Dispute Settlement
WTO - Retaliation Authorization Requests - Factsheet
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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.
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This factsheet provides information about these cases and includes
timelines of proceedings before the WTO.
WTO - U.S. Byrd Amendment
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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.
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Byrd disbursements have the effect of subsidizing U.S. producers
and encouraging more U.S. trade remedy actions.
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The Byrd Amendment was successfully challenged in the WTO by
Canada and 10 other WTO members.
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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.
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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.
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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.
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For more information on this dispute and Canada’s retaliation
decision, please visit the Byrd Amendment
website.
WTO - Softwood Lumber: Subsidy
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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).
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