CSMS Message: 97-000579

TO : ALL ABI BROKERS.

FROM : GARY ZZ-MANES

SUBJECT : SOFTWOOD LUMBER PERMIT CODE D

DATE : 06/18/97

7169071
JUNE 18, 1997

TO : ALL PORT DIRECTORS AND ENTRY FILERS

FROM : DIRECTOR, TRADE AGREEMENTS

SUBJECT: REPORTING OF THE PERMIT TYPE CODES, PARTICULARLY CODE "
D", FOR ENTRY SUMMARY PROCESSING OF IMPORTATIONS OF CANADIAN
SOFTWOOD LUMBER

PASS TO: ALL IMPORT SPECIALISTS, NATIONAL AND FIELD IMPORT
SPECIALISTS, ENTRY PERSONNEL, OTHER CONCERNED CUSTOMS
EMPLOYEES, BROKERS, AND IMPORTERS

REFERENCE: ON FEBRUARY 26, 1997, CUSTOMS REGULATIONS 19 CFR
12.140 -- SOFTWOOD LUMBERFROM CANADA, AND 19 CFR 113.62(K) -- CUSTOMS
BONDS, WERE PUBLISHED IN THE FEDERAL REGISTER.

THIS NOTICE REMINDS THE IMPORTING COMMUNITY OF THEIR OBLIGATIONS
UNDER THESE REGULATIONS COVERING SOFTWOOD LUMBER SUBJECT TO THE
U.S./CANADA SOFTWOOD LUMBER AGREEMENT OF 1996 PARTICULARLY WITH
RESPECT TO CODE "D", BONUS SHIPMENTS.

BACKGROUND:

ON MAY 29, 1996, THE UNITED STATES ENTERED INTO THE U.S./CANADA
SOFTWOOD LUMBER AGREEMENT (THE AGREEMENT) UNDER THE AUTHORITY OF
SECTION 301(C)(1)(D) OF THE TRADE ACT OF 1974, AS AMENDED.

THE AGREEMENT REFERS SPECIFICALLY TO SOFTWOOD LUMBER MILL
PRODUCTS CLASSIFIED IN SUBHEADINGS 4407.10.00, 4409.10.10,
4409.10.20, AND 4409.10.90 OF THE HARMONIZED TARIFF SCHEDULE OF
THE UNITED STATES (HTSUS) THAT WERE "FIRST MANUFACTURED" INTO A
PRODUCT OF ONE OF THOSE HTSUS SUBHEADINGS IN THE CANADIAN
PROVINCES OF ONTARIO (XO), QUEBEC (XQ), BRITISH COLUMBIA (XC) OR
ALBERTA (XA).

THE AGREEMENT REQUIRES THE COLLECTION OF INFORMATION BY CANADA IN
CONNECTION WITH THE ISSUANCE OF EXPORT PERMITS FOR SOFTWOOD
LUMBER FIRST MANUFACTURED IN ONTARIO, QUEBEC, BRITISH COLUMBIA
AND ALBERTA AND THE COLLECTION OF INFORMATION BY THE UNITED
STATES IN CONNECTION WITH IMPORT TRANSACTIONS INVOLVING SUCH
LUMBER.

- 2 -

WITH REGARD TO IMPORTS, THE AGREEMENT OBLIGATES THE UNITED STATES
TO REQUIRE THAT THE U.S. IMPORTER PROVIDE SPECIFIC INFORMATION IN
CONNECTION WITH THE ENTRY OF THE LUMBER UNDER SECTION 484 OF THE
TARIFF ACT OF 1930, AS AMENDED (19 U.S.C. 1481). THE INFORMATION
REQUIRED TO BE COLLECTED UNDER THE AGREEMENT INCLUDES THE
FOLLOWING THREE SPECIFIC DATA ELEMENTS: (1) THE PROVINCE OF FIRST
MANUFACTURE OF THE LUMBER; (2) THE EXPORT PERMIT NUMBER FOR THE
SHIPMENT ISSUED BY THE CANADIAN DEPARTMENT OF FOREIGN AFFAIRS
AND INTERNATIONAL TRADE (DFAIT) ; AND (3) THE FEE STATUS (PERMIT
TYPE) CODE OF THE LUMBER FOR WHICH THE EXPORT PERMIT WAS ISSUED
(WHETHER THE LUMBER IN THE SHIPMENT WAS ATTRIBUTED TO A QUANTITY
TO WHICH NO FEE APPLIES OR TO A QUANTITY THAT IS SUBJECT TO THE
$50 FEE OR TO A QUANTITY THAT IS SUBJECT TO THE US$100 FEE OR TO A
QUANTITY THAT IS COVERED BY THE TRIGGER PRICE MECHANISM).

FEE STATUS CODES (PERMIT TYPE CODES)

WHEN DFAIT ISSUES SOFTWOOD LUMBER EXPORT PERMITS, CERTAIN ALPHA
CHARACTERS MAY PRECEDE THE EXPORT PERMIT NUMBER. THESE ALPHA
CHARACTERS ARE FOR THE INTERNAL USE OF DFAIT, AND ARE NOT TO BE
CONFUSED WITH THE U.S. FEE STATUS (PERMIT TYPE) CODES "A,""B," "
C," OR "D." THE CONCORDANCE OF CODES IS AS FOLLOWS.

U.S. CANADA

A= NO FEE (BLANK)= NO FEE - THE EXPORTED PRODUCT FALLS WITHIN
THE BASE AMOUNT OF 14.7 BILLION
BOARD FEET.

B= $50 MBF L = $50 MBF- THE EXPORTED PRODUCT FALLS
BETWEEN 14.7 BILLIONBOARD FEET
BUT IS NOT IN EXCESS OF 15.35
BILLION BOARD FEET.

C= $100 MBF C = $100 MBF - THE EXPORTED PRODUCT IS IN EXCESS
OF 15.35 BILLION BOARD FEET.

D + 1-20 B= NO FEE - (BONUS)(EFFECTIVE 4/1/97)
WHEN THE EXPORTED PRODUCT IS
EXPORTED IN EXCESS OF 14.7
BILLION BOARD FEET BECAUSE
THE AVERAGE PRICE OF THE EXPORTED
PRODUCT EXCEEDS A PRESCRIBED
TRIGGER PRICE DURING ANY (PREVIOUS)
QUARTERLY PERIOD.

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ACTION:

PERMIT CODE TYPE "D":

1. FOR U.S. CUSTOMS PURPOSES THE FEE STATUS (PERMIT TYPE) CODE "
D" IS USED TO REPRESENT "BONUS" ALLOCATIONS OF FEE-FREE SOFTWOOD
LUMBER EXPORTS FROM CANADA. WHEN THE FEE STATUS (PERMIT TYPE)
CODE IS "D," IT MUST BE FOLLOWED BY "01" THROUGH "20." THE
NUMBERS "01" THROUGH "20" REPRESENT THE QUARTER OVER THE FIVE (5)
YEAR LIFE OF THE AGREEMENT BEGINNING ON APRIL 1, 1996 (SEE
BELOW), DURING WHICH THE "BONUS" ALLOCATION INURED TO CANADA
UNDER THE AGREEMENT'S "TRIGGER PRICE" PROVISION. EFFECTIVE APRIL
1, 1997, TO ASSIST IN TRACKING "BONUS" ALLOCATIONS, CANADA WILL
INSERT THE ALPHA CHARACTER "B" PRECEDING THE PERMIT NUMBER. FOR
ALL SUCH PERMITS, FILERS MUST INSERT THE ALPHA CHARACTER "B"
PRECEDING THE PERMIT NUMBER. FOR ALLREPORT A CODE "D" AND THE
QUARTER OF THE AGREEMENT IN WHICH THE BONUS WAS EARNED.

* * * * *

QUARTER QUARTER QUARTER QUARTER
NUMBER NUMBER

04-1-96/06-30-96 = 01 10-1-98/12-31-98= 11
07-1-96/09-30-96 = 02 01-1-99/03-31-99= 12
10-1-96/12-31-96 = 03 04-1-99/06-30-99= 13
01-1-97/03-31-97 = 04 07-1-99/09-30-99= 14
04-1-97/06-30-97 = 05 10-1-99/12-31-99= 15
07-1-97/09-30-97 = 06 01-1-00/03-31-00= 16
10-1-97/12-31-97 = 07 04-1-00/06-30-00= 17
01-1-98/03-31-98 = 08 07-1-00/09-30-00= 18
04-1-98/06-30-98 = 09 10-1-00/12-31-00= 19
07-1-98/09-30-98 = 10 01-1-01/03-31-01= 20

* * * * *

IF THE IMPORTER IS UNABLE TO DETERMINE THE QUARTER DURING WHICH
THE BONUS ALLOCATION INURED TO CANADA BECAUSE THE CANADIAN
GOVERNMENT HAS NOT PROVIDED IT, THE IMPORTER SHALL USE THE NUMBER "
01." THE UNITED STATES IS SEEKING TO HAVE CANADA SPECIFY THE
RELEVANT QUARTER ON ITS EXPORT PERMITS . WHEN THAT HAPPENS, THE
APPROPRIATE QUARTERLY DESIGNATION WILL BE REQUIRED.

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2. IN ADDITION, IF DFAIT ISSUES MORE THAN ONE PERMIT NUMBER
FOR A GIVEN SHIPMENT OF SOFTWOOD LUMBER, THERE SHOULD BE AT LEAST
ONE LINE-ITEM PER PERMIT NUMBER ON THE CF 7501 OR ITS ELECTRONIC
EQUIVALENT.

SHOULD YOU HAVE ANY QUESTIONS CONCERNING THIS MESSAGE CONTACT
GARY MANES AT (202) 927-1133.

JOYCE METZGER