Notices

Softwood Lumber Exports to the United States: 2010 Export Allocation Methodologies

Serial No. 167
Date: December 2, 2009

Table of Contents

• 1.0 Background
• 2.0 Purpose
• 3.0 Coverage
• 4.0 Duration
• 5.0 Quebec
• 6.0 Ontario
• 7.0 Manitoba
• 8.0 Saskatchewan
• 9.0 Border Measure Option - Election by Regions 2010
• 10.0 Further Information

1.0 Background

The Softwood Lumber Agreement 2006 between the Government of Canada and the Government of the United States of America (the Softwood Lumber Agreement) requires Canada to limit export quantities from Option B Regions (Quebec, Ontario, Manitoba and Saskatchewan). To implement this and other requirements, Canada has enacted the Softwood Lumber Products Export Charge Act, 2006 (SLPECA), including amendments of the Export and Import Permits Act (EIPA). The EIPA authorizes the Minister of Foreign Affairs to determine the “Regional Quota Volume” (RQV) for Option B Regions, and to establish a method for allocating the RQV to eligible applicants. A Ministerial Order specifies the method for eligibility for allocation to exporters in the Option B Regions.

Under the Softwood Lumber Agreement, each Region had the opportunity, for exports beginning on January 1, 2010, to elect between two border measures: Option A, an export charge; or Option B, lower export charges but with volume restraints. Choices were communicated to the Government of Canada by the provincial governments. For the period beginning in January 2010, Quebec, Ontario, Manitoba and Saskatchewan elected Option B. As a result, Softwood Lumber Products first manufactured in those provinces and exported to the United States are subject to an export allocation regime during 2010.

Export allocations may be issued to eligible applicants. Export allocation eligibility criteria have been established after consultation with the respective provinces.

2.0 Purpose

This Notice to Exporters is to inform exporters of the Minister’s decision respecting the allocation methodology and provide the eligibility criteria for export allocations of certain Softwood Lumber products first manufactured in Quebec, Ontario, Manitoba and Saskatchewan and exported to the United States in 2010. 

The Allocation Method Order (2010) – Softwood Lumber Products, (AMO), takes effect on January 1, 2010 and establishes the export allocation eligibility criteria for 2010. The AMO is authoritative and it is intended that the present Notice to Exporters will assist exporters by describing elements of the AMO.

An export allocation may be used for obtaining a permit to export certain softwood lumber products (first manufactured in Quebec, Ontario, Manitoba and Saskatchewan) to the United States.

3.0 Coverage

This Notice cancels and replaces Notice to Exporters SER-161 of December 31, 2008. It refers to those softwood lumber products included in Export Control List item 5104 as part of the Softwood Lumber Agreement 2006 implementation. 

Only companies that have provided a signed application and are registered under SLPECA s.23 may be eligible for an export allocation. 

4.0 Duration

This Notice will remain in effect until December 31, 2010. 

5.0 Quebec

5.1 Definitions

“Export Allocation” means an allocation issued under paragraph 6.3(3)(b) of the Export and Import Permits Act (EIPA).

“Force Majeure” means a situation in which lumber production is not possible due to a fire, strike, the inability to access log or lumber supply or other condition beyond the control of the company.

“Historic Pool” means the portion of the RQV that is available to Primary Producers with export history that elect to receive an allocation from the Historic Pool.

“Primary Producer” means a person who produces softwood lumber products from softwood sawlogs and, in the case of Quebec, includes a person who produced Quebec softwood lumber products from softwood sawlogs.

“Reference Period” means November 1, 2006 to October 31, 2009.

“Regional Quota Volume” or “RQV” means the quantity of softwood lumber products that may be exported during a month as determined by the Minister under subsection 6.3(2) of the EIPA, and consistent with the softwood lumber agreement; in particular 4.86% of monthly expected U.S. consumption multiplied by a price adjustment factor (when the framing lumber composite (FLC) average monthly price is at $US336 or over, the factor is 1; when the FLC average monthly price is at $US316-335, the factor is 32/34; when the FLC average monthly price is at US$315 or under, the factor is 30/34).

“Remanufacturer” means a person who remanufactures softwood lumber products, within the meaning of subsection 13(1) of the Softwood Lumber Products Export Charge Act, 2006.

“Reserve Pool” means the portion of the RQV that is available to Quebec Primary Producers, with or without export history, that elect to receive an allocation from the Reserve Pool.

“Softwood Lumber Products” means the softwood lumber products first manufactured in Quebec that are included in Export Control List, item 5104. 

5.2 Export Allocation Methodology

1. The RQV is allocated for each of the twelve months in a year to eligible Primary Producers and Remanufacturers of Softwood Lumber Products.

2. Subject to paragraphs 5.2.15 to 5.2.17 the following paragraphs outline the steps for determining eligibility for export allocation.

3. Primary Producers and Remanufacturers that exported Softwood Lumber Products to the United States during the Reference Period may apply for an allocation. Primary Producers request an export allocation from the Historic Pool or from the Reserve Pool. Remanufacturers may receive an export allocation only from the Historic Pool.

4. Primary Producers that did not export Softwood Lumber Products to the United States during the Reference Period are only eligible for an export allocation from the Reserve Pool. The Government of Quebec will provide DFAIT with the Reserve Pool participants’ production volume history.

5. Firstly, the volume of exports during the Reference Period for each eligible applicant is calculated and expressed as the individual applicant’s share.

6. Secondly, the portion of the Quebec RQV that is to be allocated to Remanufacturers is determined based on individual shares calculated in section 5.2.5. An individual Remanufacturer’s share is calculated by multiplying this result with the RQV.

7. Thirdly, calculate the Historic Pool, as follows:

• Divide the sum of all primary producers’ exports calculated in section 5.2.5 by the sum of ALL applicants’ exports; and
• Multiply this result by 96% to establish the Historic Pool.

8. Fourthly, determine the Historic Pool share that is to be allocated to individual Primary Producers by: dividing the individual company’s export volume during the Reference Period by the total export volume of Historic Pool participants multiplied by the total Historic Pool portion of the RQV.

9. Fifthly, calculate an individual primary producers’ allocation by multiplying their share of the Historic Pool by the RQV. Any unallocated quantity remaining in the Reserve Pool will be allocated to Historic Pool participants. 

10. Sixthly, calculate the Reserve Pool, as follows:

• Divide the sum of all primary producers’ exports calculated in section 5.2.5 by the sum of all applicants’ exports; and
• Multiply this result by 4% to establish the Reserve Pool.

11. Seventhly, determine the Reserve Pool share that is to be allocated to individual Primary Producers, by dividing the individual company’s production volume during the period January 1, 2006 to December 31, 2008, by the total production volume of Reserve Pool participants during the period January 1, 2006 to December 31, 2008 multiplied by the total Reserve Pool portion of the RQV.

12. Finally, calculate an individual primary producer’s allocation by multiplying their share of the Reserve Pool by the RQV.

13. For Reserve Pool participants, the volume allocated to an individual applicant will not exceed 40% of the applicant’s average monthly lumber production during the period January 1, 2006 and December 31, 2008. The residual volume will be allocated to Primary Producer participants in the Historic Pool.

14. Reserve Pool applicants that do not achieve 50% utilization of their export allocations during 2010, generally entailing exports to the United States and transfers with lumber, will not be entitled to export allocations from the Reserve Pool in future years.

15. Export allocations will be subject to adjustments for errors, corrections and omissions.

16. Holders of export allocations may carry-forward and/or carry-back up to 12% of their monthly export allocation.

17. When a force majeure situation prevents an allocation holder from exporting Softwood Lumber Products during a specified period, the allocation holder should inform the Export and Import Controls Bureau (EICB) as soon as possible.

6.0 Ontario

6.1 Definitions

“Base Pool” means RQV for 2010 that is allocated to eligible Primary Producers and Remanufacturers.

“Export Allocation” means an allocation issued under paragraph 6.3(3b) of the Export and Import Permits Act (EIPA).

“Force Majeure” means a situation in which lumber production is not possible due to a fire, strike, the inability to access log or lumber supply or other conditions beyond the control of the company.

“Primary Producer” means a person who produces softwood lumber products from softwood sawlogs.

“Reference Period” means November 1, 2006 through October 31, 2009.

“Regional Quota Volume” or “RQV” means the quantity of Softwood Lumber Products that may be exported during a month as determined by the Minister under subsection 6.3(2) of the EIPA, and consistent with the softwood lumber agreement. In particular, 3.34% of monthly expected U.S. consumption multiplied by a price adjustment factor (when the framing lumber composite (FLC) average monthly price is at $US336 or over, the factor is 1; when the FLC average monthly price is at $US316-335, the factor is 32/34; when the FLC average monthly price is at US$315 or under, the factor is 30/34).

“Remanufacturer” means a person who remanufactures softwood lumber products, within the meaning of subsection 13(1) of the Softwood Lumber Products Export Charge Act, 2006.

“Softwood Lumber Products” means the softwood lumber products first manufactured in Ontario that are included in the Export Control List, item 5104.

6.2 Export Allocation Methodology

1. The RQV is allocated for each of the twelve months in a year to Primary Producers and Remanufacturers of Softwood Lumber Products.

2. Subject to paragraphs 6.2.7 to 6.2.9 the following paragraphs outline the steps for determining eligibility for export allocation.

3. Firstly, calculate the total volume of exports of Softwood Lumber Products during the Reference Period by Primary Producers and Remanufacturers.

4. Secondly, express each individual eligible Primary Producer and Remanufacturers total exports during the reference period as a percentage of the total exports calculated in paragraph 6.2.3.

5. Finally, the Base Pool RQV is allocated to eligible Primary Producers and Remanufacturers based on each individual shares calculated in paragraph 6.2.4.

6. In the future, a Temporary Pool may be established.

7. Export allocations will be subject to adjustments for errors, corrections, and omissions.

8. Holders of export allocations may carry-forward and/or carry-back up to 12% of their monthly export allocation.

9. When a force majeure situation prevents an allocation holder from exporting Softwood Lumber Products during a specified period, the allocation holder should inform the Export and Import Controls Bureau (EICB) as soon as possible.

7. MANITOBA

7.1 Definitions

“Export Allocation” means an allocation issued under paragraph 6.3(3)(b) of the Export and Import Permits Act (EIPA).

“Force Majeure” means a situation in which lumber production is not possible due to a fire, strike, the inability to access log or lumber supply or other conditions beyond the control of the company.

“Primary Producer” means a person who produces current softwood lumber products from softwood sawlogs.

“Reference Period” means November 1, 2006 through October 31, 2009.

“Regional Quota Volume” or “RQV” means the quantity of Softwood Lumber Products that may be exported during a month as determined by the Minister under subsection 6.3(2) of the EIPA, and consistent with softwood lumber agreement. In particular, 0.31% of monthly expected U.S. consumption multiplied by a price adjustment factor (when the framing lumber composite (FLC) average monthly price is at $US336 or over, the factor is 1; when the FLC average monthly price is at $US316-335, the factor is 32/34; when the FLC average monthly price is at US$315 or under, the factor is 30/34).

“Remanufacturer” means a person who remanufactures softwood lumber products, within the meaning of subsection 13(1) of the Softwood Lumber Products Export Charge Act, 2006.

“Softwood Lumber Products” means the softwood lumber products first manufactured in Manitoba that are included in the Export Control List, item 5104.

7.2 Export Allocation Methodology

1. The RQV is allocated for each of the twelve months in a year to Primary Producers and Remanufacturers of Softwood Lumber Products.

2. Subject to paragraphs 7.2.6 to 7.2.8 the following paragraphs outline the steps for determining eligibility for export allocation.

3. Firstly, calculate the total volume of exports of Softwood Lumber Products during the Reference Period by Primary Producers and Remanufacturers.
4. Secondly, express each individual eligible Primary Producer and Remanufacturers total exports during the reference period as a percentage of the total exports calculated in paragraph 7.2.3.
5. Finally, the Base Pool RQV is allocated to all eligible Primary Producers and Remanufacturers based on each individual shares calculated in paragraph 7.2.4.

6. Export allocations will be subject to adjustments for errors, corrections, and omissions.

7. Holders of export allocations may carry-forward and/or carry-back up to 12% of their monthly export allocation.

8. When a force majeure situation prevents an allocation holder from exporting Softwood Lumber Products during a specified period, the allocation holder should inform the Export and Import Controls Bureau (EICB) as soon as possible.

8.SASKATCHEWAN

8.1 Definitions

“Base Pool” means RQV for 2010 that is allocated to eligible Primary Producers and Remanufacturers.

“Export Allocation” means an allocation issued under paragraph 6.3(3)(b) of the Export and Import Permits Act (EIPA)

“Force Majeure” means a situation in which lumber production is not possible due to a fire, strike, the inability to access log or lumber supply or other conditions beyond the control of the company.

“Primary Producer” means a person who produces current softwood lumber products from softwood sawlogs.

“Reference Period” means November 1, 2006 through October 31, 2009.

“Regional Quota Volume” or “RQV” means the quantity of Softwood Lumber Products that may be exported during a month as determined by the Minister under subsection 6.3(2) of the EIPA, and consistent with softwood lumber agreement. In particular, 0.46% of monthly expected U.S. consumption multiplied by a price adjustment factor (when the framing lumber composite (FLC) average monthly price is at $US336 or over, the factor is 1; when the FLC average monthly price is at $US316-335, the factor is 32/34; when the FLC average monthly price is at US$315 or under, the factor is 30/34).

“Remanufacturer” means a person who remanufactures softwood lumber products, within the meaning of subsection 13(1) of the Softwood Lumber Products Export Charge Act, 2006.

“Softwood Lumber Products” means the softwood lumber products first manufactured in Saskatchewan that are included in the Export Control List, item 5104.

8.2 Export Allocation Methodology

1. Subject to paragraphs 8.2.6 to 8.2.9 the following paragraphs outline the steps for determining eligibility for export allocation.

2. Firstly, exports of Softwood Lumber Products by Primary Producers and Remanufacturers during the Reference Period are calculated.

3. Secondly, exports calculated in paragraph two are expressed as the individual applicant's percentage share of the total regional quota volume for Saskatchewan during the reference period.

4. Thirdly, the Base Pool RQV to Primary Producers and Remanufacturers is allocated based on the shares calculated above.

5. Finally, any remaining RQV quantity in the Base Pool that is unallocated after the above steps will be allocated on a first-come, first-served basis to export permit applicants.

6. Subject to the carry-forward/carry-back provisions described below, export permits for exports of Softwood Lumber Products to the United States will be issued to applicants in a quantity that does not exceed the RQV.

7. Export allocations will be subject to adjustments for errors, corrections, and omissions.

8. 12% of the RQV may be carried-forward and/or carried-back.

9. When a force majeure situation prevents an allocation holder from exporting Softwood Lumber Products during a specified period, the allocation holder should inform the Export and Import Controls Bureau (EICB) as soon as possible.

9.0 Border Measure Option - Election by Regions 2010

On the 1st of January following the third and sixth anniversary that the Softwood Lumber Agreement entered into effect, each Region has the opportunity to review its election of the border measure that applies to exports of softwood lumber products to the United States from that Region. January 1, 2010 is the first such date/opportunity to change Options and decisions must be communicated at least 30 days in advance of that date. During 2009, the Government of Canada consulted with all provincial governments in regards to the election between Option A and Option B, as described in Section 1. This election of a border measure will result in the imposition of said elected border measure for the following three calendar years: 2010, 2011 and 2012. All Regions elected to keep their current choice intact and no further changes as a result of this election are needed.

10.0 Further Information

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

Softwood Lumber Controls Division (TIS)
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: http://www.softwoodlumber.gc.ca.

For further information with respect to the Canada – U.S. Softwood Lumber 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: http://www.softwoodlumber.gc.ca.