NEWS RELEASES

October 5, 2005 (7:15 p.m. EDT)
No. 175

CANADA AGAIN URGES THE U.S. TO RESPECT NAFTA

International Trade Minister Jim Peterson today urged the United States to live up to its commitments on softwood lumber, even as he welcomed the latest in a series of NAFTA panel rulings, all of which have found the U.S. countervailing duty determinations on Canadian softwood lumber to be illegal.

“It’s high time that the United States accept that Canadian lumber is not subsidized,” said Minister Peterson. “The U.S. should live up to its NAFTA obligations, rather than continuing to cater to narrow protectionist interests in the U.S. lumber industry. The U.S. must stop imposing duties and refund the deposits collected to date.”

Today’s NAFTA panel ruling represents the fifth time the panel has directed the U.S. Department of Commerce (DOC) to correct its subsidy determination—already reduced from 18.79 percent to 1.21 percent.

In order to apply countervailing duties, U.S. law requires a finding that a U.S. industry is being materially injured or threatened with injury as a result of subsidized imports. On August 10, 2005, a NAFTA Extraordinary Challenge Committee (ECC) confirmed that the United States did not meet this requirement, legally obligating it to revoke the duty orders, refund deposits collected and terminate all ongoing administrative reviews. Canada is now challenging the U.S. failure to comply with the ECC decision before the U.S. Court of International Trade.

“Canada continues to explore every possible option for resolving this dispute,” said Minister Peterson, adding that further litigation, possible retaliation and sustained advocacy are key elements of the Canadian strategy. “Just yesterday, I discussed Canada’s approach with my provincial counterparts, who have agreed to continue working together to maintain a strong and unified Canadian position.”

Despite repeated NAFTA rulings rejecting the U.S. allegations, Canadian exporters continue to pay an unjustified 20.15 percent in duties on softwood lumber shipped to the U.S. Since 2002, some $5 billion in duties have been collected illegally.

Minister Peterson also added that he appreciates Mexico’s statement that NAFTA dispute panels must be respected. He looks forward to the next NAFTA Commission meeting, which has been pushed back due to scheduling conflicts.

For more information regarding Canada’s legal challenges against the United States at the WTO and under NAFTA, please visit http://www.dfait-maeci.gc.ca/eicb/softwood/legal_action-en.asp.

For more information regarding softwood lumber issues in general, please visit http://www.softwoodlumber.gc.ca.

The NAFTA panel decision is available at http://www.nafta-sec-alena.org.

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For further information, media representatives may contact:

Jacqueline LaRocque
Director of Communications
Office of the Minister of International Trade
(613) 992-7332

Media Relations Office
International Trade Canada
(613) 995-1874
http://www.international.gc.ca

Backgrounder

CANADA’S NAFTA CHALLENGE OF THE U.S. DEPARTMENT OF COMMERCE’S FINAL COUNTERVAILING DUTY DETERMINATION: CHRONOLOGY OF KEY EVENTS

April 2, 2001

The United States Department of Commerce (DOC) initiated its countervailing duty investigation of Canadian softwood lumber.

March 22, 2002

The DOC made a final affirmative countervailing duty determination and imposed an 18.79 percent duty on Canadian softwood lumber imports.

April 2, 2002

A binational panel was established under NAFTA Chapter 19 to review whether the DOC’s final affirmative countervailing determination was contrary to U.S. law.

August 13, 2003

The panel issued its first report and instructed the DOC to correct its original countervailing duty determination.

January 12, 2004

The DOC released its countervailing duty remand determination and found a new subsidy rate of 13.23 percent. The DOC’s remand determination was subsequently challenged by Canada.

June 7, 2004

The panel issued its second report and again instructed the DOC to issue a determination consistent with U.S. law.

July 30, 2004

The DOC issued its second remand determination and found a new subsidy rate of 7.82 percent. The DOC’s remand determination was subsequently challenged by Canada.

December 1, 2004

The panel issued its third report and again instructed the DOC to issue a determination consistent with U.S. law.

January 24, 2005

The DOC issued its third remand determination and found a new subsidy rate of 1.88 percent. The DOC’s remand determination was subsequently challenged by Canada.

May 23, 2005

The panel issued its fourth report and again instructed the DOC to issue a determination consistent with U.S. law.

July 7, 2005

The DOC issued its fourth remand determination and found a new subsidy rate of 1.21 percent. The DOC’s remand determination was subsequently challenged by Canada.

August 10, 2005

The NAFTA Extraordinary Challenge Committee in the threat of injury case issued its decision unanimously rejecting U.S. claims and affirming the NAFTA panel’s ruling that the United States had no basis on which to find that the U.S. lumber industry was threatened by imports of Canadian softwood lumber.

October 5, 2005

The panel issued its fifth report and again instructed the DOC to issue a determination consistent with U.S. law.