Frequently asked questions – Softwood lumber

U.S. trade remedy proceedings

How do I access documents related to the softwood lumber investigations?

Information on the countervailing and anti-dumping duty investigations can be found on the U.S. International Trade Administration website. You must first register as a Guest User (listed as “Guest Registration” on the website) before being able to access information.Once you have signed up, you can search for documents by case number, as follows:

  • Anti-dumping duty investigation: A-122-857
  • Countervailing duty investigation: C-122-858

Information on the softwood lumber injury investigation can be found on the U.S. International Trade Commission’s website, listed under “Softwood Lumber from Canada”. In addition, registering with the U.S. International Trade Commission’s Electronic Document Information System (EDIS) will allow you to gain access to the various documents filed with them in relation to the softwood lumber injury case. Once your account is set up, a simple search for “softwood” or case number “701-TA-566” will display the public documents that have been filed in relation to the injury investigation.

What is a U.S. industry petition?

A U.S. industry petition is a request to the U.S. Department of Commerce to initiate a trade remedies investigation. The petition filed on November 25, 2016 outlines the U.S. industry’s specific allegations of subsidies and dumping regarding the Canadian softwood lumber industry and includes documentation supporting these allegations.In the petition filed by the U.S. lumber industry regarding softwood lumber products, the U.S. industry alleged that the Canadian federal and provincial governments provided countervailable subsidies to Canadian softwood lumber producers. It also alleged that Canadian firms are dumping lumber into the U.S. market, either by selling lumber products in the United States for less than they sell them in Canada, or by selling these products below the cost of production. Moreover, the U.S. industry claims that it has been injured and threatened with injury by this subsidization and dumping.

What are the U.S. subsidy allegations?

The main allegation made by U.S. industry is that provincial stumpage (i.e. the price charged to harvest timber from Crown lands) constitutes a countervailable subsidy.  The U.S. industry has also alleged that certain funding programs also provided countervailable subsidies to Canadian softwood lumber producers.  In the past, U.S. claims have always been found to be without basis. Canada believes this to once again be the case.During the last softwood lumber dispute, Canada successfully brought and won numerous challenges against the U.S. under the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) regarding U.S. duties on Canadian softwood lumber.

What is the U.S. trade remedies process?

The U.S. trade remedies process is the process by which U.S. companies seek protection from foreign imports that are allegedly causing injury to the U.S. domestic industry. This process is primarily administered by the U.S. Department of Commerce and U.S. International Trade Commission. Key milestones in the process include:

U.S. Industry Petition

  • The trade remedies process begins with the U.S. industry simultaneously filing petitions with the U.S. Department of Commerce and the U.S. International Trade Commission containing allegations that companies have been selling unfairly dumped and/or subsidized products into the United States in a manner that causes injury or threatens cause injury to the U.S. industry.

International Trade Commission - Preliminary Investigations

  • After the petition is filed, the U.S. International Trade Commission will begin a preliminary investigation to determine if the U.S. industry has been injured or threatened with injury by the allegedly dumped or subsidized goods.

Department of Commerce - Evaluation and Initiation

  • At the same time, the U.S. Department of Commerce will evaluate the petition and make a decision on whether to initiate anti-dumping and/or countervailing duty investigations. If it decides to do so, the Department of Commerce will then begin the investigation(s), which will include requesting detailed information from parties under investigation and conducting on-site verifications of information submitted in the context of the investigations.

International Trade Commission - Preliminary Determination

  • If the U.S. International Trade Commission, as a result of its investigation, makes a preliminary determination that the U.S. industry has been injured or threatened with injury, the U.S. Department of Commerce will continue its investigation(s).

Department of Commerce - Preliminary Determinations

  • Part way through its investigation(s), the U.S. Department of Commerce will make a preliminary determination regarding subsidy and/or dumping. Should the U.S. Department of Commerce find subsidies and/or dumping, preliminary duties will be placed on all goods covered by the investigation(s) entering the United States at that time.

Department of Commerce - Final Determination

  • Following the conclusion of the U.S. Department of Commerce investigation(s), it will make a final determination of subsidy and/or dumping.

International Trade Commission - Final Determination

  • The U.S. International Trade Commission will then make a final injury determination. If the U.S. International Trade Commission makes an affirmative final determination of injury or threat of injury and if the U.S. Department of Commerce finds subsidies and/or dumping in its final determination, the U.S. Department of Commerce will then impose final duties on all goods covered by the investigation(s). If the duty rates in the final determinations are lower than the preliminary rates, the difference will be refunded.
What is the status of Atlantic Canada in the investigations?

Historically, the Atlantic provinces have been exempted from U.S. countervailing duty investigations because the United States agreed that their timber pricing was market-based, due to both the ownership structure of forests, as well as provincial timber pricing practices. The Atlantic producers have in the past been subject to anti-dumping duties.The U.S. has included in the investigation allegations that New Brunswick stumpage (i.e. the price charged to cut timber from provincial Crown lands) constitutes a countervailable subsidy. Canada has requested that the U.S. exclude the Atlantic provinces from the countervailing duty investigation.

Will the investigations be conducted on an aggregate or company-specific basis?

The U.S. Department of Commerce has indicated that it will conduct the countervailing duty investigation on a company-specific basis, instead of taking an aggregate approach. Anti-dumping duty investigations are always conducted on a company-specific basis.In previous countervailing duty investigations, the U.S. Department of Commerce adopted an aggregate approach, which meant that the Government of Canada and implicated provinces were largely responsible for providing national and provincial statistics and information to the U.S. Department of Commerce for the purposes of their investigation.Company-specific investigations mean that the U.S. Department of Commerce selects specific companies to be investigated. These companies will be responsible for providing financial information to the U.S. Department of Commerce and undergoing an on-site verification of their operations and financial records. Should the U.S. Department of Commerce find dumping or countervailable subsidies, it will imposespecific duties on the investigated companies. These duties will then be used as the basis for calculating a weighted average duty rate which will be applied to all other exporters of Canadian softwood lumber products to the United States.

Which companies were selected to be investigated by the U.S. Department of Commerce?

For both the anti-dumping and countervailing duty investigations, the U.S. Department of Commerce selected West Fraser, Tolko, Canfor and Resolute Forest Products.All Canadian exporters of goods that are within the scope of the investigation have the right to submit voluntary responses to the various questionnaires issued by the U.S. Department of Commerce as part of its anti-dumping and countervailing duty investigations. That said, the U.S. Department of Commerce is under no obligation to agree to process voluntary responses. Because JD Irving chose to exercise its right to submit voluntary responses, and the U.S. Department of Commerce agreed to investigate alleged subsidization and dumping with respect to the company, JD Irving has received a company-specific duty rate.

Can companies that were not selected as respondents by the U.S. Department of Commerce still request company-specific rates?

If not selected as a mandatory respondent, Canadian exporters of softwood lumber products may choose to submit a voluntary response for consideration by the U.S. Department of Commerce. The U.S. Department of Commerce has sole discretion to determine if they will review any voluntary responses. The U.S. Department of Commerce has only agreed to consider voluntary responses in very limited circumstances. Should companies wish to submit a voluntary response, they may wish to retain U.S. counsel that specializes in trade remedy law prior to making their submission.Alternatively, Canadian exporters wishing to obtain duty rates that are specific to their company can request an expedited review by the U.S. Department of Commerce. It is important to note that this request can only be made following the conclusion of the current U.S. anti-dumping and countervailing duty investigations. Should companies choose this way forward, they may wish to retain U.S. counsel that specializes in trade remedy law.

What is the status of the company exclusion process?

The Government of Canada fully supports a company exclusion process that would allow companies to be excluded from the U.S. countervailing duty investigation. The Government of Canada has recently made representations to the U.S. Department of Commerce in support of a company exclusions process.Ultimately, the decision on whether to undertake a company exclusion process rests with the U.S. Department of Commerce. It is currently unclear whether it would agree to undertake such a process, and when a decision to this effect would be made.Until Commerce makes a final decision on this matter, GAC strongly encourages companies to visit Company Exclusions Process and to create a company profile in order to receive updates about this process in real time. Companies that have further questions about a potential company exclusions process may direct them to info@companyexclusions.ca or to 1-800-438-9092.

Can Canada appeal an unfavourable decision?

Final determinations of subsidy, dumping and injury can be reviewed under the World Trade Organization, and through the binding binational panel review process under Chapter 19 of the North American Free Trade Agreement.

Who is responsible for paying anti-dumping and countervailing duties that may be imposed by the United States?

The importer of record on the shipment to the United States is responsible for paying any duties imposed by the United States.If the U.S. Department of Commerce issues an affirmative preliminary determination, it will require importers to provide cash deposits on imports of certain softwood lumber products that are equivalent to the preliminary anti-dumping and countervailing duty rates.In most cases, Canadian exporters of softwood lumber products are also listed as the importer of record on shipments to the United States. Consequently, these Canadian exporters would be required to shoulder the cost of any U.S. duties placed on their goods.If the U.S. Department of Commerce issues affirmative final anti-dumping and countervailing duty orders, importers of record would be required to provide cash deposits at the final duty rates.

Scope of investigations

Will products previously excluded from the 2006 Canada-U.S. Softwood Lumber Agreement also be excluded in this investigation?

The scope of the investigations was defined by the U.S. Department of Commerce in its notice of initiation issued on December 15, 2016. Following this, Canada submitted comments to the U.S. Department of Commerce seeking clarification on the products considered to be within the defined scope and pressing for the specific exclusion of certain products.Exporters of products that were previously excluded from the 2006 SLA may still be excluded from this investigation, but there is no guarantee that this will be the case at this time. Ultimately, the decision rests with the U.S. Department of Commerce.Canada will continue engaging with the U.S. petitioner (Coalition) and with the U.S. Department of Commerce until such time as there is a preliminary determination to try to influence and clarify the scope of the investigations.

What products are targeted by the investigations (i.e. are in-scope)?

In its preliminary scope decision memorandum, dated June 23, 2017, the U.S. Department of Commerce modified the scope language of the Initiation Notice originally issued on December 15, 2016. This new scope took effect on June 30, 2017.  On November 2, 2017, the U.S. Department of Commerce issued its final scope language, which applies to both the anti-dumping and countervailing duty investigations.  It will take effect as of the date of publication of the U.S. Department Commerce’s final determination in the U.S. Federal Register.  The full final scope of the U.S. investigations now reads as follows:

The merchandise covered by this investigation is softwood lumber, siding, flooring and certain other coniferous wood (softwood lumber products). The scope includes:

  • Coniferous wood, sawn, or chipped lengthwise, sliced or peeled, whether or not planed, whether or not sanded, or whether or not finger-jointed, of an actual thickness exceeding six millimeters.
  • Coniferous wood siding, flooring, and other coniferous wood (other than moldings and dowel rods), including strips and friezes for parquet flooring, that is continuously shaped (including, but not limited to, tongued, grooved, rebated, chamfered, V-jointed, beaded, molded, rounded) along any of its edges, ends, or faces, whether or not planed, whether or not sanded, or whether or not end-jointed.
  • Coniferous drilled and notched lumber and angle cut lumber.
  • Coniferous lumber stacked on edge and fastened together with nails, whether or not with plywood sheathing.
  • Components or parts of semi-finished or unassembled finished products made from subject merchandise that would otherwise meet the definition of the scope above.

Finished products are not covered by the scope of this investigation. For the purposes of this scope, finished products contain, or are comprised of, subject merchandise and have undergone sufficient processing such that they can no longer be considered intermediate products, and such products can be readily differentiated from merchandise subject to this investigation at the time of importation. Such differentiation may, for example, be shown through marks of special adaptation as a particular product. The following products are illustrative of the type of merchandise that is considered “finished,” for the purpose of this scope: I-joists; assembled pallets; cutting boards; assembled picture frames; garage doors.

The following items are excluded from the scope of this investigation:

  • Softwood lumber products certified by the Atlantic Lumber Board as being first produced in the Provinces of Newfoundland and Labrador, Nova Scotia, or Prince Edward Island from logs harvested in Newfoundland and Labrador, Nova Scotia, or Prince Edward Island.
  • U.S.-origin lumber shipped to Canada for processing and imported into the United States if the processing occurring in Canada is limited to one or more of the following: (1) kiln drying; (2) planing to create smooth-to-size board; or (3) sanding.
  • Radius-cut box-spring-frame components, not exceeding 1” in actual thickness or 83” in length, ready for assembly without further processing. The radius cuts must be present on both ends of the boards and must be substantially cut so as to completely round one corner.
  • Box-spring frame kits if they contain the following wooden pieces – two side rails, two end (or top) rails and varying numbers of slats. The side rails and the end rails must be radius-cut at both ends. The kits must be individually packaged and must contain the exact number of wooden components needed to make a particular box spring frame, with no further processing required. None of the components exceeds 1” in actual thickness or 83” in length.

Softwood lumber product imports are generally entered under Chapter 44 of the Harmonized Tariff Schedule of the United States (“HTSUS”). This chapter of the HTSUS covers “Wood and articles of wood.” Softwood lumber products that are subject to this investigation are currently classifiable under the following ten-digit HTSUS subheadings in Chapter 44:

4407.10.01.01; 4407.10.01.02; 4407.10.01.15; 4407.10.01.16; 4407.10.01.17; 4407.10.01.18; 4407.10.01.19; 4407.10.01.20; 4407.10.01.42; 4407.10.01.43; 4407.10.01.44; 4407.10.01.45; 4407.10.01.46; 4407.10.01.47; 4407.10.01.48; 4407.10.01.49; 4407.10.01.52; 4407.10.01.53; 4407.10.01.54; 4407.10.01.55; 4407.10.01.56; 4407.10.01.57; 4407.10.01.58; 4407.10.01.59; 4407.10.01.64; 4407.10.01.65; 4407.10.01.66; 4407.10.01.67; 4407.10.01.68; 4407.10.01.69; 4407.10.01.74; 4407.10.01.75; 4407.10.01.76; 4407.10.01.77; 4407.10.01.82; 4407.10.01.83; 4407.10.01.92; 4407.10.01.93; 4409.10.05.00; 4409.10.10.20; 4409.10.10.40; 4409.10.10.60; 4409.10.10.80; 4409.10.20.00; 4409.10.90.20; 4409.10.90.40; and 4418.99.10.00.

Subject merchandise as described above might be identified on entry documentation as stringers, square cut box-spring-frame components, fence pickets, truss components, pallet components, flooring, and door and window frame parts. Items so identified might be entered under the following ten-digit HTSUS subheadings in Chapter 44:

4415.20.40.00; 4415.20.80.00; 4418.99.90.05; 4418.99.90.20; 4418.99.90.40; 4418.99.90.95; 4421.99.70.40; and 4421.99.97.80.

Although these HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of the investigation is dispositive.

When will the U.S. Department of Commerce make a final decision on the scope of the investigation?

The U.S. Department of Commerce released a preliminary scope decision memorandum on June 23, 2017, in which it modified the scope of its investigations and made certain preliminary scope determinations. The U.S. Department of Commerce also indicated that it is evaluating additional scope comments filed by interested parties. In this same memorandum, Commerce noted that it intends to issue final decisions regarding these comments in conjunction with the final determinations in the countervailing and anti-dumping duty determinations.

The U.S. Department of Commerce may also choose to make additional scope clarifications relating to previously filed requests as part of its final determinations.

For remanufacturers of softwood lumber, what value would any duties be applied to?

This is an important issue that Canada is carefully evaluating. The way duties should be calculated on remanufactured products has been an issue in prior softwood lumber investigations and the U.S. Department of Commerce has not always been consistent in its approach.In the third softwood lumber dispute (1991 – 1994), duties for remanufactured products were calculated based on the value of the lumber at the “first mill,” rather than based on the value of the finished products.  In the fourth softwood lumber dispute (2001 – 2006), Commerce rejected arguments that duties should be calculated based on “first mill” value. Under the 2006 Softwood Lumber Agreement, the parties agreed that any export charges would be calculated based on “first mill” value. Canada intends to present arguments to the U.S. Department of Commerce expressing that any duties on remanufactured products should be calculated on a “first mill” basis. The decision on whether to apply duties on this basis ultimately rests with the U.S. Department of Commerce.

If the raw material used to produce an in-scope product originates from outside of Canada, will the product automatically be excluded from the scope of the investigations and thus exempt from duties?

No. While it is possible that the U.S. Department of Commerce (Commerce) might agree to a scope exclusion based on the origin of the wood, the current scope definition from the U.S. Department of Commerce’s Notice of Initiation includes softwood lumber products from Canada and does not distinguish between products based on the source of the wood used to produce them. Furthermore, even though Petitioner’s allegations focus on stumpage (timber sourced from Crown lands), the U.S. Department of Commerce is also investigating “non-stumpage” programs that allegedly benefit producers of subject products, regardless of the source of their wood. Accordingly, producers should not assume that in-scope products made with raw material coming from outside Canada are automatically excluded from the scope of the investigations, and thus should not assume that such products are exempt from duties.

Anti-dumping and countervailing duty investigations

What does the countervailing duty investigation mean?

The U.S. Department of Commerce will investigate whether the Canadian federal and provincial governments are providing countervailable subsidies to Canadian softwood lumber producers. At the same time, the U.S. International Trade Commission will investigate whether the allegedly subsidized exports are causing or threatening to cause injury to U.S. lumber producers.Should the U.S. Department of Commerce find the existence of alleged subsidies, and if the U.S. International Trade Commission finds that these allegedly subsidized imports have either caused or are threatening to cause injury to the U.S. industry, countervailing duties could be imposed on certain Canadian softwood lumber products entering the United States.

What is a countervailing duty?

A countervailing duty is a duty imposed to counter the effects of subsidized imports from other countries. In this case, the U.S. lumber industry claims it has been injured by subsidized imports from Canada and is therefore seeking protection through the imposition of countervailing duties on certain Canadian softwood lumber products entering the United States.It should be noted that not all subsidies can be countervailed. For instance, subsidies that are generally available (i.e. that are not directed at a specific enterprise or industry) are not countervailable.

What does the anti-dumping investigation mean?

The U.S. Department of Commerce will investigate whether Canadian firms are dumping lumber into the U.S. market, essentially selling lumber products in the United States for less than they sell them in Canada, or selling these products below the cost of production. At the same time, the U.S. International Trade Commission will investigate whether the alleged dumped exports are causing injury or threaten to cause injury to U.S. lumber producers.Should the U.S. Department of Commerce find the existence of dumping, and if the U.S. International Trade Commission finds that these allegedly dumped importseither caused or arethreatening to cause injury to the U.S. industry, anti-dumping duties could be imposed on Canadian softwood lumber products entering the United States.

What is an anti-dumping duty?

Dumping is the sale of goods in foreign markets at prices below those charged for comparable sales in the home market, or below the cost of producing the goods.An anti-dumping duty is a duty to counteract the injury caused by dumped imports from other countries. In this case, the U.S. lumber industry claims it has been injured and is therefore seeking protection through the imposition of anti-dumping duties on certain Canadian softwood lumber products entering the United States.

Will all companies have to pay anti-dumping and countervailing duties or only those companies that are specifically investigated by the U.S?

The dumping and subsidy allegations were made against all imports of softwood lumber products from Canada. As such, all softwood lumber products that fall within the scope of these investigations will be subject to U.S. duties.The U.S. Department of Commerce has selected four specific Canadian producers to serve as a sample for investigation purposes in both the anti-dumping and the countervailing duty cases. Should Commerce make positive determinations, those companies will receive company-specific anti-dumping and countervailing margins. Companies that are not directly investigated would be subject to a weighted average “all-others” rate.

Injury investigation

What is an injury investigation?

When an interested party files a petition alleging dumping and/or subsidies with the U.S. Department of Commerce, it must also file the same petition with the U.S. International Trade Commission, which will evaluate whether the U.S. industry has been injured or threatened by injury due to the allegedly dumped or subsidized imports.Injury investigations conducted by the U.S. International Trade Commission run in parallel with the U.S. Department of Commerce’s anti-dumping and/or countervailing duty investigations.An affirmative determination by the U.S. International Trade Commission of either injury or threat of injury to a domestic industry is necessary for the U.S. Department of Commerce to impose anti-dumping and/or countervailing duties. Accordingly, if the U.S. International Trade Commission determines that there has been no injury and that there is no threat of injury to its domestic industry, duties cannot be imposed.

What is the significance of the U.S. International Trade Commission’s preliminary finding of material injury?

On January 13, 2017, the U.S. International Trade Commission issued a preliminary finding that there is a reasonable indication that the U.S. domestic industry is materially injured by reason of imports of softwood lumber products from Canada.This preliminary finding means that the U.S. International Trade Commission will begin the final phase of its injury investigation and that the U.S. Department of Commerce will continue its anti-dumping and countervailing duty investigations.In its final determination, ifthe U.S. International Trade Commission has found “material injury”, any preliminary duties paid will be retained by the United States. If final duties are lower than preliminary duties, the difference will be refunded. If, instead, the U.S. International Trade Commission makes a final determination of “threat of injury”, this would result in all preliminary duties paid being fully refunded. 

Timelines

When can a duty be applied?

Should the U.S. Department of Commerce issue affirmative preliminary determinations in the dumping and/or subsidy investigations, duties will come into effect as of the date these preliminary determinations are published in the U.S. Federal Register. The U.S. Department of Commerce has set a deadline of April 24, 2017 by which to make its preliminary countervailing duty determination. It has recently noted that this decision would be made public on April 25, 2017. In addition, the U.S. Department of Commerce has set a deadline of June 23rd, 2017 by which to make its preliminary anti-dumping duty determination. Such decisions are usually published in the U.S. Federal Register one week following the issuance of the decision.Preliminary duty rates could be imposed retroactively on shipments up-to 90 days prior to the preliminary determinations if the U.S. Department of Commerce makes a critical circumstances determination. This could occur if the U.S. Department of Commerce identifies export subsidies and a surge of importations (known as “massive importations”) of Canadian softwood lumber products into the United States.Final duty rates would be set once the U.S. Department of Commerce publishes its orders following affirmative final determinations by both the U.S. Department of Commerce and U.S. International Trade Commission. This could be expected to occur towards the end of 2017 or beginning of 2018. If the final duty rates are lower than the preliminary duty rates, the difference will be refunded following the conclusion of the first Administrative Review process.

When is the U.S. Department of Commerce expected to make a determination on whether duties will be applied retroactively (i.e. critical circumstances)? 

The U.S. Department of Commerce has the authority to make its critical circumstances determination at any time, but typically makes its decision at the same time as the preliminary determination.Should the U.S. Department of Commerce find Critical Circumstances, they can apply duties retroactively up-to 90 days prior to the publication of their Preliminary Determination in the U.S. Federal Register.

If Commerce makes a critical circumstances determination, when will importers of record need to pay retroactive duties?

If the U.S. Department of Commerce makes preliminary affirmative findings of critical circumstances prior to or as part of its preliminary determinations in the countervailing or anti-dumping duty investigations, it is likely that U.S. Customs and Border Protection’s notices of action requesting retroactive duties would be sent out within a month or two after those preliminary determinations are issued. There are no set payment terms for deposits to cover retroactive duties. Amounts become owed upon receipt of a bill for retroactive duties, at which time interest may begin to accrue.

Expedited review

What is an expedited review?

An expedited review is a process by which companies can obtain a company-specific countervailing duty cash deposit rate, as opposed to the final “all-others” rate in the initial U.S. Department of Commerce investigation.

The expedited review determines whether a company received countervailable subsidies by undergoing essentially the same process as completed in the initial company-specific U.S. Department of Commerce countervailing duty investigation.

While it is possible for a company to represent itself, these cases are often very complex and familiarity with U.S. countervailing duty law and U.S. Department of Commerce procedures is important. It is the strong recommendation of the Government of Canada that companies should seek legal advice to determine if proceeding with an expedited review is in their best interests and that companies who choose to request an expedited review retain U.S. counsel, specifically, counsel that specializes in U.S. trade law.

What are the eligibility criteria for an expedited review?

Under the current U.S. regulations, in a company-specific countervailing duty case, the U.S. Department of Commerce is required to undertake expedited reviews for any eligible company that requests a review.

The current U.S. regulations outline the following two conditions which companies must meet to be eligible to apply for an expedited review:

  1. Companies cannot be affiliated (as defined under U.S. law), with any mandatory or voluntary respondents (i.e.: West Fraser, Canfor, Tolko, Resolute and J.D. Irving).
  2. Companies must have exported softwood lumber products that fall within the scope of the U.S. investigations to the United States within the period of time that the expedited review will investigate. In this case, that would be calendar year 2015.

Note that the U.S. Department of Commerce requires that all documentation be presented in English. The cost of any translation is entirely the responsibility of the company, and it is up to the company to review and sign off on the final translated version prior to submission.

What is the deadline to request an expedited review and how do I apply?

Under the current U.S. regulations, companies must submit a request to the U.S. Department of Commerce within 30 calendar days of the date of publication in the U.S. Federal Register of any final countervailing duty order.

Each company must send a letter to the U.S. Department of Commerce through the U.S. International Trade Administration website (ACCESS). This request can either be submitted by the company directly or through its legal counsel.

In order to file anything directly on ACCESS, parties must register and be approved to e-file documents on ACCESS.  The approval process can take several days to complete.

The expedited review request must also be accompanied by a certification that the requesting company:

  1. Exported softwood lumber to the United States during the period of investigation;
  2. Is not affiliated with any of the four mandatory respondents or the voluntary respondent examined in the original investigation; and,
  3. Has informed the Government of Canada that the Government of Canada will be required to provide a full response to the U.S. Department of Commerce’s questionnaire.

Companies requesting an expedited review are obligated to advise the Government of Canada. This notification can be sent to Global Affairs Canada at the following email address: softwood.boisdoeuvre@international.gc.ca 

This notification must clarify in which provinces and territories your company had operations from January 1, 2006 to December 31, 2015. This will allow the federal government to notify the relevant provincial and territorial governments to collect and submit the required information to the U.S. Department of Commerce in the expedited review on your company’s program usage in subsequent U.S. questionnaires.

How long does an expedited review take?

Current U.S. regulations contemplate that an expedited review will be completed either within 270 days or 450 days, depending on whether it is “extraordinarily complicated”. However, in the last softwood lumber dispute, many of the requested expedited reviews were not completed until almost two years after publication of the countervailing duty order, and expedited reviews were not completed at all for a number of companies. Companies will continue to pay the final “all-others” countervailing duty rate until the U.S. Department of Commerce issues a final decision in the expedited review.

What are the possible results of an expedited review?

The U.S. Department of Commerce will issue preliminary results which outline their preliminary countervailing duty rates for each company undergoing an expedited review. These preliminary results, however, do not change the duty rates being paid by companies undergoing expedited review. The countervailing duty rate applied to the company in question will not change until following the final results in the expedited review are issued.

If a company demonstrates, and the U.S. Department of Commerce verifies, that the company received either zero or de minimis subsidies (i.e. a subsidy rate of less than 1%) attributed to sales in the 2015 calendar year, that company would be excluded from the final countervailing duty order, including future administrative reviews conducted by the U.S. Department of Commerce. In this situation, the company would no longer be subject to any countervailing duties as of the date of publication of the final results of the expedited review in the U.S. Federal Register. This company would also have any cash deposits made to that point refunded to them.

If the U.S. Department of Commerce determines that a company has received subsidies above the de minimis threshold (i.e.: a subsidy rate of 1% or higher), the U.S. Department of Commerce will determine a company-specific countervailing duty rate for that company. This company-specific rate will take effect on a going-forward basis, as of the date of publication in the U.S. Federal Register. The U.S. Department of Commerce in the past has not applied the final expedited review rates that are above de minimis retroactively. It is important to note that company-specific rates can be lower or higher than the final “all others” countervailing duty rate.

Under the Department of Commerce’s current procedures, duty deposit rates established in an investigation can be altered at the conclusion of the First Administrative Review. The First Administrative Review begins one year following the publication of the countervailing duty order and takes approximately 12 to 18 months to complete.

There are no past examples as to how the final results from an expedited review would be impacted by the final results of an Administrative Review in a company-specific countervailing duty case. It is therefore unclear whether the U.S. Department of Commerce will replace the expedited review rates with the countervailing duty rates from the first administrative review. 

The Government of Canada strongly recommends that companies seek legal advice to understand how decisions in the First Administrative Review may impact the rates set in the final results of the expedited reviews.

What type of information will my company have to provide in an expedited review?

Companies will have to respond to any number of U.S. Department of Commerce questionnaires about the specific practices of their companies.

These questionnaires seek information in order to determine a subsidy rate for calendar year 2015. This will involve providing information, including detailed financial information, for the period of January 1, 2006 to December 31, 2015, as subsidies received during this 10-year period can be attributed to calendar year 2015 in certain instances. This information will be required for your company, including any affiliated companies, as defined under U.S. law.

Questionnaires also ask companies to provide information about specific federal and provincial stumpage and “non-stumpage” programs. These will be the same stumpage and “non-stumpage” programs that were investigated in the initial countervailing duty investigation; however, the questionnaires could also include additional programs that were not part of the original investigation.   The U.S. Department of Commerce has a practice of asking companies whether they have received “any other assistance” from either the federal, provincial or municipal governments, in addition to the specific non-stumpage programs being investigated. It is important to note that the U.S. Department of Commerce has not provided clear guidance on their definition of what constitutes “assistance”. As such, this question requires companies to closely review their books and records to identify all assistance that the company received for the period 2006 to 2015 and work in close collaboration with legal counsel to determine how to respond to this question. In addition, coordination with federal and relevant provincial governments will be required, as these governments will also be answering this question regarding each company. The consequences of failing to provide a complete and accurate response to this question can be severe.

Each company will potentially be subject to an on-site verification by the U.S. Department of Commerce. This verification will take place at the company to verify that all information provided to the U.S. Department of Commerce throughout the expedited review process is accurate and complete. The U.S. Department of Commerce requires that these verifications be conducted in English and may request that certain documents be provided to them during verification, which may involve additional translation costs. The Department of Commerce, however, may in certain instances provide an interpreter at the Department’s expense.

My company did not harvest logs directly from provincial, territorial or federal lands and did not have Crown tenure in 2006 to 2015. Will my company-specific rate therefore be zero or de minimis?

Not necessarily. If your company, including any affiliated companies, did not directly harvest logs from provincial, territorial or federal lands, this does not guarantee that the expedited review will result in your company receiving a rate of zero or de minimis.

The U.S. Department of Commerce will undertake their investigations and determine the calculations for both stumpage and “non-stumpage” programs, associated with the 2015 sales for your company, including any affiliated companies. Stumpage is only one element of this calculation.

In expedited reviews following the last softwood lumber investigation, the U.S. Department of Commerce determined that companies that did not harvest logs directly or have Crown tenure nevertheless received some stumpage benefits. It is not clear whether the U.S. Department of Commerce will undertake the same calculations in future expedited reviews.

What is the role of the federal, provincial and territorial governments?

Following formal notification from each company that requests an expedited review, the Government of Canada is responsible for advising the relevant provincial and territorial governments of any company that has applied for an expedited review, which had operations in their province or territory during calendar years 2006 to 2015 (January 1, 2006 to December 31, 2015).

The Government of Canada, as well as each province and territory in which companies undergoing an expedited review had operations during calendar years 2006 to 2015, will be required to respond to a questionnaire regarding assistance provided to each of these companies, even if those companies no longer have operations in these provinces and territories.

Federal, provincial and territorial questionnaire responses will essentially confirm two things: 

  • the volume and value of federal, provincial and territorial stumpage acquired during calendar year 2015; and,
  • the amount, if any, of funding provided under any federal or provincial “non-stumpage” programs being investigated in an expedited review during the period from 2006 to 2015. It is important to note that the U.S. Department of Commerce may seek information about additional non-stumpage programs that were not part of the original investigation.

Companies requesting an expedited review are obligated to advise the Government of Canada prior to submitting their request for review to the U.S. Department of Commerce. This notification can be sent to Global Affairs Canada at the following email address: softwood.boisdoeuvre@international.gc.ca.

This notification must clarify in which provinces and territories your company had operations from January 1, 2006 to December 31, 2015. This will allow the federal government to notify the relevant provincial and territorial governments to collect and submit the required information to the U.S. Department of Commerce in the expedited review on your company’s program usage in subsequent U.S. questionnaires.

Can my company represent itself in an expedited review? Should my company retain legal counsel?

While it is possible for a company to represent itself, these cases are often very complex and familiarity with U.S. countervailing duty law and U.S. Department of Commerce procedures is important. It is the strong recommendation from the Government of Canada that companies should seek legal advice to determine if proceeding with an expedited review is in their best interests and that companies who choose to request an expedited review retain U.S. counsel; specifically, counsel that specializes in U.S. trade law.