, media representatives may contact:
Leslie Swartman
Office of the Minister for International Trade
(613) 992-7332
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
This document is also available on the Department's Internet site:
http://www.dfait-maeci.gc.ca
Backgrounder
Softwood Lumber Agreement
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 in April 1996.
Benefits
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.
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.
Export Fees
In return for the U.S. guarantee against trade actions, Canada agreed that
softwood lumber exports to the United States originating from Ontario, Quebec,
British Columbia, and Alberta would be charged an export fee when these lumber
shipments exceeded specific levels. The agreement states that exports exceeding
14.7 billion board feet a year will be subject to a
US$50 per thousand board feet border fee for the first 650 million board feet;
and that a US$100 per thousand board feet would be charged for quantities greater
than 650 million board feet.
In 1996-1997, export fees applied to softwood lumber products accounted for just
over 1 billion board feet, or 6.3 percent of the total 15.8 billion board feet
exported to the U.S. under the agreement.
The revenue collected by the Government of Canada through this export fee is then
contributed to the provincial governments of the provinces from which the fees
were collected after adjustments for certain expenses.
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, which preserves their traditional exemption
from U.S. trade cases.
Export Fees during the First Year
Initial figures for the first year of the Agreement
(April 1, 1996 to March 31, 1997) indicate that $87 million in collected fees
will be distributed to the provinces approximately as follows: $9.8 million to
Ontario; $35.5 million to Quebec; $36.3 million to B.C.; and $5.4 million to
Alberta.
Before the fees can be distributed, the federal government and provinces must
sign contribution agreements. These fees cannot be transferred by the provinces
to individuals or to firms in the softwood lumber industry.