Feds to levy 19 per cent special tax on softwood lumber deal holdouts: Knowledge Driven Revolution

The federal government plans to levy a 19 per cent special tax on lumber companies that withhold their co-operation with the newly signed softwood lumber deal with the United States, The Canadian Press has learned.

A federal official confirmed Tuesday the tax will be imposed in a way that penalizes lumber exporters who refuse to sign a waiver that allows Ottawa to leave about US$1 billion in lumber duties in American hands after the agreement comes into force.

Under the deal, signed Tuesday by International Trade Minister David Emerson and U.S. Trade Representative Susan Schwab in Ottawa, Canadian exporters will get back about 80 per cent of the roughly US$5 billion in punitive duties they've paid to U.S. Customs since May 2002.

The American lumber industry that triggered the duties because of complaints Canadian lumber is subsidized will get to split about US$500 million and the U.S. government will keep about US$450 million to spend on "meritorious initiatives" to be determined jointly with the Canadian government.

The deal requires companies that are due refunds to sign waivers allowing Ottawa to kick money back to the Americans because otherwise they would be entitled to a 100 per cent refund.

The holdouts have argued the agreement is a bad deal for the industry and refused to sign the waivers or withdraw trade litigation underway in U.S. courts.

Emerson's communication's director, Bob Klager, said the "special charge" is being imposed at the request of the "overwhelming majority" of lumber exporters who support the agreement.

"Industry has been urging government to create a mechanism such as this to ensure equity, a level playing field and deter free riders," he said from Ottawa.

Conservative Prime Minister Stephen Harper announced last month Ottawa is proceeding with legislation to implement the agreement's border tax and other provisions after a "clear majority" of lumber producers agreed to sign on to the deal.

A posting on International Trade's softwood website says the special charge will be included in legislation needed to implement the agreement.

Klager said enabling legislation will likely be introduced next week when Parliament resumes sitting but could not say what percentage of companies due duty refunds had formally signed onto the agreement.

The tax, roughly equivalent to the amount being funnelled back to the Americans, came as no surprise to the deal's critics within the lumber industry.

Ottawa had warned during negotiations over the summer that it would not tolerate free riders who expected to get all their money back while other exporters compromised to reach an agreement with the Americans.

But dissenters saw it as another example of high-handedness and arrogance by the Tories, who pushed the pace of negotiations since reaching a framework agreement with the U.S. side in late April.

They didn't have a majority of people with unqualified support for letting the Americans keep 20 per cent of the duties, said Vancouver mill owner David Gray, a spokesman for the Free Trade Lumber Council.

"Now what they're doing is saying, well, in the interests of Canada we're taking 20 per cent from everybody," said Gray.

Letters signed by Marie-Lucie Morin, a senior bureaucrat at the Department of International Trade, were sent by courier Tuesday to Canadian lumber exporters.

The letter says that to ensure uniform treatment of all companies benefiting from the terms of the agreement, notably the revocation of U.S. anti-dumping and countervailing duty orders, the government plans to take steps that all companies who receive funds as a result of the agreement contribute to the US$1-billion fund retained by the Americans.

"To this end it is the intention of the government of Canada to introduce a special charge on all refunded duty deposits," the letter says. "The rate of the proposed special charge would be equal to the percentage of funds directed to the U.S. interests . . . approximately 19 per cent."

It goes on to say companies that sign their duty deposit waivers will get a rebate from Ottawa.

It's expected to take many months for U.S. Customs to return lumber duties to eligible companies and Ottawa will advance the refunds through the Export Development Corp.

" This special charge is intended to minimize Canada's fiscal risk regarding the proposed payment to U.S. interests and to ensure fairness and equity among those who benefit from the agreement," says the posting on the International Trade website.

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HOME V for Vendetta - R for Reality Canadian Bird Flu Pandemic Looming ? Shill of the Week: Stephan Harper Aspartame: The Sweetest Killer Chicken Little Terrorist of the Week: Creating Fake Terrorists Shill of the Week: Paul Martin The Number 1 Reason YOU became a Slave	Feds to levy 19 per cent special tax on softwood lumber deal holdouts STEVE MERTL - CP September 15, 2006 The federal government plans to levy a 19 per cent special tax on lumber companies that withhold their co-operation with the newly signed softwood lumber deal with the United States, The Canadian Press has learned. A federal official confirmed Tuesday the tax will be imposed in a way that penalizes lumber exporters who refuse to sign a waiver that allows Ottawa to leave about US$1 billion in lumber duties in American hands after the agreement comes into force. Under the deal, signed Tuesday by International Trade Minister David Emerson and U.S. Trade Representative Susan Schwab in Ottawa, Canadian exporters will get back about 80 per cent of the roughly US$5 billion in punitive duties they've paid to U.S. Customs since May 2002. The American lumber industry that triggered the duties because of complaints Canadian lumber is subsidized will get to split about US$500 million and the U.S. government will keep about US$450 million to spend on "meritorious initiatives" to be determined jointly with the Canadian government. The deal requires companies that are due refunds to sign waivers allowing Ottawa to kick money back to the Americans because otherwise they would be entitled to a 100 per cent refund. The holdouts have argued the agreement is a bad deal for the industry and refused to sign the waivers or withdraw trade litigation underway in U.S. courts. Emerson's communication's director, Bob Klager, said the "special charge" is being imposed at the request of the "overwhelming majority" of lumber exporters who support the agreement. "Industry has been urging government to create a mechanism such as this to ensure equity, a level playing field and deter free riders," he said from Ottawa. Conservative Prime Minister Stephen Harper announced last month Ottawa is proceeding with legislation to implement the agreement's border tax and other provisions after a "clear majority" of lumber producers agreed to sign on to the deal. A posting on International Trade's softwood website says the special charge will be included in legislation needed to implement the agreement. Klager said enabling legislation will likely be introduced next week when Parliament resumes sitting but could not say what percentage of companies due duty refunds had formally signed onto the agreement. The tax, roughly equivalent to the amount being funnelled back to the Americans, came as no surprise to the deal's critics within the lumber industry. Ottawa had warned during negotiations over the summer that it would not tolerate free riders who expected to get all their money back while other exporters compromised to reach an agreement with the Americans. But dissenters saw it as another example of high-handedness and arrogance by the Tories, who pushed the pace of negotiations since reaching a framework agreement with the U.S. side in late April. They didn't have a majority of people with unqualified support for letting the Americans keep 20 per cent of the duties, said Vancouver mill owner David Gray, a spokesman for the Free Trade Lumber Council. "Now what they're doing is saying, well, in the interests of Canada we're taking 20 per cent from everybody," said Gray. Letters signed by Marie-Lucie Morin, a senior bureaucrat at the Department of International Trade, were sent by courier Tuesday to Canadian lumber exporters. The letter says that to ensure uniform treatment of all companies benefiting from the terms of the agreement, notably the revocation of U.S. anti-dumping and countervailing duty orders, the government plans to take steps that all companies who receive funds as a result of the agreement contribute to the US$1-billion fund retained by the Americans. "To this end it is the intention of the government of Canada to introduce a special charge on all refunded duty deposits," the letter says. "The rate of the proposed special charge would be equal to the percentage of funds directed to the U.S. interests . . . approximately 19 per cent." It goes on to say companies that sign their duty deposit waivers will get a rebate from Ottawa. It's expected to take many months for U.S. Customs to return lumber duties to eligible companies and Ottawa will advance the refunds through the Export Development Corp. " This special charge is intended to minimize Canada's fiscal risk regarding the proposed payment to U.S. interests and to ensure fairness and equity among those who benefit from the agreement," says the posting on the International Trade website. Read the full article here Broken Link? If the link to the original article is broken or has been altered you can view the article by clicking here. About KDR \| \| Home \| \| Weekly Features Archive	Weekly Features Archive
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