Frequently asked questions – Softwood lumber
The following information is being provided to you for reference purposes only. Although we believe this information to be correct, it is not legal advice and should not be construed as such. Companies seeking legal advice relating to the administrative review process should retain U.S. legal counsel with expertise in U.S. trade law.
Current U.S. anti-dumping and countervailing duty rates
What are the current rates in effect for Canadian softwood lumber products subject to the current U.S. anti-dumping and countervailing duties?
The current anti-dumping and countervailing duty rates in effect for subject merchandise are listed below. These rates took effect on January 3, 2018, which was the date of publication of the U.S. Department of Commerce’s final anti-dumping and countervailing duty orders.
|Company||Current Anti-dumping Duty Rate||Current Countervailing Duty Rate||Current Combined Duty Rates|
|Resolute Forest Products Canada Inc.||3.20%||14.70%||17.90%|
|Tolko Marketing Sales Ltd.||7.22%||14.85%||22.07%|
|West Fraser Mills Ltd.||5.57%||17.99%||23.56%|
|J.D. Irving Ltd.||6.04%|
U.S. trade remedy proceedings
How do I access documents related to the softwood lumber investigations?
Information on the U.S. 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 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 are the U.S. subsidy allegations?
The main allegation made by the 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 provide countervailable subsidies to Canadian softwood lumber producers. In the past, U.S. claims have 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. Canada has again brought such cases in this dispute.
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 subsidized or dumped and 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 of the initial investigation 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 to cause injury to the U.S. industry.
International Trade Commission - Preliminary Investigations
- After the petition is filed, the U.S. International Trade Commission begins 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 evaluates the petition and makes a decision on whether to initiate anti-dumping and/or countervailing duty investigations. If it decides to do so, the Department of Commerce then begins the investigation(s), which includes 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 continues its investigation(s).
Department of Commerce - Preliminary Determinations
- Part way through its investigation(s), the U.S. Department of Commerce makes a preliminary determination regarding subsidization and/or dumping. Should the U.S. Department of Commerce find countervailable subsidies and/or dumping, preliminary duties are 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 makes a final determination of subsidization and/or dumping.
International Trade Commission - Final Determination
- The U.S. International Trade Commission then makes 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 countervailable 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).
Can Canada appeal an unfavourable decision?
Yes. 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. Canada is currently challenging U.S. final determinations under these mechanisms.
Which companies were selected to be investigated by the U.S. Department of Commerce in the original investigation?
For both the anti-dumping and countervailing duty investigations, the U.S. Department of Commerce selected West Fraser, Tolko, Canfor and Resolute Forest Products as mandatory respondents. These companies were individually investigated and received company-specific anti-dumping and countervailing duty rates.
Because J.D. Irving chose to exercise its right to submit voluntary responses in the countervailing duty investigation, and the U.S. Department of Commerce agreed to investigate alleged subsidization with respect to the company, J.D. Irving was also individually investigated and received a company-specific countervailing duty rate.
Who is responsible for paying anti-dumping and countervailing duties 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. The U.S. Department of Commerce requires importers to provide cash deposits on imports of certain softwood lumber products that are equivalent to the anti-dumping and countervailing duty rates in effect at the time of entry.
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 are required to shoulder the cost of any U.S. duties placed on their goods.
Do all companies have to pay anti-dumping and countervailing duties, or only those companies that were specifically investigated by the U.S?
Only softwood lumber products that fall within the scope of these investigations are subject to U.S. duties. The U.S. Department of Commerce selected four specific Canadian producers to serve as a sample for investigation purposes in both the anti-dumping and the countervailing duty cases. Each of these has received company-specific countervailing and anti-dumping duty rates. J.D. Irving was also individually investigated as a voluntary respondent in the countervailing duty investigation and therefore received a company-specific countervailing duty rate. Companies that are not directly investigated are subject to a weighted average “all-others” rate.
What is the status of Atlantic Canada in the investigations?
Historically, the Atlantic Provinces (i.e.: New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador) have been exempted from U.S. countervailing duty investigations because the United States agreed that their timber pricing was market-based. The Atlantic producers have in the past been subject to anti-dumping duties. In this case, however, the U.S. Department of Commerce investigated allegations that New Brunswick stumpage constituted a countervailable subsidy. It also imposed preliminary anti-dumping and countervailing duties on all exporters in the Atlantic provinces. Canada requested that the U.S. exclude the Atlantic provinces from the countervailing duty investigation.
On November 1, 2017, the U.S. Department of Commerce confirmed its final scope language, which applies to both the anti-dumping and countervailing duty investigations. The final scope language specifically excludes: “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.”
Therefore, as of November 8, 2017 (the date of publication of the U.S. Department of Commerce’s final determinations in the U.S. Federal Register), exports originating from these three provinces, and which have the required Atlantic Lumber Board certificate, are excluded from the final scope of the U.S. Department of Commerce’s anti-dumping and countervailing duty investigations. Softwood lumber products originating in New Brunswick were not excluded from the application of anti-dumping and countervailing duties.
The U.S. Department of Commerce has instructed U.S. Customs and Border Protection to refund any preliminary anti-dumping and countervailing duties for entries which were accompanied by the appropriate Atlantic Lumber Board certificate.
I shipped lumber from one of the excluded provinces without an accompanying certificate from the Atlantic Lumber Board. Will I still receive a refund from the United State Customs and Border Protection for these shipments?
No. The instructions sent by the Department of Commerce to U.S. Customs and Border Protection state that to qualify for this exclusion, an importer must provide an Atlantic Lumber Board certificate with each entry certifying that the merchandise was 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. Additionally, the Atlantic Lumber Board certificate of origin number must be identified in the Customs Entry Summary documentation for each entry.
Scope of investigations
Can I get clarity on whether a specific product I manufacture is within the scope of the U.S. antidumping and countervailing duty orders?
Yes. Following the publication of the U.S. Department of Commerce final duty orders in the U.S. Federal Register, which took place on January 3, 2018, companies can formally request rulings by the U.S. Department of Commerce on whether their specific products fall within the scope of the orders.
Within 45 days of receipt of an application for a scope ruling, the U.S. Department of Commerce must either issue a final scope ruling or initiate a scope inquiry. The Department of Commerce will issue a final ruling if it can determine based on prior determinations and the descriptions of the merchandise contained in the application for the scope ruling, whether the product is within or outside of the scope of the final duty orders. Alternatively, if the U.S. Department of Commerce cannot make a determination based on these criteria, it will initiate a scope inquiry. The U.S. Department of Commerce normally issues its determination in a scope inquiry within 120 days of commencing the inquiry. Companies typically have the opportunity to provide comments and additional information to the U.S. Department of Commerce during the course of a scope inquiry.
The Government of Canada is not able to provide advice on product-specific scope issues. Canadian exporters wishing to obtain scope rulings that are specific to their products may wish to retain U.S. counsel that specialize in trade remedy law.
What products are targeted by the investigations (i.e. are in-scope)?
On November 1, 2017, the U.S. Department of Commerce confirmed its final scope language, which applies to both the anti-dumping and countervailing duty investigations. It took effect as of the date of publication of the U.S. Department Commerce’s final determination in the U.S. Federal Register (November 8, 2017). 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; 4422.214.171.124; 44126.96.36.199; 44188.8.131.52; 44184.108.40.206; and 44220.127.116.11.
Although these HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of the investigation is dispositive.
For remanufacturers of softwood lumber, what value do duties apply to?
This is an important issue for Canadian remanufactures. 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.
In its November 1, 2017 final determinations, the U.S. Department of Commerce did not direct U.S. Customs and Border Protection to collect cash deposits on merchandise subject to this investigation on the value of lumber at the “first mill.” As a result, U.S. Customs and Border Protection is applying duties according to its normal practice and collect cash deposits on merchandise subject to this investigation (including remanufactured products) on the value of the final product.
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?
Not necessarily. In its November 1, 2017 final determinations, the U.S. Department of Commerce agreed to a limited scope exclusion based on the origin of the wood. Specifically, the final scope of the U.S. investigations provides:
- U.S.-origin lumber shipped to Canada for processing and imported into the United States is excluded from the scope of the investigations 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.
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 was the deadline to request an expedited review?
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.
The U.S. Department of Commerce published its countervailing duty order in the U.S. Federal Register on January 3, 2018. As a result, the deadline for companies to submit a request for an expedited review to the U.S. Department of Commerce was February 2, 2018.
Note that the U.S. International Trade Administration announced that it would extend by three days the deadline to submit a request for an expedited review to the U.S. Department of Commerce. The new deadline was Monday, February 5, 2018.
For how many companies did the United States initiate the expedited review process?
The U.S. Department of Commerce initiated expedited reviews for 33 of the 34 Canadian companies that requested such a review, and granted a withdrawal request for the 34th company. The U.S. Department of Commerce subsequently granted withdrawal requests for all 24 Canadian companies that requested it after initiation. As a result, only nine companies remain in the process.
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”. If the timeline is fully extended, final results could come as late as spring of 2019.
What are the possible results of an expedited review?
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 participating in the expedited review 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.
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 these expedited reviews.
What is the role of the federal, provincial and territorial governments?
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, are 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.
New Shipper Review
My company did not ship during 2015, but is doing so now and must pay duties. Can my company receive a company-specific duty rate?
- U.S. regulations and statute allow new shipper reviews for companies that did not export to the United States during the period that was investigated in the original investigation. For the countervailing duty investigation, this was calendar year 2015. For the anti-dumping investigation, this was October 1, 2015 through to September 30, 2016.
- A new shipper review is essentially a mechanism for producers and exporters of softwood lumber products that fall within the scope of the U.S. investigations to obtain their own individual anti-dumping duty rate and countervailing duty rate. To request a new shipper review, the requester must have exported, or sold for export, relevant softwood lumber products to the United States.
- Note also that, to be eligible for a new shipper review, the applicant must not be affiliated with an exporter or producer that did export relevant softwood lumber products to the United States during the periods of investigation.
- Companies should be aware that there is no guarantee of receiving lower duty rates as a result of the new shipper review process than the “all-others” duty rates, and that companies could, in fact, receive higher rates. New shippers will also not be excluded from the order even if they receive a zero or de minimis rate of less than 1 percent.
- The Government of Canada strongly recommends that companies interested in requesting a new shipper review retain U.S. counsel; specifically, counsel that specializes in U.S. trade law.
When can I apply for a new shipper review?
- An exporter or producer may request a new shipper review within one year of the date on which the relevant softwood lumber products first entered the United States, or were withdrawn from warehouse, for consumption, or, if the exporter or producer cannot establish the date of first entry, the date on which the exporter or producer first shipped merchandise for export to the United States.
How long does a new shipper review take?
- U.S. regulations provide that the U.S. Department of Commerce will issue preliminary results of the new shipper review within 180 days after the date on which the new shipper review was initiated, and final results of the review within 90 days after the date on which the preliminary results were issued. These deadlines may be extended to 300 days and 150 days, respectively.
What are the first steps in a new shipper review?
- If your company is a new shipper and is considering undergoing the new shipper review process, you will need to notify the Government of Canada, as well as each Province / Territory where your company had operations during calendar years 2008 to 2018. You can advise the Government of Canada of your intention to participate in this process at our dedicated softwood email address: firstname.lastname@example.org.
- Due to the complexities of these reviews, as well as their associated costs and risks, the Government of Canada strongly recommends that companies interested in requesting a new shipper review retain U.S. counsel; specifically, counsel that specializes in U.S. trade law.
- Date Modified: