WT/DS533/2  
 
16 March 2018  
(18-1636) Page: 1/5 
  Original: English  
 
UNITED STATES – COUNTERVAILING MEASU RES  
ON SOFTWOOD LUMBER F ROM CANADA  
REQUEST FOR THE ESTA BLISHMENT OF A PANEL  BY CANADA  
The following communication, dated 15 March 2018 , from the delegation of Canada  to the 
Chairperson of the Dispute Settlement Body, is cir culated pursuant to Article 6.2  of the DSU.  
 
 
_______________  
 
 
On 28 November 2017, the Government of Canada ("Canada") requested consultations with the 
Government of the United States of Ame rica (the "United States" or " US") pursuant to Article 4 of 
the Understanding on Rules and Procedures Governing the Settlement of Disputes  ("DSU"), 
Article  XXII:1 of the General Agreement on Tariffs and Trade 1994  ("GATT 1994") and Article 30 of 
the Agreement o n Subsidies and Countervailing Measures  ("SCM Agreement") concerning certain 
countervailing measures on softwood lumber products from Canada as well as the US measure of 
treating Nova Scotia and New Brunswick as in -country benchmarks for provincial stumpag e 
markets in Alberta, Ontario and Québec.  
Canada held c onsultations with the United States on 17 January 2018. These consultations failed 
to settle the dispute.  
I. SOFTWOOD LUMBER PRODUCTS FROM CANADA  
The US countervailing measures concerning softwood lumber products from Canada include:  
1.  Certain  Softwood Lumber Products from Canada: Final Affirmative Countervailing Duty 
Determination, and Final Negative Determination of Critical Circumstances , 82 Fed. 
Reg. 51,814 (November 8, 2017);  
2.  Countervailing Duty  Investigation of Certain Softwood Lumber Products from Canada : 
Issues and Decision Memorandum for the Final Determination (November 1, 2017);  
3.  Certain Softwood Lumber Products From Canada: Amended Final Affirmative 
Countervailing Duty Determination an d Countervailing Duty Order , 83 Fed. Reg. 347 
(January 3, 2018); and  
4. The notice of initiation, initiation checklist, questionnaires, verification reports, 
preliminary determination, decision memorandum for the preliminary determination, 
calculations mem oranda, market memoranda, as well as other determinations, 
memoranda, reports, and measures related to the Certain  Softwood Lumber Products 
from Canada  countervailing duty investigation . 
Canada considers these US countervailing measures to be inconsistent with provisions of the SCM 
Agreement and the GATT 1994, including:  WT/DS533/2  
 
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  A. Stumpage  
1. Articles  1.1(b) and 14(d) of the SCM  Agreement as the United States improperly 
rejected in -jurisdiction benchmarks for stumpage (i.e., standing timber) that 
reflected prevailing market conditions in each of Alberta, British Columbia (B.C.), 
Ontario, New Brunswick, and Québec as the basis for  evaluating adequacy of 
remuneration and, as a result, incorrectly determined the existence and amount of 
any benefit;  
 
2. Articles 1.1(b) and 14(d) of the SCM Agreement as the United States failed to 
make necessary adjustments to stumpage to reflect prevail ing market conditions in 
assessing adequacy of remuneration  when it compared:  
a. Alberta, Ontario, New Brunswick, and Québec stumpage to a Nova Scotia 
stumpage benchmark, and  
b. B.C. stumpage to a benchmark based on US Pacific Northwest log prices,  
and therefore  incorrectly determined the existence and amount of any benefit;  
 
3. Articles 1.1(b) and 14(d) of the SCM Agreement as the United States relied on a 
Nova Scotia stumpage benchmark that:  
a. was based on data that were unreliable and not fully disclosed,  
b. suffered  from methodological flaws, and  
c. was otherwise not reliable, including when assessed in the light of other 
more comparable out -of-jurisdiction benchmarks,  
and therefore incorrectly determined the existence and amount of any benefit;  
 
4. Articles 1.1(b), 14(d ), 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the 
GATT 1994 as the United States, in assessing adequacy of remuneration for 
stumpage, improperly set to zero the results of comparisons that did not show a 
benefit before it calculated the aggreg ate benefit from the provision of stumpage, 
and therefore incorrectly determined the existence and amount of any benefit;  
B. Log Export Permitting Processes  
5. Articles 11.2 and 11.3 of the SCM Agreement as the United States  improperly 
initiated an investigat ion into federal and provincial log export permitting processes 
for B.C. logs without sufficient evidence of a financial contribution within the 
meaning of Articles 1.1(a)(1)(iii) and (iv) of the SCM Agreement;  
 
6. Articles 1.1(a)(1)(iii) and (iv), 19.3, and 19.4 of the SCM Agreement and 
Article  VI:3 of the GATT 1994 as the United States  improperly determined that 
federal and provincial log export permitting processes for B.C. logs constitute a 
financial contribution  by finding that:  
a. the federal and provincial governments entrusted or directed private entities 
to provide B.C. logs to softwood lumber producers, and  
b. the provision of B.C. logs is normally vested in the federal and provincial 
governments and does not diff er from the practices normally followed by 
governments,  
and therefore incorrectly determined the existence of a subsidy;  
C. Non-Stumpage Programs  
7. Articles 10, 19.1, 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the 
GATT 1994 as the United States  improperly attributed to the production of 
softwood lumber products certain alleged subsidies that were bestowed on the 
production of products that were not under investigation, including:  
a. BC Hydro – Electricity Purchase Agreements,  WT/DS533/2  
 
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  b. Hydro -Québec – Purcha se of Electricity under PAE 2011 -01, and  
c. NB Power – Large Industrial Renewable Energy Purchase Program,  
and therefore failed to ascertain the precise amount of subsidies attributable to the 
product under investigation;  
 
8. Articles 1.1(b) and 14(d) of the SCM Agreement as the United States erroneously 
rejected benchmarks that reflected prevailing market conditions and instead relied 
on inappropriate benchmarks that did not reflect prevailing market conditions for 
the sale of the relevant type of electricity  when it assessed adequacy of 
remuneration concerning:  
a. BC Hydro – Electricity Purchase Agreements; and  
b. Hydro -Québec – Purchase of Electricity under PAE 2011 -01,  
and, as a result, incorrectly determined the existence and amount of any benefit;  
 
9. Articles 1. 1(a)(1)(iii), 1.1(b), and 14(d) of the SCM Agreement as the United 
States failed analyze the Large Industrial Renewable Energy Purchase Program as 
the purchase of good by NB Power and, as a result, incorrectly determined the 
existence and amount of any ben efit; 
 
10. Articles 1.1(a)(1)(i) and (iii), 19.3, and 19.4 of the SCM Agreement and Article 
VI:3 of the GATT 1994 as the United States erroneously determined that 
reimbursements Québec provided to Resolute for services related to partial cut 
silviculture presc riptions on provincial Crown land constituted a financial 
contribution;  
 
11. In the alternative, Articles 1.1(b), 14(d), 19.3, and 19.4 of the SCM Agreement 
and Article VI:3 of the GATT 1994 as the United States improperly determined that 
reimbursements Québe c provided to Resolute for services related to partial cut 
silviculture prescriptions conferred a benefit resulting in the imposition of 
countervailing duties in excess of the amount of any alleged subsidy;  
 
12. Articles 1.1(a)(1)(i) and (iii), 19.3, and 19.4 of the SCM Agreement and Article 
VI:3 of the GATT 1994 as the United States erroneously determined that 
reimbursements New Brunswick provided to J.D. Irving for services related to the 
company's performance of silviculture and forest management services on  
provincial Crown land constituted a financial contribution;  
 
13. In the alternative, Articles 1.1(b), 14(d), 19.3, and 19.4 of the SCM Agreement 
and Article VI:3 of the GATT 1994 as the United States improperly determined that 
the reimbursements New Brunswic k provided to J.D. Irving for services related to 
silviculture and licence management conferred a benefit resulting in the imposition 
of countervailing duties in excess of the amount of any alleged subsidy; and  
 
14. Articles 2.1(a) and 2.1(b) of the SCM Agreem ent as the United States improperly 
found that the Federal Accelerated Capital Cost Allowance for Class 29 Assets was 
limited to certain enterprices and was de jure specific, when in fact it is generally 
available to all enterprises and is based on objecti ve criteria and conditions.  
 
The measures of the United States set out above have also, to the extent not already specified 
above, resulted in the imposition or levying of countervailing duties in a manner that is 
inconsistent with Articles 10, 19.1, 19.3, 19.4, 21.1, 21.2, 32.1, and 32.5 of the SCM Agreement 
and Article VI:3 of the GATT 1994.  
 
II. THE UNITED STATES' IMPROPER DETERMINATION OF IN -COUNTRY BENCHMARKS  
Canada has distinct provincial markets for stumpage that reflect important differences in the 
provincial forests, the availabil ity, accessibility, and quality of standing timber, transportation 
costs, distance to market, and other prevailing market conditions. These distinct provincial 
stumpage markets mean that a comparison to prevailing market conditions in the country of WT/DS533/2  
 
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  provis ion under Article 14(d) of the SCM Agreement must be made in relation to prevailing market 
conditions for each province's distinct stumpage market.  
 
The United States, in a series of previous administrative reviews, and in recent preliminary and 
final coun tervailing duty determinations, has improperly treated stumpage in certain Atlantic 
provinces (i.e., Nova Scotia as well as, in the previous administrative reviews, New Brunswick) as 
if this stumpage were an in -country benchmark that reflected prevailing m arket conditions for 
standing timber sold in provincial markets in Alberta, Ontario, and Québec.  
 
This US measure is inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement as Nova 
Scotia and New Brunswick cannot be considered to be in -country ben chmarks for Alberta, Ontario 
or Québec as stumpage markets in these provinces have completely different prevailing market 
conditions from those in Nova Scotia and New Brunswick.  
 
This US measure is evidenced, inter alia , by the following:  
a. Notice of Final R esults of Countervailing Duty Administrative Review and Rescission 
of Certain Company -Specific Reviews: Certain Softwood Lumber Products From 
Canada , 69 Fed. Reg. 75,917 (December 20, 2004) as amended by 70 Fed. Reg. 
9,046 (February 24, 2005);  
b. Issues and D ecision Memorandum: Final Results of Adminstirative Review: Certain 
Softwood Lumber Products from Canada (December 13, 2004);  
c. Notice  of Final Results of Countervailing Duty Administrative Review: Certain 
Softwood Lumber Products from Canada , 70 Fed. Reg. 7 3,448 (December 12, 
2005);  
d. 2nd Adminsitrative Review of the Countervailing Duty Order on Certain Softwood 
Lumber Products from Canada: Issues and Decision Memorandum: Final Results of 
Adminsitrative Review (December 5, 2005);  
e. Notice of Preliminary Results and Extension of Final Result of Countervailing Duty 
Administrative Review: Certain Softwood Lumber Products From Canada , 71 Fed. 
Reg. 33,931 (June 12, 2006);  
f. Certain Softwood Lumber Products From Canada: Preliminary Affirmative 
Countervailing Duty Determi nation, and Alignment of Final Determination With Final 
Antidumping Duty Determination , 82 Fed. Reg. 19,657 (April 28, 2017);  
g. Decision  Memorandum for the Preliminary Determination in the Countervailing Duty 
Investigation of Certain Softwood Lumber Products from Canada (April 24, 2017);  
h. Certain  Softwood Lumber Products from Canada: Final Affirmative Countervailing 
Duty Determination, and Final Negative Determination of Critical Circumstances , 82 
Fed. Reg. 51,814 (November 8, 2017) ;  
i. Countervailing Duty Investigation of Certain Softwood Lumber Products from 
Canada : Issues and Decision Memorandum for the Final Determination (November 1, 
2017);  
j. Certain Uncoated Groundwood Paper From Canada: Preliminary Affirmative 
Countervailing Duty Determination, and Alignment of Final Determination With Final 
Antidumping Duty Determination , 83 Fed. Reg. 2133 (January 16, 2018);  
k. Decision Memorandum for the Affirmative Preliminary Determination in the 
Countervailing Duty Investigation of Certain Uncoated Groundwood Paper from 
Canada (January 8, 2018);  and 
l. The orders, questionnaires, verification reports, calculations memoranda, issues and 
decision memoranda, as well as other determinations, memoranda, reports, and 
measures related to the above administrative reviews and investigations concerning 
softwood lumber products from Canada.  
 
This measure is attributable to the United States, consists of the content id entified and described 
above, and is presently occurring and likely to be continued in the future. In the alternative, it 
constitutes ongoing conduct or a rule or norm of general and prospective application that is 
inconsistent with the United States' WTO obligations.  WT/DS533/2  
 
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The US measure set out above has also, to the extent not already specified above, resulted in the 
imposition or levying of countervailing duties in a manner that is inconsistent with Articles 10, 
19.1, 19.3, 19.4, 21.1, 21.2, 32.1, and 32.5 o f the SCM Agreement and Article VI:3 of the 
GATT  1994.  
 
The US countervailing measures in Certain Softwood Lumber from Canada, and the US measure of 
treating Nova Scotia and New Brunswick as in country benchmarks for provincial stumpage 
regimes in Alberta,  Ontario and Québec, nullifies or impairs benefits accruing to Canada, directly or 
indirectly, under the cited agreements.  
 
Therefore, Canada respectfully requests, pursuant to Article 6 of the DSU and Article 30 of the 
SCM Agreement, that the Dispute Sett lement Body establish a panel to examine this matter, with 
the standard terms of reference as set out in Article 7.1 of the DSU.  
 
Canada also asks that this request be placed on the agenda of the next meeting of the DSB 
scheduled to be held on  27 March 201 8. 
 
 
 
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