Softwood Lumber Dispute Lumbers On: Preliminary Countervailing Duties on Canadian Softwood Lumber Announced, Parts 1 & 2 Page: 1 of 4
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CRS Reports & Analysis
Legal Sidebar
Softwood Lumber Dispute Lumbers On: Preliminary
Countervailing Duties on Canadian Softwood Lumber
Announced (Part I)
04/28/2017
According to various news reports, on April 24, 2017, President Trump announced that the Administration would "be
putting a 20% ... tariff on softwood coming into the United States from Canada." The U.S. Department of Commerce
("Commerce") later announced it had reached a preliminary determination in its countervailing duty investigation of
imports of softwood lumber from Canada, which it initiated on December 22, 2016. In the determination, Commerce
indicated it preliminarily planned to impose countervailing duties ranging from 3.02% to 24.12% on softwood lumber
produced by five specific Canadian producers that it had investigated individually and 19.88% on all other Canadian
producers.
Part I of this two-part sidebar post provides a general background on countervailing duties and the procedures that result
in the imposition of these types of duties. Part II of this sidebar explores the Canadian softwood lumber dispute in more
detail, providing a history of this thirty-year dispute and details about the status of the current countervailing duty
investigation.
What Are Countervailing Duties?
The United States imposes countervailing duties on imported goods that benefit from subsidies provided by foreign
governments and/or antidumping duties on imported goods that are sold in the United States at less-than-fair value. As
the U.S. Court of International Trade ("Trade Court") has stated, both types of duties are intended to serve the same
purpose: to "level the playing field between U.S. manufacturers and their overseas competition. But each regime
addresses a different problem." That is, while antidumping duties address sales made at less-than-fair value,
countervailing duties are intended to correct the distortive effects of subsidies (both of these types of duties are
discussed in more detail in this CRS Report). In parallel countervailing duty investigations, Commerce investigates
whether a countervailable subsidy has been provided, while the International Trade Commission ("Commission")
determines whether a U.S. domestic industry is materially injured or threatened with material injury by reason of the
imports. If both investigations result in affirmative determinations, Commerce will issue a countervailing duty order on
the goods.
How Do Countervailing Duty Investigations Proceed?
Duty investigations are typically initiated after a domestic industry files a petition with Commerce. After an
investigation is initiated, the Commission has forty-five days from the time the petition was filed to reach its preliminary
injury determination, while Commerce has sixty-five days from the date the investigation is initiated to determine
"whether there is a reasonable basis to believe or suspect that a countervailable subsidy is being provided." Under the
relevant statute, a subsidy is a "financial contribution" that confers a benefit upon the recipient. Once Commerce
identifies a subsidy, it must then determine if the subsidy is countervailable. Only certain subsidies are countervailable,
including: export subsidies that are "contingent upon export performance"; (2) import substitution subsidies that are
"contingent upon the use of domestic goods over imported goods"; and (3) subsidies that are "specific .. . , in law or in
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Library of Congress. Congressional Research Service. Softwood Lumber Dispute Lumbers On: Preliminary Countervailing Duties on Canadian Softwood Lumber Announced, Parts 1 & 2, report, April 28, 2017; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc1042528/m1/1/?q=%22trade%22: accessed April 16, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.