March 22, 2004No. 45International Trade Minister Jim Peterson welcomed a World Trade Organization(WTO) panel report released today that found the U.S. International Trade Commission(ITC) threat of injury determination to be inconsistent with the United States' WTOobligations."This is a major victory for Canada. The WTO panel's message is clear: thecountervailing and anti-dumping duties imposed by the U.S. on Canadian softwoodlumber exports are baseless," said Minister Peterson.The panel found that the key factor on which the U.S. relied to make its threat of injurydetermination--an imminent and likely surge in imports of softwood lumber productsfrom Canada--was not a determination "that could have been reached by an objectiveand unbiased investigating authority."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 ofsoftwood lumber from Canada.Canada challenged the ITC threat of injury determination before the WTO and underthe North American Free Trade Agreement (NAFTA).On September 5, 2003, the NAFTA panel ordered the ITC to issue a new determinationconsistent with U.S. law. Canada is confident that the NAFTA panel reviewing the ITC'snew determination will find, in its report to be issued on April 30, 2004, that the ITC hasnot substantiated its determination that imports of Canadian softwood lumber threatento injure the U.S. domestic industry.The Government of Canada will continue to work with the provinces and industry on thetwo-track strategy of litigation before NAFTA and WTO panels, and negotiations to finda lasting resolution to this dispute.For more information regarding Canada's legal challenges against the U.S. at the WTOand under NAFTA, please visit http://www.dfait-maeci.gc.ca/eicb/softwood/legal_action-en.asp.For more information on softwood lumber issues in general, please visit http://www.softwoodlumber.gc.ca.- 30 -A backgrounder is attached.For further information, media representatives may contact:Jacqueline LaRocqueDirector of CommunicationsOffice of the Minister of International Trade(613) 992-7332Media Relations OfficeDepartment of Foreign Affairs and International Trade(613) 995-1874http://www.dfait-maeci.gc.caBACKGROUNDERCANADA'S WTO CHALLENGE OF THE U.S. INTERNATIONAL TRADE COMMISSION FINAL THREAT OF INJURY DETERMINATIONCanada argued that the U.S. violated its WTO obligations by imposing anti-dumpingand countervailing duties on imports of Canadian softwood lumber. These duties wereestablished on the basis of a fundamentally flawed injury investigation and finaldetermination by the U.S. ITC that does not comply with the provisions of the WTOAnti-dumping Agreement and Subsidies and Countervailing Measures Agreement andthe GATT 1994.The panel's findings include the following:Threat of injurySpecifically, Canada argued that the ITC final threat of injury determination is based ona central finding (a likely substantial increase in imports) that is unsupported by areasoned and adequate explanation and positive evidence. The panel agreed withCanada's claim and stated that the finding that imports would increasesubstantially is not "one that could be reached by an objective and unbiasedinvestigating authority."Causal relationshipAnother issue raised by Canada was that the determination fails to establish a causallink between the predicted increase in subject imports and the alleged threat of injury.On this issue, having already determined the ITC finding of a likely substantialincrease in imports is WTO-inconsistent, the panel found that it is clear that thecausal analysis is inconsistent with WTO rules.Non-attributionFinally, Canada argued that the ITC determination fails to separate and distinguish theinjurious effects of other known factors from any injurious effects of the subject importson the domestic industry. In Canada's view, there was strong evidence before the ITCthat factors other than imports of softwood lumber products from Canada were havingsubstantial adverse effects on the U.S. domestic industry (i.e. third-country imports, theU.S. industry's contribution to oversupply). The panel indicated that it did not have tomake a formal finding on that issue. Nevertheless, it considered the issue andagreed with Canada that the U.S. failed to ensure that injuries caused by otherfactors were not attributed to imports of Canadian softwood lumber products.Chronology of key events:April 2, 2001: The U.S. International Trade Commission (ITC) initiated its injuryinvestigation with respect to softwood lumber from Canada.May 23, 2001: The U.S. ITC published its preliminary determination on the issue ofinjury. It determined that the U.S. softwood lumber industry had not been injured byreason of subject imports, but that there was a reasonable indication that the industrywas "threatened" with material injury by reason of imports of Canadian softwood lumbersubsidized and dumped in the U.S. market.May 2, 2002: The U.S. ITC voted 4 to 0 that the U.S. softwood lumber industry is"threatened" with material injury by reason of imports of softwood lumber from Canadafound by the U.S. Department of Commerce to be subsidized and sold in the U.S. atless than fair value. The threat of injury determination meant that the U.S. industry hadnot been injured to that date by Canadian imports of lumber.May 7, 2003: At Canada's request, the World Trade Organization (WTO) established apanel to resolve the dispute.December 19, 2003: The panel issued its interim report to the parties.March 22, 2004: The panel published its final report.
