WT/DS533/1  
G/L/1205  
G/SCM/D116/1  
 
30 November 2017  
(17-6597) Page: 1/4 
  Original: English  
 
UNITED STATES – COUNTERVAILING MEASU RES  
ON SOFTWOOD LUMBER F ROM CANADA  
REQUEST FOR CONSULTA TIONS BY CANADA  
The following communication, dated 28 November 2017 , from the delegation of Canada  to the 
delegation of the United States  and to the Chairperson of the Dispute Settlement Body, is 
circulated in accordance with Article  4.4 of the DSU.  
 
_______________  
 
My authorities have instructed me to request consultations with the Government of the United 
States pursuant to Article 4 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes, Article XXII:1 of the General Agreement on Tariffs and Trade 1994 
("GATT  1994") and Article 30 of the Agreement on Subsidies and Countervailing Measures ("SCM 
Agreement") conce rning certain countervailing measures with respect to softwood lumber products 
from Canada . 
 
I. CERTAIN SOFTWOOD LUMBER PRODUCTS FROM CANADA  
The US countervailing measures concerning softwood lumber products from Canada include:  
 
1. Certain  Softwood Lumber Produ cts 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); and  
 
3. The Notice of Initiation, Initiation Checklist, Questionnaires, Verification Reports, 
Preliminary Determination, Decision Memorandum for the Preliminary 
Determination, Calc ulations Memoranda, Market Memoranda, other determinations, 
memoranda, reports and measures related to the countervailing duty investigation 
of Certain  Softwood Lumber Products from Canada .1 
Canada considers these US countervailing measures to be inconsist ent with provisions of the SCM 
Agreement and the GATT 1994, including:  
 
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. In the alternative, Articles 1.1(b) and 14(d) of the SCM Agreement as the United 
States failed to make necessary adjustments to stumpag e benchmarks to reflect 
                                                
1 Canada also intends to include as a measure the U.S. Countervailing Duty Order which is expected to 
follow the issuance of any final affirmative injury or threat of injury determination concerning Softwood Lumber 
Products from Canada .   WT/DS533/1 • G/L/1205 • G/SCM/D116/1  
 
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  prevailing 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 N orthwest log prices,  
and therefore incorrectly determined the existence and amount of any benefit;  
 
3. In the alternative, 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 t hat were unreliable and not fully disclosed,  
b. suffered from methodological flaws, and  
c. was otherwise unreliable,  
and therefore incorrectly determined the existence and amount of any benefit;  
 
4. 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, 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 aggregate 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 investigation 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) o f 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 
governm ents and does not differ from the practices normally followed by 
these 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. B.C. Hydro – Electricity Purchase Agreements,  
b. Hydro -Québec – Purchase of Electricity under PAE 2011 -01, and  
c. New Brunswick Power – Large Industrial Renewable Energy Purchase 
Program,  
and therefore failed to ascertain the precise amount of subsidies attributable to the 
product under invest igation;  
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 WT/DS533/1 • G/L/1205 • G/SCM/D116/1  
 
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  the sale of the relevant type of electricity when it assessed adequacy of 
remuneration concerning:  
a. B.C. Hydro – Electricity Purchase Agreements; and  
b. Hydro -Québec – Purchase of Electricity under PAE 2011 -01,  
and, as a result, incorrectly determined the exist ence and amount of any benefit;  
 
9. Articles 1.1(a)(1)(i) and (iii), 1.1(b), and 14(d) of the SCM Agreement as the 
United States improperly treated as a grant the purchase of electricity by New 
Brunswick Power under the Large Industrial Renewable Energy Purch ase Program 
and, as a result, incorrectly determined the existence and amount of any benefit;  
 
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 
reimburse ments Québec provided to Resolute for services related to partial cut 
silviculture prescriptions 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 Québec 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 
provincia l 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 Brunswick 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 Agreement 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 that engage in certain activities  and is based on 
objective 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  
 
1. Canada has distinct provincial markets for stumpage that reflect import ant differences in 
the provincial forests, the availability, 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 provision under Article 14(d) of the SCM Agreement must be 
made in relation to prevailing market conditions for each province's distinct stumpage 
market.  
 
2. The United States, in a series of previous administ rative reviews, and in recent preliminary 
and final countervailing 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 WT/DS533/1 • G/L/1205 • G/SCM/D116/1  
 
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  market conditions for standing timber sold in provincial markets in Alberta, Ontario, and 
Québec.  
 
3. 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 benchmarks 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.   
 
4. This US measure is evidenced, inter alia , by the following:  
a. Notice of Final Results 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, 20 04) as amended by 70 Fed. Reg. 
9,046 (February 24, 2005);  
b. Notice  of Final Results of Countervailing Duty Administrative Review: Certain 
Softwood Lumber Products from Canada , 70 Fed. Reg. 73,448 (December 12, 
2005);  
c. Notice of Preliminary Results and Extensi on of Final Result of Countervailing Duty 
Administrative Review: Certain Softwood Lumber Products From Canada , 71 Fed. 
Reg. 33,931 (June 12, 2006);  
d. Certain Softwood Lumber Products From Canada: Preliminary Affirmative 
Countervailing Duty Determination, and  Alignment of Final Determination With Final 
Antidumping Duty Determination , 82 Fed. Reg. 19,657 (April 28, 2017);  
e. Decision  Memorandum for the Preliminary Determination in the Countervailing Duty 
Investigation of Certain Softwood Lumber Products from Canad a (April 24, 2017);  
f. 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) ;  
g. Countervailing Duty Investigation of Certain Softwood Lumber Products from 
Canada : Issues and Decision Memorandum for the Final Determination 
(November  1, 2017) ; and  
h. The questionnaires, verification reports, calculations memoranda, issues and 
decision memo randa, other determinations, memoranda, reports and measures 
related to the above administrative reviews and investigations concerning softwood 
lumber products from Canada.  
5. This measure is attributable to the United States, consists of the content identifi ed 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 obliga tions.  
 
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 of the SCM Agreement and Article VI:3 of the 
GATT  1994.   
**** 
The United States' measures described above nullify or impair the benefits accruing to Canada 
directly or indirectly under the cited agreements.  
 
Canada reserves the right to address additional measu res and claims in the course of 
consultations.  
 
Canada looks forward to receiving the United States' reply to this request and to determining a 
mutually convenient date and place for consultations.  
 
 
__________