On April 3, 2009, the new United States Trade Representative, Ron Kirk, rejected Canada's offer to make a government-to-government payment of $36.66 million (C$46.7 million) to the United States in response to the London Court of International Arbitration decision finding a breach of the 2006 Softwood Lumber Agreement (SLA).
Kirk said in a written press statement that Canada's claim that its offer complies with an arbitration decision regarding Canada's breach of the SLA was “unfounded.”
Kirk further threatened retaliation if Canada fails to cure its breach within the time prescribed by the tribunal and does not make the compensatory adjustments determined by the LCIA.
On April 7, 2009, the United States announced it would unilaterally retaliate and impose a 10% duty on softwood lumber from Ontario, Quebec, Manitoba and Saskatchewan. USTR Ron Kirk said in a news release that the duties will remain in place unitl such time as the U.S. has collected $USD 54.8 Million. So much for the G-20 April declaration against protectionism and the imposition of customs duties.
At the G-20 meetings last week, the leaders recognized that the global financial crisis was affecting trade. This Canada-United States softwood lumber issue presents a prefect opportunity for the USTR to do something honourable and accept Canada's offer to make a payment and to ask for that payment to be paid to the World Bank or IMF for the benefit of least developed countries. The USTR has an opportunity that is being squandered.
The USTR also expressed disappointment with Canada's decision to pursue further arbitration proceedings. On April 2, 2009, Canada asked the LCIA to determine whether Canada has cured its breach of the SLA. If the USTR had accepted Canada's offer and seen the opportunity to take a positive step for the world economy, further arbitration would not be necessary.