NEWS RELEASES

April 13, 2006 (12:10 p.m. EDT)
No. 36

SOFTWOOD LUMBER: CANADA WINS APPEAL AT WTO

The WTO Appellate Body today found in favour of Canada and reversed a November 15, 2005, WTO compliance panel finding in the softwood lumber dispute. The Appellate Body agreed with Canada that the compliance panel had failed to properly review the measure that the U.S. claims sets the basis for countervailing and anti-dumping duties on Canadian softwood lumber.

“We are pleased with this decision because it reflects the position we have maintained all along. The United States can no longer claim that its measure is WTO-consistent,” said International Trade Minister and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics David L. Emerson. “I will be consulting closely with the provinces and industry to determine the best way forward following this successful appeal.”

The Appellate Body did not rule on whether the U.S. measure is consistent with U.S. WTO obligations. The Government of Canada continues to believe that the U.S. measure fails to demonstrate that the U.S. industry is threatened by Canadian softwood lumber imports. Canada will carefully consider its options following this decision, including the possibility of bringing a new WTO proceeding against the U.S. measure in this case.

“The Government of Canada is committed to finding a negotiated resolution to the lumber dispute. In the meantime, we will continue to pursue our legal options before NAFTA, the WTO and the U.S. Court of International Trade,” Minister Emerson added.

More information on softwood lumber issues is available at http://www.softwoodlumber.gc.ca

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A backgrounder is attached.

For further information, media representatives may contact:

Jennifer Chiu
Press Secretary
Office of the Minister of International Trade and Minister for the Pacific Gateway and the Vancouver-Whistler Olympics
(613) 992-7332

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

Backgrounder

CANADA’S WTO CHALLENGE OF THE U.S. INTERNATIONAL TRADE COMMISSION FINAL THREAT OF INJURY DETERMINATION

On March 22, 2004, a WTO panel found the original U.S. International Trade Commission (ITC) determination that Canadian softwood lumber imports threaten to injure the U.S. industry to be inconsistent with U.S. WTO obligations.

Following the adoption of the panel report on April 26, 2004, the United States Trade Representative instructed the ITC to issue a new determination on threat of injury to comply with the WTO ruling.

On November 24, 2004, the ITC issued a revised threat of injury determination to comply with the panel ruling. The revised determination relies on the same analysis that was found to be WTO-inconsistent by the original WTO panel in March 2004.

Therefore, on February 14, 2005, Canada requested that a WTO compliance panel be established to review the revised threat of injury determination. In order to preserve any future retaliatory rights, Canada also filed a request for authority to retaliate in the amount of softwood lumber cash deposits that were held with the U.S. Treasury at that time (over C$4.25 billion), plus the amount of cash deposits that the U.S. continues to collect illegally (approximately C$650 million annually), until such time as the U.S. complies with its WTO obligations.

On November 15, 2005, the WTO compliance panel considering the ITC’s November 2004 injury determination publicly released its final report and found that the U.S. revised threat of injury determination is consistent with U.S. WTO obligations.

On January 13, 2006, Canada appealed the November 2005 panel decision to the WTO Appellate Body on the grounds that the U.S. revised threat of injury determination fails to demonstrate that the U.S. industry is threatened by Canadian softwood lumber imports.