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<p><font face="Arial"></font><font face="Arial" size="+1"></font><font face="Arial" size="+1"><strong>April 14, 2004 <em>(1:30 p.m. EDT)</em> No. 58</strong></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>CANADA LAUNCHES NEW WTO PROCEEDINGS ON SOFTWOOD
LUMBER</strong></font></p>
<p><font face="Arial">Jim Peterson, Minister of International Trade, announced today that Canada has
requested WTO consultations with the United States regarding individual countervailing
duty rates for Canadian exporters of softwood lumber. The United States has failed to
establish individual countervailing duty rates for Canadian exporters who have
requested these rates in the expedited and administrative review processes.</font></p>
<p><font face="Arial">"Clearly these duties are unjustified," said Minister Peterson. "We believe that the U.S.
has an obligation under the WTO to conduct company-specific reviews for all Canadian
companies that have requested one and provide them with a company-specific rate."</font></p>
<p><font face="Arial">In the U.S. system, cash-deposit countervailing duty rates apply until annual
administrative reviews finally assess the countervailing duty rates. Currently, 52
Canadian exporters are paying individual cash-deposit rates established through the
expedited review process initiated in July 2002.</font></p>
<p><font face="Arial">However, the United States has decided that, in the first administrative review process,
it will only conduct a limited number of company-specific reviews, and not all companies
that have requested reviews will receive one. This means that the country-wide
countervailing duty assessment rate would apply to all companies that have not been
selected for a company-specific review, including those that are currently paying
individual cash-deposit rates.</font></p>
<p><font face="Arial">Canada's request for consultations also includes the failure of the United States to
promptly complete the expedited reviews that have been requested. A number of
Canadian exporters are still waiting for the completion of their expedited reviews and, in
the meantime, are subject to the country-wide cash-deposit rate (18.79 percent).</font></p>
<p><font face="Arial">Canada remains committed to working with the United States to find a resolution to the
softwood lumber dispute. The Minister is continuing to consult with provincial
governments and industry on a proposal for settlement. In the meantime, Canada
continues to pursue its legal rights through WTO and NAFTA litigation. Canada has
WTO and NAFTA challenges under way against the U.S. determinations of subsidy,
dumping and threat of injury.</font></p>
<p><font face="Arial">Consultations are the first step in WTO dispute settlement proceedings. Provincial and
territorial governments and the Canadian softwood lumber industry are strongly
supportive of the decision to request consultations.</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/20071123093036/http://www.softwoodlumber.gc.ca/">http://www.softwoodlumber.gc.ca</a>.</font></p>
<p align="CENTER"><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">Jacqueline LaRocque<br>
Director of Communications<br>
Office of the Minister of International Trade<br>
(613) 992-7332</font></p>
<p><font face="Arial">Media Relations Office<br>
Foreign Affairs Canada and International Trade Canada<br>
(613) 995-1874<br>
<a href="https://bac-lac.wayback.archive-it.org/web/20071123093036/http://www.dfait-maeci.gc.ca/">http://www.dfait-maeci.gc.ca</a></font></p>
<p align="CENTER"><font face="Arial" size="+1"><strong>Backgrounder</strong></font></p>
<p><font face="Arial"><strong>Administrative Reviews</strong></font></p>
<p><font face="Arial">In the retrospective U.S. duty assessment system, countervailing duty rates for
shipments made during the previous year are finally assessed through annual
administrative reviews. These reviews also establish new cash-deposit rates for future
shipments. If a review were to result in lower duty rates than the current cash-deposit
rate established in the original investigation, companies would be refunded the
difference plus interest following the completion of the administrative review. Should the
duty rates increase, companies would be required to pay the difference between the
current deposit rate and the rate resulting from the review. The United States initiated
the administrative review on July 1, 2003, and will issue the final results on
December 1, 2004.</font></p>
<p><font face="Arial">In this case, the United States indicated that it would be conducting an aggregate
administrative review, with a limited number of company-specific reviews. Any company
that has not been selected for review, including those that obtained a cash-deposit
countervailing duty rate in an expedited review, will pay the country-wide countervailing
duty rate determined in the administrative review.</font></p>
<p><font face="Arial"><strong>Chronology</strong></font></p>
<p><font face="Arial"><strong>July 1, 2003:</strong> The United States Department of Commerce (DOC) initiated an
administrative review of the countervailing duty order.</font></p>
<p><font face="Arial"><strong>July 25, 2003:</strong> The DOC issued a Decision Memorandum regarding its methodology for
the administrative review, which indicated that an aggregate review would be conducted
with a possibility of a limited lumber of company-specific reviews. A total of 296
companies have requested a company-specific review, 148 of which requested a review
based on a zero or <em>de minimis</em> rate of subsidization.</font></p>
<p><font face="Arial"><strong>March 15, 2004: </strong>The DOC indicated in a Decision Memorandum that it would only be
conducting company-specific administrative reviews of 11 of the 296 requesting
companies.</font></p>
<p><font face="Arial"><strong>Expedited Reviews</strong></font></p>
<p><font face="Arial">Expedited reviews seek to determine the degree to which individual producers/
exporters of softwood lumber products benefited from the "alleged" subsidies found
during the course of the original DOC countervailing duty investigation. Under the WTO
Subsidies and Countervailing Measures (SCM) Agreement, exporters that were not
investigated are entitled to individual expedited reviews following a countervailing duty
investigation in order to establish individual countervailing duty rates. However, the U.S.
has not followed through on carrying out expedited reviews for all of the companies that
requested one.</font></p>
<p><font face="Arial">A total of 109 companies have requested an expedited review, and there are currently
27 companies that are without a final result. Most of the remaining companies have
requested a pass-through analysis of whether they received a subsidy benefit from
arm's-length purchases of timber and lumber. Six of the reviewed companies were
found to benefit from either zero or <em>de minimis</em> (less than 1 percent) levels of
subsidization and were therefore excluded from the countervailing duty order. To date,
expedited reviews have been completed for 52 companies. Exports of softwood lumber
products from these 52 companies are therefore subject to an individual cash-deposit
countervailing duty rate.</font></p>
<p><font face="Arial">Under WTO rules, the parties enter into consultations within 30 days following the filing
of a request with a view to reaching a mutually satisfactory solution.</font></p>
<p><font face="Arial"><strong>Chronology</strong></font></p>
<p><font face="Arial"><strong>May 22, 2002:</strong> The DOC published its amended final affirmative countervailing duty
determination and order, and announced its intention to conduct expedited reviews for
Canadian companies requesting such reviews.</font></p>
<p><font face="Arial"><strong>July 17, 2002: </strong>The DOC published its notice of initiation of expedited reviews for 73
exporters that filed timely requests. The purpose of such reviews is to calculate
individual cash-deposit countervailing duty rates.</font></p>
<p><font face="Arial">The DOC divided the requesting companies into two groups. <strong>Group 1</strong> includes (a)
companies that obtain the majority of their wood (over 50 percent of their inputs) from
the United States, the Maritime Provinces, Canadian private lands and/or Canadian
companies excluded from the order; and (b) companies that source less than a majority
of their wood from these sources and do not have tenure. <strong>Group 2</strong> includes companies
that source less than a majority of their wood from these sources and have acquired
Crown timber through their own tenure.</font></p>
<p><font face="Arial"><strong>August 8, 2002:</strong> The DOC announced the preliminary results of the expedited reviews
for 18 Group 1 companies.</font></p>
<p><font face="Arial"><strong>September 20, 2002: </strong>The DOC published its notice of initiation of expedited reviews
for 31 additional exporters.</font></p>
<p><font face="Arial"><strong>October 31, 2002:</strong> The DOC released its final results of the expedited reviews for 13 of
the initial 18 Group 1 companies.</font></p>
<p><font face="Arial"><strong>May 3, 2003: </strong>The DOC announced the preliminary results for 28 additional Group 1
companies.</font></p>
<p><font face="Arial"><strong>November 24, 2003: </strong>The DOC announced the preliminary results for 16 Group 2
companies.</font></p>
<p><font face="Arial"><strong>March 9, 2004: </strong>The DOC published final results for 42 companies.</font></p>
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