Washington, DC - U.S. Commerce Secretary Carlos M. Gutierrez announced that Commerce today took steps to implement the 2006 Softwood Lumber Agreement between the governments of Canada and the United States.

"Finding a durable solution for the long-standing dispute over softwood lumber trade is an important achievement for both the United States and Canada. With this issue behind us, we can focus on expanding opportunities in our commercial relationship, which is already the largest bilateral trade relationship in the world," said Gutierrez." U.S. - Canadian trade results in trillions of dollars that flow across our borders, creating jobs in both countries and stimulating economic growth. As we implement this Agreement, I will work to ensure that our greater relationship grows and prospers."

Consistent with the 2006 Softwood Lumber Agreement, the Department of Commerce rescinded the ongoing antidumping (AD) and countervailing (anti-subsidy) duty (CVD) administrative reviews (that provide for the annual calculation of AD/CVD rates) and revoked the AD and CVD orders on softwood lumber from Canada. The Department is instructing U.S. Customs and Border Protection to refund to importers of record all AD and CVD duties collected on softwood lumber from Canada, except where a court order prevents it, and to cease collecting those duties on future imports. As a result of letters from domestic producers indicating that they would not be harmed by Canadian imports while the agreement's provisions are observed, the Department will not initiate an AD or CVD case on softwood lumber from Canada while the Agreement is in effect.

Background:

Under the terms of the Agreement, critical pieces of the litigation over trade in softwood lumber will come to an end, and unrestricted trade will occur in favorable market conditions. When the lumber market is soft, as it is currently, Canadian exporting provinces can choose either to collect an export tax that ranges from 5 to 15 percent as prices fall , or to collect lower export taxes and limit export volumes. The Agreement will also include provisions to address potential Canadian import surges, provide for effective dispute settlement, distribute the antidumping and countervailing (anti-subsidy) duty deposits currently held by the U.S. Customs and Border Protection, and discipline future trade cases. The Agreement will also establish a bi-national working group to discuss provincial policy reforms.

Dumping occurs when a foreign producer sells a product in the United States at a price that is less than fair value, which is often the producer's sales price in the country of origin ("home market"), or its cost of production. The difference between the price (or cost) in the foreign market and the price in the U.S. market is called the dumping margin. Unless the conduct falls within the legal definition of dumping as specified in U.S. law, a foreign producer selling imports at prices below those of American products is not necessarily dumping.

Foreign governments subsidize industries when they specifically provide financial assistance to benefit the production, manufacture or exportation of goods. Subsidies can take many forms, such as direct cash payments, credits against taxes, and loans at terms that do not reflect market conditions. The statute and regulations establish standards for determining when an unfair subsidy is conferred. The amount of subsidies the foreign producer receives from the government is the basis for the subsidy rate by which the subsidy is offset or "countervailed."