A recent ruling from a NAFTA Chapter 19 dispute panel found some aspects of the way the U.S. Department of Commerce calculates duties on Canadian softwood lumber is inconsistent with U.S. law.

The ruling said that it was directing the U.S. to review the treatment of export taxes. The U.S. Commerce Department in July set a duty rate of 7.99% on the product.

The United States has based its tariffs on a finding that Canadian timber harvested from federal and provincial lands with low government-set stumpage fees constitutes an unfair subsidy, while most U.S. timber is harvested from private land at market rates.

The Honourable Mary Ng, Minister of Export Promotion, International Trade and Economic Development, issued the following statement regarding today’s North American Free Trade Agreement (NAFTA) Chapter 19 panel ruling on Canada’s challenge of the Unites States Department of Commerce’s final dumping determination on Canadian softwood lumber products:

“Canada is pleased that the NAFTA dispute panel agrees that elements of the U.S. dumping determination are inconsistent with U.S. law. These duties are unwarranted—the only fair outcome is for the United States to revoke all duties on Canadian softwood lumber without further delay.

“The panel directed the U.S. Department of Commerce to review key aspects of its determination. Canada will continue to have an active voice during this process.

“Canada is a world leader in softwood lumber, which is an important industry that creates good, well-paying jobs for thousands of Canadians and supports communities across our country.

“For years, the United States has imposed unjust and illegal duties on Canadian softwood lumber, disrupting our deeply integrated supply chains. We will continue to advocate for Canadian softwood lumber workers and industry as we pursue other legal challenges of unjustifiable U.S. duties.”

he Canada-U.S. softwood lumber dispute has become one of the most enduring trade disputes between both nations. Over the past 25 years, the United States lumber industry has frequently sought U.S. government restrictions on Canadian softwood lumber imports through the application of U.S. countervailing duty and antidumping laws – laws that allow the imposition of import duties when a U.S. industry is allegedly harmed by subsidies in the exporting country (countervailing duties), or by dumping, which is when a U.S. industry is allegedly harmed by imported products sold at prices that are lower than the cost of production or lower than prices in the domestic market (anti-dumping duties). 

The U.S. Department of Commerce conducts an annual review of anti-dumping and countervailing duty orders. The annual review process is similar to the process for initial investigations but applies only to companies that are subject to review.