US Hits Canada With Duties in International Trade Dispute

US Secretary of Commerce Wilbur Ross announced last night the preliminary determination in the countervailing duty (CVD) investigation of softwood lumber from Canada. Commerce preliminarily determined that exporters of softwood lumber from Canada received countervailable subsidies of 3.02 percent to 24.12 percent. In 2016, imports of softwood lumber from Canada were valued at an estimated $5.66 billion. The petitioner in the case was a coalition of US lumber industry trade groups and companies. As a result, Commerce will instruct US Customs and Border Protection to collect cash deposits based on these preliminary rates. Since Commerce determined that critical circumstances exist, certain companies will be subject to the retroactive collection of cash deposits. The merchandise subject to this investigation is softwood lumber, siding, flooring and certain other softwood lumber products. For the purpose of CVD investigations, a countervailable subsidy is financial assistance from foreign governments that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods. Unless the final determination is postponed, Commerce is currently scheduled to announce its final CVD determination on September 7, 2017. This final determination will be based on the verification of the information provided to the Department for the preliminary ruling, comments by the parties, and further analysis. If Commerce makes an affirmative final determination of subsidization and the US International Trade Commission (ITC) makes an affirmative final injury determination, Commerce will issue a CVD order. If Commerce makes a negative final determination of subsidization or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued. “It has been a bad week for US-Canada trade relations,” said Commerce Secretary Wilbur Ross. “Last Monday, it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States. In a different matter, the Department of Commerce determined a need to impose countervailing duties of roughly one billion dollars on Canadian softwood lumber exports to us. This is not our idea of a properly functioning Free Trade Agreement.”