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<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 14pt"><span style="font-weight: bold">January 11, 2006 <i>(2:15 p.m. EST)</i><br>
No. 2</span></span></span></p>
<br>
<p style="text-align: center"><span style="font-family: 'Arial', sans-serif"><span style="font-size: 14pt"><span style="font-weight: bold">CANADA LAUNCHES CHALLENGE OF NEW U.S. SOFTWOOD DUTY
RATE</span></span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">Following consultations with the Canadian softwood lumber industry, the Government of
Canada today filed a request for a NAFTA panel review of the U.S. Department of
Commerce’s (DOC’s) second countervailing duty (CVD) administrative review
determination.</span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">The DOC conducts annual administrative reviews of CVD and anti-dumping (AD) duty
orders to determine the alleged subsidy and dumping levels for the period under review
and establish cash deposit rates that Canadian exporters pay from that point forward.
The period of review for the second CVD administrative review was April 1, 2003, to
March 31, 2004. </span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">The final results of the DOC’s second administrative reviews, published on
December 12, 2005, determined a new countervailing duty rate of 8.7 percent (down
from 16.37 percent) and an AD rate of 2.11 percent (down from 3.78 percent), resulting
in a combined rate of 10.81 percent. As the anti-dumping case involves
company-specific issues, litigation of the results will be industry-led.</span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">In its challenge, Canada maintains that the countervailing duty rate should be
eliminated.</span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">Notwithstanding this challenge, the Government of Canada maintains the position that
the United States is already legally obligated to revoke the countervailing and anti-dumping duty orders, refund all duties collected with interest, and terminate all ongoing
administrative reviews. </span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">This is a result of the NAFTA Extraordinary Challenge Committee decision in
August 2005, which upheld a NAFTA panel ruling that Canadian softwood lumber
poses no threat of injury to the U.S. lumber industry and which the United States
continues to ignore. Canada is currently challenging the U.S. failure to comply with this
ruling in the U.S. Court of International Trade.</span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">Canada continues to consult closely with the provinces and industry on this and other
softwood lumber litigation matters. </span></span></p>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt">More information on softwood lumber issues is available at:
</span></span><a href="https://bac-lac.wayback.archive-it.org/web/20070221013039/http://www.softwoodlumber.gc.ca/"><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #0000ff"><span style="text-decoration: underline">http://www.softwoodlumber.gc.ca</span></span></span></span></a><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #000000">.</span></span></span></p>
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<p style="text-align: center"><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #000000">- 30 -</span></span></span></p>
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<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #000000">For further information, media representatives may contact:</span></span></span></p>
<br>
<br>
<p><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #000000">Media Relations Office<br>
International Trade Canada<br>
(613) 995-1874<br>
</span></span></span><a href="https://bac-lac.wayback.archive-it.org/web/20070221013039/http://www.international.gc.ca/"><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #0000ff"><span style="text-decoration: underline">http://www.international.gc.ca</span></span></span></span></a><span style="font-family: 'Arial', sans-serif"><span style="font-size: 12pt"><span style="color: #000000"></span></span></span></p>
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