“On January 10, 2008, the Government of Canada proposed creation of a $1 billion Community Development Trust, including aid to Canada’s forestry sector.  In response to concerns in the United States about this announcement, on January 15, 2008, Ambassador Susan C. Schwab sent a letter to Canadian Trade Minister David L. Emerson seeking Canada’s assurance that any funds disbursed to the forestry sector from the Community Development Trust will be used in a manner consistent with Canada’s obligations under the U.S.-Canada Softwood Lumber Agreement (SLA).  The United States remains committed to the SLA, and hopes Canada will demonstrate its commitment to the Agreement as it considers this proposal.”

BACKGROUND:

The U.S.-Canada Softwood Lumber Agreement entered into force on October 12, 2006.  Under the SLA, the Government of Canada committed not to take any action that circumvents the SLA, including actions that reduce or offset the Agreement’s export measures, such as providing new subsidies to producers or exporters of Canadian softwood lumber products.

On March 30, 2007, the United States requested formal consultations with Canada to resolve concerns regarding Canada’s implementation of the export measures, in particular the operation of the Agreement’s surge mechanism and quota volumes, as well as several federal and provincial assistance programs that benefit the Canadian softwood lumber industry.  After formal consultations failed to resolve these concerns, the United States requested international arbitration under the terms of the Agreement on August 13, 2007.  That arbitration challenges Canada’s application of the import surge mechanism and quota volumes.  The United States expects to file a second request for arbitration shortly challenging a number of assistance programs implemented by Quebec and Ontario.

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