Much fuss was made this week among operators subject to the  Canadian Softwood Lumber AD/CVD Case CVD GAP period. The issue requiring further clarification has to do with the ability of the U.S. Customs Broker to delay filing of a shipment’s “Entry Summary” for ten business days from the time the shipment is “Arrived” at the U.S. Customs Port of Entry.    

Madison’s spoke with intrepid US Customs Broker Mike Jones [http://www.joneschb.com] Thursday for an accurate explanation of circumstances.

With respect to CVD investigations, the U.S. Department of Commerce has 120 days from the date of their Preliminary Determination to file their Final Determination, which in this case, is August 25^th  The Final Determination will provide whatever final CVD rates are to be used going forward, as well as confirm the Scope’s captured commodities.  If the DOC does not file by the 120 day deadline, they can no longer collect the applicable CVD Rate Cash Deposits – until they do file, providing what is referred to as a “GAP”.  Because of the U.S. Customs Broker’s ability to manipulate the filing of the Entry Summary, shipments crossing into the U.S. as early as 12:01 a.m. (midnight) (East Coast Time) August 14^th, would be exempted from the CVD Cash Deposit requirements, due to the broker filing the August 14^thshipment’s Entry Summary after the August 25^th Final CVD Determination deadline. Monday, Monday, August 28^th would actually be the tenth business day – due to the weekend involved.

Canadian exporters see this looming deadline for the DOC — in conjunction with the normal ten business day window for their Customs Broker to file the Entry Summary — as an potential opportunity to NOT pay preliminary CVD duties on wood shipped to the US during that ten day ‘gap’.

For example: the U.S. Customs Broker defers submitting their Entry Summary data specific to shipments crossing  into the U.S. August 14, since by U.S. Customs Regulations,  they have until August 28 (the tenth business day)  to do so, in the hopes that the DOC does NOT meet the 120 day (August 25) deadline to publish a Final Determination, resulting in their clients not having to tender the Preliminary CVD Cash Deposits on any shipments crossing August 14^th and after – until the DOC does publish their Final Determination.

HOWEVER, should the DOC indeed publish their Final Determination on or before the 120^thday, the CVD Cash Deposits related to any shipments that crossed August 14^th and after, would be required to be tendered to U.S. Customs no later than the tenth business day.   Unless the CVD Cash Deposits are being remitted to  U.S. Customs via an ACH program, or the client has an adequate deposit in the broker’s account, this could create a rush to get the funds specific to shipments that crossed between August 14^th and August 28th to the broker for remittance to U.S. Customs before the tenth business day.

This is not a guaranteed window or gap exempting payment of the existing preliminary CVD duties.  This will only be allowed IF the US Department of Commerce does not comply with U.S. DOC AD/CVD regulations and publishes its Final Determination late.

No one can say how long the window will be open.  Due to the significant amount of CVD monies involved, extreme pressure is being put on the DOC to publish their Final timely,  Additional pressure is being put on the Softwood Lumber Agreement negotiators to announce an SLA before the NAFTA negotiations are schedule to begin; August 16^th.   Official announcement of an SLA prior to the CVD Final Determination deadline of August 25^th, would include dismissal of the AD/CVD case, making the “CVD GAP” issue moot.

FOR MORE INFO PLEASE CONTACT:

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: www.joneschb.com

Cargo Tracking: www.smartborder.com

Filer Code: WQO (Whiskey-Queen-Oscar)

Fast on the heals of British Columbia’s new NDP Premier John Horgan’s assertion last week that Canada and the US were “close” to a new softwood lumber trade deal, Canadian Prime Minister Justin Trudeau said on Tuesday he was "very hopeful" of getting a deal with the United States on softwood lumber, which has become an escalating trade dispute ahead of NAFTA talks this month.

The two countries must chop down one big, remaining impediment to a deal on softwood lumber and this obstacle involves wood from neither country but from other places: Germany, Sweden, Chile, Brazil and Russia, said GlobalNews Tuesday.

This sticking point involves third-country imports. according to CBC also Tuesday. More specifically, it's about who gets to fill the US demand for lumber in the event of a hot construction market like the present one, when American supply falls short.

The two governments have already agreed to split the US lumber market by percentage. According to Canada’s ambassador to Washington, Americans would supply around 70 per cent; Canadian imports would be capped around 30 per cent, which falls somewhere in the historical average.

The basic point, when US lumber sales are high, is to allow Canadian exporters to surpass that regular cap of 30 per cent, rather than have other countries fill the gap. Other countries, including Germany, Sweden, Chile, Brazil and Russia, currently supply a minuscule share of US imports.

In such an event, Canada is adamant that the agreement should contain what's called a hot-market provision. There are different ways to design it. One example appears in a sugar deal struck between the US and Mexico this June — if the US seeks additional sugar imports, Mexican suppliers would get a right of first refusal.

US Coniferous Sawn Wood Imports: May 2017

According to the latest figures from the US Department of Agriculture’s Foreign Agriculture Service, for January to May 2017 the USA imported US$2,235 billion of softwood lumber from the World, which amounts to a 17 per cent increase from the first five months of the previous year, when it was US$1,858 billion.

The vast majority of this wood came from Canada, with US imports of Canadian softwood lumber up 16 per cent to US$2,011 for the first five months of this year, from US1,690 in January to May 2016.

Canada Coniferous Sawn Wood Exports: May 2017

Looked at another way, the latest Statistics Canada data shows that Canada exported C$4,538 billion of softwood lumber to the World in January to May 2017, which amounts to a 13 per cent increase over the same time last year when it was C$3,954.Exports of Canadian softwood lumber to the USA for the first five months of this year were up 14 per cent, to C$3,420 from C$2,949 for January to May 2016.

Canada Softwood Lumber Production, Sawmill Manufacturing Sales: May 2017

Both were essentially flat compared to the previous year.

(blue bars are total Canada softwood lumber production, red line is BC, AB, QC combined sawmill manufacturing sales)

US LOG EXPORTS: May 2017

Yet more proof of a very healthy US forest products manufacturing industry, US log exports continue to plummet as US domestic solid wood manufacturers are consuming logs at their own softwood lumber production facilities:

In January to May 2017, US log exports to the World dropped by 14 per cent, to US$432 million, from US$492 million in the first five months last year.

US log exports to China, by far the largest customer, increased by 3 per cent, from US$205 million to US$261 million for January to May 2017.

CANADA LOG EXPORTS: May 2017

In Canada, of interest, log exports — which are tiny compared to Canada lumber exports or US log exports — to the World did increase in the first five months of 2017, to C$335 million from C$294 million the previous year.

Canadian log exports to China improved by 17 per cent to C$176 million from C$147 million in January to May 2016.