April 13, 2006
No. 36
The WTO Appellate Body today found in favour of Canada and reversed a November
15, 2005, WTO compliance panel finding in the softwood lumber dispute. The Appellate
Body agreed with Canada that the compliance panel had failed to properly review the
measure that the U.S. claims sets the basis for countervailing and anti-dumping duties
on Canadian softwood lumber.
“We are pleased with this decision because it reflects the position we have maintained
all along. The United States can no longer claim that its measure is WTO-consistent,”
said International Trade Minister and Minister for the Pacific Gateway and the
Vancouver-Whistler Olympics David L. Emerson. “I will be consulting closely with the
provinces and industry to determine the best way forward following this successful
appeal.”
The Appellate Body did not rule on whether the U.S. measure is consistent with U.S.
WTO obligations. The Government of Canada continues to believe that the U.S.
measure fails to demonstrate that the U.S. industry is threatened by Canadian softwood
lumber imports. Canada will carefully consider its options following this decision,
including the possibility of bringing a new WTO proceeding against the U.S. measure in
this case.
“The Government of Canada is committed to finding a negotiated resolution to the
lumber dispute. In the meantime, we will continue to pursue our legal options before
NAFTA, the WTO and the U.S. Court of International Trade,” Minister Emerson added.
More information on softwood lumber issues is available at
http://www.softwoodlumber.gc.ca
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A backgrounder is attached.
For further information, media representatives may contact:
Jennifer Chiu
Press Secretary
Office of the Minister of International Trade and Minister for the Pacific Gateway and
the Vancouver-Whistler Olympics
(613) 992-7332
Media Relations Office
International Trade Canada
(613) 995-1874
http://www.international.gc.ca
Backgrounder
CANADA’S WTO CHALLENGE OF THE U.S. INTERNATIONAL TRADE
COMMISSION FINAL THREAT OF INJURY DETERMINATION
On March 22, 2004, a WTO panel found the original U.S. International Trade
Commission (ITC) determination that Canadian softwood lumber imports threaten to
injure the U.S. industry to be inconsistent with U.S. WTO obligations.
Following the adoption of the panel report on April 26, 2004, the United States Trade
Representative instructed the ITC to issue a new determination on threat of injury to
comply with the WTO ruling.
On November 24, 2004, the ITC issued a revised threat of injury determination to
comply with the panel ruling. The revised determination relies on the same analysis that
was found to be WTO-inconsistent by the original WTO panel in March 2004.
Therefore, on February 14, 2005, Canada requested that a WTO compliance panel be
established to review the revised threat of injury determination. In order to preserve any
future retaliatory rights, Canada also filed a request for authority to retaliate in the
amount of softwood lumber cash deposits that were held with the U.S. Treasury at that
time (over C$4.25 billion), plus the amount of cash deposits that the U.S. continues to
collect illegally (approximately C$650 million annually), until such time as the U.S.
complies with its WTO obligations.
On November 15, 2005, the WTO compliance panel considering the ITC’s November
2004 injury determination publicly released its final report and found that the U.S.
revised threat of injury determination is consistent with U.S. WTO obligations.
On January 13, 2006, Canada appealed the November 2005 panel decision to the
WTO Appellate Body on the grounds that the U.S. revised threat of injury determination
fails to demonstrate that the U.S. industry is threatened by Canadian softwood lumber
imports.
