NEWS RELEASES

November 22, 2005 (9:45 p.m. EST)
No. 230

U.S. FINALLY DETERMINES CANADIAN SOFTWOOD NOT SUBSIDIZED: ONE STEP TOWARD RESOLUTION

International Trade Minister Jim Peterson today said he was encouraged by the news that the U.S. Department of Commerce (DOC) has finally issued a determination on countervailing duties that supports Canada’s long-standing position that Canadian softwood lumber is not subsidized.

“The Government of Canada welcomes this important step by the U.S. Clearly, the Bush administration has heard the vigorous appeals from Canada that they must respect the terms of NAFTA,” said the Minister. “This is a positive move and one that Canadians should rightly see as a vindication of our strong position.”

The Minister added, “This first step is encouraging, but a complete victory will not have been secured until the duties improperly collected have been returned—until all duties are eliminated.”

Today’s remand determination of 0.80 percent by the DOC was in response to the NAFTA panel’s fifth request that the DOC correct its subsidy determination—previously reduced by the DOC from 18.79 percent to 1.21 percent. Canadian exporters continue to pay an unjustified 20.15 percent duty on softwood lumber shipped to the U.S. Since 2002, some $5 billion in duties has been collected illegally.

Even before today’s decision, the imposition by the United States of countervailing duties on Canadian softwood lumber was ruled inconsistent with U.S. law. On August 10, 2005, a NAFTA Extraordinary Challenge Committee (ECC) upheld a NAFTA panel decision that there was no basis in U.S. law for finding threat of injury to the U.S. industry. The ECC decision legally required the U.S. to revoke the countervailing and anti-dumping duty orders, to refund, with interest, deposits collected, and to stop all ongoing administrative reviews.

Canada will continue to explore every reasonable option for resolving this dispute, including litigation (with the possibility of retaliation), high-level political intervention and advocacy, and will aggressively seek export opportunities for softwood lumber in other markets.

“However, this is but one step toward resolution. At this time duties will continue to be collected. None of the duties paid so far to the U.S. have been refunded,” Minister Peterson concluded. “We will continue to advocate for the interests of our lumber industry and for the full respect for the terms of NAFTA by the administration.”

The Government of Canada will consult closely with the industry itself and the affected provinces on the next steps.

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.

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For further information, media representatives may contact:

Jacqueline LaRocque

Office of the Minister of International Trade

(613) 992-9940

Media Relations Office

Foreign Affairs Canada and International Trade Canada

(613) 995-1874

http://www.dfait-maeci.gc.ca

Backgrounder

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

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 is contrary to U.S. law.

August 13, 2003: The NAFTA 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 NAFTA 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 NAFTA 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 NAFTA 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 NAFTA panel issued its fifth report and again instructed the DOC to issue a determination consistent with U.S. law.

October 28, 2005: The DOC filed a motion with the NAFTA panel requesting clarification of the panel’s October 5 instructions. The DOC also sought permission to file its remand determination 10 days after having received clarification from the panel.

November 16, 2005: The NAFTA panel denied the U.S. request for clarification, reiterated its October 5 instructions and ordered the DOC to issue a new determination by November 23, 2005.

November 22, 2005: The DOC issued its fifth remand determination and found a new subsidy rate of 0.80 percent.