June 9, 2005 No. 107 Minister of International Trade Jim Peterson welcomed today’s North American Free Trade Agreement (NAFTA) panel decision regarding the West Fraser Mills Ltd. lumber duties. The decision found that the United States Department of Commerce (DOC) determination that it was not required to refund duties paid by West Fraser is inconsistent with U.S. law. The NAFTA panel has ordered the DOC to issue a new determination within 30 days. “The NAFTA panel decision supports what Canada has maintained throughout this case—the U.S. has an obligation under its domestic law and NAFTA to refund duties,” said Minister Peterson. “We want to see the U.S. do the right thing and refund these duties to this Canadian company. We consider that this panel’s findings set out clearly what must occur if there is no basis for anti-dumping or countervailing duty orders—duties must be refunded.” On April 21, 2004, the DOC found that West Fraser’s dumping margin was de minimis (i.e. less than two percent). As a result, the company should not have been liable for anti-dumping duty deposits. However, the DOC indicated that it would not refund the duties paid by the Canadian company. The panel also reconsidered its earlier decision regarding zeroing and found that zeroing is inconsistent with U.S. law. The panel instructed the DOC to issue a new determination without the use of zeroing, which should result in a lower dumping margin. Canadian parties had requested that the panel review its earlier decision in light of the August 11, 2004, Appellate Body ruling which found the U.S. practice of zeroing to be inconsistent with its World Trade Organization (WTO) obligations. Zeroing is the practice of assigning a value of zero—rather than a negative value—to the results of comparisons between domestic and export prices when establishing a margin of dumping. This practice has the effect of making the dumping rate higher than would otherwise be the case if zeroing were not used. 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.asp. For more information regarding softwood lumber issues in general, please visit http://www.softwoodlumber.gc.ca. The NAFTA panel decision is available at http://www.nafta-sec-alena.org. - 30 - For further information, media representatives may contact: Andrea Lanthier Press Secretary Office of the Minister of International Trade (613) 992-7332 Media Relations Office International Trade Canada (613) 995-1874 http://www.international.gc.ca Backgrounder CHRONOLOGY OF KEY EVENTS: CANADA’S NAFTA CHALLENGE OF THE U.S. DEPARTMENT OF COMMERCE’S FINAL ANTI-DUMPING DUTY DETERMINATION April 2, 2001: The United States Department of Commerce (DOC) initiated its anti-dumping duty investigation of Canadian softwood lumber. October 30, 2001: The DOC made a preliminary anti-dumping duty determination. Six Canadian exporters were assigned individual margins of dumping, provisionally ranging from 5.94 percent to 19.24 percent. The average dumping margin (12.58 percent) for these six exporters was used to establish the rate for all other Canadian exporters of softwood lumber. March 22, 2002: The DOC announced a final affirmative determination of dumping assigning the six Canadian exporters individual dumping margins ranging from 2.18 percent to 12.44 percent. An “all others” dumping margin of 8.43 percent was applied to all other Canadian exporters of softwood lumber. April 2, 2002: A binational panel was established under NAFTA Chapter 19 to review whether the DOC’s final affirmative determination of dumping was contrary to U.S. law. July 17, 2003: The panel issued its first report and instructed the DOC to correct its original anti-dumping determination. October 15, 2003: In response to the panel report, the DOC released a remand determination establishing new dumping margins for the six Canadian exporters, ranging from 2.22 percent to 12.36 percent. The new “all others” rate was reduced to 8.07 percent (not yet in force). March 5, 2004: The panel reviewed the DOC’s October 15 determination in its second report and again instructed the DOC to issue a determination consistent with U.S. law. April 21, 2004: The DOC issued its second remand determination which determined that West Fraser Mills Ltd. was not dumping softwood lumber products into the U.S. market. This effectively excludes West Fraser Mills Ltd. from the anti-dumping duty order once the process is finalized but the DOC indicated that it would not refund duties paid by the company. Because one of the companies has been excluded, DOC recalculated an “all others” rate of 8.85 percent (not yet in force), using the dumping margins of the five remaining respondents. June 9, 2005: The panel issued its third report and found that the DOC’s decision not to refund duties paid by West Fraser Mills Ltd to be inconsistent with U.S. law. The panel also ruled that the U.S. practice of zeroing is inconsistent with U.S. law. This decision is consistent with an earlier WTO ruling on the matter.
