[Federal Register Volume 61, Number 109 (Wednesday, June 5, 1996)]
[Notices]
[Pages 28626-28627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13993]



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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-87]


Notice of Agreement; Monitoring and Enforcement Pursuant to 
Sections 301 and 306: Canadian Exports of Softwood Lumber

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of monitoring and determination.

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SUMMARY: On May 29, 1996, the United States and Canada entered into an 
agreement on trade in softwood lumber, with effect form April 1, 1996. 
This agreement is intended to provide a satisfactory resolution to 
certain acts, policies and practices of the Government of Canada 
affecting exports to the United States of softwood lumber that were the 
subject of an investigation initiated by the United States Trade 
Representative (``USTR'') under section 302(b)(1)(A) of the Trade Act 
of 1974 (the Trade Act) and that were found to be unreasonable and to 
burden or restrict U.S. commerce pursuant to section 304(a) on October 
4, 1991. The USTR has determined that this agreement will be subject to 
the provisions of section 306 of the Trade Act and that USTR will 
monitor Canadian compliance with this agreement pursuant to section 306 
of the Trade Act and will take action under section 301(a) if Canada 
fails to comply with it.

DATES: The U.S.-Canada agreement on trade in softwood lumber was signed 
on May 29, 1996.

ADDRESSES: Office of the United States Trade Representative, 600 17th 
Street, NW, Washington, D.C. 20508.

FOR FURTHER INFORMATION CONTACT:
Gordana Earp, Deputy Assistant United States Trade Representative for 
Industry, (202) 395-6160; or William Kane, Associate General Counsel, 
(202) 395-6800 (for legal issues).

SUPPLEMENTARY INFORMATION: On October 4, 1991, Canada unilaterally 
terminated a Memorandum of Understanding (MOU) dated December 30, 1986, 
between the United States and Canada under which, among other things, 
Canada had imposed a 15 percent export charge on certain softwood 
lumber products exported to the United States. The MOU had been entered 
into to settle a pending countervailing duty (CVD) proceeding examining 
subsidies and injury with respect to imports of Canadian softwood 
lumber. As of October 4, 1991, Canada ceased collecting export charges 
under that MOU to offset possible injurious subsidies. In response, on 
October 4, 1991, (a) the U.S. Department of Commerce announced that it 
would self-initiate a CVD investigation on softwood lumber from Canada, 
and (b) the USTR initiated an investigation pursuant to section 
302(b)(1)(A) of the Trade Act (19 U.S.C. 2412(b)(1)(A)) and pursuant to 
section 304(a) of the Trade Act determined that Canada's acts, policies 
and practices regarding the exportation of softwood lumber to the 
United States were unreasonable and burdened or restricted U.S. 
commerce. 56 FR 50738 (October 8, 1991) as amended by 46 FR 58944 
(November 22, 1991).
    USTR further determined that action was appropriate under section 
301 of the Trade Act to restore and maintain the status quo ante 
pending issuance of a preliminary CVD determination, and, if warranted, 
to impose duties to offset any subsidies found in the investigation. 
Commerce issued its preliminary CVD determination on March 12, 1992 and 
its final affirmative CVD determination on May 28, 1992.
    Both the domestic industry and affected Canadian parties appealed 
Commerce's final subsidy determination to binational panels established 
pursuant to Chapter 19 of the U.S.-Canada Free Trade Agreement (FTA). 
Following completion of the panel proceedings, and a decision by an 
Extraordinary Challenge Committee (ECC) established pursuant to FTA 
Article 1904.13 affirming the results of those proceedings, Commerce--
although it expressed disagreement with the panel's findings--on August 
16, 1994, revoked the CVD order on softwood lumber from Canada. 59 FR 
42029 (Aug. 16, 1994). USTR subsequently terminated the action taken 
under section 301. 59 FR 52846 (October 19, 1994).
    In response to the decisions of the binational panel and the ECC, 
the domestic industry filed a complaint with the United States Court of 
Appeals for the District of Columbia Circuit on September 14, 1994, 
challenging Chapter 19 of the FTA. On December 15, 1994, in order to 
create a process that could ultimately settle the dispute arising from 
the unilateral termination in 1991 of the MOU by Canada, and in 
conjunction with the domestic industry's withdrawal of its challenge to 
Chapter 19 of the FTA, the United States and Canada agreed to establish 
a consultative process regarding trade in softwood lumber. The process 
included the participation of the U.S. Government, Canadian federal and 
provincial governments, and where appropriate, industries and other 
interested parties in both countries.
    As a result, on May 29, 1996, the United States and Canada entered 
into an agreement on trade in softwood lumber, with effect from April 
1, 1996. During its five-year term, the agreement will foster stable 
growth in the North American softwood lumber market and ensure fair and 
competitive trade for U.S. firms and workers by addressing the 
disruptive effects of unprecedented high levels of Canadian imports 
previously found by the U.S. Department of Commerce to be subsidized. 
The agreement requires

[[Page 28627]]

Canada to assess fees on any softwood lumber shipped from its four 
leading producing provinces in excess of 14.7 billion board feet in 
each of the next five years. The agreement establishes procedures for 
export licensing and information collection that will greatly 
facilitate scrutiny of cross-border lumber trade, and for expedited 
determinations of whether Canada is carrying out its obligations under 
the agreement. Copies of the agreement are available to the public in 
the USTR reading room.
    The agreement is intended to provide a satisfactory resolution to 
the acts, policies and practices of Canada regarding the exportation of 
softwood lumber to the United States that were the subject of the 
investigation initiated under section 302(b)(1)(A) of the Trade Act and 
found to be unreasonable and to burden or restrict U.S. commerce 
pursuant to section 304(a) on October 4, 1991. Section 306 of the Trade 
Act (19 U.S.C. 2416) requires the USTR to monitor the implementation of 
each measure undertaken, or agreement that is entered into to provide a 
satisfactory resolution of a matter subject to a section 301 
investigation. Section 306 further requires that, if the USTR considers 
that a country is not satisfactorily implementing a measure or 
agreement, the USTR shall determine what further action to take under 
section 301(a).
    Adherence to the terms of the agreement is vital to the achievement 
of its objectives. USTR, the Department of Commerce, the U.S. Customs 
Service, and other agencies as appropriate, will carefully monitor and 
vigorously enforce this agreement. To that end, Customs will provide 
USTR and Commerce the data that Customs collects on imports (including 
province of origin and the type of permit) of softwood lumber from 
Canada. If data, including data provided by the domestic industry, 
reveal that export fees called for under the agreement are not being 
collected, or if other information, including information provided by 
the domestic industry, reveals that Canada is in material non-
compliance with any other of its obligations under the agreement, USTR 
will invoke the dispute settlement provisions of the agreement. I have 
determined that if: (a) An audit under the agreement confirms that fees 
have not been collected, and that action has not been taken 
subsequently to collect the fees, (b) an arbitral panel finds that 
Canada is otherwise not in conformity with the agreement, such as by 
offsetting, reducing, or undercutting its obligations under the 
agreement, and that the situation has not been cured, or (c) Canada 
unilaterally suspends its performance of, or terminates, the agreement 
in a manner inconsistent with the agreement, the USTR pursuant to 
section 306(b) of the Trade Act will consider that Canada is not 
satisfactorily implementing the agreement. In response, the USTR will 
take prompt and effective action under section 301(a) of the Trade Act 
to remedy Canada's failure to comply with the agreement, including, in 
the case where the required export fees have not been collected and 
action has not subsequently been taken to collect the fees, the 
imposition of duties on softwood lumber from Canada commensurate with 
Canada's failure to collect the fees under the agreement and sufficient 
to ensure compliance with the agreement and, as appropriate, other 
action to enforce or ensure compliance with the agreement.
Ira S. Shapiro,
Ambassador, Senior Counselor and Negotiator.
[FR Doc. 96-13993 Filed 6-4-96; 8:45 am]
BILLING CODE 3190-01-M