Vol. 148, No. 12 — June 4, 2014
SOR/2014-121 May 16, 2014
SOFTWOOD LUMBER PRODUCTS EXPORT CHARGE ACT, 2006
Expiry of Section 12.2 of the Softwood Lumber Products Export Charge Act, 2006 Regulations
P.C. 2014-577 May 15, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to paragraph 101(a) and section 102 of the Softwood Lumber Products Export Charge Act, 2006 (see footnote a), makes the annexed Expiry of Section 12.2 of the Softwood Lumber Products Export Charge Act, 2006 Regulations.
EXPIRY OF SECTION 12.2 OF THE SOFTWOOD LUMBER PRODUCTS EXPORT CHARGE ACT, 2006 REGULATIONS
Ceasing to be in force
1. Section 12.2 of the Softwood Lumber Products Export Charge Act, 2006 ceases to be in force on October 12, 2013.
Coming into force
2. These Regulations are deemed to have come into force on October 13, 2013.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Under the Softwood Lumber Agreement Between the Government of Canada and the Government of the United States of America of 2006 (the Agreement), Canada is required to impose export measures, that is export charges and export volume limitations (quotas), on shipments of softwood lumber products to the United States. Canadian softwood lumber producers who export lumber manufactured in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario or Quebec to the United States pay an export charge when the price of lumber is at or below US$355 per thousand board feet (MBF). This charge is expressed as a percentage of the price of the product being exported. Export charge revenues collected by the Government of Canada are distributed to the provinces, minus costs associated with implementation and administration of the Agreement.
On January 18, 2008, the United States submitted a request to the London Court of International Arbitration (the Tribunal) requesting a review of various programs established by the Ontario and Quebec governments for the forest products sector. The United States contended that Canada had violated its commitments under the Agreement by reducing or offsetting the export measures.
On January 21, 2011, the Tribunal ruled that a subset of the challenged measures were in breach of the Agreement and imposed an additional export charge on the export of softwood lumber products originating from Ontario or Quebec. On September 29, 2011, the Minister of Finance tabled a ways and means motion to amend the Softwood Lumber Products Export Charge Act, 2006 (the Act) to provide for an additional export charge of 0.1% in the case of an export from Ontario or 2.6% in the case of an export from Quebec. This additional charge was included in the Keeping Canada’s Economy and Jobs Growing Act that was tabled in the House of Commons on October 4, 2011, and which received Royal Assent on December 15, 2011. The additional export charge came into force on March 1, 2011.
On September 30, 2013, Canada and the United States submitted a joint request for a limited arbitration in order to rule on a disagreement between the two countries concerning the termination date of the additional export charge. On March 26, 2014, the Tribunal released its ruling in favour of Canada and set that date as being October 12, 2013. Following the release of the Tribunal’s decision, the Government of Canada announced that it would cease collecting the additional export charge and that it would refund any such charges collected from the Ontario and Quebec exporters after October 12, 2013.
- End the application of section 12.2 of the Act to give effect to the Tribunal’s ruling of March 26, 2014.
The Expiry of Section 12.2 of the Softwood Lumber Products Export Charge Act, 2006 Regulations (the Regulations) establish October 12, 2013, as the date on which the provision that imposes the additional export charge on exports originating from Ontario or Quebec ceases to be in force. As a result, the additional charge no longer applies after that date.
The “One-for-One” Rule does not apply, as the Regulations do not impose new administrative costs on business.
Small business lens
The small business lens does not apply to the Regulations, as there are no costs imposed on business.
The elimination of the charge is fully consistent with Canada’s international trade agreements, as well as the Tribunal’s ruling that “Canada has no obligation to continue to apply the Compensatory Adjustments (the additional export charge) beyond October 12, 2013.”
Terminating the imposition of the additional export charge on exports to the United States will result in cost savings to softwood lumber producers. The exporters in the two provinces are expected to save over CAN$1 million per month.
As the Regulations set the date on which section 12.2 of the Act ceases to be in effect, the Government of Canada will refund charges collected from Ontario and Quebec exporters subsequent to the termination of the charge on October 12, 2013.
The affected provinces have been consulted and agree. Softwood lumber producers and other interested parties have been made aware of the status of the additional export charge.
Mr. Ron Hagmann
Excise Duties and Taxes Division
320 Queen Street, 20th Floor
- Footnote a
S.C. 2006, c. 13