Notice to Exporters

Softwood Lumber Exports to the United States: Excluded Companies

Serial No. 150
Date: January 18, 2007

Table of Contents

1.0 Background

1.1 The Canada-U.S. Softwood Lumber Agreement 2006 (the Agreement) makes provision for the exclusion of exports by 32 companies from the imposition of the export measures, subject to certain requirements under the Softwood Lumber Products Export Charge Act, 2006 (SLPECA). Thus, s. 16(1) of the SLPECA provides that certain softwood lumber exports by a persons named in the Schedule to the Act are exempt from the export charge, provided the person satisfies the prescribed conditions. Conditions are prescribed in the Conditions for Exempted Persons Regulations.

2.0 Purpose

2.1 The purpose of this Notice is to advise exporters of the policies that apply to exports to the United States of softwood lumber products that are first manufactured or remanufactured by the excluded companies.

3.0 Exclusion from the Export Measure

3.1 Softwood lumber products that are either first manufactured or remanufactured by the excluded companies and exported to the United States are excluded from the export charge. The exclusion from the export charge is limited without reduction to an annual export volume that is derived for each excluded company from a Base Average Monthly Production. (See section 4.0 Calculation of the Base Average Monthly Production for a description of this calculation)

3.2 The exclusion from the export charge is subject to the reduction provisions described in Section 7.0 of this Notice, Continued Exclusion from the Export Measure.

3.3 Exporters of softwood lumber products first manufactured or remanufactured by these companies must obtain export permits for all exports to the United States.

4.0 Calculation of the Base Average Monthly Production

4.1 An excluded company's Base Average Monthly Production will be calculated and used in determining a company's annual export limit. A Base Average Monthly Production shall be established for each company by dividing its total production of softwood lumber products in 2004 and 2005, as provided by the provincial governments, by 24. The Export and Import Controls Bureau (EICB) will advise each company of its Base Average Monthly Production amount. A company's Base Average Monthly Production amount will remain fixed throughout the Agreement, unless the reductions as described in Section 7.0 of this Notice are applied.

4.2 For 9157-9516 Québec inc. (Scierie Nord-Sud inc.), a Base Average Monthly Production shall be established by dividing the company's total production of Softwood Lumber Products for 2002 and 2003 by 24.

4.3 Each excluded company's Annual Export Limit shall be that company's Base Average Monthly Production multiplied by the number of months in that Year that the Prevailing Monthly Price was not more than US$355/MBF. At the end of each year, the EICB will determine each company's compliance with Section 6.0 of this Notice.

4.4 The Softwood Lumber Products Export Charge Act 2006, received Royal Assent on December 14, 2006 with effect from October 12, 2006. As stated in Section 4.1, a Base Average Monthly Production amount will be established for each company. The October 2006 Base Average Monthly Production amount for each company was reduced to 64.52% reflecting the 20 days in October that the Act is in force.

4.5 Excluded companies will be advised individually by EICB of their Base Average Monthly Production amount.

5.0 Exports by Excluded Companies

5.1 An application for an export permit must declare the excluded company as the mill of origin. The application must provide the excluded company's Canada Revenue Agency Business Number that designates the mill of origin as an excluded company as identified in the Export and Import Controls System (EICS).

5.2 In the case of remanufactured lumber, the excluded company is required to identify the mill of origin of the input lumber in a comment box in the export permit application

5.3 The excluded company's annual export limit includes exports authorized pursuant to permits issued to the excluded company.

5.4 The date of an export by an excluded company is the date of export established in section 5 of the Softwood Lumber Products Export Charge Act, 2006.

6.0 Exports by Wholesalers

6.1 Softwood lumber products first manufactured or remanufactured by the excluded companies may be exported to the United States by a wholesaler, as long as the lumber product was not further processed by a non-excluded company prior to export.

6.2 Wholesalers can obtain permits for exports by using their unique EICB wholesaler account number and an application for an export permit must declare the excluded company as the mill of origin. The application must provide the excluded company's Canada Revenue Agency Business Number that designates the mill of origin as an excluded company as identified in the Export and Import Controls System (EICS).

6.3 The excluded company's annual export limit includes exports authorized pursuant to permits issued to wholesalers even though the product was not exported by the excluded company.

6.4 The date of an export by a wholesaler is the date of export established in section 5 of the Softwood Lumber Products Export Charge Act, 2006.

7.0 Continued Exclusion from the Export Measure

7.1 Each excluded company's annual export limit shall be that company's base average monthly production multiplied by the number of months in that Year that the Prevailing Monthly Price was not more than $US355/MBF.

7.2 An excluded company's actual exports, including exports by wholesalers of the excluded company's softwood lumber products, shall be determined at the end of the Year by summing the company's actual exports during the months when the Prevailing Monthly Price was not more than $US355/MBF.

7.3 If, in any Year, an excluded company's actual exports do not exceed its annual export limit, the company shall not be subject to a volume reduction in the following Year.

7.4 If, in any Year, an excluded company's actual exports exceed its annual export limit by 0.5% or less, the company shall not be subject to a volume reduction in the following Year, and such excess exports shall be disregarded in determining whether the company has exceeded its annual export limit.

7.5 If, in any Year, an excluded company's actual exports exceed its annual export limit by more than 0.5% of its annual export limit, the excluded company's limit for the following Year shall be reduced by the amount of the excess.

7.6 If, in any subsequent Year (whether or not consecutive), the excluded company again exceeds its annual export limit by more than 0.5% of its annual export limit, the excluded company's limit for the following Year shall be reduced by twice the amount of the excess.

7.7 If, in any subsequent Year (whether or not consecutive), the excluded company again exceeds its annual export limit by more than 0.5% of its annual export limit, the excluded company's limit for the following Year shall be reduced by three times the amount of the excess.

7.8 Finally, in any subsequent Year (whether or not consecutive), the excluded company again exceeds its annual export limit by more than 0.5% of its annual export limit, the Softwood Lumber Products that the company produces shall no longer be excluded from the Export Measures in the following year.

8.0 Example of the Calculation of the Base Average Monthly Production amount and the Annual Export Limit

8.1 Example 1 - January 2007 to December 2007

December 2006 - If an excluded company's total production of softwood lumber products in 2004 was 1,100 bfm and in 2005 was 1,300 bfm the calculation of the Base Average Monthly Production amount would be as follows:

(1,100+1,300)/24=100 bfm

January 2008 - There were 10 months of the previous Year that the Prevailing Monthly Price was not more than US$355/MBF, then the company's Annual Export Limit would be as follows:

(100 * 10 ) = 1,000 bfm

8.2 Example 2 - Transition Period October 12, 2006 to December 31, 2006

October 12, 2006 - If an excluded company's total production of softwood lumber products in 2004 was 1,100 bfm and in 2005 was 1,300 bfm the calculation of the Base Average Monthly Production amount would be as follows:

(1,100+1,300)/24=100 bfm

January 2007 - There were 3 months of the previous Year that the Prevailing Monthly Price was not more than US$355, then the company's Annual Export Limit would be as follows:

(100 * 64.52%) + (100 * 2) = 265 bfm

9.0 Further Information

9.1 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

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

9.2 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

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