Volume 46, Issue 3 - April 2007

In the News
International Trade

Softwood Lumber Agreement Update

Last September, Ambassador Susan C. Schwab, deputy United States trade representative, and Canadian international trade minister David Emerson met in Ottawa to sign an agreement, effectively ending an extended dispute over the U.S. anti-dumping (AD) and countervailing duty (CVD) orders. The seven-to-nine year agreement (pending a possible two-year extension) became official in October, after being agreed upon in September, and called for all litigation arising out of the U.S. AD and CVD orders to be terminated or withdrawn, tariffs replaced with a combination of export taxes and volume restraints, and for funds previously collected and held in a clearing account by U.S. Customs and Border Protection to be distributed.

With an agreement signed, one would think this issue is over. But a spokesperson for Schwab told Shelter that the ambassador wrote Emerson a letter in late January, raising concerns over recent pledges for financial assistance that the provincial governments of Quebec and Ontario made to their lumber industries. According to Schwab, the initiatives could be at odds with Canada’s commitments under the SLA, and non-adherence, she warned, would be troubling, particularly so early in life of the agreement.

Immediate Dialogue
Schwab’s representative told Shelter she has asked for an immediate dialogue on these funding programs, including discussion at the inaugural meeting of the Softwood Lumber Committee scheduled for February 22-23 in Washington, D.C.

Peter Morton, Washington Bureau Chief for the National Post in Canada said a spokesman for Emerson denied Canada and the provinces were violating the agreement saying, “We believe that these programs are fully consistent with Canada’s obligations under the softwood lumber agreement with the United States.”

SLA History
According to the office of the United States Trade Representative, money collected under the AD/CVD orders were to be distributed as follows: approximately $4.3 billion to the importers of record; $500 million disbursed to the petitioners in the AD/CVD case—the Coalition for Fair Lumber Imports; $50 million disbursed to a binational industry council; and $450 million for meritorious initiatives.

Funds for meritorious initiatives are allocated for: assistance for timber reliant communities; low income housing and disaster relief; and promotion of sustainable forest management practices. The $450 million total was to be disbursed to private nonprofit organizations whose missions reflect the objectives of the agreement and, in a press release dated September 12, 2006, Schwab said, “I look forward to working with the Canadian government on which organizations will receive funds. These funds will support worthy causes while at the same time reinforcing the underlying purpose of the settlement agreement which is to create a stronger, more vibrant North American lumber industry.”

Three weeks after the Softwood Lumber Agreement (SLA) came into force in October, Canada’s government reported that Canadian producers and sawmills began receiving refunds through the Export Development Canada refund mechanism. On December 14, the Canadian government reported that 98.9 percent of refunds had been processed and Emerson, along with the Honourable Maxime Bernier, minister of industry, announced that the C-24 bill, Softwood Lumber Products Export Charge Act, 2006, had received royal assent in Parliament.

The United States and Canada have been arguing over softwood lumber since May 2002. The U.S. Department of Commerce imposed a 27-percent countervailing and anti-dumping duty after the International Trade Commission (ITC) found that there was a potential “threat” to U.S. lumber producers from Canadian lumber imports. 

The World Trade Organization (WTO) also repeatedly ruled in favor of the United States in applying duties against subsidized and dumped Canadian lumber. 

Mergers & Acquisitions

Another Brick in Dixieline’s Wall of Companies
San Diego-based Dixieline Lumber Co., a supplier of building materials to professional builders and contractors, is purchasing Sandstone Brick Co. Dixieline is a division of Pro-Build Holdings, one of the nation’s largest suppliers of building materials to the professional contractor. The terms of the purchase have not been disclosed.

A lumber, truss and building materials supplier, Sandstone Brick Co., headquartered in Bakersfield, Calif., serves the professional contractor retail market in California's Kern County. The organization is comprised of a truss manufacturing plant and lumber distribution yard.

“The growing Southern California metro markets have performed favorably over the last few years and are expected to regain their strength in years to come,” says Joe Lawrence, president of Dixieline Lumber Co. “The acquisition of Sandstone Brick Co. complements our current operations in southern California, expanding and strengthening our ability to serve customers in this important market.”

Following the completion of the acquisition, the chief operating officer of Sandstone Brick Co., Jim Earnest, will remain with the company as general manager.“This agreement allows us to capitalize on the growth opportunities that will positively impact both Sandstone and Dixieline within our existing geographies and beyond,” says Jim Earnest, general manager of Sandstone. “We look forward to joining forces with a company of Dixieline's caliber.” www.dixieline.com

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