[Federal Register: April 10, 2009 (Volume 74, Number 68)]
[Notices]
[Page 16436-16438]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap09-121]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket No. USTR-2009-0011]
Initiation of Section 302 Investigation, Determination of Action
Under Section 301, and Request for Comments: Canada--Compliance With
Softwood Lumber Agreement
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of initiation of Section 302 investigation and
determinations therein; imposition of duties on certain softwood lumber
from Canada; and request for public comment.
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SUMMARY: Under the 2006 Softwood Lumber Agreement (SLA), Canada agreed
to impose export measures on Canadian exports of softwood lumber
products to the United States. At the request of the United States, an
arbitral tribunal established under the SLA found that Canada had not
complied with certain SLA obligations, and in February 2009 the
tribunal issued an award concerning the remedy to be applied. In order
to enforce U.S. rights under the SLA, the United States Trade
Representative (``Trade Representative'') has initiated an
investigation under Section 302 of the Trade Act of 1974, as amended
(``Trade Act''). In that investigation, the USTR has (i) Determined
that Canada is denying U.S. rights under the SLA; (ii) found that
expeditious action is required to enforce U.S. rights under the SLA;
and (iii) determined that appropriate action under Section 301 of the
Trade Act is to impose 10 percent ad valorem duties on imports of
softwood lumber products from the provinces of Ontario, Quebec,
Manitoba, and Saskatchewan, as set out in the annex to this notice. The
duties will remain in place until such time as the United States has
collected $54.8 million, which is the amount determined by the arbitral
tribunal. Interested persons are invited to submit comments on the
determinations in this investigation, and to participate in a public
hearing in the event a hearing is requested.
DATES: Effective Date: The 10 percent ad valorem duties on imports of
softwood lumber products from the provinces of Ontario, Quebec,
Manitoba, and Saskatchewan shall be effective with respect to products
that are entered for consumption or withdrawn from warehouse for
consumption on or after April 15, 2009.
ADDRESSES: Non-confidential comments (as explained below) should be
submitted electronically via the Internet at http://
www.regulations.gov, docket number USTR-2009-0011. If you are unable to
provide submissions by http://www.regulations.gov, please contact Sandy
McKinzy at (202) 395-9483 to arrange for an alternative method of
transmission. If (as explained below), the comment contains
confidential information, then persons wishing to submit such comments
should contact Sandy McKinzy at (202) 395-9483.
FOR FURTHER INFORMATION CONTACT: John Melle, Deputy Assistant USTR for
the Americas, (202) 395-9448, or Daniel Stirk, Assistant General
Counsel, (202) 395-9617, for questions concerning the enforcement of
U.S. rights under the SLA; William Busis, Associate General Counsel and
Chair of the Section 301 Committee, (202) 395-3150, for questions
concerning procedures under Section 301; or Gwendolyn Diggs, Staff
Assistant to the Section 301 Committee, (202) 395-5830, for questions
concerning procedures for filing submissions in response to this
notice.
SUPPLEMENTARY INFORMATION:
A. Enforcement of U.S. Rights Under the SLA
Under the SLA, Canada agreed to impose export measures on Canadian
exports of softwood lumber products to the United States. When the
prevailing monthly price of lumber, determined per the Agreement, is
above US$355 per thousand board feet (MBF), Canadian lumber exports are
unrestricted. When prices are at or below US$355 per MBF, each Canadian
exporting region has chosen to be subject to either an export tax with
a soft volume cap or a lower export tax with a hard volume cap. The
export measures are to be adjusted in accordance with the market price
of lumber, and the SLA includes an adjustment mechanism to ensure that
the export volume caps are calculated
[[Page 16437]]
appropriately under rapidly changing market conditions.
The SLA provides that disputes under the agreement may be submitted
to an arbitral tribunal operating under the auspices of the LCIA
(formerly the London Court of International Arbitration). In order to
enforce U.S. rights under the SLA, in August 2007 the United States
requested that an arbitral tribunal examine a U.S. claim that Canada
was not complying with its SLA obligations to impose export measures.
In a March 2008 award on liability, the tribunal agreed with the United
States that Canada failed properly to calculate export quotas for the
Eastern provinces during the first six months of 2007.\1\ In a February
26, 2009 award on remedy, the tribunal found that Canada's failure to
make the downward adjustments provided for under the SLA resulted in
greater levels of shipments from Canada than were allowed under the
SLA, a failure which exacerbated already difficult market
conditions.\2\
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\1\ The Award on Liability can be viewed on USTR's Web site:
http://www.ustr.gov.
\2\ The Award on Remedy can be viewed on USTR's Web site: http:/
/www.ustr.gov.
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In its February 2009 award on remedy, the tribunal (i) rejected
Canada's argument that Canada had already cured the breach simply by
starting to apply the adjustment and thus that no further remedy was
required, and (ii) determined that appropriate adjustments to the
export measures in light of Canada's breach would consist of collecting
an additional 10 percent export charge until Canada had collected CDN
$68.26 million. (Based on the exchange rate at the time of the award,
the U.S. dollar equivalent is $54.8 million.) The tribunal ordered
Canada to cure its breach within 30 days, the maximum period permitted
under the SLA. The tribunal determined that if Canada failed to cure
the breach within 30 days, the SLA required Canada to impose the
compensatory export measures as determined by the tribunal. The
tribunal did not opine upon what an adequate cure would be.
During the 30-day period, the United States and Canada discussed
Canada's intended course of action to cure the breach. Canada took no
action during the 30-day period, which expired on March 28, 2009. On
March 27, 2009, Canada informed the United States that it did not
intend to adopt any export measure, and instead its only action would
be to make an offer of a monetary payment to the Government of the
United States. A monetary payment, however, would do nothing to cure
Canada's breach resulting from excess shipments of softwood lumber in
2007.
The SLA provides that in the event the complaining party finds that
the defending party has failed to cure the breach or impose the
compensatory adjustments determined by the Tribunal within 30 days of
an award, the complaining party is entitled to impose the compensatory
measures itself. Accordingly, with regard to Canada's 2007 breach of
the SLA, the SLA authorizes the United States to impose duties in an
amount not to exceed the additional export charges that the tribunal
has specified as compensation for the breach. The SLA contemplates the
use of Section 301 as a mechanism for imposing such duties.
B. Initiation of Section 302 Investigation and Determinations Therein
Section 302(b) of the Trade Act authorizes the Trade Representative
to initiate an investigation of any matter covered under Section 301,
including whether the rights of the United States under a trade
agreement are being denied. In accordance with the recommendation of
the interagency Section 301 Committee, the Trade Representative has
initiated an investigation of whether Canada has denied U.S. rights
under the SLA.
Section 303 of the Trade Act requires that the Trade Representative
request consultations on the date of initiation of the investigation
with the country subject to the investigation. Accordingly, the United
States has issued a consultation request to the Government of Canada
concerning Canada's compliance with its SLA obligations.
Section 304(b) of the Trade Act requires that the Trade
Representative engage in certain consultations before making
determinations in a Section 301 investigation. However, if expeditious
action is required, the Trade Representative may first make
determinations in the investigation, and then engage in Section 304
consultations. In accordance with the recommendation of the Section 301
Committee, the Trade Representative has found that expeditious action
is required to secure U.S. rights under the SLA.
Under Section 304(a)(1) of the Trade Act, the Trade Representative
shall determine whether the rights of the United States under a trade
agreement are being denied. If the determination is affirmative, the
Trade Representative shall further determine what action to take under
Section 301.
On the basis of the awards of the LCIA Tribunal and Canada's
failure to impose export charges or any other acceptable measure to
cure the breach, and in accordance with the recommendation of the
Section 301 Committee, the Trade Representative has determined (1) that
Canada is denying U.S. rights under the SLA, and (2) that appropriate
action under Section 301(a)(1) of the Trade Act is to impose 10 percent
ad valorem duties on imports of softwood lumber products from Canada
originating in Ontario, Quebec, Manitoba, and Saskatchewan. The details
of the action under Section 301 of the Trade Act are set out in the
annex to this notice. The duties will apply to articles entered for
consumption or withdrawn from warehouse for consumption on or after
April 15, 2009. The procedures set forth in the U.S. Customs and Border
Protection (CBP) test program for post entry amendments may not be used
by participants in that test to submit amendments regarding entries
affected by this action.
The duties will remain in place until such time as the United
States has collected $54.8 million in duties. USTR will notify U.S.
Customs and Border Protection (CBP) of the date on which to cease
collecting the additional duties, and USTR will make a public
announcement and publish a notice in the Federal Register terminating
the application of the additional duties.
C. Opportunity for Public Comments
In accordance with Section 304 of the Trade Act, the Section 301
Committee invites comments from interested persons with respect to the
determinations made in this investigation. In particular, the comments
invited by the Committee include whether Canada is denying U.S. rights
under the SLA, and whether the imposition of the 10 percent duty
pursuant to this notice is an appropriate action in response. Any
comments should be submitted within 30 days of the publication of this
notice (by no later than May 11, 2009).
Section 304 of the Trade Act also provides that any interested
person may request a public hearing on these matters. Any request for a
public hearing should be made within 10 days of the publication of this
notice (by no later than April 20, 2009). In the event a hearing is
requested, USTR will issue a notice specifying the date of the hearing
and the procedures for submitting written testimony.
To submit comments via http://www.regulations.gov, enter docket
number USTR-2009-0011 on the home page and click ``go''. The site will
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provide a search-results page listing all documents associated with
this docket. Find a reference to this notice by selecting ``Notice''
under ``Document Type'' on the left side of the search-results page,
and click on the link entitled ``Send a Comment or Submission.'' (For
further information on using the http://www.regulations.gov Web site,
please consult the resources provided on the Web site by clicking on
``How to Use This Site'' on the left side of the home page.)
The http://www.regulations.gov site provides the option of
providing comments by filling in a ``General Comments'' field, or by
attaching a document. Given the detailed nature of the comments sought
by the Section 301 Committee, all comments should be provided in an
attached document. Submissions must state clearly the position taken
and describe with specificity the supporting rationale and must be
written in English. After attaching the document, it is sufficient to
type ``See attached'' in the ``General Comments'' field.
Comments will be placed in the docket and open to public inspection
pursuant to 15 CFR 2006.13, except confidential business information
exempt from public inspection in accordance with 15 CFR 2006.15 or
information determined by USTR to be confidential in accordance with 19
U.S.C. 2155(g)(2). Comments may be viewed on the http://
www.regulations.gov Web site by entering docket number USTR-2009-0011
in the search field on the home page.
Persons wishing to submit business confidential information must
certify in writing that such information is confidential in accordance
with 15 CFR 2006.15(b), and such information must be clearly marked
``BUSINESS CONFIDENTIAL'' at the top and bottom of the cover page and
each succeeding page. Any comment containing business confidential
information must be accompanied by a non-confidential summary of the
confidential information. The non-confidential summary will be placed
in the docket and open to public inspection. Comments containing
business confidential information should not be submitted via the
http://www.regulations.gov Web site. Instead, persons wishing to submit
comments containing business confidential information should contact
Sandy McKinzy at (202) 395-9483. Information or advice contained in a
comment submitted, other than business confidential information, may be
determined by USTR to be confidential in accordance with section
135(g)(2) of the Trade Act of 1974 (19 U.S.C. 2155(g)(2)). If the
submitter believes that information or advice may qualify as such, the
submitter--
(1) Must clearly so designate the information or advice;
(2) Must clearly mark the material as ``SUBMITTED IN CONFIDENCE''
at the top and bottom of the cover page and each succeeding page; and
(3) Must provide a non-confidential summary of the information or
advice.
The non-confidential summary will be placed in the docket and open
to public inspection. Comments submitted in confidence should not be
submitted via the http://www.regulations.gov Web site. Instead, persons
wishing to submit such comments should contact Sandy McKinzy at (202)
395-9483.
William L. Busis,
Chair, Section 301 Committee.
[FR Doc. E9-8232 Filed 4-9-09; 8:45 am]
BILLING CODE 3190-W9-P