NEWS RELEASES
PETTIGREW EXPRESSES DISMAY AT FINAL U.S. LUMBER DECISION
May 2, 2002 (2:00 p.m. EDT) No. 46
PETTIGREW EXPRESSES DISMAY AT FINAL U.S. LUMBER DECISION
International Trade Minister Pierre Pettigrew today announced that Canada will conduct an immediate review
regarding possible challenges to today's United States International Trade Commission (ITC) Final
Determination that Canadian softwood lumber exports posed a threat of injury to U.S. industry.
"This decision was not unexpected, given the protectionist nature of U.S. softwood lumber decisions," said
Minister Pettigrew. "But that doesn't make it any less damaging. It's hard to understand how the U.S.
Commission found threat of injury given the stable Canadian share of the U.S. market, the strong U.S. lumber
market and U.S. industry profitability."
In a 4 to 0 vote, the ITC today found that Canadian softwood lumber exports represent a threat of injury to U.S.
lumber producers. This means that bonds and cash deposits posted by Canadian softwood lumber companies
prior to May 16 should, as in the past, be refunded. Cash deposits for estimated duties will have to be made for
all softwood lumber exports following the anti-dumping and countervailing duty orders, expected by May 23,
2002.
"U.S. industry has never been able to sustain its subsidy and injury allegations," added Minister Pettigrew. "This
decision is very damaging for our industry. Unfair and punitive duties will come into effect later this month. We
will look hard at this newest decision and determine next steps, as soon as the Commission provides its
reasons."
As a result of this determination, no provisional duty measures will be imposed by the U.S. Department of
Commerce. All bonds posted will be cancelled and cash deposits made prior to May 16 will be refunded by the
U.S. Customs Service eliminating over $760 million in contingent duty liabilities being carried by Canadian
lumber producers.
A decision to challenge the ITC's Final Determination by the Government of Canada would complement
ongoing challenges of U.S. law and practice at the World Trade Organization and under the North American
Free Trade Agreement.
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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
U.S. INTERNATIONAL TRADE COMMISSION FINAL DETERMINATION--THREAT OF
INJURY
On May 2, 2002, the U.S. International Trade Commission (ITC) voted 4 to 0 that the United States softwood
lumber industry is "threatened" with material injury by reason of imports of softwood lumber from Canada that
have been found by the Department of Commerce to be subsidized and sold in the United States at less than
fair value. The ITC will make its reason public in a report on May 16.
The Department of Commerce will publish Anti-dumping and Countervailing Duty Orders by May 23, 2002. The
Orders will require Canadian exporters to make cash deposits on future shipments of softwood lumber to the
United States, based on subsidy and dumping margins found by the Department of Commerce in its final
determinations of subsidy and dumping. However, as a result of this threat of injury determination, all bonds
posted, should, as in the past, be cancelled, and cash deposits made prior to May 16, 2002, should, as in the
past, be cancelled or refunded by the U.S. Customs Service. This should eliminate over $760 million in
contingent duty liabilities being carried by Canadian lumber producers.
Final Countervailing Duty Determination
On March 21, 2002, the Department of Commerce made its final countervailing duty determination, ruling that
federal and provincial programs conferred countervailable subsidies (after adjustment for technical errors) of
18.79%. The four Atlantic provinces as well as 20 companies have been excluded from the countervailing duty
action.
Final Anti-dumping Determination
On March 21, 2002, the Department of Commerce made its final determination in the anti-dumping
investigation, ruling that Canadian producers/exporters had sold softwood lumber in the United States below
fair value. The anti-dumping duty rates for the six mandatory respondent companies (after adjustment for
technical errors) range from 2.18% to 12.44% (Abitibi - 12.44%, Canfor - 5.96%, Slocan - 7.71%, Tembec -
10.21%, West Fraser - 2.18%, and Weyerhaeuser - 12.39%). The "all others" rate for remaining shipments is
8.43%.
Bonding/Cash Deposits
Countervailing duties: Under international trade rules and U.S. law, the Department of Commerce could impose
provisional countervailing duties for no more than four months. As a result, the provisional 19.31% duty was
imposed from mid-August to mid-December 2001. The 18.79% final determination subsidy rate cannot be
imposed until such time as the Department of Commerce publishes a Countervailing Duty Order, which is
expected by May 23, 2002. As of that date, importers will be required to post cash deposits to the U.S.
Customs Service in the amount of 18.79%.
Anti-dumping duties: Under international trade rules and U.S. law, the Department of Commerce could impose
provisional anti-dumping duties for no more than six months. As a result, the provisional anti-dumping duties
averaging 12.58% were imposed from November 6, 2001 to April 1, 2002. From April 2 to May 5, 2002, the
provisional anti-dumping duties averaged 8.43%. In the anti-dumping investigation, companies were required to
post bonds or cash deposits until May 5, 2002. After publication of the Anti-dumping Order, expected by May
23, 2002, exporters will be required to make cash deposits at the rate of 8.43%
NAFTA Challenges
On April 2, 2002, the Government of Canada formally requested a NAFTA panel review of the U.S. final
subsidy and dumping determinations. Canadian provinces, industry associations individual companies have
also requested NAFTA panel reviews. Chapter 19 of NAFTA provides for a binding, binational panel review of
final determinations in trade remedy cases. Panels consisting of five persons are established to review the
determinations. Panels are required to ascertain whether the determinations are consistent with the trade laws
of the country conducting the investigation. Under NAFTA rules, panel rulings are required within 315 days of
the request for review.
Canada will conduct an immediate review regarding possible challenges to the ITC's final injury determination
under Chapter 19 of NAFTA.
WTO Challenges
Canada will continue to pursue its WTO challenges of a number of provisions of U.S. law and of the preliminary
determinations. The actions currently underway include:
1. Section 129(c)(1) of the Uruguay Round Agreements Act
This section prevents the United States from refunding duty deposits collected from foreign companies in
situations where the imposition of those duties has been found to be inconsistent with WTO rules. Canada is
challenging the U.S. law on this issue.
2. Preliminary Determination of Subsidy
On August 9, 2001, the Department of Commerce made a preliminary determination of subsidy. Canada is
challenging the determination. The preliminary hearings were held on April 24 and 25, 2002.
3. The Byrd Amendment
This Amendment, also known as the Continued Dumping and Subsidy Offset Act of 2000, requires U.S.
customs authorities to distribute duties assessed pursuant to a countervailing duty order, or an anti-dumping
order or finding, to "affected domestic producers" for "qualifying expenses." Canada, along with numerous other
countries, is challenging this U.S. law on the basis that it is WTO-inconsistent because the only action a
member may take to offset dumping or subsidization is the imposition of dumping or countervailing duties. The
second hearing was held in March 2002.
4. Future Challenges
The government has already announced challenges to the final determination of subsidy and dumping and will
promptly consider a possible challenge of the ITC final injury determination.
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