DOC Office of Enforcement and Compliance’s Position on CVD Rate to be used

DOC Office of Enforcement and Compliance’s Position on CVD Rate to be used

Madison’s is becoming increasingly alarmed that — through sheer lack of clarity and basic instructions to US Customs Border agents — the US has a sneaky way of applying the highest announced softwood lumber duty rates to the widest range of companies:

  • what is “all others”?? that’s not a legal definition.
  • is the duty rate to be charged on the First Mill prices as always before (the primary sawmills which process raw timber), in other words the price of the first sale after the operator processing the tree, or “Selling” price, which would be the higher-value or remanufactured product made out of that primary sawmill wood?

These points are important, in fact VITAL, because this time there are a great many companies included in the new duty requirements which never were before.
Secondary processors and remanufacturers making a wide range of products, of which SOME are captured in this latest duty, have never been involved in this duty process before.
So vague legality, basic terms and definitions which are either unclear or not defined, is inexcusable for Canadian operators who just want to be in compliance with regulations.

To the point; there are actually customs operators at the border incorrectly advising their clients the wrong amounts, because they themselves don’t understand the new rules:

U.S. Customs Brokers who were informing their clients that the exporters’ All Other Case c-122-858-000 and 19.88% CVD Rate had to be used.  We can only convey to those parties that this information was received direct from the DOC [see below for details]

New Softwood Lumber Duty Regulations Beyond Unclear for Canadian Operators to be in Compliance

This is similar to changes to US Entry Visa requirements earlier this year…customs officials on the ground actually DID NOT KNOW how to interpret the new law.
These staff have a lot of power when it comes to implementation, and it is not unlikely that they follow the most encompassing interpretation of their documentation.

Part of the reason things are so murky this time is because there actually has not yet been a new USTR appointment since the change in US Administration. The Deputy seems to be handling the bureaucracy well enough, such as it is, but there is definitely little to no impetus to illuminate some of these basic questions of how to actually fill out pro-forma invoices and waybills to get Canadian wood across the border to the US.

This today from an excellent source for Madison’s, US Customs Broker Mike Jones:

We really have no way of knowing at this time, and probably not until after the Final Determination of both the CVD and AD investigations, which price is going to be used
The DOC would not comment on which price the CVD assessment was to be made, the “First Mill” or “Selling” price, with the latter allowing for the deduction of non-dutiable charges.

In lieu of any instructions from the DOC otherwise, we believe U.S. Customs is going to cite Title 19 CFR Section 152 provisions, requiring the AD/CVD assessments to be made on the “Transaction Value” – price paid or payable by the first non-related U.S. buyer to the last foreign seller.

As if all this wasn’t preposterous enough, the term “all others” is unclear. Again, specifically — because they have never been subject to a softwood duty before — secondary sawmills and remanufacturers, who almost always source their feedstock from a variety of primary mills, DO NOT KNOW which duty to apply to a selection of their products.

Again from Mike, below:

the CVD Case Number and CVD Rate used by an exporter that did not have their own specific CVD Case Number and specific CVD rate, was to use the CVD Case Number and specific CVD rate of the Primary Mill from whom they sourced the material they are exporting to the U.S.

If an exporter with the All Other CVD Case Number C-122-858-000 and 19.88% CVD rate sourced their lumber from a specifically listed Primary Mill with their own specific CVD Case Number

for example Resolute or any of their listed wholly owned subsidiaries, their C-122-858-003 Case Number, and specific 12.82% CVD Rate would be the CVD Case Number and CVD Rate
Conversely, if the exporter sourced their lumber being exported to the U.S. from West Fraser Mills or any other their listed wholly owned subsidiaries, West Fraser’s CVD Case Number C-122-858-005 and their 24.12% CVD Rate would be used.

There remain some HUGE QUESTIONS about which actual commodity items are included in the new duty.

Unassembled Pallet exporters should be sure to continue not only to include the proper description and board to stringer ratios of each type of pallet, but also be sure to include the statement “Pallets must be assembled in exact ratios specified”.  If any over-sized pallets are to be involves (deck board thicknesses in excess of one inch, or stringers in excess of the usual 48 – 52 inch lengths…

it goes on like that for a while. This is technical stuff involving billions of dollars annually of Canadian manufactured product exports. it is ASTONISHING that the unrolling of the FIFTH softwood lumber duty by the US in recent decades is this much of an absolute blunder.

At writing, Madison’s got in touch with another excellent source, Russ Cameron at The Independent Wood Processors Association of BC. Russ’s comments follow below:

This iteration of the Dispute is by far the messiest to date.  Customs and Border Protection (CBP) is bewildered on how to deal with entries when final Scope is unknown, value for duty is unknown, and there is nothing in the US legislation directing them on how to collect Critical Circumstances.

CBP is scratching their heads and they have no choice but to play it safe and use “ad valorem” value for duty and include everything that is covered under the broad range of HTSUS Codes listed in the PD until and if they receive some dispositive language removing items from the codes.

It seems the soonest US officials are REQUIRED to clarify these important points is December, with the Final Duty Rates coming on in January 2018. Representatives from several industry groups and associations are madly trying to get answers before that. Madison’s will update readers with the latest developments of this vital sector to the general Canadian economy as they happen.

US Customs Broker Mike Jones can be contacted at:

Jones & Jones Customs Brokers and Trade Consultants
Michael D. Jones, President – CHB – Inactive Marine NCO
Blaine Phn: 360-332-6090 or 888-536-5079
Fax: 360-332-1282
Cells: Michael 360-220-6101 – Kim 360-201-2180
638 Peace Portal Drive –  Suite 202
Blaine, Washington 98230
J&J Website:
Cargo Tracking:
Filer Code: WQO (Whiskey-Queen-Oscar)

BC IWPA President Russ Cameron can be found here:

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