Memorandum on Determination Under Section 301 of the Trade Act of 1974

Memorandum for the Secretary of Commerce, the United States Trade Representative

Pursuant to Section 301 of the Trade Act of 1974, as amended (19 U.S.C. 2411), I have determined that the inability of the Government of Canada to collect an export charge on exports of certain softwood lumber products to the United States of America until at least January 8, 1987, is necessary to enforce the rights of the United States under a trade agreement or is unjustifiable and unreasonable and constitutes a burden or restriction on U.S. commerce and that expeditious action is required. I also have determined in response to proclaim a temporary increase in the rates of duty on certain softwood lumber products exported from Canada. The increase will apply to those products listed in the Appendix hereto and will add a surcharge of 15 percent ad valorem to the rate of duty currently applicable to each such product when exported from Canada. This increase shall go into effect on December 31, 1986, and will terminate when the Government of Canada begins to collect the export charge on exports of certain softwood lumber products, as they have agreed to do in the Memorandum of Understanding between our two Governments signed today. I direct the Secretary of Commerce to determine when the Government of Canada begins to collect the export charge and, when he has made that determination, to take all necessary and appropriate steps to end the imposition of the temporary surcharge I have today declared.

Fulfillment of the objectives and commitments in the Uniderstanding is of critical importance. Therefore, I intend to take or to authorize all appropriate action in response to any future failure by the Government of Canada to meet the objectives and commitments of the Understanding.

Reasons for Determination

Today the Governments of Canada and of the United States of America have signed an agreement on trade in certain softwood lumber products. This agreement will enhance the ability of our softwood lumber industry to complete by negating the impact of Canadian provincial practices which the U.S. Department of Commerce preliminarily determined to be subsidies.

This agreement successfully addresses the problems which led the U.S. softwood lumber industry to file a petition under the countervailing duty law with the Department of Commerce. As a result, the U.S. industry is withdrawing its petition and the Department of Commerce will terminate its investigation.

Under the agreement, the Government of Canada will impose a 15 percent tax on exports of softwood lumber to the United States. This tax may be phased out as the Canadian provinces increase the charges imposed on softwood lumber production. The Government of Canada has informed us that because of administrative reasons they cannot begin to collect the export charge provided for in the Uniderstanding until at least January 8, 1987. Since the investigation begin conducted by the Commerce Department was terminated today, there will be at a minimum a nine-day period during which the Canadians are not collecting the export charge. The temporary surcharge I have declared is necessary to prevent an increase in exports of certain softwood lumber products from Canada which would have the effect of undermining the objectives of the Understanding.

This determination shall be published in the Federal Register.

RONALD REAGAN

THE WHITE HOUSE,

Washington, December 30, 1986.