Issue link: http://palletcentral.uberflip.com/i/842358
palletcentral.com PalletCentral • May-June 2017 35 a CVD that totaled 21-26% on Canadian lumber. In 1996, the first Softwood Lumber Agreement (SLA) was established between the two countries to normalize trade. This SLA set a tariff- rate quota (14.7 billion board feet) on much of Canadian lumber, and shipments that exceeded the quota were taxed by the Canadian Government. If prices exceeded a "moderate level," Canadian lumber could enter the U.S. tax-free. The U.S. reciprocated by not imposing a CVD or other restricting action. The SLA expired in 2001 amid allegations that Canadian lumber companies were making slight modifications to the lumber so that it would classify under exemptions to quota. Upon expiration, the DOC and ITC reviewed petitions by the U.S. lumber industry against Canadian lumber entering the U.S., where the original determination was made that it would be subject to a CVD and anti-dumping duty (AD) totaling 27.2%. Canada made several appeals in the subsequent years, which resulted in reductions in payments. The second SLA came into effect in 2006, where the U.S. agreed to terminate both CVDs and ADs. Canada agreed to collect taxes and made quota restrictions on lumber exports. Fees were assessed from 2.5% to 15% based on the region of production and prevailing retail price. Both U.S. and Canadian entities were scrutinized for proper enforcement over the following years, but the agreement held until its expiration in October 2015. A one year extension was put in place while the two countries attempted to reach a new deal, but one was not reached. As of October 2016, softwood lumber had been entering the U.S. freely without a duty or tax. Soon after, the U.S. Lumber Coalition filed another CVD/AD petition with the threat of retroactive duties limiting the amount of lumber crossing the border from Canada. April 2017 Duties Announced On April 24, 2017, the Trump Administration took retaliatory action against Canada over the softwood lumber issue. Commerce Secretary Wilbur Ross announced a preliminary countervailing "We have not yet felt the impact, other than lumber prices skyrocketing as everyone speculates. As pallet kits are included now for the first time, we are on a "wait and see" mode to see what changes occur once all the dust has settled. Countervailing duties and dumping fees are no stranger to the lumber industry, but pallet kits? This is a whole new world." — Kathleen Dietrich, Commercial Lumber and Pallet Company, Inc. "Disruption for the sake of disruption? No. We are in full support of the concept of the 2017 softwood lumber agreement with Canada. The U.S. Dept. of Commerce has stated that exporters of softwood lumber from Canada currently receive and have received subsidies between 3% and 25%, which gives them an unfair advantage against U.S.-based companies. Furthermore, the vast majority of standing timber in Canada is owned by provincial governments, which are free to dump their lumber at virtually no cost in order to stimulate their forest industry. Naturally, resistance is heard from people who are profiting from this arrangement. I recently read that a mattress frame company said the wood they need has small knots and fine grain, a characteristic of softwood species grown in colder climates like Canada, and opposes the tariff. As far as I know, there are multitudes of other woods that can be used in lieu of "cold-grown" wood or perhaps something as simple as reengineering is in order. Either way, it's not the end of anything, just a recalibration. Will certain costs increase? It's not only likely, it's expected and encouraged. We support the leveling of the playing field to allow American companies to compete and succeed." — Anonymous Pallet Manufacturer