Frequently Asked Questions – U.S. petition filed on November 25, 2016

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.
  • The U.S. Department of Commerce is expected to make a decision on whether it will initiate countervailing duty and anti-dumping investigations within 20 days of the filing of the petition. The Government of Canada will hold consultations with the U.S. Department of Commerce concerning the allegations made in the petition prior to the initiation of an investigation.
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 injuryandif 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.
Does this mean Canadian lumber exporters will pay duties?
  • The U.S. Department of Commerce and the U.S. International Trade Commission must determine that subsidization or dumping has occurred, and that imports of certain Canadian softwood lumber products have either caused or are threatening to cause injury to the U.S. lumber industry, before duties can be imposed.
What is a countervailing duty?
  • A countervailing duty is a duty imposed to protect a country’s industry from injury caused by subsidized imports from other countries. In this case, the U.S. lumber industry claims it has been injured and threatened by injury 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 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 imposed to protect a country’s industry from 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.
When will duties be applied? When will companies have to pay cash deposits?
  • If the U.S. issues affirmative preliminary determinations in the dumping and subsidy investigations, companies must pay duties.
  • A preliminary countervailing duty determination could be issued five or six months after the U.S. industry files a petition with the U.S. Department of Commerce. If the U.S. Department of Commerce and U.S. International Trade Commission each make a positive determination, preliminary countervailing duties will be applicable at that time.
  • A preliminary anti-dumping duty determination could be issued seven or eight months after the U.S. industry files a petition with the U.S. Department of Commerce. If the U.S. Department of Commerce and the U.S. International Trade Commission each make a positive determination, anti-dumping duties will be applicable at that time.
  • Preliminary duty rates could be imposed retroactively on shipments made up to 90 days prior to the preliminary determination if the U.S. Department of Commerce determines that there was a significant increase in importations of softwood lumber products into the United States.
  • Final duty rates are set once the U.S. Department of Commerce publishes its final determination orders. This is expected to occur in early 2018. If the final duty rates are lower than the preliminary duty rates, the difference will be refunded.
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. If the final duty rates are lower than the preliminary rates, the difference would be refunded to importers of record.