BEFORE THE INTERNATIONAL TRADE ADMINISTRATION UNITED … · 2016-12-02 · Andrew W. Kentz David A. Yocis Nathaniel M. Rickard Lisa W. Wang Roop Bhatti Michelle Li Jeremy Lagelee,

DOC Inv. No. A-122-857

ITC Inv. No. 731-TA-__ Investigation

PUBLIC VERSION Business Proprietary Information in Brackets ([ ]) Redacted from Pages 3-12, 14-15, 19, 21-23, 25-27, 30-32, 34-35, Exhibits 69, 72, 73, 75, 77, 78, 81, 84, 85 of this Volume.

BEFORE THE INTERNATIONAL TRADE ADMINISTRATION UNITED STATES DEPARTMENT OF COMMERCE AND THE UNITED STATES INTERNATIONAL TRADE COMMISSION

PETITIONS FOR THE IMPOSITION OF ANTIDUMPING DUTIES ON IMPORTS OF CERTAIN SOFTWOOD LUMBER PRODUCTS FROM CANADA

ON BEHALF OF THE COMMITTEE OVERSEEING ACTION FOR LUMBER INTERNATIONAL TRADE INVESTIGATIONS OR NEGOTIATIONS (“COALITION”)

VOLUME II: ANTIDUMPING DUTIES

November 25, 2016

Valerie Owenby Capital Trade Inc. 1200 18th Street, N.W. Suite 601 Washington, DC 20036 Telephone: (202) 463-1850

Andrew W. Kentz David A. Yocis Nathaniel M. Rickard Lisa W. Wang Roop Bhatti Michelle Li Jeremy Lagelee, Law Clerk

PICARD KENTZ & ROWE LLP 1750 K Street, N.W. Suite 800 Washington, D.C. 20006 Telephone: (202) 331-4040

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Table of Contents

I. ALLEGATION OF SALES AT LESS THAN FAIR VALUE .................................... 1

A. METHODOLOGY .................................................................................................1

B. EXPORT PRICE ....................................................................................................3

1. U.S. Sales Price ................................................................................................. 4

2. Freight and Other Expenses ............................................................................... 6

3. Computation of Ex-Factory U.S. Price ............................................................ 12

C. EX-FACTORY NORMAL VALUE BASED ON PRICE ..................................12

1. Domestic Inland Freight .................................................................................. 13

2. Early Payment Discounts................................................................................. 14

3. Computation of Ex-Factory NV ...................................................................... 14

4. Price-to-Price Dumping Margin Calculation ................................................... 14

D. EX-FACTORY NV BASED ON CONSTRUCTED VALUE ............................15

1. General Methodology ...................................................................................... 17

2. Production Process .......................................................................................... 19

3. The Eastern SPF Model ................................................................................... 21

4. Western DF Model .......................................................................................... 31

II. CONCLUSION ....................................................................................................... 36

Exhibit Number DescriptionExhibit 1 Random Length, 2016 Big Book: The Buyers and Sellers Directory of the Forest Products Industry (2016) Exhibit 2 U.S. Softwood Lumber Industry: 2013 – 2016 YTD, WWPA Lumber Track Summary

Exhibit 32006 Softwood Lumber Agreement between the Government of the United States of America and the Government of Canada, Oct. 12, 2005

Exhibit 4 Western Wood Products Association, “Home Page”Exhibit 5 Southern Forest Products Association (“SFPA”), “Our Members”Exhibit 6 U.S. Department of Commerce, National Institute of Standards and Technology, American Softwood Lumber Standard Exhibit 7 Southern Pine Inspection Bureau, “About Us: History of Southern Pine Inspection Bureau”Exhibit 8 Western Wood Products Association, “Western Lumber Grades and Quality Control” Exhibit 9 Northeastern Lumber Manufacturers Association, “Lumber and Timbers Inspection Program”

Exhibit 10 Petition Support Letters

Exhibit 11“AD Investigation Initiation Checklist: Certain Passenger Vehicle and Light Truck Tires from the People’s Republic of China, Attachment II,” Case No. A-570-016 (July 14, 2014)

Exhibit 12 Canfor Corporation, Annual Information Form 2016 (excerpt)Exhibit 13 International Forest Products, 2015 Annual Report (excerpt)Exhibit 14 West Fraser Timber Co. Ltd., Annual Report 2015 (excerpt)Exhibit 15 West Fraser Timber Co. Ltd., 2nd Quarter 2016 Report to Shareholders (excerpt)Exhibit 16 Softwood Lumber Products from Canada , No. ECC-94-1904-01USA, Aug. 3, 1994, dissenting opinion of Wilkey, J.

Exhibit 17Notice of Final Results of Countervailing Duty Administrative Review and Rescission of Certain Company-Specific Reviews: Certain Softwood Lumber Products from Canada, 69 Fed. Reg. 75,917 (Dep’t Commerce Dec. 20, 2004) and accompanying Issues and Decision Memorandum

Exhibit 18Notice of Final Results of Antidumping Duty Administrative Review: Certain Softwood Lumber Products from Canada, 70 Fed. Reg. 73,437 (Dep’t Commerce Dec. 12, 2005) and accompanying Issues and Decision Memorandum

Exhibit 19Notice of Preliminary Results and Extension of Final Result of Countervailing Duty Administrative Review: Certain Softwood Lumber Products from Canada, 71 Fed. Reg. 33,932 (Dep’t Commerce June 12, 2006)

Exhibit 20Notice of Final Results of Antidumping Duty Administrative Review and Notice of Final Results of Antidumping Duty Changed Circumstances Review: Certain Softwood Lumber Products From Canada, 69 Fed. Reg. 75,921 (Dep’t Commerce Dec. 20, 2004) and accompanying Issues and Decision Memorandum

Exhibit 21Notice of Final Results of Antidumping Duty Administrative Review: Certain Softwood Lumber Products From Canada, 70 Fed. Reg. 73,437 (Dep’t Commerce Dec. 12, 2005) and accompanying Issues and Decision Memorandum

Exhibit 22International Trade Commission, Press Release: Certain Softwood Lumber Products from Canada , Case No. USA/CDA-02-1904-07, Views of the Commission on Remand (Third) (Sept. 10, 2004)

Exhibit 23Certain Softwood Lumber Products from Canada, 67 Fed. Reg. 15,539 (Apr. 2, 2002) (Notice of Final Affirmative Countervailing Duty Determination and Final Negative Critical Circumstances Determination) and accompanying Issues and Decision Memorandum

Exhibit 24 Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 701-TA-928 (Final), USITC Pub. 3509 (May 2002)Exhibit 25 William T. Simpson, “Drying and Control of Moisture Content and Dimensional Changes,” Chapter 12Exhibit 26 U.S. Softwood Lumber Import StatisticsExhibit 27 Canadian Imports Following Expiration of SLA 2006 Exhibit 28 Canada Ministry of Justice, Softwood Lumber Products Export Permit Fees Regulations , SOR/96-317, Section 1 (Oct. 26, Exhibit 29 Softwood Lumber from Canada, Inv. No. 701-TA-312 (Final), USITC Pub. 2530 (July 1992)Exhibit 30 Softwood Lumber from Canada, Inv. No. 701-TA-197 (Prelim), USITC Pub. 1320 (Nov. 1982) Exhibit 31 Softwood Lumber from Canada, Inv. No. 701-TA-274 (Prelim), USITC Pub. 1874 (July 1986)

Exhibit 32Katie Hoover & Ian F. Fergusson, “Softwood Lumber Imports From Canada: Current Issues,” Congressional Research Service, R42789 (May 11, 2016)

Exhibit 33Certain Circular Welded Pipe and Tube from Brazil, India, Korea, Mexico, Taiwan, Thailand, and Turkey, Investigation Nos. 701-TA-253 and 731-TA-132, 252, 271, 273, 532-534 and 536 (Third Review), USITC Pub. 4333 (June 2012)

Exhibit 34 Apparent Consumption and Import Penetration Statistics

Exhibit 35London Court of International Arbitration, “Award on Liability,” Case No. 7941, United States, Claimant v. Canada, Respondent (Mar. 3, 2008)

Exhibit 36 London Court of International Arbitration, “Award,” Case No. 91312, Canada, Claimant v. United States, Respondent Exhibit 37 Random Lengths, “U.S.–Canada Trade Dispute Timeline: 1982 to Present,” (Dec. 2012)Exhibit 38 London Court of International Arbitration, “Award,” Case No. 81010, United States, Claimant v. Canada, Respondent (Jan. Exhibit 39 Random Lengths , “U.S.-Canada Trade Dispute Timeline: Answers to frequently asked questions in the trade dispute” Exhibit 40 SLA 2006 Export Tax Measures Applied by Month

Exhibit 41Keegan, Daniels, et al. , “Impact of the Great Recession and Housing Collapse on the Forest Products Industry in the Western United States,” University of Montana and the USDA Forest Service, Pacific Northwest Research Center (2012)

Exhibit 42Hodges, Hartsell et al. , “Recession Effects on the Forests and Forest Products Industries of the South,” University of Tennessee and USDA Forest Service, Southern Research Station (2012)

Exhibit 43 CME Group, “Agricultural Products: An Introductory Guide to Random Length Lumber Futures and Options” Exhibit 44 Random Lengths Summary January 2013 – November 2016

Exhibit 45Crow’s Weekly Market Report (August - September 2016); Random Lengths Weekly Report (January 29, 2016; August 26, 2016)

Exhibit 46 Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 731-TA-928 (Prelim), USITC Pub. 3426 (May 2001)Exhibit 47 Petitions for Trade Adjustment AssistanceExhibit 48 Canadian Softwood Lumber Exports Entering the U.S. Market Exhibit 49 Random Lengths (Sept. 16, 2016)Exhibit 50 Random Lengths (Aug. 5, 2016)Exhibit 51 Brian Yu, “Softwood Agreement Expiration Lifts B.C. Lumber Exports,” Business in Vancouver (June 14, 2016)Exhibit 52 Natural Resources Canada, “Legality and Sustainability” (May 20, 2016)Exhibit 53 Curtailments 2013-2016

Petition Exhibit List

Page 1 of 8

Exhibit Number DescriptionPetition Exhibit List

Exhibit 54 COALITION MembersExhibit 55 U.S. Producers of Softwood LumberExhibit 56 U.S. Lumber Production in 2015Exhibit 57 Harmonized Tariff Schedule of the United States (2016) Supplement-1, Section 9, Chapter 44Exhibit 58 U.S. Importers Contact InformationExhibit 59 Lost Sales and Lost Revenue InformationExhibit 60 WWPA Lumber Track (August 2016; June 2015; June 2014)Exhibit 61 Canadian Producers of Softwood Lumber

Exhibit 62Canada, House of Commons, Standing Committee on International Trade, “Evidence: Tuesday, May 3, 2016,” CIIT-14 (Statement by Mr. Duncan Davies)

Exhibit 63 2006 Softwood Lumber Agreement (Jan. 23, 2012)Exhibit 64 Random Lengths , “U.S.-Canada Lumber Trade Issue: Latest Developments”Exhibit 65 Critical Circumstances ArticlesExhibit 66 Data Regarding the Surge of Canadian ImportsExhibit 67 Senators' Letter to Ambassador Michael Froman (July 19, 2016)Exhibit 68 U.S. Producers Submitting Certain Financial DataExhibit 69 Cost Benchmark ReportExhibit 70 Russ Taylor, “BC Coast Industry Competitiveness: Good News and Bad News,” Truck LoggerBC (Spring 2016)Exhibit 71 International Wood Markets Group Inc.'s Client ListExhibit 72 U.S. Price DeclarationsExhibit 73 Margin Calculations for Offers 1 – 5 Exhibit 74 Lumber TariffsExhibit 75 Canadian National Rail Rates Exhibit 76 Brokerage & Handling Calculation and SourcesExhibit 77 Home Market DeclarationExhibit 78 Eastern SPF Cost Model CalculationsExhibit 79 Description of Lumber Wrap ProductsExhibit 80 Quebec Import Statistics: HTS 392010 Exhibit 81 Lumber Wrap Declaration Exhibit 82 Full Quebec Stumpage Data for the Presumptive POIExhibit 83 Calculation of SG&A, Interest Expense and Profit RatiosExhibit 84 Mills and Annual Production Capacities - Supporting DocumentationExhibit 85 Western DF Cost Model Calculations

Exhibit 86Maureen Puettmann et al., “Cradle-to-Gate Life Cycle Assessment of Softwood Lumber Production from the Northeast-North Central,” Consortium for Research on Renewable Industrial Materials, University of Washington (April 2013)

Exhibit 87 Quebec Timber Sales Office (Bureau de mise en marché des bois )Exhibit 88 Ontario Crown Forest Sustainability Act (1994) Exhibit 89 Ontario Regulation 167/95

Exhibit 90Ontario Crown Timber Charges (Stumpage) – Charges Payable to Forestry Futures Trust (FFT) CFSA Section 51(5) (October 1, 2015 – September 20, 2016)

Exhibit 91 Ontario Harvest Volume and Value (2001)

Exhibit 92Department Final Redetermination Pursuant to Court Remand, “Husteel Co., Ltd., et al., v. United States, Consol. Court No. 14-0021 ,” A-580-870 (Feb. 22, 2016)

Exhibit 93 BC Forest Act Exhibit 94 BC Ministry of Forests, Lands, and Natural Resource Operations, Interior Appraisal Manual, as amended, effective July 1, Exhibit 95 BC Harvest Billing System (Oct. 2015 - Aug. 2016)Exhibit 96 Department Exchange Rates for the Presumptive POIExhibit 97 Thunder Bay Chamber of Commerce, Free Trade Needed on Softwood Lumber (Sept. 1, 2016)Exhibit 98 IRS Depreciation Table (excerpt)

Exhibit 99Government of Canada, “Response to the Department’s July 12, 2016 New Subsidy Allegation Questionnaire,” Countervailing Duty Expedited Review of Supercalendered Paper from Canada, (Aug. 12, 2016) (excerpt)

Exhibit 100“Preliminary Results of Expedited Review of the Countervailing Duty Order on Supercalendered Paper from Canada,” C-122-854 (November 18, 2016)

Exhibit 101 BC Ministry of Forests, Mines, and Lands, The State of British Columbia’s Forests (3d ed. 2010)

Exhibit 102BC Ministry of Forests, Lands and Natural Resource Operations, Major Primary Timber Processing Facilities in British Columbia 2014 , Nov. 2015

Exhibit 103 BC Harvest Billing System data (Apr. 2015 - Mar. 2016)Exhibit 104 BC Ministry of Forests, Lands, and Natural Resource Operations, Coast Appraisal Manual, as amended, effective Apr. 1, Exhibit 105 Robert D. Stoner & Matthew G. Mercurio, Economic Analysis of Price Distortions in a Dominant-Firm/Fringe Market (Jan. Exhibit 106 Washington Department of Natural Resources, Delivered Log Price Surveys (Apr. 2015-Mar. 2016)Exhibit 107 Lumber IV AR3 Prelim BC Calculation Memorandum (May 31, 2006)Exhibit 108 Washington Department of Natural Resources, Delivered Log Price CalculationsExhibit 109 Report of the Commission of Inquiry into Compensation for the Taking of Resource Interests, Aug. 21, 1992Exhibit 110 BC Forestry Revitalization Act, SBC 2003, ch. 17

Exhibit 111Canadian Council for Policy Alternatives, "$145 Million and Counting in Compensation for “Lost” Timber: Forest Industry Sweet Deal" (Mar. 9, 2006)

Exhibit 112 Lumber IV Investigation , Amended Calculations for the Final Affirmative Determination (April 25, 2002)Exhibit 113 Alberta Innovates Bio Solutions Presentation, “Building the next generation of feedstocks” (2011)

Exhibit 114Government of Alberta, "Questionnaire Response of the Government of Alberta" Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada, Ex. AB-S-1 (June 28, 2001)

Exhibit 115Government of Alberta, "Questionnaire Response of the Government of Alberta" Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada, Ex. AB-LER-11 (June 28, 2001)

Exhibit 116 Sustainable Forest Management in Canada, “Forest Governance in the Province of Alberta” (2014)

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Exhibit 117 Alberta Forests Act, R.S.A. 2000 Ch. F-22Exhibit 118 Alberta Timber Management Regulation 60/1973Exhibit 119 Alberta Department of Agriculture and Forestry, “Forest Tenure – Forest Management”

Exhibit 120 Government of Alberta, “Forestry Economic Impact Report 2012” (May 2013) (“2012 Alberta Econ. Impact Report”)

Exhibit 121 Alberta Sustainable Resource Development, “Differences between the main types of forest tenure in Alberta,” (Feb. 2009)

Exhibit 122 Northeast Alberta Operating Ground Rules (Mar. 1, 2015)

Exhibit 123Government of Alberta, "Questionnaire Response of the Government of Alberta" Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada, (June 28, 2001) (excerpt)

Exhibit 124 FMA HoldersExhibit 125 Alberta Department of Agriculture and Forestry, “Timber Quotas – Forest Management”Exhibit 126 Alberta Department of Agriculture and Forestry, “Timber Permits – Forest Management”

Exhibit 127Government of Alberta, "Questionnaire Response of the Government of Alberta" Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada, AB-S-43 (June 28, 2001)

Exhibit 128Government of Alberta, "Questionnaire Response of the Government of Alberta" Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada, AB-S-25 (June 28, 2001)

Exhibit 129Hearing Before the Standing Senate Committee on Agriculture and Forestry (Nov. 2, 2010) (testimony of Bob Austman, First Vice-President, Canadian Federation of Woodlot Owners)

Exhibit 130 Alberta Timber Dues Letter (Apr. 2016)Exhibit 131 Lumber IV AR3 Prelim Alberta Calculation MemorandumExhibit 132 Alberta Official Statistics: Provincial Timber Harvest and Annual Allowable Cut, Alberta Crown Lands

Exhibit 133Nova Scotia Department of Natural Resources, Report on Prices for Standing Timber Sales from Nova Scotia Private Woodlots for the Period April 1, 2015 through March 31, 2016 (Sept. 23, 2016)

Exhibit 134 2015 Minnesota Public Stumpage Price Review and Price Indices (Apr. 15, 2016)Exhibit 135 Share of Canadian Annual Softwood Lumber Production by Province Exhibit 136 Government of Saskatchewan, Forest Governance in the Province of SaskatchewanExhibit 137 Government of Saskatchewan, Saskatchewan Forestry Sector OverviewExhibit 138 Government of Saskatchewan, Ministry of the Economy Plan for 2016-17 (excerpt)Exhibit 139 Thomas Piller, Rebirth of Saw Mill in Big River, Saskatchewan (May 13, 2014)

Exhibit 140Response from the Government of Saskatchewan to the Department's May 1, 2001 Questionnaire, Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada (June 28, 2001) (excerpt)

Exhibit 141 Government of Saskatchewan, Saskatchewan Timber Supply Areas and Large Forest Product MillsExhibit 142 Saskatchewan Forest Resources Management ActExhibit 143 Saskatchewan Forest Resources Management RegulationsExhibit 144 National Aboriginal Forestry Association, Third Report On First Nation-Held Forest Tenure in Canada 2015Exhibit 145 Amended and Restated Prince Albert Forest Management Agreement (Aug. 31, 2010)Exhibit 146 Government of Saskatchewan, Term Supply LicenseExhibit 147 Government of Saskatchewan, Forest Product PermitExhibit 148 Random Lengths Prices for WSPFExhibit 149 Legislative Assembly of Saskatchewan, Debates and Proceedings, 1st Session, 28th Legislature (2016).Exhibit 150 Legislative Assembly of Saskatchewan, Bill 28-10Exhibit 151 Government of Saskatchewan, Saskatchewan Quarterly Dues and Fees Table (2015-2016)Exhibit 152 Lumber IV Investigation , Initiation Checklist (Apr. 23, 2001)Exhibit 153 Government of Saskatchewan, Ministry of Environment Annual Report for 2015-2016Exhibit 154 Lumber IV AR3 Prelim Saskatchewan Calculation MemorandumExhibit 155 Manitoba Conservation and Water Stewardship, “Five-Year Report on the Status of Forestry: April 2006-March 2011” Exhibit 156 ReservedExhibit 157 Natural Resources Canada and Manitoba Conservation Forestry Branch, “Manitoba’s Forests” (2003)Exhibit 158 Manitoba Forest Act , C.C.S.M. Ch. F 150Exhibit 159 Manitoba Forest Use and Management RegulationExhibit 160 Manitoba Conservation and Water Stewardship, “Manitoba’s Forest Management Boundaries”Exhibit 161 Manitoba Conservation and Water Stewardship, “Forested Crown Land Tenure”Exhibit 162 Lumber IV AR3 Prelim Manitoba Calculation MemorandumExhibit 163 ReservedExhibit 164 Government of Ontario, Forestry FactsExhibit 165 Ontario Ministry of Natural Resources and Forestry, Forest Resource MillsExhibit 166 Ontario Order in Council 993Exhibit 167 Ontario Declaration Order MNR-75

Exhibit 168Resolute Forest Products, Managing for Environmental, Social and Economic Balance in Ontario’s Forests, Boreal Forum 8

Exhibit 169 Ontario List of Management Units in Ontario and MapExhibit 170 Government of Ontario, Using Trees from Crown Forests for Commercial PurposesExhibit 171 Ontario Sustainable Forest Licenses

Exhibit 172Response from the Government of Ontario to the Department's May 1, 2001 Questionnaire, Countervailing Duty Investigation of Certain Softwood Lumber Products from Canada (June 28, 2001) (excerpt)

Exhibit 173 Ontario Ministry of Natural Resources and Forestry, Forest Industry at a Glance (August 25, 2015)Exhibit 174 Ontario Ministry of Natural Resources and Forestry, Overview of Forest-Management Models in Ontario (September, Exhibit 175 Ontario Ministry of Natural Resources and Forestry, Annual Report on Forest Management 2012-2013 Exhibit 176 The Minister’s Council on Forest Sector Competitiveness Final Report (May 2005) Exhibit 177 Ontario Government, Forest Roads Funding ProgramExhibit 178 Tembec Inc., “Annual Information Form” (Dec. 7, 2007)

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Exhibit 179 Legislative Assembly of Ontario, Standing Committee on Estimates, “Official Report of Debates,” 2nd Session, 39th

Parliament (Sept. 29, 2010) Exhibit 180 Boniferro Mill Works ULC v. Ontario, 97 O.R. (3d) 475 (Ct. App. Ontario, Jan. 28, 2009) Exhibit 181 Ontario Government, Crown Timber Charges for Forestry CompaniesExhibit 182 ReservedExhibit 183 Ontario Crown Timber Charges (Stumpage) (April 01, 2015 – March 31, 2016)Exhibit 184 Ontario Forest Tenure Modernization ActExhibit 185 Ontario Ministry of Natural Resources and Forestry, Forest Tenure Modernization GoalsExhibit 186 Nawiinginokiima Forest Management Corporation, “Forest Management Units"Exhibit 187 Ontario Available Wood Report (Aug. 2015)Exhibit 188 Nawiinginokiima Forest Management Corporation, “Operations (Public)"Exhibit 189 “Crown Wood Agency Still in Building Phase,” Northern Ontario Business (June 10, 2014)Exhibit 190 Forestry Futures Trust Ontario, Annual Report 2013/2014Exhibit 191 Ontario Ministry of Natural Resources and Forestry, Evolution of Forest Tenure in Ontario (September 2015) Exhibit 192 ReservedExhibit 193 Lumber IV AR3 Prelim Ontario Calculation Memorandum Exhibit 194 ReservedExhibit 195 Michigan Department of Natural Resources, Average Stumpage Price Report for 04/01/2015 to 03/31/2016 Exhibit 196 Quebec Ministry of Finance, Competitiveness in the Quebec Forest Industry: Budget 2016-2017 (Mar. 17, 2016)Exhibit 197 Sustainable Development Technology Canada, "Board & Committees"Exhibit 198 Quebec Sustainable Forest Development Act , R.S.Q., c. A-18Exhibit 199 Manual of the Timber Sales Office, Manuel de mise en marché des bois, Version 4 (June 2015)

Exhibit 200Report – Meeting of the Board on Integrated Management of Resources and Land of Rouyn-Noranda, 3. Presentation: Timber sales office – Ghislain Huppé

Exhibit 201 Government of Quebec, Ministry of Forest, Wildlife and Parks, Forest Resources and Industries: Statistical Overview Exhibit 202 Quebec Forest Industry Council PresentationExhibit 203 Quebec Ministry of Forest, Wildlife and Park ,The New Forest Regime: Supply Guarantees (2013 edition)

Exhibit 204Quebec Ministry of Forest, Wildlife and Park, “Minister Lessard announces annual consultation on the market value of wood” (May 2, 2016)

Exhibit 205Quebec Ministry of Forest, Wildlife and Park, “Minister Lessard announces the publication of the market value of timber for 2016-2017” (Aug. 15, 2016)

Exhibit 206 One year after the forestry crisis: ‘Complete turnaround’, according to Laurent Lessard, Le Manic (July 20, 2016)Exhibit 207 Crise forestière sur la Côte-Nord: Lessard prêt à signer une entente, Le Soleil (July 9, 2015)Exhibit 208 Forestry to disappear from Quebec's North Shore without more support, says Resolute Forest Products, Financial Post

Exhibit 209Press conference of Mr. Laurent Lessard, Minister of Forests, Wildlife and Parks, Mr. Jacques Daoust, minister of Economy, Science and Innovation and Mr. Pierre Arcand, minister of Energy and Natural Resources, (Aug. 31, 2015)

Exhibit 210 Assistance from Quebec, Radio Gaspesie (Jul. 16, 2016)

Exhibit 211Forestry Industry in Gaspesie – Minister Sebastien Proulx announces an agreement concerning the regionalization of the forestry regime to facilitate forestry operations, Portail Quebec (Jul. 11, 2016)

Exhibit 212 Yvon Parker, Forestry Outlook (Newsletter), Office des Producteurs de Bois du Gatineau, Vol. 23, No 1 (March 2016)Exhibit 213 Forest ActExhibit 214 Quebec Ministry of Finance, Quebec Economic Plan: Budget 2015 – 2016 , (Mar. 26, 2015) Exhibit 215 Michel Morin, A massively subsidized industry , TVA NOUVELLES (Mar. 24, 2016)Exhibit 216 Quebec Stumpage Prices by Zone, April 2015 to March 2016Exhibit 217 Ann Harvey, “An Albertan opposes the loss of fuel tax rebate,” (Mar. 14, 2011)Exhibit 218 Quebec Bureau of the Chief Forester, Decision of the Chief Forester, Sept. 25, 2014Exhibit 219 Lumber IV AR3 Prelim Quebec Calculation MemorandumExhibit 220 Maine Forest Service, 2014 Stumpage Prices , Nov. 6, 2015

Exhibit 221Government of Quebex, "Response of the Gouvernement of Quebec to the Department’s May 1, 2001 Questionnaire on Case C-122-839", Vol. 1 (June 28, 2001)

Exhibit 222 New Brunswick Department of Natural Resources, Annual Report 2014-2015 (2015)Exhibit 223 Thom Erdle et al., Management Alternatives for New Brunswick’s Public Forests (2008)

Exhibit 224See Auditor General of New Brunswick, “Report of the Auditor General – 2015, Volume II, Chapter 4: Department of Natural Resources Private Wood Supply” (2015)

Exhibit 225 Crown Lands and Forests Act, S.N.B. 1980, c. C-38.1, s. 28

Exhibit 226Government of Canada and the Government of New Brunswick, “Response to the Department’s July 12, 2016 New Subsidy Allegation Questionnaire on Countervailing Duty,” Volume I (Aug. 12, 2016)

Exhibit 227Auditor General of New Brunswick, “Report of the Auditor General – 2015, Volume II, Chapter 3: Department of Natural Resources Silviculture” (2015)

Exhibit 228Auditor General of New Brunswick, “Report of the Auditor General – 2008, Chapter 5: Department of Natural Resources Timber Royalties” (2008)

Exhibit 229 Kent Regional Service Commission, “Meeting of the Board of Directors” (June 26, 2014)Exhibit 230 CBC News, “David Coon demands details of Irving forest deal be made public,” CBC.ca (Mar. 19, 2015)

Exhibit 231Memorandum of Agreement between J.D. Irving, Limited, and Her Majesty the Queen in Right of the Province of New Brunswick as Represented by the Minister of Natural Resources (Feb. 7, 2014)

Exhibit 232 CBC News, “Twin Rivers invests $2.5M in Plaster Rock mill, creates 50 jobs,” CBC.ca (Mar. 27, 2014)Exhibit 233 Timber Regulation, N.B. Reg. 86-160 (Can.)Exhibit 234 Donald Floyd et al., New Approaches for Private Woodlots – Reframing the Forest Policy Debate (2012) Exhibit 235 New Brunswick Crown Land Task Force, “A path for a sustainable economic forest in New Brunswick” (Oct. 13, 2011)

Exhibit 236New Brunswick Forest Products Commission, “New Brunswick Private Woodlot Stumpage Values: Stumpage Study Methodology” (July 2016)

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Exhibit 237Letter from the Department, “Analysis of Amended New Subsidy Allegations,” Countervailing Duty Expedited Review of Supercalendered Paper from Canada, C-122-854, Expedited Review (01/01/2014 – 12/31/2014) (July 12, 2016)

Exhibit 238 New Brunswick Regulation 2014-158 Exhibit 239 NB Regulation 2015-32 Exhibit 240 NB Regulation 2015-39 Exhibit 241 New Brunswick Forest Products Commission, New Brunswick Private Woodlot Stumpage Value, 2016

Exhibit 242“Generating More Wealth from British Columbia’s Timber: A Review of British Columbia’s Log Export Policies,” A report for the British Columbia Minister of Forests and Range (Dec. 2006)

Exhibit 243“Notice To All Log Exporting and Interested Parties,” B.C. Ministry of Forests, Lands and Natural Resource Operations, Ref. 20740-01/GEN (Dec. 30, 2014)

Exhibit 244 Joel Wood for British Columbia, Log Export Policy 2014 Report

Exhibit 245BC Ministry of Forests, Lands and Natural Resource Operations, “Notice To All Log Exporting and Interested Parties,” Ref. 20740-01/GEN (Jan. 17, 2013)

Exhibt 246 Export and Import Permits Act , R.S.C., 1985, c.E-19 (amended Oct. 2014), § 3(1)(b)Exhibit 247 “Export Control List,” SOR/89-202 (amended Oct. 2015) Schedule Group 5Exhibit 248 “Notice to Exporters No. 102 – Export of Logs from British Columbia,” Serial No. 102 (Apr. 1, 1998)Exhibit 249 Canadian Institute of Forestry, Vancouver CIF January Dinner Meeting , Jan. 27, 2015

Exhibit 250Certain Uncoated Paper From Indonesia: Final Affirmative Countervailing Duty Determination , 81 Fed. Reg. 3104 (Dep’t Commerce Jan. 20, 2016) and accompanying Issues and Decision Memorandum

Exhibit 251 Duncan K. Davies, Log Export Restrictions in British Columbia: An Economic Examination, University of B.C. M.S. Exhibit 252 “Unfair log restrictions in B.C,” Brian Frank, Wood Business Canada (Sept. 4, 2014)Exhibit 253 Log Export Restrictions: A Case Study in Bad Public Policy and Inconvenient Truths (May 7, 2014) Exhibit 254 David Haley, PhD, Log Export Restrictions on Private Land , University of British Columbia, December 2002

Exhibit 255BC Coast Three-Month Log Reports for the periods ending June 30, 2015, September 30, 2015, December 31, 2015, and January 2016

Exhibit 256BC Interior Three-Month Log Reports for the periods ending June 30, 2015, September 30, 2015, December 31, 2015, and January 2016

Exhibit 257 GTIS data for 4403.2080 (Douglas Fir sawlogs and veneer logs) Exhibit 258 GTIS Canada log import and ITC USA log export data Exhibit 259 Quebec Act Respecting the Marketing of Agricultural, Food and Fish Products, 2013Exhibit 260 Quebec Ministry of Forest, Programme d'aide a la mise en valeur des forets pricees (PAMVFP)

Exhibit 261Quebec Ministry of Forests, Wildlife and Parks, Remboursement des taxes foncières des producteurs forestiers reconnus (Property Tax Rebate Program)

Exhibit 263 Quebec Ministry of Forests, Wildlife and Parks, Programme de financement forestier (Forestry Finance Program)Exhibit 262 Press Release, “New market dynamics force FerroAtlántica to cancel its Port-Cartier project” (December 16, 2015)Exhibit 264 Quebec Ministry of Forests, Wildlife and Parks, Forêts Privées (Private Forests)

Exhibit 265Syndicat des Producteurs de Bois de la Mauricie (Mauricie Wood Producer Syndicate), Documents de Références (Reference Documents)

Exhibit 266 Syndicat des Producteurs du Centre-du-Quebec (Central Quebec Wood Producer Syndicate), Devenir Membre Exhibit 267 Syndicat des Producteurs Forestiers du Sud du Quebec (South Quebec Wood Producer Syndicate), La Mission (Mission Exhibit 268 Archeteurs de bois de sciage en Beauce, Le bulletin forestier: Reland de la production de bois a pate (May 2015) Exhibit 269 Quebec Mill signed declaration for log prices (2016)Exhibit270 Price Comparisons for Quebec Syndicate Offers PV (2016)

Exhibit 271Perspectives intéressantes pour les forêts québécoises (Interesting Perspectives for Quebec Forests), Le Monde Forestier (May 28, 2013)

Exhibit 272 Natural Resources Canada, “Investments in Forest Industry Transformation (IFIT)", IFIT services standardExhibit 273 Natural Resources Canada, “IFIT-funded projects"Exhibit 274 Natural Resources Canada, Investments in Forest Industry Transformation, Performance Report 2010-2014 Exhibit 275 Energy and Mines Ministers’ Conference, “Annex A: Compendium on Energy Technology Innovation in Canada” (Aug. Exhibit 276 Natural Resources Canada, “IFIT Frequently Asked Questions”Exhibit 277 Canada Foundation for Sustainable Development Technology Act , S.C. 2001Exhibit 278 Sustainable Development Technology Canada, 2015 SDTC Annual Report (2016)Exhibit 279 A Compendium by the Canadian Council of Forest Ministers, “Forest Sector Innovation in Canada 2015” (Aug. 2015)Exhibit 280 Sustainable Development Technology Canada, “Our companies’ successes are our successes. Annual Report 2015” Exhibit 281 Sustainable Development Technology Canada, “Minister Findlay Announces Investment in Clean Technology Projects in

Exhibit 282RISI Technology Channels , “West Fraser pulp mill in Alberta to recover wood product for transformation into green bioproducts” (April 6, 2016)

Exhibit 283 West Fraser, Annual Report 2012Exhibit 284 Sustainable Development Technology Canada, “Apply - Frequently Asked Questions”

Exhibit 285Brief from the Sustainable Development Technology Canada, “Improving Canada’s Competitive Advantage in the Clean Energy and Natural Resources Sector”

Exhibit 286 Natural Resources Canada, “State of Canada’s forests reports, Indicator: Gross Domestic Product” (April 2016)Exhibit 287 Statistics Canada, “About Us” (September 16, 2016)Exhibit 288 Natural Resources Canada, “Forest Innovation Program"Exhibit 289 Natural Resources Canada, “Forest Innovation Program - Canadian Wood Fibre Centre”Exhibit 290 Natural Resources Canada, “Transformative Technologies”Exhibit 291 Reserved.Exhibit 292 British Columbia, “BC Bioenergy Strategy: Growing our Natural Energy Advantage” (2008)

Exhibit 293Janice Larson, Director, Bioenergy and Renewables, BC Ministry of Energy, Mines, and Petroleum Resources, “BC’s Bioenergy Strategy: Growing BC’s Natural Energy Advantage”

Exhibit 294 Conifex Timber Inc., Annual Information Form (2015)Exhibit 295 Industrial Efficiency Programs Database, “BC Hydro Power Smart"

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Exhibit 296Industrial Forestry Service Ltd., “Wood Based Biomass in British Columbia and its Potential for New Electricity Generation,” Prepared for BC Hydro Long Term Planning Process (July 2015)

Exhibit 297 BC Hydro Power Smart, “Wood Products”Exhibit 298 The Sierra Club, Supplemental Information Request, BC Hydro Response, “Power Smart Program (PSP), V.2. App. N”

Exhibit 299Independent Power Producers Association of BC Information Request, BC Hydro Response, “Reference: Application, Volume 2, Appendix 1 (PS 10 Year Plan)"

Exhibit 300 Canfor Corporation, Annual Report (2014)Exhibit 301 Biomass Magazine , “Canfor to add pellet production to 2 sawmill sites in Canada” (September 26, 2014)Exhibit 302 Powerpoint presentation by Don Kayne and Pat Elliot on Canfor’s CIBC Investor Conference (January 2015)Exhibit 303 Conifex Timber Inc., Consolidated Financial Statements: December 31, 2013 and 2012Exhibit 304 Conifex Timber Inc., Consolidated Financial Statements: December 31, 2015 and 2014Exhibit 305 The Daily Courier , “Work to get underway on Tolko pellet plant” (Jan. 14, 2015)Exhibit 306 BC Hydro, News, “Energy-saving measures give Tolko Industries Ltd. a competitive edge” (Dec. 17, 2013)Exhibit 307 Global News , “Controversial Lavington pellet plant moves forward as critics appeal” (Jan. 29, 2015)Exhibit 308 Marvin Shaffer & Associates Ltd., “Review of BC Hydro’s Industrial Power Smart Expenditures” (April 2004)Exhibit 309 BC Hydro, “About BC Hydro” Exhibit 310 Ministry of Energy and Mines Responsible for Core Review, Backgrounder, “British Columbia’s and BC Hydro’s programs”

Exhibit 311Steel Concrete Reinforcing Bar from Turkey, Inv. No. C-489-819, "Decision Memorandum on New Subsidy Allegations" (March 29, 2016)

Exhibit 312BC Hydro, “Integrated Customer Solutions: Process and Proposal Submission Guide” and “Load Displacement Project Selection and Eligibility Requirements”

Exhibit 313 British Columbia Hydro and Power Authority, Annual Report 2014/15Exhibit 314 The Hydro and Power Authority Act , RSBC, Ch. 212, 12(1.1)(a) (1996)Exhibit 315 BC Hydro Power Smart, “About Independent Power Projects” Exhibit 316 BC Hydro, “Overview of BC Hydro’s Energy Procurement Practices” (Nov. 2013)Exhibit 317 BC Hydro, “Independent Power Producers (IPPs) currently supplying power to BC Hydro”Exhibit 318 West Fraser, CIBC Institutional Investor Conference: Investor Presentation (Jan. 22- 24, 2014)Exhibit 319 Canadian Mining & Energy , “Conifex Timber launches biomass power plant” Exhibit 320 The Tyee , Opinion, “BC Hydro: From Public Interest to Private Profits” (Sept. 12, 2016)Exhibit 321 Desmog Canada , “BC Hydro Paying Millions to Independent Power Producers to Not Produce Power Due to Oversupply”

Exhibit 322Certain Hot-Rolled Steel Flat Products from the Republic of Turkey: Negative Preliminary Countervailing Duty Determination and Alignment of Final Determination with Final Antidumping Duty Determination , 81 Fed. Reg. 2,166 (Dep’t Commerce Jan. 15, 2016) and accompanying Issues and Decision Memorandum

Exhibit 323 BC Hydro Power Smart, “Closed Offers”Exhibit 324 NB Power, Annual Report 2013-2014 Exhibit 325 NB Power, Annual Report 2014-2015

Exhibit 326SC Paper New Subsidy Allegation Initiation Memorandum and CBC News , “NB Power Full Rate Hearing Gets Questions About Big Paper Mills”

Exhibit 327The National Observer , “NB Power Subsidizing J.D. Irving’s Mills?” contributing article to Special Report: “Playing Hardball the J.D. Irving Way” (June 20, 2016)

Exhibit 328 Supercalendered Paper New Subsidy Allegation Initiation Memorandum Exhibit 329 New Brunswick Electricity from Renewable Resources Regulation – Electricity Act, 2013-65 § 5Exhibit 330 Ontario Ministry of Northern Development and Mines, “Northern Industrial Electricity Rate Program”Exhibit 331 Northern Ontario Business , “Industry Welcomes Extended Industry Electricity Rate” (April 29, 2015)

Exhibit 332Tembec Inc. Press Release, “Tembec applauds Ontario’s ongoing commitment to Northern Industrial Electricity Relief” (April 7, 2015)

Exhibit 333Ontario Ministry of Northern Development and Mines, “Ontario Commits to Ongoing Northern Industrial Electricity Rate Program Funding” (April 7, 2015)

Exhibit 334 Supercalendered Paper Issues and Decision MemorandumExhibit 335 Hydro-Quebec, “Hydro-Québec at a Glance”

Exhibit 336Hydro-Quebec Distribution, Programme d'achat d'électricité provenant de centrales de cogénération à base de biomasse forestière résiduelle (Program for the acquisition of electricity from cogeneration plants using forestry biomass)

Exhibit 337 Gazette Officielle du Québec, Décret 1086-2011, 26 octobre 2011 (Decree 1086-2011, October 26, 2011), no 45 (Nov. 9,

Exhibit 338Hydro-Quebec Distribution, Programme d'achat d'électricité de 300 MW produite par des centrales de cogénération à base de biomasse forestière résiduelle de 50 MW et moins, Tableau sommaire des contrats signes (PAE 2011-01) (Program for the acquisition of 300 MW of electricity from cogeneration plants of 50 MW or less using forestry biomass,

Exhibit 339Hydro-Québec Distribution, Approvisionnement en Electricite - Programme d'achat d'électricité de 300 MW produite par des centrales de cogénération à base de biomasse forestière résiduelle de 50 MW et moins (PAE 2011-01) (Electricity Procurement - Program for the acquisition of 300 MW of electricity from cogeneration plants of 50 MW or less using

Exhibit 340Régie de l’Energie, Decision Finale, Demande d’approbation des modalités du programme d’achat d’électricité produite par cogénération à base de biomasse forestière résiduell (Final Decision, Request for approval of the conditions of the program for the purchase of cogeneration electricity from residual forestry biomass) D-2011-190 - R-3780-2011

Exhibit 341 Gérald Fillion, "Radio-Canada", La réalité sur les surplus (The truth about surpluses) (December 10, 2014)Exhibit 342 Claude Charron, "La Tribune", Le scandale éolien (The windmill scandal) (December 12, 2012)Exhibit 343 Hydro-Québec, “Annual Report 2015” (2016) Exhibit 344 Act Respecting the Regie de l’Energie, CQLR c R-6.01 §60 (1996)Exhibit 345 Act Respecting the Regie de l’Energie , CQLR c R-6.01

Exhibit 346Le Soleil, “Une centrale de cogénération de 50 millions $ à Sacré-Coeur ” (“A $50 million cogeneration plant in Sacre-Coeur”)(Apr. 13, 2014)

Exhibit 347Contrat D'approvisionnement en electricite entre PF Resolu Canada, Inc. et Hydro-Quebec Distribution Centrale de Cogeneration de Gatineau, December 6, 2012.

Page 6 of 8


Exhibit 348Contrat D'approvisionnement en electricite entre PF Resolu Canada, Inc. et Hydro-Quebec Distribution Centrale de Cogeneration de Gatineau, Deptember 4, 2012

Exhibit 349Contrat d’approvisionnement en Electricite entre les Chantiers Chabougamau Ltee et Hydro-Quebec Distribution, Centrale de Cogeneration Assinica (Electricity Supply Agreement between Chantiers Chabougamau Inc. and Hydro-Quebec Distribution, Assinica Cogeneration Plant – Annexe II) (March 26, 2015)

Exhibit 350 Les Chantiers Chibougamau Ltée, “Contacts”Exhibit 351 Dayakur Devaru et al ., West Virginia University, “Energy Profiling in Sawmills,” PPT presentation (2011)

Exhibit 352Contrat d’approvisionnement en Electricite entre Bio-Energie Sacre-Coeur S.E.C. et Hydro-Quebec Distribution, Centrale de Cogeneration Complexe Boisaco (Electricity Supply Agreement between Bio-Energie Sacre-Coeur and Hydro-Quebec Distribution, Boisaco Complex Cogeneration Plant – Annexe II) (March 26, 2015)

Exhibit 353 Guillaume Roy, Canadian Biomass, “Residual effect - Boisaco optimizes mill byproducts” (Augsut 10, 2016)

Exhibit 354Association Quebecoise de la production d’énergie renouvelable (Quebec Association for the Production of Renewable Energy), Signature d’un contrat d’approvisionnement en électricité entre Hydro-Québec et Cogénération Val d’Or S.E.C . (Signature of an electricity procurement contract between Hydro-Québec and Cogénération Val d’Or S.E.C) (Apr. 9, 2014)

Exhibit 355Gazette Officielle du Québec, Règlement sur la capacité maximale de production visée dans un programme d’achat d’électricité produite par cogénération à la biomasse forestière résiduelle (Regulation on the maximum production capacity in a program for the purchase of cogeneration electricity from residual forest biomass), no 45 (Nov. 9, 2011)

Exhibit 356Contrat d’approvisionnement en Electricite entre Cogénération Val-d'Or S.E.C. et Hydro-Quebec Distribution, Centrale de Cogeneration Complexe Val-d'Or (Electricity Supply Agreement between Bio-Energie Sacre-Coeur and Hydro-Quebec Distribution, Val-d'Or Complex Cogeneration Plant) (October 13, 2015)

Exhibit 357 Organization for Economic Cooperation and Development, “Fossil Fuel Support Country Note: Canada” (Sept. 2016)Exhibit 358 Nova Scotia Power Inc., “About Us: Who We Are: Our History” Exhibit 359 Regie de l’Énergie, “FAQ – Frequently Asked Questions” (May 2, 2011)

Exhibit 360Quebec Ministry of Forests, Wildlife and Parks, Programme d'aide à la mise en valeur des forêts privées (Private Forest Development Assistance Program)

Exhibit 361 Reserved.Exhibit 362 Regulation Respecting the Reimbursement of Property Taxes of Certified Forest Producers

Exhibit 363Government of Quebec, Remboursement des taxes foncières des producteurs forestiers reconnus (Reimbursement of Property Taxes of Certified Forest Producers)

Exhibit 364 Government of Quebec, Pour être reconnu producteur forestier (To Be Certified as Forest Producer)Exhibit 365 Response from the Government of Quebec, C-122-816 (June 28, 2001) Exhibit 366 Annual Report of Resolute Forest Products Inc. – RFP (Form 10-K) (filed April 30, 2009) (period: December 31, 2008)Exhibit 367 Taxation Act Exhibit 368 Government of Quebec, The Quebec Economic Plan Section B (March 2016)Exhibit 369 Government of Quebec, Versement Des Acomptes Provisionnels D’Une Société (Payment of Instalments by A Exhibit 370 Government of Quebec, Information Bulletin 2007-9: Measures To Support the Manufacturing Sector (Nov. 23, 2007)Exhibit 371 Reserved.Exhibit 372 Form 10-K: Resolute Forest Products, Inc. – RFP (filed Feb. 29, 2016) (period Dec. 31, 2015)Exhibit 373 An Act Respecting the Sectoral Parameters of Certain Fiscal Measures § 11.1 (updated to May 15, 2016) Exhibit 374 Investissement Quebec, Tax Credit for Gaspésie and Certain Maritime Regions of QuebecExhibit 375 U.S. Census Bureau, “North American Industry Classification System” available at http://www.census.gov/eos/www/naics/

Exhibit 376Statistics Canada, North American Industry Classification System (NAICS) Canada 2012 : 3211 – Sawmills and wood preservation (June 19, 2012)

Exhibit 377 Government of Quebec, Index des Usines de la Gaspésie– Îles-de-la-MadeleineExhibit 378 Quebec Government, Budget 2013-2014: Investing for Our Prosperity – The Government’s Economic vision (2012)

Exhibit 379Investissement Quebec and Raymond Chabot Grant Thornton, Taxation in Quebec – Favourable Measures to Foster Investment 2015 (2015)

Exhibit 380 Quebec Government, Budget Plan – Budget 2013-2014 (2012) Exhibit 381 Regulation Respecting the Taxation Act , Schedule B, Class 29(a) (April 1, 2016) Exhibit 382 An Act to give effect to the Budget Speech delivered on 4 June 2014 and to various other fiscal measures § 464 (2015)

Exhibit 383Ministère des Affaires municipales et de l'Occupation du territoire (Ministry of Municipal Affairs and Land Management), MRC de la Matapedia (May 2016)

Exhibit 384 Act Respecting the Régie de l’assurance maladie du Quebec §§ 33, 34, 34.1.0.3 and 34.1.0.4 (April 1, 2016) Exhibit 385 Auditor General of Quebec, “Report of the Auditor General of Quebec to the National Assembly for 2010-2011”, Volume IIExhibit 386 Reserved.Exhibit 387 BC Motor Fuel Tax Act

Exhibit 388Quebec Government, Bulletin D’Information 2015-2: Ministerial Statement Concerning Improvements to the Tax Holiday for Large Investment Projects (February 10, 2015)

Exhibit 389 BC, Motor Fuel Tax Regulation (December 20, 1985)Exhibit 390 BC, South Coast British Columbia Transportation Authority Act (July 30, 1998)Exhibit 391 BC, Carbon Tax Act , S.B.C. 2008 (May 29, 2008)Exhibit 392 Sawmills located in the SCBC transportation service region, along with the map of their locationsExhibit 393 Ontario Chamber of Commerce, “Compendium: 2013-2016 Helping Ontario Businesses Emerge Stronger” (May 3, 2013)

Exhibit 394BC Ministry of Finance, “Instructions for Completing the Off-highway Refund Application (FN141)” accompanying “Off-highway Refund Application under the Motor Fuel Tax Act” (September 30, 2014)

Exhibit 395 Alberta Fuel Tax Act , S.A. 2006Exhibit 396 Alberta Fuel Tax Regulation , A.R. 62/2007

Exhibit 397Alberta Treasury Board and Finance, Tax and Revenue Administration, “Alberta Fuel Tax Act Information Circular: Prescribed Rebate Off-Road Percentages (PROP),” (Sept. 21, 2010)

Exhibit 398Alberta Treasury Board and Finance, Tax and Revenue Administration, “Instructions for Completion of the Prescribed Rebate Off-Road Percentages (PROP) Application Form,” (August 2010)

Exhibit 399Alberta Treasury Board and Finance, Tax and Revenue Administration, “Alberta Fuel Tax Act Information Circular: Tax Exempt Fuel User (TEFU) Rebates” (August 2010)

Page 7 of 8


Exhibit 400 Tax Back Ltd., “Frequently Asked Questions – What is PROP?”

Exhibit 401Petroleum Services Association of Canada, “PSAC Delivers . . . … a Streamlined Process for Filing Applications & Receiving Rebates for Alberta’s Tax Exempt Fuel Use (TEFU) Program,” (January 2006)

Exhibit 402Alberta Treasury Board and Finance, Tax and Revenue Administration, “Fuel Tax Act Information Circular: Fuel Tax Exemption Certificates” (Jan. 20, 2016)

Exhibit 403 Alberta Treasury Board and Finance, Tax and Revenue Administration, “Declaration of Tax Exempt Fuel User” (August

Exhibit 404Alberta Treasury Board and Finance, Tax and Revenue Administration, “Current and Historic Alberta Tax Rates (from January 1, 2000 to current),” Fuel Tax Rates (May 24, 2016)

Exhibit 405 Alberta Business Tax Review Committee, “Alberta Business Tax Review – Report and Recommendations,” (September

Exhibit 406WTO Committee on Agriculture, “Export Subsidies, Export Credits, Export Credit Guarantees or Insurance Programmes, International Food Aid and Agricultural Export State Trading Enterprises: Background Document by the Secretariat," Canada: Description of Programme and Export Financing Entity (July 26, 2016)

Exhibit 407 Export Development, “2013 Annual Report: Corporate Mandate”Exhibit 408 Export Development Canada, “Export Guarantee Program”Exhibit 409 Export Development Canada, “Solutions Guide: Export Guarantee Program”Exhibit 410 Export Development Canada, “Case Study: Leveraging Foreign Inventory to Increase Financial Capacity” Exhibit 411 Canada-Quebec Forestry Task Team, “$200m to help workers and communities in crisis” (May 15, 2009)Exhibit 412 House of Commons, Standing Committee on Finance, “Evidence,” No. 35, 2nd Session, 40th Parliament, (June 11, 2009)Exhibit 413 Acadian Timber Corporation, “Annual Information Form” (Mar. 30, 2016)

Exhibit 414Supercalendered Paper From Canada: Final Affirmative Countervailing Duty Determination , 80 Fed. Reg. 63,535 (Dep’t of Commerce Oct. 20, 2015) and accompanying Issues and Decision Memorandum

Exhibit 415 U.S. Department of Commerce, “Softwood Lumber Subsidies Report to the Congress” (June 16, 2016) Exhibit 416 Ontario Minister’s Council on Forest Sector Competitiveness, “Final Report” (May 27, 2005)

Exhibit 417Ontario Ministry of Natural Resources and Forestry, “Ontario Strengthens Local Forest Industry” (Oct. 16, 2008) (“MNR 2008 Press Release”)

Exhibit 418 Legislative Assembly of Ontario, “Official Report of Debates,” No. 125, 2nd Session, 38th Parliament (Nov. 23, 2006)

Exhibit 419Supercalendered Paper From Canada: Final Affirmative Countervailing Duty Determination , 80 Fed. Reg. 63,535 (Oct. 20, 2015) and accompanying Issues and Decision Memorandum

Exhibit 420 Dan Cooligan, Ontario Ministry of Natural Resources, “State of Ontario’s Forests – Indicator Report” (May 2013)Exhibit 421 Ontario Ministry of Northern Development, Annual Report 2010-2011 (2011) Exhibit 422 SooToday, “New sawmill and new jobs for Chapleau” (Februrary 14, 2008)

Exhibit 423Press Release, “Hornepayne Mill Expansion Helps Retain And Create Jobs - #910104: McGuinty Government Invests In New Saw Line,” Ministry of Northern Development and Mines (January 28, 2008)

Exhibit 424Press Release, “Supporting Growth in Ontario’s Forest Industry: Ontario Creating Jobs, Strengthening Northern Economy,” Ministry of Natural Resources and Forestry (September 19, 2013)

Exhibit 425 MyAlgoma.ca, “Haavaldsrud Timber in Hornepayne Suspends Operations” (December 1, 2015)

Exhibit 426MyAlgoma.ca, “NDP MPP Mantha urges Premier not to forsake Hornepayne families and to keep mill and plan open” (January 29, 2016)

Exhibit 427 Legislative Assembly of Ontario, “Official Report of Debates,” First Session, 39th Parliament, No. 137, 6143 (April 21, Exhibit 428 Pulp & Paper Canada, “Industry News: Pulp, Paper Companies Benefit from Ontario Handout” (Oct. 31, 2006)Exhibit 429 Haavaldsrud Press Release, “Ontario Supports New Sawline” (Feb. 14, 2008)

Exhibit 430News Release, “A Vision for Prosperity in Ontario’s Forest: Premier McGuinty Commits $220 million To Help Rural and Northern Communities Succeed,” Office of the Premier (February 22, 2006)

Exhibit 431 Domtar, Inc., “Domtar Announces Third Quarter 2006 Financial Results” (Oct. 31, 2006)Exhibit 432 Domtar, Inc., “Domtar Announces Third Quarter 2006 Financial Results” (Oct. 31, 2006)

Exhibit 433 Legislative Assembly of Ontario, “Official Report of Debates,” Second Session, 38th Parliament, No. 125 (Nov. 23, 2006)

Exhibit 434 Western Economic Diversification Canada, “The Department”

Exhibit 435Quebec Ministry of Forests, Wildlife, and Parks, Grille annuaelle des taux d’investissement en foret privee (Annual schedule for investment rates in private forests for fiscal year 2016-2017)

Exhibit 436 Western Economic Diversification Canada, “What We Do”

Exhibit 437Notice of Final Results of Countervailing Duty Administrative Review: Certain Softwood Lumber Products from Canada , 69 FR 75917 (Dep’t Commerce Dec. 20, 2004) and accompanying Issues and Decision Memorandum

Exhibit 438 Western Economic Diversification Canada, “Western Diversification Program – Call for Proposals” Exhibit 439 Western Economic Diversification Canada, “Western Economic Diversification Canada Programs”Exhibit 440 Western Economic Diversification Canada, 2016-2017 Report on Plans and PrioritiesExhibit 441 Western Economic Diversification Canada, “Western Innovation Initiative (WINN)” Exhibit 442 Western Economic Diversification Canada, “WINN Frequently Asked Questions”

Page 8 of 8

1

PETITION FOR THE IMPOSITION OF ANTIDUMPING DUTIES ON IMPORTS OF CERTAIN SOFTWOOD LUMBER FROM CANADA

I. ALLEGATION OF SALES AT LESS THAN FAIR VALUE

This volume of the petitions contains allegations regarding sales at less than fair value in

the United States of softwood lumber imported from Canada. The application of the Department

of Commerce’s (“Department”) standard dumping methodology shows that producers and/or

exporters in Canada sold, or offered for sale, softwood lumber (“lumber”) in the United States at

less than normal value during the proposed period of investigation (“POI”) of October 1, 2015 to

September 30, 2016.

A. METHODOLOGY

As detailed in Section A below, Petitioner relied on export price as the basis for U.S.

price, because lumber produced in Canada is typically sold directly to unaffiliated U.S.

wholesalers, distributors, brokers, buying cooperatives, retailers and even other mills in the

United States. Petitioner computed the ex-factory export price (“ex-factory U.S. Price”) in U.S.

dollars by deducting from quoted U.S. transaction prices the costs of delivering the merchandise

to customers in the United States. Specifically, Petitioner deducted rail freight charges from the

Canadian mills to the point of delivery in the United States, as well as amounts for domestic

brokerage and handling fees, and early payment discounts.

As detailed in Section B, for comparison to certain U.S. price quotes for Canadian

“Spruce-Pine-Fir” (“SPF”) lumber, Petitioner was able to obtain prices for the identical SPF

lumber sold contemporaneously in Canada by a Canadian producer, and calculated the ex-factory

Normal Value (“NV”) by subtracting from the Canadian home market prices, in Canadian dollars

(“CDN”), truck freight charges associated with delivering the merchandise to customers in

Canada, as well as an amount for early payment discounts. Petitioner converted NV in CDN to

2

U.S. Dollars (“USD”) using the Department’s official daily exchange rate in effect on the date of

the U.S. price quote.

Petitioner next compared each ex-factory U.S. price with the ex-factory NV for identical

merchandise, subtracted the U.S. price from the ex-factory NV, and divided the difference by the

U.S. price for each observation to determine the dumping margin as a percentage of export price.

For comparison to other U.S. price quotes for SPF lumber and kiln-dried (“KD”)

Douglas Fir (“DF”) lumber, for which Petitioner was unable to locate contemporaneous sales

prices to Canadian customers, Petitioner based NV on Constructed Value (“CV”). As detailed

in Section C below, to derive CV, Petitioner developed two cost models – one reflecting Eastern

Canadian SPF production – The Eastern SPF Model – and one reflecting Western Canadian KD

Douglas Fir production – The Western DF Model. Both models rely primarily on detailed,

province-specific, Canadian sawmill production cost models published by a major, well-

respected Canadian forestry consulting firm, which is the best information available to

Petitioner.1 Wherever possible, Petitioner adjusted these models to incorporate cost data that is

1 International Wood Markets Group Inc., Global Timber/Sawmill/Lumber/Sawnwood Cost Benchmark Report: For 2014 Annual and 2015 Q1 (Sept. 2015); International Wood Markets Group, Global Timber/Sawmill/Lumber Cost & Revenue Study – Quarterly Log & Sawmill Costs with Lumber Sales Averages and By-Product Prices: Q1 / 2015 – Q2 / 2016 for 20 Countries/Regions (Sept. 2016) (collectively, “Cost Benchmark Report”) (Exhibit 69).

Based on information reasonably available to Petitioner, International Wood Markets Group Inc. is Canada’s largest wood products consulting firm. See Russ Taylor, “BC Coast Industry Competitiveness: Good News and Bad News,” Truck LoggerBC (Spring 2016) available at http://www.tla.ca/sites/default/files/news_policy/2016spring_truckloggerbc_bccoastindustrycompetitiveness_taylor.pdf (last visited Nov 18, 2016) (Exhibit 70). Wood Markets describes itself as:

{C}onsulting team has provided industry and market expertise in the solid woodproducts field to its clients since 1993. The company provides market research,new business development, business plan/strategy, as well as other consultativeservices to wood product companies in North America and around the world. The

3

the most contemporaneous to the presumptive POI and specific to the particular species of

lumber to the extent such data is reasonably available to Petitioner.

B. EXPORT PRICE

Based on information reasonably available to Petitioner, Canadian mills typically sell the

subject merchandise directly to unaffiliated brokers, distributors, wholesalers, buying

cooperatives, retailers, and even other lumber mills in the United States with delivery either

direct to the wholesaler, broker etc., or direct to the final unrelated purchaser in the United

States.2 U.S. lumber mills typically learn of U.S. price offerings by Canadian mills [

].3

Canadian offerings of lumber in the United States are for the identical species, grades and

dimensions of lumber, and are readily comparable to goods produced and sold in the United

States. Indeed, Canadian and domestic mills compete for the same customers on a daily basis.4

firm also publishes a number of strategic industry multi-client reports including its landmark WOOD Markets Monthly International Report (since 1996) and monthly China Bulletin.

Id. The Wood Markets team has served over 200 clients, including U.S. and Canadian forestry companies, and has been featured at over 200 North American and International conferences. See International Wood Markets Group Inc., “Client List” available at https://www.woodmarkets.com/consulting/client-lists/ (last visited Nov 18, 2016) (Exhibit 71).

2 See Declaration of [ ] ¶ 3 (Exhibit 72); Declaration of [ ] ¶ 3 (Exhibit 72).



PUBLIC VERSIONBusiness Proprietary Information Deleted

4

1. U.S. Sales Price

Petitioner obtained the following quoted offer prices for sales of SPF lumber produced in

and exported from Eastern and Western Canada, and sold or offered for sale to customers in the

United States.5

Canadian Producer

U.S. Customer

Species Grade Dimen-sion

Offer Date Delivered Price USD/MBF6

Offer 1 [ ]

SPF [ ]

Offer 2 [ ] SPF [ ] Offer 3 [

] SPF [ ]

Offer 4 [ ]

SPF [ ]

A declaration and supporting documentation certifying the terms of these sales offers are

provided in Exhibit 72. The products offered for sale by the Canadian mills represent a common

species and grade of softwood lumber, the dimensions of which are identical to lumber sold by

domestic mills in the United States.7 These products therefore represent typical sales or offers

for sale of subject merchandise.8

The price for Offer 1 above is for [ ] of the specified merchandise

offered for sale on [ ] direct to [ ], for

delivery [

].9 The price for Offer 2 above is for [ ] of the specified

merchandise offered for sale on [ ] direct to [ ] for

5 See Declaration of [ ] ¶¶ 5-8 (Exhibit 72).

6 MBF = thousand board feet.

7 See Declaration of [ ] ¶ 9 (Exhibit 72).

8 See id.



5

delivery [ ].10 The price for Offer 3 is for [

] of the specified merchandise offered for sale on [ ] direct to [

] for delivery to [

].11 The price for Offer 4 is for [ ] of

specified merchandise offered for sale on [ ] to [

] for delivery [ ].12

Petitioner understands the quoted sales offers were all made to unrelated customers for

purchase prior to importation to the United States. Accordingly, export price is the appropriate

basis for U.S. price.13 Additionally, Petitioner understands the sales terms for all four offers

above between the Canadian mills and their U.S. customers to be [ ].14 Petitioner

calculated the export prices for these transactions using these quoted transaction prices as the

best information reasonably available.

Petitioner obtained the following quoted offer price for a sale of KD DF lumber produced

in and exported from Western Canada and sold or offered for sale to a customer in the United

States.15

Canadian Producer

U.S. Customer

Species Grade Dimension Offer Date

Delivered Price USD/MBF

Offer 5 [ ]

KD DF [ ]




13 See section 772(a) of the Act, 19 U.S.C. § 1677a(c) (2000).




6

Offer 5 reflects an offer for sale of [ ] of KD DF studs on [

] to [ ] for delivery to [ ].16

The product offered for sale by the Canadian mill represents a standard species and grade of

softwood lumber, the dimensions of which are identical to lumber sold by domestic mills in the

United States.17 This product represents a typical sale or offer for sale of subject merchandise.

As was the case for the SPF sales offers above, Petitioner understands this quoted offer to

be made to an unrelated customer for purchase prior to importation, and accordingly Petitioner

has used the export price as the appropriate basis for U.S. price.18 Additionally, Petitioner

understands the sales terms for Offer 5 between the Canadian mill and the U.S. customer to be

[ ].19 Petitioner calculated the export price for Offer 5 using the quoted transaction

price as the best information reasonably available.20

2. Freight and Other Expenses

In order to calculate the ex-factory U.S. price for sales to the United States, Petitioner

deducted from the quoted transaction prices the costs associated with exporting and delivering

the product to the customer in the United States.21 These costs consist of the rail freight incurred

to deliver merchandise from the Canadian mill to the delivery location specified by the U.S.


17 See Declaration of [ ] ¶ 6 (Exhibit 72)

18 See section 772(a) of the Act, 19 U.S.C. § 1677a(c).

19 See Declaration of [ ] ¶ 7 (Exhibit 72)

20 See Margin Calculations for Offers 1 – 5 (Exhibit 73).

21 See section 772(c)(2)(A) of the Act, 19 U.S.C. § 1677a(c)(2)(A).


7

customer, as well as domestic brokerage and handling fees.22 In addition, it is standard practice

in the U.S. market for both U.S. and Canadian Mills to offer [ ] or [

] payments terms (i.e., granting U.S. customers a [ ]

discount for on-time payment within ten days of the date invoice/shipment).23 Petitioner

understands that it is very rare for U.S. customers not to pay on time and has accordingly

deducted a discount for on-time/early payments as appropriate.24

The following sections describe the calculations performed to derive the ex-factory U.S.

Price. Petitioner’s calculations of the ex-factory U.S. price for each offer appear in Exhibit 73.

Rail Freight from the Canadian Mill to the Point ofa.Delivery in the United States

Petitioner was unable to obtain information on the actual rail freight expenses incurred by

the Canadian mills in shipping the merchandise specified in Offers 1 through 5 to the United

States. Petitioner has no way to know the specific routes the Canadian mills would have used for

the U.S. transactions, or the specific rail rates charged to Canadian mills for U.S. sales. As the

best information reasonably available for Offers 1, 2, and 5, Petitioner relied on published, per

rail-carload freight rates by the Canadian National Railway (“CN”). CN publishes “base” rates,

specific to certain product groups, for various routes from Canada to western and eastern U.S.

22 According to the 2015 and 2016 editions of the Harmonized Tariff Schedule of the United States (“HTS”), the duty rate for entries of subject lumber into the United States is 0.00 percent. See Harmonized Tariff Schedule of the United States, “Subheading 14407.10.01” (2015); NAFTA: Merchandise Processing Fee Exemption and Technical Corrections, 71 Fed. Reg. 49,391 (Oct. 23, 2006) (collectively, Exhibit 74). In addition, under the North American Free Trade Agreement, Canadian mills would not be subject to any merchandise processing fees. See Exhibit 74. Accordingly, the Canadian mills would not incur, and Petitioner has not made, any deductions for U.S. customs duties or fees.


24 See id.


8

destinations on a per carload basis. For lumber, the rates for routes from Western Canada to the

southern United States are published in CN Tariff Schedule “CN T 002421” and the rates for

routes from Canada to western U.S. destinations are published in Tariff Schedule CN T

002002.25 Petitioner obtained the version of these schedules in effect on the date of the U.S.

price offers, and determined the likely rail routes for U.S. offers 1, 2, and 5 as follows.

CN routes are defined by specific “origin” and “destination” “groups” based on

geographic locations. For Offers 1 and 2, based on information reasonably available, Petitioner

believes that the SPF lumber offered for sale could have been produced in any of the mills

operated by [

]. Petitioner calculated an average rail freight per carload for all

applicable CN routes from [ ] to the specified delivery locations of [

]. Because this implies a route from western Canada to the

southern United States, CN Tariff Schedule CN T 002421 applies. Of the numerous destination

groups listed in Tariff Schedule CN T 002421, the destination group most likely to include

and/or be closest to these destinations is [ ]. Of the numerous

origin groups listed in in Tariff Schedule CN T 002421, Petitioner determined that the producer’s

SPF lumber mills are likely to fall under one of the following origin designations: [

]. Based on the version of the CN T 002421 schedule in effect for the period [

], Tariff Schedule CN T 002421–AU, Petitioner identified

and averaged the per car rates for the following routes: [

25 See Canadian National Rail Rates (Exhibit 75).


9

].26

Offer 5 reflects a Douglas Fir shipment from [ ] to a location in

[ ]. [ ].27

Petitioner therefore assumed that the Douglas Fir lumber in Offer 5 was shipped from this

region. Because this implies a route from Canada to the western United States, CN Tariff

Schedule CN T 002002 applies. Of the various destination groups in Tariff Schedule CN T

002002, Petitioner assumed the destination group most likely to include/and or be closest to

[ ] to be the [ ] group designation. Based on

the version of the CN T 002002 schedule in effect for the period [

], Tariff Schedule CN T 002002–A7, Petitioner identified the per car rate for

routes [ ]. The

derivation of the rail freight for Offer 5 appears in Exhibit 75. Petitioner then subtracted the

freight cost from the offered U.S. price.28 As best information available, Petitioner has

conservatively assumed that the CN routes and rates represent the most likely routes used by the

Canadian mills, and reflect the cost of hauling and freight as delivered to the U.S. point of

delivery.

26 See Canadian National Rail Rates (Exhibit 75). Petitioner assumed shipment by flat cars, and averaged the rates specific to flat cars based on the fact that Random Lengths assumes shipment by flats for delivered prices for Western SPF. See, e.g., Random Lengths (Apr. 15, 2016) at 6 (Exhibit 75).

27 See Canadian National Rail Rates (Exhibit 75).



10

Offers 3 and 4 reflect U.S. price quotes by the Canadian producer [

], with mills located in [ ], for delivery to [

]. CN does not make rates for shipment from Eastern Canada to the southern

United States available on its website. Petitioner was otherwise unable to obtain publicly

available rail rates for this or a similar route. However, Petitioner did obtain an estimated freight

rate for these sales, in USD/MBF, from an experienced lumber sales manager in the region.29 As

a result, Petitioner has relied on a USD/MBF freight as estimated by [ ] as the

best information reasonably available for Offers 3 and 4.30 Petitioner subtracted this freight cost

from the offered U.S. price for Offers 3 and 4.31

Domestic Brokerage and Handling Chargesb.

Petitioner has assumed that as part of the [ ] terms of sale to the United

States, the Canadian mills incurred domestic brokerage and handling charges. Petitioner

calculated the USD/kg rate using the Department’s standard methodology based on the World

Banks’ publication Doing Business in Canada (“Doing Business”), which is the best information

reasonably available to Petitioner concerning brokerage and handling fees.32 For Offers 1 and 2,

Petitioner obtained an invoice for a contemporaneous sale of identical merchandise in Canada,

which also serves as the basis for home market price in Petitioner’s price-to-price margin


30 See id.


32 See World Bank, Doing Business 2016: Canada, 13th Edition at 71 (2016) (Exhibit 76). Petitioner calculated the USD cost per kilogram for “Border Compliance” and “Documentary Compliance” costs for Toronto.


11

calculations.33 This invoice reports the total weight and the total MBF for this sale. Petitioner

calculated the weight of SPF lumber per MBF in this invoice, applied a standard conversion of

2.2046 pounds/kilogram, and multiplied the average weight in kg/MBF by the Doing Business

USD/kg brokerage and handling rate to derive the domestic brokerage and handling charges on

an USD/MBF basis.34 Petitioner subtracted this cost from the U.S. price offers.

For Offers 3, 4 and 5, Petitioner relied on a pounds/MBF figure for the specific SPF and

DF merchandise offered for sale, as estimated by the sources for the offers, as the best

information reasonably available.35 As before, Petitioner took the total estimated weight of the

lumber offers, divided by the volume of MBF in the offer, applied a standard conversion of

2.2046 pounds/kilogram, and multiplied the average weight in kg/MBF by the Doing Business

USD/kg brokerage and handling rate to derive the domestic brokerage and handling charges on

an USD/MBF basis.36 Petitioner subtracted this cost from the U.S. price offers.

Early Payment Discountsc.

As explained above, both U.S. and Canadian lumber producers normally offer payment

terms of [ ] or [ ] – i.e., granting U.S. customers a [

] discount for on-time payment within 10 days of the date of invoice or shipment.37

Petitioner understands that it is very rare for U.S. customers not to pay on time and therefore has

33 See Margin Calculations for Offers 1 – 5 (Exhibit 73); Declaration of [ ] ¶ 3 (Exhibit 77).


35 See Declaration of [ ] ¶ 11(Exhibit 72); Declaration of [ ] ¶ 8 (Exhibit 72)


37 See Declaration of [ ] ¶ 10; Declaration of [ ] ¶ 7 (Exhibit 72).


12

deducted a discount for early payments.38 Petitioner calculated a discount of [ ],

as appropriate to each sale based on the declarations certifying to the terms of the sales offers, to

the quoted price for each U.S. offer.39

3. Computation of Ex-Factory U.S. Price

Petitioner subtracted the calculated freight, domestic brokerage and handling, and

discounts from the quoted U.S. prices for each of the Offers 1 through 6 for subject merchandise

produced in and exported from Canada and offered for sale in the United States. A detailed

calculation of the ex-factory U.S. prices for imports of the subject merchandise from Canada is

provided in Exhibit 73.

C. EX-FACTORY NORMAL VALUE BASED ON PRICE

The preferred method for determining the normal value of imported products is to

examine sales or offers of sales of the identical or similar product in the home market of the

exporting country. For the SPF lumber in U.S. Offers 1 and 2, Petitioner was able to obtain

home market pricing for sales of identical merchandise on the same day, made by a Canadian

lumber mill [ ] to a customer in

Canada. Given the Department’s statutory preference for price-to-price margin calculations,

Petitioner obtained the following transaction price for lumber produced by this known Canadian

mill and sold to customers in Canada:

Canadian Producer

Canadian Customer

Species Grade Dimension Offer Date Delivered Price CDN/MBF

HM Sale 1

[

]

SPF [ ]

38 See id.

39 See U.S. Price Declarations (Exhibit 72); Margin Calculations for Offers 1 – 5 (Exhibit 73).


13

This merchandise is substantially identical to subject merchandise sold in the United

States, being the identical species, grade, and dimension as the SPF products in U.S. Offers 1 and

2. Furthermore, this home market price reflects pricing offered by a Canadian mill located in

Western Canada, just as U.S. Offers 1 and 2 likewise reflect pricing offered by a Canadian mill

located in Western Canada.40 Petitioner therefore calculated the NV corresponding to U.S.

Offers 1 and 2 based on this home market price.

The invoice for this home market sale indicates shipment to the Canadian customer [

] terms of sale.41 As such, the prices as invoiced

include [ ]. Petitioner

has accounted for [ ] freight expenses relevant to customers in Canada when calculating ex-

factory NV. The invoices for each of these HM transactions further indicate payment terms of

[ ]. As also detailed below, Petitioner conservatively assumed payment

for each home market transaction was received within the applicable deadline and made a

corresponding [ ] deduction to the price as invoiced when calculating ex-factory NV to

reflect the likely discount.42

1. Domestic Inland Freight

As discussed above, HM sales invoices available to Petitioner indicates that the Canadian

producer made sales in the Canadian market on [ ] basis.

Accordingly, the prices as invoiced include [ ] freight. Petitioner was [



42 See Declaration of [ ] ¶ 3 (Exhibit 77); Margin Calculations for Offers 1 – 5 (Exhibit 73).


14

] freight expenses incurred in shipping this subject merchandise to the home market

customer, and has deducted those [ ] freight expenses to derive ex-factory NV.43

2. Early Payment Discounts

As mentioned above, each of the home market transactions have [

] payments terms, thus granting the Canadian customer a [ ] discount for early

payment. Petitioner conservatively assumed the Canadian customer paid within the specified

period and has accordingly deducted a [ ] discount when calculating ex-factory NV.

Petitioner calculated the discount as a percentage of the invoiced price, net taxes.44

3. Computation of Ex-Factory NV

The calculations described above resulted in the ex-factory NVs for subject SPF lumber

produced by a Western Canadian mill and sold in the home market. In accordance with the

Department’s standard practice, Petitioner converted the ex-factory NV in CDN to USD using

the Department’s official daily exchange rate in effect on the date of the U.S. offer, which is also

the same date as the Canadian sale . 45 A detailed calculation of the NVs based on home market

prices for the subject merchandise is provided in Exhibit 73.

4. Price-to-Price Dumping Margin Calculation

Petitioner subtracted the export price from the adjusted ex-factory NV and divided the

difference by the export price to determine the dumping margin for U.S. Offers 1 and 2.46






15

These price-to-price comparisons demonstrate that Western Canadian producers sold or

offered to sell the subject merchandise in the United States at prices that are less than normal

value. Specifically, these price-to-price calculations for lumber produced in Western Canada

show an estimated dumping margin of 21.70 percent.

D. EX-FACTORY NV BASED ON CONSTRUCTED VALUE

Petitioner was unable to obtain home market pricing for the identical or similar SPF

products offered for sale by [ ] in U.S. Offers 3 and 4. Petitioner were also unable to

obtain home market pricing for the identical or similar Douglas Fir product that was offered for

sale by [ ] in U.S. Offer 5 . Petitioner has therefore based the NV for comparison to

Offers 3, 4 and 5 on CV.

Traditional methods of obtaining home market price quotes (i.e., by means of the services

of a foreign market researcher) were not reasonably available to Petitioner. As described in

Volume I of these Petitions, the SLA 2006 placed a “standstill” period of 12-months after the

expiration of the agreement in which the U.S. domestic industry agreed not to file a petition for

AD or countervailing duty (“CVD”) relief from unfairly traded Canadian imports.47 The SLA

2006 expired on October 12, 2015, which meant that the standstill period ended on October 12,

2016, and the U.S. domestic industry could file AD and CVD petitions seeking trade relief from

subject imports.48 Thus, as early as September 2006, since the signing of the SLA 2006,

Canadian producers and exporters were aware that an AD or CVD proceeding was likely

47 2006 Softwood Lumber Agreement Between the Government of the United States of America and the Government of Canada (“SLA 2006”), Sept. 12, 2006, Article XVIII (“SLA 2006”) (Exhibit 3).

48 2006 Softwood Lumber Agreement Between the Government of the United States of America and the Government of Canada Extending the Softwood Lumber Agreement Between the Government of the United States of American and the Government of Canada, As Amended (Jan. 23, 2012) (Exhibit 63).

PUBLIC VERSIONBusiness Proprietary Information

16

following the expiration of the agreement. Further, when the agreement expired on October 12,

2015, Canadian producers and exporters were aware of a near exact date when AD or CVD

proceedings were likely (i.e., shortly after the standstill period), as reported by industry and news

sources.49

Given Canadian producers’ knowledge of a likely AD or CVD case, Petitioner

considered traditional methods for obtaining home market pricing information – methods well

known to the Canadian lumber industry and its counsel – to be unreliable. Even if a foreign

market researcher was somehow able to obtain home market price quotes from Canadian

producers, Petitioner has a reasonable basis to question the accuracy and reliability of such

information.

Petitioner thus sought home market pricing from alternative sources (i.e., seeking out

producers in Canada willing to provide information to Petitioner). In that effort, Petitioner

secured the cooperation of a SPF producer in Western Canada that ultimately provided the home

market price information used as the basis for NV for U.S. offers 1 and 2. No other producers in

Canada agreed to provide such information. Unable to obtain contemporaneous home market

prices or price quotes for merchandise comparable to U.S. Offers 3, 4 and 5 Petitioner relied on

CV as the basis for NV.

49 See e.g., Random Lengths, “U.S.-Canada Lumber Trade Issue: Latest Development” available at http://www.randomlengths.com/Woodwire/WoodwireContent/?nodeId=24 (last visited Nov. 17, 2016) (Exhibit 64) (providing monthly updates of the status of a possible AD or CVD proceeding); Bloomberg Markets, “Lumber Trade War Brewing as Hope of New Canada-U.S. Deal Fades” (Aug. 25, 2016) available at http://www.bloomberg.com/news/articles/2016-08-25/lumber-trade-war-brewing-as-hope-of-new-canada-u-s-deal-fades (last visited Nov. 17,2016) (Exhibit 65) (“If the deadline is missed, the U.S. is expected to begin a process to enactnew tariffs, which would be a barrier to Canadian producers including major players such asCanfor Corp., West Fraser Timber Co. and Interfor Corp. Exports from Canada accounted formost of the increased lumber demand from U.S. builders this year through April, BloombergIntelligence estimates.”).

17

1. General Methodology

Petitioner does not have access to Canadian producers’ actual production costs, and this

information is not otherwise reasonably available to Petitioner through alternate sources.

Consequently, Petitioner developed two cost models – one reflecting Eastern Canadian SPF

production (for the calculation of CV compared to Offers 3 and 4) – The Eastern SPF Model –

and one reflecting Western Canadian Douglas Fir production (for the calculation of CV

compared to Offer 5) – The Western DF Model.

Both of these models rely primarily on the detailed, region-specific, log and sawmill

production costs published by Wood Markets.50 Wood Markets’ September 2015 Cost

Benchmark Report includes detailed cost models for average sawmills on the British Columbia

(“BC”) Coast, the BC Interior, the “Prairies” (including Alberta), Ontario, and Quebec for each

quarter of 2014 and the first quarter of 2015.51 A more recent “Quarterly Update,” released in

September 2016, provides some of these same costs, albeit with a less detailed breakout, for the

same regions for the first quarter 2015 through the third quarter of 2016 – which cover the

quarters of the prospective POI.52 For purposes of the costs models, Petitioner relied on the more

detailed breakdown of costs in the Cost Benchmark Report for the most recent quarter captured

in that report – the first quarter (“Q1”) of 2015 – and inflated those costs to the POI based on the

broader cost categories of quarterly data available in the Quarterly Update.

50 See Cost Benchmark Report at 9 (Exhibit 69).

51 See Cost Benchmark Report at 9 (Exhibit 69) and Quarterly Update at 21-23 (Exhibit 69). While the Cost Benchmark Report separately details the logging, hauling, stumpage and woodlands overhead costs included in delivered log costs, the Quarterly Update groups all such costs together into a single delivered log cost

52 See Quarterly Report at 21-23 (Exhibit 69).

18

Each of these reports is based on Wood Markets’ considerable knowledge and experience

with typical Canadian lumber producers, and contain extensive and detailed per unit log and

sawmilling costs, lumber yields, byproduct revenues, and profit margins for all of the major

sawnwood producing regions in North America, Europe, Russia, the Southern Hemisphere, and

China.53 For Canada, the report provides very specific, quarterly, net (i.e., actual), per cubic

meter, log and sawmill costs, lumber recoveries, byproduct revenues, and profit margins for

sawmills in the BC Coast, BC Interior, Canada Prairies, Ontario, Quebec, and Canadian Atlantic

regions. Petitioner is aware of no other source of data more specific to the production costs

actually incurred by Canadian lumber mills. These data, without question, stand as the best

information available to Petitioner to model the likely costs incurred by Canadian producers of

subject lumber and are a highly accurate basis upon which to derive CV.

While the data in these reports are the foundation of Petitioner’s cost models, whenever

possible, Petitioner adjusted the model to incorporate data that are even more contemporaneous

to the POI and specific to the product where such data were available. For example, Petitioner’s

models are based on the Q1 2015 costs for average BC, Quebec and Ontario mills as reported in

the Cost Benchmark Report.54 Wood Markets reports these costs in USD per cubic meter (“m3”)

– having converted the costs as incurred in the original CDN to USD using a uniform exchange

rate specific to the Cost Benchmark Report. To better reflect the presumptive POI, Petitioner

53 See supra at FN1.

54 Petitioner notes that both the Cost Benchmark Report and Quarterly Update include results for both “Average” mills and mills in the “Top Quartile.” See Cost Benchmark Report (Exhibit 69). Petitioner has based these cost models on the costs reported for “Average” mills in the relevant Canadian regions. Petitioner has no knowledge which of the mills of the Canadian producers making Offers 3, 4 and 5 would be included in the definition of “average” or “top quartile” definitions. Thus, Petitioner has assumed an overall “average” experience for each producer.

19

revised the costs as reported in the Cost Benchmark Report as follows. First, Petitioner

converted the costs from the Cost Benchmark Report back to the original CDN using the

standard exchange rate used in the report. Petitioner next inflated these CDN/m3 Q1 2015 costs

to the POI using indices Petitioner calculated based on the CDN/m3 quarterly data available in

the recent Quarterly Update. Petitioner then converted back to USD, using the average of the

Department’s official daily exchange rates in effect for the POI.

In addition, rather than rely on the Q1 2015 average regional stumpage costs as reported

in the Cost Benchmark Report, Petitioner sought more accurate and specific stumpage costs

where available, and calculated and applied to the models publicly available per unit average

POI stumpage costs specific to SPF harvested by [ ] in the Eastern SPF Model, and

specific to DF harvested by [ ] in the Western DF Model. To derive CV, Petitioner

calculated financial ratios based on the 2015 financial experience of West Fraser. Finally, as

also detailed below, Petitioner calculated packing costs based on import statistics for the POI for

Quebec and BC specific to the main packing input (“lumber wrap”), and the consumption rate

for lumber wrap incurred by a U.S. domestic producer, [ ].55 [ ] is a

significant U.S. producer of softwood lumber and a reasonable proxy for estimating the packing

experience of Canadian lumber producers.56

2. Production Process

The lumber production process may vary slightly from sawmill to sawmill depending on

the specific machinery installed and configuration, but the basic steps are all the same.57 In all

55 See Declaration of [ ] ¶¶ 4-5 (Exhibit 81).


57 See Maureen Puettmann et al., “Cradle-to-Gate Life Cycle Assessment of Softwood Lumber Production from the Northeast-North Central,” Consortium for Research on Renewable


20

cases, sawmill operations are controlled by sophisticated computerized systems, and skilled

operators, to ensure that each log is cut so as to optimize its commercial value, producing the

highest value combination of dimensions and lengths. Lumber production generally entails three

main stages of production: the sawmill, the kiln, and the planer.58

The sawmill process includes debarking logs, sawing logs into rough-green lumber,

chipping portions of logs that did not make lumber, sorting rough-green lumber into size classes,

and stacking rough-green lumber for drying.59 Lumber that is not processed beyond this stage is

sold as rough or “green” lumber.

The cut and trimmed pieces of rough lumber may be further processed by kiln drying.

The kiln drying process includes loading green stacked lumber into kilns, drying rough-green

lumber, and unloading rough-dry stacked lumber from the kilns. After drying, the lumber is

returned to the yard before being sent through the planer – the final step in the production

process. Each piece of rough, dry lumber is surfaced on all four sides with a slight radius on the

comers or “eased edges.” After surfacing, the lumber is graded and marked, sorted by type, size

and grade, stacked into units, and sent through the packing line for wrapping.60

There are three major cost items associated with manufacturing the subject softwood

lumber: (1) delivered wood costs; (2) lumber mill processing costs; and (3) byproducts revenue.

It is normal for there to be byproducts to the production process such as wood chips, planer

Industrial Materials, University of Washington, 12-14 (April 2013) (“Softwood Lumber Production Study”) (Exhibit 86).

58 Id. “Green” lumber would not be kiln-dried, and would only go through the sawmill and planer stages of production.

59 Id. at 12.

60 Id. at 14.

21

shavings, and sawdust. These byproducts are generally either sold or reused as energy

alternatives in the manufacturing process. Accordingly, these items are treated within the

models as offsets to costs. Petitioner estimated the cost of production and constructed value for

SPF subject merchandise produced and exported by an eastern Canadian producer, and KD DF

subject merchandise produced and exported by western Canadian producers. The calculations

for the production costs in question appear in Exhibits 78 and 85.

3. The Eastern SPF Model

The Canadian producer making the offer for SPF lumber in U.S. Offers 3 and 4 is

[ ].

Petitioner is not privy to the actual manufacturing costs for subject SPF lumber for this producer.

Accordingly, given that Petitioner estimated the cost of manufacturing subject SPF lumber in

Quebec and Ontario based on the costs for those regions detailed in the Cost Benchmark Report

and the Quarterly Update – adjusted, wherever possible, to use even more contemporaneous and

specific costs where such data were available. 61

Direct Materialsa.

The raw material used to produce subject lumber is wood – specifically logs. The Cost

Benchmark Report details the following USD/m3 actual costs specific to the cost of logs: logging

to roadside, hauling to mill, stumpage, and woodlands overhead.62 Petitioner utilized the logging

to roadside, hauling to mill, woodlands overhead costs (in USD/m3) for Q1 2015 for Quebec and

Ontario, and the stumpage costs for Q1 2015 for Ontario. In order to use costs for Q1 2015

61 See e.g., Eastern SPF Cost Model Calculations (Exhibit 78).

62 Cost Benchmark Report (Exhibit 69).


22

based on the Department’s daily official exchange rates, rather the exchange rate used by Wood

Markets, Petitioner undertook the following steps:

Petitioner first converted the costs reported for Quebec and Ontario in Q1 2015from USD to CDN using the exchange rate applied in the Cost BenchmarkReport.

Petitioner then inflated the Q1 2015 costs to the POI based on quarterly indicesderived from the Quarterly Update.

Finally, Petitioner converted the CDN costs back to USD using the POI averageof the Department’s daily official exchange rates.63

For stumpage in Quebec, Petitioner did not rely on the average stumpage costs from the

Wood Markets report because the data reasonably available to Petitioner allowed for a more

specific calculation of this cost that would best approximate the cost paid by the particular SPF

lumber producer rather than the average province-wide costs provided by Wood Markets.

In Quebec, the Timber Sales Office, or Bureau de mis en marché des bois, calculates a

standard per-cubic-meter timber price for 187 different “pricing zones” within the province.64

For each species and grade of timber, the GOQ publishes a quarterly price for Crown timber

harvested in each of its 187 established pricing zones.65 Petitioner calculated the SPF-specific

stumpage rate specific to [ ]’s Quebec mills by determining the rates for SPF Grade B

logs in each of the four quarters of the POI applicable to the particular tariff zones [

63 See Cost Benchmark Report (Exhibit 69); Eastern SPF Cost Model Calculations (Exhibit 78).

64 Quebec Timber Sales Office (Bureau de mise en marché des bois), available at https://bmmb.gouv.qc.ca/publications-et-reglements/tarification-forestiere/ (last visited Nov. 18, 2016) (“Timber Sales Office Website”) (Exhibit 87).

65 These rate schedules are available at https://bmmb.gouv.qc.ca/publications-et-reglements/tarification-forestiere/. Petitioner directly downloaded from this site the Crown stumpage rates by tariff zones in an Excel spreadsheet for the period from October 2015 through September 2016. These data are provided in Exhibit 82.


23

]. Petitioner converted the average stumpage rate in

CDN/m3 to USD using the average of the Department’s official daily exchange rates for the

POI.66 In other words, based on information reasonably available, Petitioner was able to derive

the per unit cost of stumpage based on the average actual stumpage costs that would have been

incurred by [ ] for SPF in Quebec during the POI, as reported in the stumpage rates

published by the Timber Sales Office.

All sawmills in Ontario pay the same stumpage rate for SPF timber harvested on Crown

land, regardless of grade or location within the province.67 In the last CVD investigation, the

government of Ontario (“GOO”) reported that more than 93 percent of the softwood lumber

harvested in Ontario is SPF.68 Accordingly, the most specific and best information available to

Petitioner for Ontario SPF stumpage costs are the average costs indicated in the Wood Market’s

study. For the cost modeling, Petitioner therefore relied on the Cost Benchmark Report CDN/m3

66 See Eastern SPF Cost Model and Supporting Documentation (Exhibits 78); Full Quebec Stumpage Data for the Presumptive POI (Exhibit 82).

67 As further discussed in Volume III of Petitioner’s petitions, there are four separate components to the total price charged by the GOO for harvesting Crown timber: (1) an annual area charge, which is a fixed rate determined by the area size of a license – C$51 for each kilometer for a SFL or C$103 for each kilometer for a FRL; (2) “stumpage rate”; (3) forestry renewal charges; and (4) forestry futures charges. See Ontario Crown Forest Sustainability Act (1994) §§ 31(1), 32(1), 49(1) and 51(1) (Exhibit 88); Ontario Regulation 167/95 § 2 (Exhibit 89).

The “stumpage rate” for all grades of SPF paid by Ontario sawmills ranged from C$4.93 to C$4.99 per cubic meter for the presumptive POI. See Ontario Crown Timber Charges (Stumpage) – Charges Payable to Forestry Futures Trust (FFT) CFSA Section 51(5) (October 1, 2015 – September 20, 2016) (Exhibit 90). The GOO publishes its stumpage rates as an Excel spreadsheet. Petitioner has downloaded the spreadsheets for the presumptive POI in Exhibit 90.

68 See “Response of the Government of Ontario,” Case C-122-839, Vol. 2 at 10 (June 29, 2001) (Exhibit 91).


24

stumpage rates for Q1 2015, and converted and inflated those costs as detailed above, to derive

the SPF stumpage for the POI for Ontario.69

Next, Petitioner added the logging, hauling, and woodlands overhead costs for the POI

reported in the Cost Benchmark Report to calculate the total actual delivered wood costs on per

cubic meter of logs. Using the identical methodology employed by Wood Markets, Petitioner

then converted the total delivered log costs on a m3 log basis to log costs on a m3 lumber basis by

dividing by the average POI log recovery percentages for Quebec and Ontario, as sourced from

Wood Markets Quarterly Update.70 The resulting figures represent the total average cost of logs

needed to produce a cubic meter (actual, not nominal) of lumber in these mills.

Sawmill Costsb.

The Cost Benchmark Report details the following USD/m3 actual costs specific to

sawmill processing: direct labor, other direct mill costs (which includes energy, and operating

and maintenance supplies), and other mill overhead costs (including all other mill overhead

except depreciation).71 In order to use costs for Q1 2015 based on the Department’s daily

official exchange rates, rather the exchange rate used by Wood Markets, Petitioner undertook the

following steps:

69 See Eastern SPF Cost Model and Supporting Documentation (Exhibit 78). The stumpage rate provided for Ontario in the Cost Benchmark Report CDN/m3 are for an “average” mill in the province and include the four components charged by the GOO for harvesting Crown timber. See Cost Benchmark Report at 9 and Quarterly Update at 21-23 (Exhibit 69).

70 See Eastern SPF Cost Model Calculations (Exhibit 78). With regard to lumber recovery rates, there is no difference in the level of detail between that provided in the Cost Benchmark Report and the Quarterly Update. See Cost Benchmark Report at 9 and Quarterly Update at 21-23 (Exhibit 69). As a result, as demonstrated in Exhibit 78, rather than inflate a rate from Q1 2015 to the POI period, Petitioner was able to simply calculate and apply log recovery rates specific to POI using the quarterly data in the Quarterly Update.


25



Finally, Petitioner converted the CDN costs back to USD using the POI averageof the Department’s daily official exchange rates.72

Byproductsc.

As indicated above, it is normal for there to be byproducts to lumber production – namely

wood chips, sawdust/planer shavings and bark (hog fuel).73 The Cost Benchmark Report details

the following USD/m3 values specific to by-products: “wood chips” and “sawdust/planer

shavings, bark, bio energy.”74 Petitioner utilized the reported revenues for Q1 2015 for average

mills in Quebec and Ontario. In order to use the reported revenues for Q1 2015 based on the

Department’s daily official exchange rates, rather the exchange rate used by Wood Markets,

Petitioner undertook the following steps:



Finally, Petitioner converted the CDN costs back to USD using the presumptivePOI average of the Department’s daily official exchange rates.75

Cost of Manufacturingd.

Petitioner calculated [ ] estimated USD/m3 cost of manufacturing (“COM”)

for SPF production in Quebec and Ontario by adding total delivered wood costs, on a lumber

72 See Eastern SPF Cost Model Calculations (Exhibit 78).

73 See Softwood Lumber Production Study at 12-14 (Exhibit 86).




26

basis, and total sawmill costs, and then deducting total by-product revenues.76 Petitioner next

calculated a single COM, net of depreciation, for [ ] by weight averaging the separately

derived COMs for Quebec and Ontario based on the [

].77

Total Cost of Production and CVe.

Per the Department’s statute and regulations, Petitioner added to COM (which is net of

depreciation) additional expenses relating to depreciation, selling, general, and administrative

expenses, and profit.78 The calculations are described herein.

1) Depreciation

The Cost Benchmark Report provides the depreciation specific to each Canadian region.79

As with other Wood Markets costs, Petitioner derived more accurate POI-specific depreciation

costs for Quebec and Ontario by first converting the USD/m3 depreciation reported for Q1 2015

for Quebec and Ontario in the Cost Benchmark Report back to CDN using the exchange rate

applied in the Cost Benchmark Report. Petitioner next inflated the Q1 2015 costs to the POI

based on quarterly indices derived from the Quarterly Update, and then converted back to USD

using the POI average of the Department’s daily official exchange rates.80 Petitioner next

calculated a single weighted-average depreciation for [ ] by weight averaging the



78 See section 773(b)(3) of the Act; 19 CFR § 351.405.


80 See Eastern SPF Cost Model Calculations (Exhibit 78). To derive the inflator for depreciation, Petitioner relied on the difference between the EBITDA and EBIT Earnings figures reported in the Quarterly Update. As indicated in the Cost Benchmark Report the difference between EBITDA and EBIT is depreciation. See Cost Benchmark Report at 9 (Exhibit 69).


27

separately derived depreciation amounts for Quebec and Ontario based on the [

].81 Petitioner added this single

weighted-average depreciation to COM in its calculation of COP and CV on a USD/m3 basis.82

2) SG&A and Interest Expenses

To establish the financial ratios for Eastern SPF lumber production, Petitioner relied upon

the 2015 financial statements of West Fraser.83 [

] indicate no profits. In accordance with the Department’s long-established practice

not to rely on financial data that show a net loss,84 Petitioner searched for alternative publicly

available financial statements for eastern Canadian lumber producers, but was unable to identify

publicly available statements for any eastern Canadian producers that had profits in FY 2015. In

light of the Department’s long-standing preference for contemporaneous financial data,85

81 See Eastern SPF Cost Model Calculations (Exhibit 78); [ ] Mills and Annual Production Capacities (Exhibit 84).


83 See West Fraser Annual Report 2015, available at http://www.westfraser.com/sites/default/files/West%20Fraser%20Annual%20Report%202015.pdf (last visited Nov. 7, 2016) (“West Fraser 2015 Annual Report”) (Exhibit 14).

84 See Department Final Redetermination Pursuant to Court Remand, “Husteel Co., Ltd., et al., v. United States, Consol. Court No. 14-0021,” A-580-870, 19-20 (Feb. 22, 2016) (“OCTG Korea 2016 Redetermination”) (Exhibit 92) (stating that “it is the Department’s long -established practice when calculating CV profit to exclude from the list of surrogate candidates financial statements that show a net loss”); see also Magnesium Metal from the Russian Federation: Final Results of Antidumping Duty Administrative Review, 76 Fed. Reg. 56,396 (Sept. 13, 2011) and accompanying Issues and Decision Memorandum at Comment 1.B. (employing an alternative method to calculate the profit ratio because the respondent’s financial statements did not reflect a positive profit value); and Certain Fresh Cut Flowers from Ecuador: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 64 Fed. Reg. 18,878, 18,883 (Apr. 16, 1999) (“In order to calculate a positive amount for profit ... we disregarded financial statements of producers that incurred losses.”).

85 See OCTG Korea 2016 Redetermination at 16-17 (Exhibit 92) (stating that the Department’s evaluation of financial statements for purposes of CV profit calculation include: “1) the similarity of the potential surrogate companies’ business operations and products to the


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Petitioner broadened their search for publicly available financial statements to include Western

Canadian producers. Like Eastern Canada, Western Canada is home to several large and

significant lumber producers. West Fraser’s 2015 financial statement, which indicates profits, is

publicly available.86 Not only is it contemporaneous to the POI, but it is sufficiently transparent

and detailed to calculate meaningful financial ratios. As such it is the best information available

to Petitioner, and represents a reasonable surrogate for financial data.

With respect to selling, general, and administrative costs (“SG&A”), Petitioner multiplied

the calculated COM (excluding depreciation) by West Fraser’s SG&A ratio as derived from the

company’s 2015 financial statements to arrive at the SG&A expense for the Eastern SPF

Model.87 Given that Petitioner’s U.S. price calculations for Offers 3 and 4 are net of freight and

domestic brokerage and handling expenses, Petitioner excluded from the SG&A ratio West

Fraser’s reported “freight and distribution costs.”88

Similarly, Petitioner multiplied the calculated COM (excluding depreciation) by West

Fraser’s interest expense ratio to arrive at the interest expense for the Eastern SPF Model.

respondent’s business operations and products; 2) the extent to which the financial data of the surrogate company reflects sales in the home market and does not reflect sales to the United States; 3) the contemporaneity of the data to the POI; and, 4) the extent to which the customer base of the surrogate and the respondent were similar (e.g., original equipment manufacturers versus retailers).”) (emphasis added); see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Color Television Receivers from Malaysia, 69 Fed. Reg. 20,592 (Apr. 16, 2004) and accompanying Issues and Decision Memorandum at Comment 26.

86 See West Fraser 2015 Annual Report (Exhibit 14).


88 See Eastern SPF Cost Model Calculations (Exhibit 78); West Fraser 2015 Annual Report (Exhibit 14).

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Petitioner added the calculated SG&A expense and the calculated interest expense to the

calculated COM in its calculation of COP and CV on a USD/m3 basis.89

3) Profit

In order to establish the profit ratio for the Eastern SPF Model, Petitioner again relied

upon the 2015 financial statements of West Fraser.90 To calculate the profit expense, Petitioner

multiplied the calculated total COP (COM plus SG&A and interest expenses) by West Fraser’s

profit ratio as derived from that company’s financial statement. Petitioner added the calculated

profit amount in its calculation of CV on a USD/m3 basis.91

4) Cubic Meter / MBF and Net / Nominal Conversions

The costs and modeling used in the Cost Benchmark Report reflect costs per “net cubic

meter” – that is, actual, not nominal, volumes.92 In relying on those costs, Petitioner’s cost

models likewise calculate a CV that reflects net costs. Before CV can be compared to U.S.

prices, which are reported on a USD/nominal MBF basis, Petitioner first converted CV in

USD/m3 to USD/actual MBF by multiplying by the standard conversion factor of 2.36 m3/MBF

(or 0.424 MBF/m3).93 To convert net costs to nominal, Petitioner relied on the same

methodology applied in the Cost Benchmark Report and Quarterly Update and multiplied CV –

89 See Eastern SPF Cost Model Calculations (Exhibit 78); West Fraser 2015 Annual Report (Exhibit 14).


91 See Eastern SPF Cost Model Calculations (Exhibit 78)


93 This is the identical conversion factor used in the Cost Benchmark Report to convert net costs per m3 to net costs per MBF. See Cost Benchmark Report at 9 (Exhibit 69).

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on a net USD/actual MBF basis – to nominal MBF using the nominal-to-net conversion factor

specific to Quebec and Ontario regions, [ ].94

5) Packing Materials

Lumber wrap is the primary packing material for subject merchandise. As detailed in

Exhibit 79, this packing input is a complex polyethylene material composed of two different

types of ethylene polymers that has been treated for extended outdoor use and transportation.

Petitioner calculated the average unit value (“AUV”) of imports into Quebec under HTS 3920.10

“Film and sheet, etc, non-cellular, etc, of polymers of ethylene,” as compiled by Statistics

Canada, for the most POI-contemporaneous data available.95 Petitioner also excluded from the

AUV calculation import data which came from countries that the Department treats as non-

market economies (i.e., China and Vietnam) or from countries where the Department has found

the provision of generally available export subsidies by the government (i.e., Indonesia, South

Korea, India, and Thailand).96 The reported packing material AUVs in CDN/kg were converted

to USD/lb using the standard 2.2046 lb/kg conversion rate and the POI average of the

Department’s daily official exchange rates. Petitioner then multiplied [ ] consumption


95 See Description of Lumber Wrap Products (Exhibit 79); Quebec Import Statistics: HTS 392010 (Exhibit 80). Data was derived from the Canadian International Merchandise Trade Database at http://www5.statcan.gc.ca/cimt-cicm/home-accueil?lang=eng (last visited Nov. 18, 2016) (Exhibit 80).

96 See e.g., Utility Scale Wind Towers From the Socialist Republic of Vietnam: Preliminary Results of Antidumping Duty Administrative Review; 2013-2014, 80 Fed. Reg. 12,449 (Dep’t of Commerce Mar. 9, 2015) and accompanying Preliminary Decision Memorandum at 14-15 (“Based on the existence of these {generally available} subsidy programs that were generally available to all exporters and producers in these countries, the Department finds that it is reasonable to infer that all exporters from India, Indonesia, South Korea and Thailand may have benefitted from these subsidies. Therefore, the Department has not used prices from India, Indonesia, South Korea and Thailand in calculating the import-based SVs.”).


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rate in lbs/MBF by the USD/lb value to derive the cost of the packing material consumed in the

production of one MBF of lumber.97

Less Than Normal Value Comparison U.S. Offers 3 and 4f.

In calculating the dumping margins for U.S. Offers 3 and 4, Petitioner subtracted the

export price from the constructed value derived by the Eastern SPF Model, and divided the

difference by the export price to determine the dumping margin.98

The comparisons demonstrate that [ ] sold or offered to sell the subject

merchandise in the United States at prices that are less than normal value. Specifically, these CV

calculations for SPF lumber produced in Eastern Canada show an estimated dumping margin of

between 20.12 percent and 23.38 percent.

4. Western DF Model

The Canadian mill making the offer for DF lumber in U.S. offer 5 is [ ]. Petitioner

is not privy to the actual manufacturing costs for subject lumber for this producer. Accordingly,

given that [ ] produces DF lumber in the BC Interior region, Petitioner estimated CV

based on the costs for the BC Interior region as detailed in the Cost Benchmark Report and the

Quarterly Update – adjusted, wherever possible, to use even more contemporaneous and specific

costs where such data were available.

Direct Materialsa.

Petitioner used the identical methodology to derive total wood costs for the Western DF

Model as detailed above for the Eastern SPF Model, with the exception of using the Cost

Benchmark Report’s logging to roadside, hauling to mill, and woodlands overhead costs for BC

97 See Eastern SPF Cost Model Calculations (Exhibit 78); See Declaration of [ ] ¶¶ 4-5 (Exhibit 81)



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Interior rather than Quebec and Ontario. For stumpage in BC Interior, Petitioner did not rely on

the average stumpage costs from the Wood Markets report because the data reasonably available

to Petitioner allowed for a more specific calculation of this cost that would best approximate the

cost paid by the particular DF lumber producer rather than the average province-wide costs

provided by Wood Markets. In BC Interior, stumpage is paid on a per-cubic-meter basis for each

cutting authority in a manner prescribed by regulation.99 For the BC Interior, the Interior

Appraisal Manual contains certain formulas for determining the stumpage rate based on the type

of harvesting permit.100 Based on information reasonably available, Petitioner was able to derive

the per unit cost of stumpage based on the average actual stumpage costs incurred by [ ]

for DF harvested by this producer in the BC Interior on Crown lands during the POI period, as

sourced from British Columbia’s online “Harvest Billing System.”101 The Harvest Billing

System’s stumpage data are client, species, and transaction specific, and denominated in

CDN/m3 of log. Petitioner calculated a specific stumpage for the BC DF producer for the POI by

first identifying all DF line items specific to the producer during the POI. Next, Petitioner

divided the total value of these line items by the total volume to derive the CDN/m3 POI

stumpage rates for DF specific to that producer. Petitioner converted the average stumpage rate

99 BC Forest Act §§ 103, 105 (Exhibit 93).

100 BC Ministry of Forests, Lands, and Natural Resource Operations, Interior Appraisal Manual, as amended, effective July 1, 2015 (Exhibit 94). For the specific parallel provisions, see § 3.5 (estimated winning bid), § 3.6 (specified operations), § 3.7 (final estimated winning bid),§ 4.9 (tenure obligation adjustment), § 5.2.1 (final rate).

101 The Harvest Billing System is available at http://www2.gov.bc.ca/gov/content/industry/forestry/competitive-forest-industry/timber-pricing/harvest-billing-system. Petitioner has downloaded from this site the relevant stumpage data in Exhibit 95.


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in CDN/m3 to USD using the average of the Department’s official daily exchange rates for the

POI.102

In addition, after summing stumpage, logging, hauling and woodlands overhead costs for

the POI – all denominated in USD/m3 – to calculate the total actual delivered wood costs on a

log basis, Petitioner again converted the total delivered log costs on a m3 log basis to log costs on

a m3 lumber basis, but did so by dividing by the average POI log recovery percentage for the BC

Interior, as sourced from the Quarterly Update.103

Sawmill Costsb.

Petitioner used the identical methodology to derive total sawmill costs for the Western

DF Model as detailed above for the Eastern SPF Model, with the exception that the Petition

relied on the Cost Benchmark Report’s costs for direct labor, other direct mill costs (which

includes energy, and operating and maintenance supplies), and other mill overhead costs

(including all other mill overhead except depreciation) for BC Interior rather than Quebec and

Ontario.104

Byproductsc.

Petitioner used the identical methodology to derive byproduct values for the Western DF

Model as detailed above for the Eastern SPF Model, with the exception that Petitioner relied on

the Cost Benchmark Report’s “wood chips” and “sawdust/planer shavings, bark, bio energy”

values for BC Interior rather than Quebec and Ontario.105

102 See Western DF Cost Model Calculations (Exhibit 85).


104 See Cost Benchmark Report at 9 (Exhibit 69); Western DF Cost Model Calculations (Exhibit 85).

105 See Cost Benchmark Report at 9 (Exhibit 69); Western DF Cost Model Calculations (Exhibit 85).

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Cost of Manufacturing (COM)d.

Petitioner calculated [ ] estimated USD/m3 COM - net of depreciation- for DF

production in BC Interior by adding total delivered wood costs, on a lumber basis, and total

sawmill costs, and then deducting total by-product revenues.106

Total Cost of Production and CVe.

In accordance with the Department’s statute and regulations, Petitioner added to COM

(which is net of depreciation) additional expenses relating to depreciation, SG&A expenses, and

profit.107 Petitioner used the identical methodologies and the identical SG&A, interest expense

and profit ratios as detailed above for the Eastern SPF Model. In converting CV on a net

USD/m3 basis to a nominal USD/MBF basis, Petitioner again first converted CV in USD/m3 to

USD/MBF by multiplying by the standard 2.36 m3/MBF (or 0.424 MBF/m3) to net cost in m3 in

order to obtain net costs per (actual) MBF. To convert net costs to nominal MBF, Petitioner

multiplied CV – on a net USD/MBF basis – to nominal using the Quarterly Update nominal-to-

net factor specific to the BC Interior, [ ]. Petitioner calculated the packing using

the identical usage rate as described above, but instead applied the AUV for imports of HTS

3920.10 into BC instead of Quebec.108


107 See section 773(b)(3) of the Act; 19 C.F.R. § 351.405.

108 See Cost Benchmark Report at 9 (Exhibit 69); Western DF Cost Model Calculations (Exhibit 85)


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Final Normal Value – Western DF Modelf.

Petitioner added the calculated CV net of packing to the calculated packing expenses to

yield a final constructed value for [ ]. The constructed value represents the normal value

for [ ] for KD Douglas Fir.109

Less Than Normal Value Comparison U.S. Offer 5g.

In calculating the dumping margins for U.S. Offer 5, Petitioner subtracted the export

price from the constructed value derived by the Western DF Model, and divided the difference

by the export price to determine the dumping margin.110

The comparison demonstrates that [ ] sold or offered to sell the subject

merchandise in the United States at prices that are less than normal value. Specifically, these CV

calculations for DF lumber produced in the interior of BC show an estimated dumping margin of

52.89 percent.




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II. CONCLUSION

Based on the information presented in this petition, Petitioner alleges that imports of

softwood lumber from Canada are being sold, and are likely to be sold, at less-than-fair-value in

the United States. As such, the Department should initiate antidumping duty investigations and

make affirmative determinations of dumping.

Respectfully submitted,

Andrew W. Kentz David A. Yocis Lisa W. Wang

PICARD KENTZ & ROWE LLP 1750 K Street, N.W. Suite 800 Washington, D.C. 20006

Counsel to the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations