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<title>WTO RELEASES INTERIM REPORT ON SOFTWOOD LUMBER</title>
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<p><font face="Arial"></font><font face="Arial" size="+1"></font><font face="Arial" size="+1"><strong>December 19, 2003 <em>(3:15 p.m. EST)</em> No. 196</strong></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong></strong></font><font face="Arial" size="+1"><strong>WTO RELEASES INTERIM REPORT ON SOFTWOOD LUMBER</strong></font><font face="Arial"></font></p>
<p><font face="Arial">International Trade Minister Jim Peterson is pleased with reports that a World Trade Organization (WTO) panel
has found that the U.S. International Trade Commission (ITC) did not follow international trade rules when it
determined that Canadian softwood lumber exports threaten to injure the U.S. industry.</font></p>
<p><font face="Arial">"We have consistently maintained that countervailing and anti-dumping duties imposed by the U.S. on
Canadian softwood lumber exports violate international trade rules," said Minister Peterson. "We are pleased
with today's interim report."</font></p>
<p><font face="Arial">On May 22, 2002, the ITC determined that the U.S. softwood lumber industry was "threatened" with material
injury by reason of alleged subsidized and dumped imports of softwood lumber from Canada. </font></p>
<p><font face="Arial">Canada challenged the ITC's threat of injury determination before the WTO and under the North American Free
Trade Agreement (NAFTA). On September 5, a NAFTA panel ordered the ITC to issue a new determination
that is consistent with U.S. law. On December 16, the ITC issued a new determination reaffirming its original
finding of threat of injury. Canadian parties will ask that this new determination be reviewed by the NAFTA
panel.</font></p>
<p><font face="Arial">The Government of Canada will continue to work with the provinces and industry on our two-track strategy of
litigation before NAFTA and WTO panels and negotiations to find a lasting resolution to this dispute. This WTO
panel finding will be an important element in our ongoing consideration of the U.S. proposal for a settlement.</font></p>
<p><font face="Arial">For more information regarding Canada's legal challenges against the United States at the WTO and under
NAFTA, please visit: <a href="https://bac-lac.wayback.archive-it.org/web/20061209063007/http://www.dfait-maeci.gc.ca/eicb/softwood/legal_action-en.asp">http://www.dfait-maeci.gc.ca/eicb/softwood/legal_action-en.asp</a></font></p>
<p><font face="Arial">For more information regarding softwood lumber issues in general, please visit:
<a href="https://bac-lac.wayback.archive-it.org/web/20061209063007/http://www.softwoodlumber.gc.ca/">http://www.softwoodlumber.gc.ca</a></font></p>
<p><font face="Arial">- 30 -</font></p>
<p><font face="Arial">A backgrounder is attached.</font></p>
<p><font face="Arial">For further information, media representatives may contact:</font></p>
<p><font face="Arial">Media Relations Office</font></p>
<p><font face="Arial">Department of Foreign Affairs and International Trade</font></p>
<p><font face="Arial">(613) 995-1874</font></p>
<p><a href="https://bac-lac.wayback.archive-it.org/web/20061209063007/http://www.dfait-maeci.gc.ca/"><font face="Arial">http://www.dfait-maeci.gc.ca</a></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>Backgrounder</strong></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>CANADA'S WTO CHALLENGE OF THE U.S. INTERNATIONAL TRADE COMMISSION'S
FINAL THREAT OF INJURY DETERMINATION</strong></font></p>
<p><font face="Arial"></font><font face="Arial"><strong>Chronology of key events</strong></font></p>
<p><font face="Arial"><strong>April 2, 2001:</strong> The U.S. ITC initiated its anti-dumping and countervailing duty injury investigation with respect to
softwood lumber from Canada.</font></p>
<p><font face="Arial"><strong>May 23, 2001:</strong> The U.S. ITC published its preliminary determination in which it concluded that the United States
softwood lumber industry had not been injured by reason of subject imports, but that there was reasonable
indication that the industry was "threatened" with material injury by reason of imports of Canadian softwood
lumber that were subsidized and dumped in the U.S. market.</font></p>
<p><font face="Arial"><strong>May 2, 2002:</strong> The U.S. 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 threat of injury
determination meant that the U.S. industry had not been injured to date by Canadian imports of lumber. The
ITC made its reason public in a report on May 16. </font></p>
<p><font face="Arial"><strong>May 7, 2003:</strong> At Canada's request, the WTO established a panel to resolve the dispute.</font></p>
<p><font face="Arial"><strong>December 19, 2003</strong>: The Panel issued its interim report to the parties.</font></p>
<p><font face="Arial"><strong>Issues raised in Canada's WTO challenge</strong></font></p>
<p><font face="Arial">Canada challenged the ITC final threat of injury determination on numerous grounds, including the following:</font></p>
<p><font face="Arial">a. it is based on a central finding (likely substantial increase in imports) that is unsupported by a reasoned and
adequate explanation and positive evidence; </font></p>
<p><font face="Arial">b. it fails to identify what clearly foreseen and imminent change in circumstances would create a situation in
which the dumping or subsidies would cause injury; </font></p>
<p><font face="Arial">c. it fails to establish a causal link between the subject imports and the alleged threat of injury; and </font></p>
<p><font face="Arial">d. it fails to separate and distinguish the injurious effects of other known factors from any injurious effects of
the subject imports on the domestic industry. </font></p>
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