Notices

SOFTWOOD LUMBER EXPORTS TO THE UNITED STATES - PERMIT REQUIREMENTS

Serial No. 143
Date: September 19, 2006

1.0 Background

1.1 On April 27, 2006 Canada and the United States announced a framework agreement to resolve the softwood lumber dispute. The legal text of the agreement was initialled by Canada and the United States on July 1, 2006 and signed on September 12, 2006.

2.0 Purpose

2.1 The purpose of this Notice to Exporters is to advise softwood lumber exporters of changes to the export permit requirements in order to implement the Canada – United States Softwood Lumber Agreement 2006 (“Agreement”), and to describe a number of important elements of the Agreement.

2.2 Softwood lumber products will be included on the Export Control List (ECL), subject to a regulation made under the authority of Paragraph 3(d) of the Export and Import Permits Act (EIPA). Effective October 1, 2006, the Government of Canada will require that all exporters obtain an export permit for every shipment of the covered softwood lumber products to the United States by the date of shipment.

2.3 The requirement for export permits is applicable to all provinces and territories, including the excluded regions and excluded companies identified in the Agreement for as long as the Agreement remains in effect. Export permits will also be required during periods of “free trade” when the Prevailing Market Price exceeds $US355 and no export measures (export charge and/or volume restraint) are applied.

3.0 Coverage

3.1 Effective October 1, 2006, export permits for every shipment to the United States will be required for covered goods that are described more fully in Annex 1 to this Notice, Scope and Coverage of the Agreement. For Canadian implementation purposes, exporters will be required to provide the Canadian Customs Tariff (CCT) classification of the goods (first column in below table) in the application for export permits (See Annex 5 to this Notice – Applying for a Softwood Lumber Export Permit).

COVERED PRODUCTS

Drilled and notched lumber products and angle cut lumber products are covered under the scope of the Agreement, regardless of their classification.

3.2 The following products are excluded from the scope and coverage of the Agreement. Export permits are not required for these goods. For greater certainty, see Annex 1 to this Notice - Scope and Coverage of the Agreement.

4.0 Authority

4.1 Softwood lumber products will be included on the Export Control List by the Governor in Council pursuant to the Export and Import Permits Act, as amended. The Export Control List will be amended to include the products identified in this Notice effective October 1, 2006. As well, Export Permit Regulations (Softwood Lumber Agreement 2006) will be issued effective October 1, 2006.

5.0 Border Measure Options

5.1 Pursuant to the Agreement, Canada will apply an export measure to shipments of softwood lumber products to the United States upon the Agreement’s effective date, October 1, 2006. Two options exist for this border measure:

Annex 4 of this Notice – Major Provisions of the Softwood Lumber Agreement 2006 provides more details related to the two options accorded within the Agreement.

5.2 Softwood lumber products first manufactured in the following provinces or regions are subject to the export measure:

• British Columbia Coast
• British Columbia Interior
• Alberta
• Saskatchewan
• Manitoba
• Ontario
• Quebec

5.3 Exports from the Maritime Provinces (Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland and Labrador) are exempt from the charge; however, a charge is payable on exports from the Atlantic provinces that exceed inventory and production during a quarter. Exports from Yukon, the Northwest Territories or Nunavut are exempt from the charge.

5.4 Prior to October 1, 2006, provinces affected by the export charge are to provide advice to the Minister of International Trade respecting the rate of charge option that should apply to exports of softwood lumber products first manufactured in their respective regions. The Minister will establish allocation methods, in consultation with respective provinces, for exports of softwood lumber first manufactured in regions electing Option B. Regions will have the opportunity to provide similar advice to the Minister following Year 3 and Year 6 of the Agreement.

6.0 Transition

6.1 During the transition period from October 1 to December 31, 2006, prior to implementation of Option B, exports of softwood lumber first manufactured in all the covered regions (i.e. not including the excluded regions and the excluded companies) will be made under the Option A, Export Charge.

6.2 The following rules will apply to shipments made during this period.

6.2.1 Export permits will be required for every shipment of softwood lumber to the United States.

6.2.2 A region’s share of the United States market will be calculated on a monthly basis in accordance with Annex 8 of the Agreement.

6.2.3 Exporters will be required to self assess and remit the export charge on a monthly basis to the Canada Revenue Agency.

6.2.4 In the event that exports during the month from a region that elect Option B do not exceed the region’s volume restraint had quota allocations been made, exporters of lumber first manufactured in that region will be provided a partial refund of the export charge remitted to the Canada Revenue Agency for exports made that month. If exports during the month from a region that elect Option B do exceed the region’s volume restraint had quota allocations been made, exporters of lumber first manufactured in that region will not be entitled to a refund of the export charge for that month.

6.2.5 The surge provisions of the Agreement (see Annex 4 – Major Provisions of the Softwood Lumber Agreement 2006) apply to exporters of softwood lumber products first manufactured in regions electing Option A and to exporters of softwood lumber products first manufactured in regions electing Option B during a month in which the region does not qualify for a refund of the export charge.

6.2.6 The Department of Foreign Affairs and International Trade will publish on its public web site shipment levels, based on export permits issued, on a daily basis.

7.0 Softwood Lumber Export Charge – Canada Revenue Agency Registration

7.1 Under the Agreement, Canada is required to collect an export charge on shipments of softwood lumber to the United States when the Prevailing Monthly Price is less than or equal to US$355 per thousand board feet. Exporters of softwood lumber to the United States will be required to register with the Canada Revenue Agency (CRA) for the purpose of administration of the export charge. CRA will send a registration package to known potential exporters. This package will contain registration information based upon requirements that have been announced by the Government but not yet enacted in legislation, a registration form which may be completed voluntarily on the basis of the announced legislation, and a return address for the form. Also, a telephone contact number will be provided. Exporters that do not receive a registration package can obtain a registration form from either the CRA website or any CRA Tax Services Office.

7.2 CRA will provide all registered exporters with instructions on filing regular returns and remitting payment of the export charge.

7.3 Any further information on this subject which may become available will be placed on the business pages of the CRA website.

You may also contact the CRA Information Line at 1-866-330-3304.

8.0 Lumber First Manufactured in the Maritime Provinces

8.2 Exporters of softwood lumber first manufactured in the Maritimes Provinces will be required to register with the Canada Revenue Agency. Exporters will also be required to obtain export permits from the Department of Foreign Affairs and International Trade for every shipment of softwood lumber products to the United States. Finally, exporters must provide a valid COO number when making an application for an export permit in order for the export to qualify as a shipment of softwood lumber products first manufactured in the Maritime Provinces that is exempt from the export measures under the Agreement.

8.3 The COO is a required entry summary document by U.S. Customs and Border Protection and must specifically state that the corresponding U.S. customs entry is for softwood lumber products first manufactured in the Maritime Provinces from logs originating in the Maritime Provinces or the State of Maine.

8.4 Exporters located in other provinces of softwood lumber first manufactured in the Maritime Provinces must also obtain export permits for every shipment to the United States. These exporters will be required to provide a valid COO number at the time an application for export permit is made in order for the export to qualify as a shipment of softwood lumber products first manufactured in the Maritime Provinces and exempt from the export measures under the Agreement.

8.5 If, during any quarter during the life of the Agreement, the volume of exports of softwood lumber products first manufactured in the Maritime Provinces exceeds the sum of the total production and inventory of softwood lumber products first manufactured in the Maritime provinces during that quarter, the Agreement requires that the Government of Canada collect retroactively an export charge of C$200 per thousand board feet from those exporters responsible for the excess shipments.

8.6 For further information with respect to obtaining a valid Certificate of Origin, exporters should contact the Maritime Lumber Bureau, P.O. Box 459, Amherst, Nova Scotia B4H 4A1; Phone: 902-667-3889; Facsimile: 902-667-0401; e-mail: mlb@ns.sympatico.ca.

9.0 Lumber First Manufactured in the Yukon, Northwest Territories or Nunavut

9.1 Shipments of softwood lumber products first manufactured in the Yukon, Northwest Territories or Nunavut (the Territories) from logs originating in the Territories are exempt from the export measures of the Canada -U.S. Softwood Lumber Agreement 2006.

9.2 All exporters of softwood lumber products from the Territories will be required to register with Canada Revenue Agency and to obtain an export permit from the Department of Foreign Affairs and International Trade for every shipment of softwood lumber products to the United States.

10.0 Lumber Manufactured by Excluded Companies

10.1 Shipments of softwood lumber products first manufactured by the excluded companies listed in Annex 3 to this Notice - Excluded Companies are exempt from the export measures of the Agreement, up to an annual level to be established for each of the excluded companies as specified in the Agreement.

10.2 All exporters of softwood lumber products first manufactured by the excluded companies will be required to register with Canada Revenue Agency and to obtain an export permit from the Department of Foreign Affairs and International Trade for every shipment of softwood lumber products to the United States.

10.3 Shipments of softwood lumber first manufactured by an excluded company will continue to be eligible for exclusion from the export measures as long as the company’s actual annual export volume does not exceed its annual export limit, as determined by the Agreement. In the event that annual shipments do exceed a company’s export limits, the export limits in following years will be reduced. Continued annual shipments in excess of an excluded company’s export limit could lead to the possibility that the company will lose its exclusion from the export measures.

11.0 Export Permit Issuance and Validity

11.1 Export permits are governed by the Export Permits Regulations (Softwood Lumber Agreement 2006). An export permit will be required for every shipment of softwood lumber products to the United States. A description of the process of applying for an export permit is attached to this Notice as Annex 5 - Applying for a Softwood Lumber Export Permit.

11.2 Export permits are delivered through customs brokers across Canada, or through the office of the Export and Import Controls Bureau (EICB), Department of Foreign Affairs and International Trade, 125 Sussex Drive, Ottawa Ontario, K1A 0G2.

11.3 A list of Canadian customs brokers having access to the Export and Import Control System (EICS) may be obtained from EICB on request or at the EICB website.

11.4 Export permits are issued with a validity period of 30 days.

11.5 Exporters of the subject softwood lumber products will now obtain an export permit for every shipment of softwood lumber to the United States. Export permit applicants should complete form EXT-1466-1, "Application for Permit to Export Softwood Lumber Products to the U.S.A.", and transmit it to the agents referred to in paragraph 11.2.

11.6 Exporters that do not have an EICB company file number will, prior to receipt of their first export permit, be required to obtain a company file number by completing the “Application for an EICB Company Number” form. Companies with multiple mills will be required to register each mill separately with Canada Revenue Agency and obtain an EICB number for every mill.

12.0 Permit Application

12.1 The Agreement requires that exporters furnish the following data elements with each application for a permit (See Annex 2 for Definitions of the terms below):

1. Manufacturer’s Canada Revenue Agency Business Number;
2. Export and Import Control Bureau Company File Number;
3. Name of Exporter;
4. Region of Origin;
5. Customs Tariff (Canada) Classification and Product Description (See Section 3.0 Coverage);
6. Quantity In Board Feet;
7. Export Price ($US);
8. U.S. Port of Entry;
9. Anticipated U.S. Entry Date;
10. Name of Importer/ Consignee;
11. Mode of Transportation;
12. Canadian Shipment Date; and
13. Maritime Lumber Bureau Certificate of Origin Number, if applicable.

12.2 The Minister requires, as a condition of issuing an export permit to ship softwood lumber to the United States, that an applicant retains all documentation which substantiates the data elements for the permit for seven (7) years.

13.0 Compliance and Enforcement

13.1 The exportation of goods on the Export Control List without an export permit issued by the Minister of Foreign Affairs is an offence and may lead to prosecution under the Export and Import Permits Act.

13.2 Exporters are required to keep records of individual shipments covered by each permit. This information may be subject to verification and additional information may be requested by the Export and Import Controls Bureau (EICB).

14.0 Permit Fees

14.1 Export permit fees are payable pursuant to the Export and Import Permits and Certificates Fees Order. A $9 fee will be levied for each permit where the export permit is delivered by a person who is not employed in the public service of Canada but who is authorized by the Minister to make the delivery. However, brokers with on-line privileges may charge more; brokers' fees may vary.

14.2 Where an exporter applies directly to the EICB for an export permit, the permit fee is $14 payable with the application. Payment may be made by cheque or bank money order, payable to the "Receiver General for Canada"; by bank wire transfer as described below in paragraph 14.3; or by "Visa" or "Master Card", by providing card number, expiry date and name of card holder.

14.3 Payment of export permit fees may be made by cheque, bank money order or bank wire transfer in the following ways. First, exporters may send a cheque payable to the "Receiver General for Canada" to the following address:

By Mail or Prepaid Courier:

Department of Foreign Affairs and International Trade
125 Sussex Drive,
Cashiers Office, Tower D-1 (SMFM)
Ottawa, Ontario
K1A 0G2

A second means for payment is available through wire transfers capability. For this option, an exporter has to request from a bank that a wire transfer payable to the "Receiver General for Canada" be sent to the Department's Royal Bank branch at the following address:

Royal Bank of Canada
L.B. Pearson Bldg.
125 Sussex Dr.
Ottawa, Ontario
K1A 8V5
Transit # 1016
Branch # 003
ATT: DFAIT – Export and Import Finance Section (613-944-2496)

15.0 Other Provisions of the Canada-U.S. Softwood Lumber Agreement 2006

15.1 Annex 4 of this Notice provides a summary of the major provisions of the Agreement. These provisions will be explained in greater detail in future Notices to Exporters. Exporters should be aware of the measures in order to prepare for the implementation of the Agreement on October 1, 2006.

15.2 The full text of the Agreement can be found on the Department’s website.

16.0 Further Information

16.1 For further information with respect to the Agreement, please contact:

Softwood Lumber Division (TNS)
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario K1A 0G2

Hot Line 613-944-2167
Facsimile 613-944-1452
E-mail address
Web Page

16.2 For further information with respect to the export controls on shipments of softwood lumber to the United States, please contact:

Export and Import Controls Bureau
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario K1A 0G2

Hot Line 613-944-2168 or 1-877-808-8838
Facsimile 613-995-5137
E-mail address
Web Page