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Dispute Settlement

WTO - Retaliation Authorization Requests - Factsheet

  • As part of the Government’s efforts to defend Canadian interests and in order to preserve any future retaliation rights, Canada has filed requests for authorization to retaliate against the United States in three different cases before the World Trade Organization (WTO): the WTO U.S. Byrd Amendment case, the WTO softwood lumber subsidy case, and the WTO softwood lumber threat of injury case.

  • This factsheet provides information about these cases and includes timelines of proceedings before the WTO.

WTO - U.S. Byrd Amendment

  • Under the Continued Dumping and Subsidy Offset Act of 2000 (commonly referred to as the Byrd Amendment), anti-dumping and countervailing duties are disbursed to U.S. producers who supported these trade remedy actions. These duties were previously deposited in the U.S. Treasury.

  • Byrd disbursements have the effect of subsidizing U.S. producers and encouraging more U.S. trade remedy actions.

  • The Byrd Amendment was successfully challenged in the WTO by Canada and 10 other WTO members.

  • As a result of the U.S. failure to comply with its WTO obligations, on November 26, 2004, Canada received WTO authorization to retaliate against the United States. Brazil, Chile, India, Japan, South Korea, Mexico, and the European Union have also received retaliation authorization.

  • These WTO members can retaliate in an amount of up to 72 percent of the annual level of Byrd disbursement of duties on their respective exports in a given year.

  • On March 31, 2005, Canada announced that it will retaliate against the United States in response to the U.S. failure to repeal the Byrd Amendment. This decision follows extensive public consultations with domestic stakeholders. Starting May 1, 2005, a 15% surtax on imports of the following U.S. goods will be imposed: live swine, cigarettes, oysters, and certain specialty fish.

  • For more information on this dispute and Canada’s retaliation decision, please visit the Byrd Amendment website.

WTO - Softwood Lumber: Subsidy

  • On January 19, 2004, the WTO Appellate Body ruled that the U.S. countervailing duty determination issued in April 2002 was WTO-inconsistent. Specifically, the Appellate Body found that the U.S. Department of Commerce (DOC) failed to demonstrate that a subsidy existed in arm’s-length sales of logs by timber harvesters to softwood lumber producers. On December 6, 2004, the U.S. DOC issued a revised countervailing duty determination to implement the Appellate Body’s ruling but again failed to properly demonstrate the existence of a subsidy in such log transactions.

  • Canada considers that the U.S. has not properly implemented the WTO ruling and, on December 30, 2004, requested that a WTO compliance panel review the U.S. DOC’s revised determination. Compliance panels typically take three to six months to issue a report. The results of compliance panels can be appealed, which would take an additional three months.

  • In order to preserve any future retaliation rights, on December 30, 2004, Canada also filed a request for authorization to retaliate against the United States. Canada indicated that it is seeking authority to retaliate by imposing a tariff surtax on a maximum of C$200 million of U.S. products imported into Canada in 2005. The issue of retaliatory rights will be adjudicated after the matter of compliance has been determined.

WTO - Softwood Lumber: Threat of Injury

  • On March 22, 2004, a WTO panel found the U.S. International Trade Commissions (ITC) original determination that Canadian softwood lumber imports threaten to injure the U.S. industry to be inconsistent with U.S. WTO obligations. The United States was given until January 26, 2005, to implement the WTO ruling.

  • On November 24, 2004, the U.S. ITC issued a new positive threat of injury determination to implement the panel ruling. The United States also published amended anti-dumping and countervailing duty orders to reflect the new U.S. ITC determination.

  • Canada considers that the U.S. ITC’s November 24 threat of injury determination relies on the same faulty analysis that was found to be WTO-inconsistent by the original WTO panel. Therefore, on February 14, 2005, Canada requested that a WTO compliance panel be established to review U.S. implementation.

  • Compliance panels typically take three to six months to issue a report. The results of compliance panels can be appealed, which would take an additional three months.

  • In order to preserve any future retaliation rights, on February 14, Canada also filed a request for authorization to retaliate against the United States. Canada has requested authority to retaliate in the amount of softwood lumber cash deposits currently held with the U.S. Treasury (over C$4.25 billion), plus the amount of cash deposits that the United States continues to collect illegally (over C$1 billion annually), until such time as the U.S. complies with its WTO obligations. The issue of retaliatory rights will be adjudicated after the matter of compliance has been determined.

Timeline of Canada’s WTO Compliance and Retaliation Requests
- All Future Dates are Approximate and Subject to Delays -

  Filing of
Compliance
Panel Request
and Request
for Authority
to Retaliate		 Compliance Panel
Establishment		 Compliance
Panel Report
(90 days) 1		 Adoption or Appeal of Compliance Panel Report
(20 to 60 days)		 Appellate Body Report (90 days) Adoption of Appellate Body Report (30 days) Results of Arbitration to determine the amount of authorized retaliation (60 days) 2
 Final Retaliation Authorization Request
(no fixed deadline)
WTO - Softwood Lumber Subsidy December 30, 2004

Retaliation Amount Requested: C$200 million for 2005 - to be recalculated annually.

 January 14, 2005 June 17, 2005 3 July, 2005 October, 2005 November, 2005 Assuming no appeal: September, 2005

Assuming appeal: January 2006		 This request can be filed at any time after the results of the arbitration are issued.
WTO - Softwood Lumber Injury February 14, 2005

Retaliation Amount Requested: Retaliation authority in an amount equal to the over C$4.25 billion in cash deposits collected to date, plus all future cash deposits that are illegally collected - to be determined annually.

 February 25, 2005 September, 2005 4 October, 2005 January, 2005 February, 2005 Assuming no appeal: December, 2005

Assuming appeal:
April, 2006

 This request can be filed at any time after the results of the arbitration are issued.
WTO - Byrd Amendment January 26, 2004

Retaliation Amount Requested: A level of annual retaliation based on the previous year’s amount of actual disbursements under the Byrd Amendment

 N/A N/A N/A N/A N/A August 31, 2004

Arbitration Results: Authority to retaliate annually in an amount of up to 72 percent of the previous year’s amount of actual disbursements under the Byrd Amendment.

November 26, 2004

1. The compliance panel report is subject to appeal before the WTO Appellate Body if requested by either or both parties. If the panel report is favourable to Canada and it is not appealed by the United States, then the process moves directly to arbitration to determine the amount of authorized retaliation.

2. Arbitration panels often take longer than the prescribed 60 days to render a decision. For example, the arbitrator in the Byrd retaliation case took seven months to issue its decision.

3. The panel has issued a notional timeline indicating that the final report will be ready on June 17 (subject to possible delays in translation).

4. The panel has issued a notional timeline indicating that the final report will be ready in September (subject to possible delays in translation).
Last Updated:
2005-04-07
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