PETTIGREW WELCOMES POSITIVE INTERIM WTO DECISION ONSOFTWOOD LUMBER
May 27, 2003 (12:10 p.m. EDT) No. 70
PETTIGREW WELCOMES POSITIVE INTERIM WTO DECISION ON
SOFTWOOD LUMBER
International Trade Minister Pierre Pettigrew today welcomed the news that a World Trade Organization (WTO)
panel's interim decision supports Canada's claim that Canadian provincial stumpage programs are not
subsidies.
"Yet again, it appears that the U.S. is being told that its attempts to prove that our softwood industry is
subsidized are flawed. We expect more results from our WTO and NAFTA challenges to U.S. harassment of
our exports in the summer and fall," said Minister Pettigrew. "In the meantime, we remain open to resuming
negotiations with the U.S. on the basis of a fair and reasonable settlement of the dispute."
The WTO panel is expected to issue its final report on the U.S. subsidy determination in July 2003. Canada is
also pursuing NAFTA and WTO challenges of the dumping and threat of injury determinations as well as a
NAFTA review of the subsidy determination.
For a summary of the status of Canada's legal challenges at the WTO and NAFTA, please consult the following
Web site: www.dfait-maeci.gc.ca/eicb/softwood/english.htm
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Backgrounders are attached.
For further information, media representatives may contact:
Sébastien Théberge
Director of Communications
Office of the Minister for International Trade
(613) 992-7332
sebastien.theberge@dfait-maeci.gc.ca
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
http://www.dfait-maeci.gc.ca
Backgrounder
CHRONOLOGY OF KEY EVENTS
April 2, 2001: The United States Department of Commerce (DOC) initiated its fourth countervailing duty
investigation of Canadian softwood lumber in 20 years.
August 9, 2001: The DOC made a preliminary countervailing duty determination and imposed a 19.31 percent
provisional duty on Canadian softwood lumber imports.
Canada challenged this determination at the WTO, and on September 27, 2002, the WTO ruled that the United
States' preliminary finding of subsidy was inconsistent with its WTO obligations. For more information, see
http://www.softwoodlumber.gc.ca
March 22, 2002: The DOC made a final affirmative countervailing duty determination and imposed an
18.79 percent duty on Canadian softwood lumber imports.
May 3, 2002: Canada initiated its WTO challenge of the final determination.
June 18, 2002: Canada and the United States held WTO consultations, which failed to resolve the dispute.
October 1, 2002: At Canada's request, the WTO established a panel to resolve the dispute.
July 2003: The panel is expected to issue its final report.
Backgrounder
ISSUES RAISED IN CANADA'S WTO CHALLENGE OF THE U.S. DEPARTMENT OF
COMMERCE'S FINAL COUNTERVAILING DUTY DETERMINATION
Among the issues raised were:
Subsidy
To determine whether a program is a subsidy, WTO rules require that it be established that the program is a
financial contribution by a government that confers a benefit.
a) Subsidy--Benefit
The DOC used cross-border benchmarks to determine whether provincial stumpage programs confer a
"benefit." That is, the U.S. based its benefit finding on U.S. stumpage prices rather than on the prevailing
market conditions in Canada, a practice that Canada argues, and the previous WTO lumber panel found, is
inconsistent with WTO rules.
b) Subsidy--Financial Contribution
The DOC determined that provinces make a financial contribution to their softwood lumber industries through
provincial stumpage programs that it alleges provide a good: standing timber. Canada disagrees, arguing that
provinces, through stumpage programs, grant a licence or right of access to cut timber; as such, stumpage
programs do not constitute a "provision of goods" within the WTO's definition of that term. The DOC therefore
erred in finding that stumpage programs involve a financial contribution.
Pass Through
The DOC presumed that the alleged benefits from harvesting timber under stumpage programs are passed
through in arm's-length sales of logs or lumber used. It claimed that loggers, lumber producers and
remanufacturers are integrated producers and that stumpage is therefore a direct subsidy to all of them.
Canada disagrees, arguing that the DOC's presumption is illegal, just as the previous WTO lumber panel
found.
Specificity
WTO rules allow members to impose countervailing duties only against subsidies that are targeted to an
industry or a group of industries. Canada maintains that the U.S. failed to meet this standard, since stumpage
programs are not targeted at lumber producers. Canada also argues that the DOC interpreted "industry" too
broadly and failed to consider the evidence indicating that many varied industries use stumpage programs.