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Frequently Asked Questions
Countervailing Duty Determination
Q1. What is a countervailing duty?
A1. A countervailing duty ("CVD") is a special
duty imposed to protect an industry from injury or a threat of injury
caused by subsidized imports from other countries. International trade
agreements such as the NAFTA and the WTO Agreement on Subsidies and Countervailing
Measures, set out the specific criteria which must be met if a party to
the agreement is to legally impose and maintain a countervailing duty.
Q2. When can a CVD be applied?
A2. A CVD can only be applied if it has been established
in an investigation that imported goods have been subsidized and that
such subsidized imports are causing material injury, or threatening to
cause injury to the domestic industry. The duty cannot exceed the amount
of subsidy found in the investigation. Under U.S. law, a preliminary determination
of injury is made 45 days after the petition for CVDs is made. A final
determination will either confirm or dismiss the preliminary finding.
Q3. Who conducts a U.S. CVD investigation against Canadian industry?
A3. The U.S. Department of Commerce (“DOC”)
must determine whether a foreign government is directly or indirectly
providing a countervailable subsidy for the manufacture, production or
exportation of merchandise imported or sold into the United States. The
U.S. International Trade Commission (“ITC”) must determine
whether the U.S. industry producing the like goods has been materially
injured, or threatened with material injury, by reason of the subsidized
imports. If these two conditions are met, a CVD equal to the amount of
the subsidy is imposed upon the imports of the subsidized merchandise.
Q4. Are duty rates province-specific?
A4. The U.S. industry allegations of subsidy targeted
a number of federal and provincial programs. While allegations differed
from province to province, a “weighted average” rate applied
equally to all provinces covered by the countervailing duty investigation.
In the dumping investigation, those companies that were investigated received
company-specific rates. Companies that were not directly investigated
were subject to an average “all-other” rate.
Q5. What are some examples of programs found by the DOC to confer
countervailable subsidies in the softwood lumber case?
A5. The DOC had determined that federal and provincial
stumpage programs confered a countervailable subsidy to the softwood lumber
industry. The stumpage programs constituted the bulk of the DOC's subsidy
finding.
Q6. What was the status of Atlantic Canada?
A6. The U.S. had excluded the Atlantic provinces from
the countervailing duty action; however, Atlantic Canada producers were
included in the dumping action.
Q7. Why was Atlantic Canada excluded from the countervailing
duty order?
A7. Atlantic Canada has generally been exempt from the
various actions taken by the United States, including the 1986 Memorandum
of Understanding on Softwood Lumber, the 1991 countervailing duty investigation,
and the 1996 Softwood Lumber Agreement. After initially including the
Maritime Provinces in the Lumber IV investigations, the DOC excluded lumber
from the Maritime Provinces in an August 2, 2001 amended notice of initiation
due in part to the fact that there were no subsidy allegations against
Maritime producers.
Anti-Dumping Determination
Q8. What is dumping?
A8. Dumping is the sale of goods in a foreign market
at prices below those charged for comparable sales in the home market
or that are below the cost of producing the goods.
Q9. What is an anti-dumping duty?
A9. An anti-dumping duty (“AD”) is a special
duty imposed to counteract the sale of goods in a foreign market at prices
below those charged for comparable sales in the home market or that are
below the cost of producing the goods.
Q10. Who conducted the U.S. anti-dumping investigation against
Canadian companies?
A10. The DOC determines dumping margins by comparing
the price at which the subject goods (in this case: certain softwood lumber
products) are sold in the United States (“export price”) with
the price at which comparable sales of the subject goods are made in the
home market (normal value). The ITC determines whether the U.S. industry
producing the like goods has been materially injured, or threatened with
material injury, by reason of the dumped imports. If these two conditions
are met, an AD equal to the margin of dumping is imposed on the dumped
imports.
Q11. How is an anti-dumping investigation different from a countervailing
duty investigation?
A11. Unlike a CVD investigation, which examines the
subsidy practices of governments, AD investigations concern the pricing
practices of individual firms. The Government of Canada is therefore not
a party to AD investigations.
Challenges
Q12. Can final determinations or administrative reviews be challenged?
A12. Yes. Final determinations and administrative reviews
can be challenged either before a binational panel under NAFTA Chapter
19, before the U.S. Court of International Trade or under the WTO dispute
settlement process.
Administrative Reviews
Q13. What is an administrative review?
A13. In the retrospective U.S. trade remedy system,
annual administrative reviews confirm the subsidy and/or dumping rates
for shipments during the previous 12-month period of reviews, and establish
new cash deposit rates for future shipments. If the review results in
lower duty rates than the cash deposit rate that was in effect during
the period of review, companies would be refunded the difference plus
interest following the completion of the administrative review. However,
should the duty rates increase, companies would be required to pay the
difference between the current deposit rate and the results of the review.
Q14. Who is responsible for conducting the administrative review?
A14. The U.S. Department of Commerce is responsible
for determining the CVD and AD duty rate for Canadian softwood lumber
imports for the period under review.
Q15. How long does it take to complete the administrative review?
A15. Under U.S. statute, the U.S. Department of Commerce
has up to 18 months to complete an administrative review and issue a final
determination.
Log Exports
Q16. Why does British Columbia have restrictions on log exports?
A16. In British Columbia, logs from both private and
public land must be deemed surplus to provincial needs before a log can
be exported, with the provincial government applying a surplus test to
logs from provincial Crown lands and the federal government applying a
surplus test to logs harvested from private and federal lands in the province.
Under B.C.’s surplus testing process, domestic processors may bid
on these logs, and only if the logs are deemed surplus to domestic requirements
may an export permit be granted. Most log exports come from B.C. private
land, which accounts for only 3% of B.C.’s commercial forests. Private
landowners may export logs, as long as surplus testing is undertaken and
federal regulations are met. There is no outright ban on log exports.
Federal export permits are required for log exports from all provinces
and territories.
FOR FURTHER INFORMATION...
Additional inquiries may be made by writing to International Trade Canada
Softwood Lumber Division.
Mailing address:
125 Suusex Drive
Ottawa ON K1A 0G2
Courier address:
Sussex Pavilion, 4th Floor
111 Sussex Drive
Ottawa ON K1N 1J1
E-mail: tns@international.gc.ca
Telephone: (613) 944-2167 (Hot line)
Facsimile: (613) 944-1452
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