March 11, 2016 CLIENT end the litigation. After two amendments, it expired on October 12, 2015, starting a one-year litigation moratorium. In other words, new U.S. unfair trade cases may not be brought by the Coalition against Canadian lumber before October 12, 2016. The product coverage of the Agreement matched the product coverage of the countervailing and antidumping duties (softwood lumber products and a broad remanufactured wood products and home builder kits).

Indeed the scope of the Agreement expanded as Commerce determined an increasingly number of softwood lumber products to be covered by the Agreement. Canada, through the Canada Revenue Agency, imposed, administered and collected export measures on a broad range of softwood lumber products from Canada. Exports from BC were subject to Option A, which imposed higher taxes on softwood lumber product exports. Mills in Quebec, Ontario, Manitoba, and Saskatchewan choose Option B, which combined export taxes ranging from 5 to 15 percent and quotas depending on the level of lumber prices. These measures became more restrictive when the price of lumber fell, with no tax and no quota where prices were above US$355 per mbf. Lumber that was remanufactured by impending remanufactures was taxed at the lower value of the production input, whereas integrated remanufacturers were taxed at the price of the finished products. Lumber produced from logs harvested in the Maritime provinces, the Yukon, the Northwest Territories or Nunavut is excluded from the border measures, as is lumber produced by certain Canadian companies, primarily along the Quebec/U.S.

border, that were excluded from the countervailing duty. Disbursement of the $5 Billion The Agreement spelt out in detail how the nearly $5 billion in AD and CVD duties collected since 2002 would be allocated upon termination of the litigation. Of those duties, $1 billion stayed in the U.S., $450 million was set aside to a fund for “meritorious initiatives,” $500 million was distributed to the Coalition members who brought the trade case, and the remaining $50 million went a binational industry council. The remaining deposits of approximately $4 billion were returned to U.S. importers, who were generally affiliated with Canadian mills. Issues Going Forward Canada and U.S.

officials will face obstacles as they work on a new softwood lumber agreement because of disagreements between their respective lumber industries, as well as among Canada’s provinces, on the type of export measures that should be applied to Canadian shipments. The U.S. lumber industry has signaled a preference for a hard quota on Canadian exports, while the Canadian government wants to ensure that any agreement includes more than one type of export measure, leaving it up to provinces to choose the option they ALERT page 2 of 2 prefer.

As the largest lumber supplier to the United States, British Columbia is shipping in large volumes, thus, will generally oppose a quota system. Quebec is demanding that its exports be excluded altogether under any new deal because it believes that its timber pricing system is market-based. Also, some Coalition members may favour litigation, considering they received $500 million under the last Agreement. The changed economics further complicate matters, as it is not certain that Canada would prevail in any new litigation in a similar way that it did in the last round. For all of these reasons a prudent course of action for all affected companies on both sides of the border is to monitor and advocate where necessary to ensure that their interests are protected and promoted in any new deal or ensuing litigation.

Those efforts include closely monitoring the developments over the next year and interjecting where necessary; undertaking the necessary efforts to make sure that the products that will be subject to any new litigation or deal are not adverse to their interest; advocating for particular export measures in any negotiated settlement; advocating for product and company exclusions or inclusions according to their interests; and understanding how any new AD or CVD duties or export measures, whether in the form of quotas or taxes, will be applied, paid and collected throughout the supply chain This client alert is published by Dickinson Wright PLLC/Dickinson Wright LLP to inform our clients and friends of important developments in the field of cross border law. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in here. FOR MORE INFORMATION CONTACT: Brenda C.

Swick is a Member in Dickinson Wright’s Toronto office. She can be reached at 416.594.4052 or bswick@dickinsonwright.com. Daniel D. Ujczo is Of Counsel in Dickinson Wright’s Columbus office.

He can be reached at 614.744.2579 or dujczo@dickinsonwright.com. Bruce C. Thelen is a Member in Dickinson Wright’s Detroit office. He can be reached at 313.223.3624 or bthelen@ dickinsonwright.com. .