NEWS RELEASES
WTO PANEL TO REVIEW UNFAIR U.S. DUTIES ON CANADIAN SOFTWOOD LUMBER
December 5, 2001 (1:45 p.m. EST) No. 161
WTO PANEL TO REVIEW UNFAIR U.S. DUTIES
ON CANADIAN SOFTWOOD LUMBER
International Trade Minister Pierre Pettigrew today welcomed the World Trade Organization (WTO) decision to
establish a panel to review the recent 19.31 percent U.S. duty on Canadian softwood lumber.
"We are taking measures to protect the rights of our industry," said Minister Pettigrew. "The duty is unfair and
unwarranted, and while we hope to resolve this issue through negotiations, we are also continuing to pursue
the legal options available to us at the WTO."
On August 9, 2001, the United States made a preliminary countervailing duty determination and imposed a
19.31 percent provisional duty on Canadian softwood lumber imports. This newly created panel will consider
whether the U.S. Department of Commerce's preliminary subsidy and critical circumstances determinations in
the countervailing duty investigation are consistent with the United States' WTO commitments. The panel will
also examine the WTO-consistency of the expedited review provisions of U.S. countervailing duty law.
Once the panel is constituted, the proceedings may take about nine months to complete. A final report is
expected in September 2002.
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A backgrounder is attached.
For further information, media representatives may contact:
Sébastien Théberge
Office of the Minister for International Trade
(613) 992-7332
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
http://www.dfait-maeci.gc.ca
Backgrounder
In April 2001, the United States Department of Commerce initiated its fourth countervailing duty investigation of
Canadian softwood lumber in 20 years.
On August 9, 2001, the U.S. made a preliminary countervailing duty determination and imposed a
19.31 percent provisional duty on Canadian softwood lumber imports. The U.S. Department of Commerce also
made a preliminary critical circumstances determination on August 9 that could result in the 19.31 percent
finding of subsidy being applied retroactively to May 2001.
On September 17, 2001, Canada held World Trade Organization (WTO) consultations with the United States to
raise its concerns with these two determinations. The consultations failed to resolve the dispute. As a result,
Canada requested the establishment of a panel to hear this challenge at the November 5 meeting of the WTO
Dispute Settlement Body. The U.S. blocked the establishment of a panel at that meeting. Following WTO
procedure, Canada repeated its request at the December 5 meeting of the Dispute Settlement Body and the
panel was formally established.
Preliminary Countervailing Duty Determination
Canada considers the preliminary countervailing duty determination inconsistent with the United States' WTO
obligations on a number of grounds.
Among the WTO inconsistencies in its preliminary determination, the Department of Commerce treated
provincial forest management regimes generally, and stumpage, in particular, as "financial contributions" on the
basis that provinces are providing a "good." Under provincial forest management regimes, provinces grant a
licence or right of access to cut timber, which in Canada's view is not a "financial contribution" as defined under
the WTO Agreement. The United States also used cross-border, rather than in-country, benchmarks to
determine whether stumpage confers a "benefit" (i.e., it based its benefit finding on U.S. prices, rather than on
the prevailing market conditions in Canada). In Canada's view, these actions are inconsistent with the United
States' WTO Agreement obligations.
Preliminary Critical Circumstances Determination
Canada is similarly concerned with the preliminary critical circumstances determination. In Canada's view, such
determinations cannot be enforced on a provisional basis. In addition, the preliminary critical circumstances
determination was based on an alleged export subsidy that was found to be de minimis (i.e., conferring a
subsidy rate of less than one percent) in the countervailing duty determination. The use of a de minimis alleged
subsidy to justify the retroactive application of a preliminary duty rate of 19.31 percent is inconsistent with the
United States' WTO Agreement obligations.
Expedited Review
Exporters subject to countervailing duty action are entitled to individual expedited reviews following an
investigation in order to calculate company-specific duty rates. However, U.S. law does not provide for
individual expedited company reviews where investigations are conducted on a countrywide basis, which is
inconsistent with Article 19.3 of the WTO Subsidies and Countervailing Measures Agreement.
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