United States: HHR Wins Another Softwood Lumber Ruling For Canada

May 19, 2020 - The firm notched another victory for the Government of Canada in a dispute over whether cedar shakes and shingles (CSS) are subject to duties on Canadian softwood lumber imposed by the United States.

On April 20, the U.S. Court of International Trade (CIT) upheld the U.S. Commerce Department's decision in February to exclude CSS from the scope of the antidumping and countervailing duty orders on Canadian softwood lumber, thus invalidating the application of approximately 25 percent duties to roughly $200 million in annual imports of CSS.

CIT Judge Jennifer Choe-Groves noted that Commerce's redetermination was consistent with her November 2019 opinion directing Commerce to reconsider imposing duties on CSS imports after failing to account for prior determinations. In a brief submitted to the court last year, HHR argued that Commerce treated CSS as distinct from softwood lumber in five previous investigations and two agreements between the Canadian and American governments in 1996 and 2006.

Judge Choe-Groves also observed in her decision that "Commerce disclaimed its prior reasoning for considering and rejecting plaintiff and plaintiff-intervenor's arguments that the language defendant-intervenor used in the petition and attached exhibit supported a finding that [cedar shakes and shingles] fall outside the scope of the orders." 

The Shake and Shingle Alliance (SSA) filed suit against the U.S. government in November 2018, challenging CSS' inclusion within the scope of products subject to the U.S. tariffs on Canadian softwood lumber. The SSA contended that CSS -- a high-end product used primarily for roofing -- is produced by a separate industry from the one that produces softwood lumber, and therefore should be excluded from American tariffs on Canadian imports of the latter.

The Government of Canada joined with the SSA in August 2018 in support of exclusion for the CSS industry. HHR represents Canada in its trade dispute with the U.S. over softwood lumber, which centers on whether Canada, one of the largest lumber producers and exporters in the world, unfairly subsidizes its industry. U.S. producers revived the dispute four years ago after the second of two international agreements between the two nations expired in 2015 and negotiators failed to strike a new deal.

Commerce previously concluded that CSS were covered by the scope of the duty orders on Canadian softwood lumber, citing a passage from the U.S. Department of Agriculture's Wood Handbook, which makes reference to the production of shakes and shingles as being part of the lumber sector.

Eric Parnes led the team on behalf of the Government of Canada, with Dan Witkowski arguing the case before Judge Choe-Groves in September. Stephen Halpin and Conor Gilligan assisted on the briefs. Joanne Osendarp leads the broader defense of the Government of Canada in its trade dispute.