Notice to Exporters

Softwood Lumber Exports to the United States: Entry Into Force of the Softwood Lumber Agreement and Transition Period Exports October 12 – December 31, 2006

Serial No. 145
Date: October 12, 2006

Table of Contents

  1. Background
  2. Purpose
  3. Entry Into Force of the Agreement
  4. Transition Period Exports
  5. Option A – Export Charge
  6. Option B – Export Charge With Export Allocation
  7. Lumber Manufactured by Excluded Companies
  8. Coverage
  9. Authority
  10. Compliance and Enforcement
  11. Permit Fees
  12. Further information

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 Canada-United States Softwood Lumber Agreement 2006 (the Agreement) was initialled by Canada and the United States on July 1, 2006 and signed on September 12, 2006.

1.2 On September 18, 2006, the Minister of International Trade introduced the Softwood Lumber Products Export Charge Act, 2006. Once passed, the legislation will have retroactive effect to October 12, 2006.

1.3 Under the Agreement, and as provided for under the legislation to implement the Agreement, the Minister will designate that softwood lumber first manufactured in a region subject to the export measures be subject to one of two border measures: Option A, an export charge without export allocations; and Option B, a lower export charge with export allocations. The following table summarizes the two options.

Prevailing Monthly PriceOption A – Export Charge (Expressed as a % of Export Price)Option B – Export Charge (Expressed as a % of Export Price) with Export Allocation
Over $US355No Export ChargeNo Export Charge and no volume restraint
$US336-3555%2.5% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 34% of Expected U.S. Consumption for the month
$US316-33510%3% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 32% of Expected U.S. Consumption for the month
$US315 or under15%5% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 30% of Expected U.S. Consumption for the month

1.4 Regions electing Option B (export charge with export allocations) will operate under the Option A (export charge) regime, commencing October 12, 2006 until the Government of Canada is able to implement Option B, on January 1, 2007. The legislation makes provision for exporters shipping softwood lumber products first manufactured in Option B regions during this three-month transition period.

1.5 The full text of the Agreement can be found on the Softwood Lumber web site.

2.0 Purpose

2.1 The purpose of this Notice to Exporters is to advise softwood lumber exporters to the United States that the Softwood Lumber Agreement will enter into force on October 12, 2006.

2.2 This Notice also advises that special provisions will be put in place during the transition period of October 12, 2006 to December 31, 2006, pursuant to the legislation.

2.3 This Notice amends Notice to Exporters Serial No. 143 with respect to lumber manufactured by excluded companies

3.0 Entry Into Force of the Softwood Lumber Agreement

3.1 Further to the Notice to Exporters Serial No. 144, the Governments of Canada and the United States have agreed that the Softwood Lumber Agreement will enter into force on October 12, 2006. Changes in export permit requirements outlined in Notice to Exporters Serial No. 143 will take effect October 12, 2006.

4.0 Transition Period Exports

4.1 The following provisions will apply to exports of softwood lumber to the United States with shipments dates commencing October 12, 2006 and ending December 31, 2006. Export permits will be required for all shipments of softwood lumber to the United States during this period.

4.2 The Option A, Export Charge will apply to exports from: British Columbia Coast, British Columbia Interior, Alberta as described in Section 5.0 below. The Option B, Export Charge With Export Allocation will apply to exports from: Quebec, Ontario, Manitoba and Saskatchewan as described in Section 6.0 below.

5.0 Option A – Export Charge

5.1 Exporters of softwood lumber products to the United States that are first manufactured in Option A regions will be required to obtain export permits and to remit export charges at the rates specified in paragraph 1.3 during the transition period October 12, 2006 to December 31, 2006.

5.2 Option A Surge Provisions - Exporters of softwood lumber products will be subject to the surge provisions as specified in the legislation during the transition period. In the event that the volume of softwood lumber products exported to the United States first manufactured in an Option A region in any month exceeds that region's Trigger Volume:

  1. if the volume of exports from the region exceeds the region's Trigger Volume by 1% or less in a month, the applicable Trigger Volume for that region will be reduced during the following month by the total volume of the overage (i.e., the amount by which actual exports exceeded the Trigger Volume);

  2. if the volume of exports from a region exceeds that region's Trigger Volume by more than 1% in a month, an additional export charge equal to 50% of the applicable export charge rate for that month will be applied retroactively to all exports to the United States first manufactured in that region during that month.

5.3 For the month of October 2006, the Trigger Volumes for each region will be adjusted by a factor of 64.52% of the volume that would have otherwise been available to each region for the full month of October.

5.4 The Department will publish the monthly Trigger Volumes for each of the regions on its web site and update the shipment data on a daily basis, based on the export permits issued the previous day.

6.0 Option B – Export Charge With Export Allocation

6.1 Exporters of softwood lumber products to the United States that are first manufactured in Option B regions will be required to obtain export permits and to remit export charges at the Option A rates specified in paragraph 1.3 during the transition period October 12, 2006 to December 31, 2006.

6.2 Although no export allocations will be made to exporters of softwood lumber first manufactured in Option B regions, a Regional Quota Volume will be established as specified in the legislation and published on the department's web site.

6.3 Exporters of softwood lumber products first manufactured in an Option B region that do not exceed the Regional Quota Volume for the month by more than 12% will be entitled to a refund of a portion of the export charge remitted to the Canada Revenue Agency (CRA). The refund will be the difference between the amount remitted at the Option A export charge rate, and what the exporter would have paid in export charge for that month under Option B, as specified in paragraph 1.3. The refund of export charges remitted will be made by CRA. Please consult CRA for procedures for requesting a refund. Further information 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.

6.4 During this transition period, Option B regions will be subject to the carry-forward and carry-back provisions of the legislation, at a regional level. A region will be permitted to carry-forward from the immediate prior month up to 12% of the Regional Quota Volume for the current month.

6.5 As well, a region will be permitted to carry-back (borrow) from the next month up to 12% of the Regional Quota Volume for the current month. The amount of Regional Quota Volume borrowed from the next month will be deducted from the Regional Quota Volume for the next month.

6.6 The carry-forwards and carry-backs will be limited to 12% of the monthly Regional Quota Volume and will be applied on a regional basis only. No carry-forward from a period prior to October 12, 2006 will be permitted. No carry-back from a period following the Transition Period (December 31, 2006) will be permitted.

6.7 If shipments of softwood lumber products to the United States first manufactured in an Option B region exceed the Regional Quota Volume for that region during a month, including the adjustment for the carry-forward and carry-back provisions of the Agreement, exporters of softwood lumber first manufactured in that region will be subject to the Option A export charge rates for shipments made during that month. In addition, the Option A surge provisions of the Agreement and the legislation will apply. See Paragraph 5.2.

6.8 For the month of October 2006, the Trigger Volumes for each region will be adjusted by a factor of 64.52% of the volume that would have otherwise been available to each region for the full month of October. As well, the carry-back allowance for a region selecting Option B, Export Charge with Export Allocation will be limited to 12% of the adjusted October Trigger Volume for each region.

6.9 The Department will publish the monthly Trigger Volumes for each of the regions on its web site and update the shipment data on a daily basis, based on the export permits issued the previous day.

7.0 Lumber Manufactured by Excluded Companies

7.1 Section 10.0 of Notice to Exporters Serial No. 143, is hereby repealed and replaced with the following:

7.2 Shipments of softwood lumber products manufactured by the excluded companies listed in Annex 3 - Excluded Companies to Notice to Exporters Serial No. 143 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.

7.3 All exporters of softwood lumber products 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.

7.4 Shipments of softwood lumber 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.

8.0 Coverage

8.1 Effective October 12, 2006, export permits for every shipment to the United States will be required for covered goods that are described in Annex 1 - Covered Products. For Canadian implementation purposes, exporters will be required to provide the Canadian Customs Tariff (CCT) classification of the goods (first column in Annex 1 - Covered Products) in the application for export permits. See Annex 2 – Applying for an Export Permit.

9.0 Authority

9.1 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 12, 2006. As well, Export Permit Regulations (Softwood Lumber Agreement 2006) will be issued effective October 12, 2006.

10.0 Compliance and Enforcement

10.1 The exportation of goods listed in Annex 1 – Covered Products and as included on the Export Control List without an export permit issued by the Minister of International Trade is an offence and may lead to prosecution under the Export and Import Permits Act.

10.2 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).

11.0 Permit Fees

11.1 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.

11.2 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.

11.3 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:
Foreign Affairs and International Trade Canada
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

12.0 Further Information

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

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

Telephone: 613-944-2167
Facsimile: 613-944-1452
E-mail address: softwood.boisdoeuvre@international.gc.ca
Web Site: Softwood Lumber

12.2 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
Foreign Affairs and International Trade Canada
125 Sussex Drive
Ottawa, Ontario K1A 0G2

Telephone: 613-944-2168 or 1-877-808-8838 (Hot Line)
Facsimile: 613-995-5137
E-mail address: softwood.boisdoeuvre@international.gc.ca
Web Site: Softwood Lumber