December 19, 2003International 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."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."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. 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.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.For more information regarding Canada's legal challenges against the United States at the WTO and under NAFTA, please visit: http://www.dfait-maeci.gc.ca/eicb/softwood/legal_action-en.aspFor more information regarding softwood lumber issues in general, please visit: http://www.softwoodlumber.gc.ca- 30 -A backgrounder is attached.For further information, media representatives may contact: Media Relations Office Department of Foreign Affairs and International Trade (613) 995-1874 http://www.dfait-maeci.gc.ca BACKGROUNDERCANADA'S WTO CHALLENGE OF THE U.S. INTERNATIONAL TRADE COMMISSION'S FINAL THREAT OF INJURY DETERMINATIONChronology of key eventsApril 2, 2001: The U.S. ITC initiated its anti-dumping and countervailing duty injury investigation with respect to softwood lumber from Canada.May 23, 2001: 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.May 2, 2002: 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. May 7, 2003: At Canada's request, the WTO established a panel to resolve the dispute.December 19, 2003: The Panel issued its interim report to the parties.Issues raised in Canada's WTO challengeCanada challenged the ITC final threat of injury determination on numerous grounds, including the following: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; 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; c. it fails to establish a causal link between the subject imports and the alleged threat of injury; and 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.
