RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/184 
14 March 2005 
 (05-1055) 
Dispute Settlement Body 
25 February 2005  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 25 February 2005  
 
Chairman:  Mr. Eirik Glenne (Norway) 
  
 Subjects discussed
: Page  
 
1. United States – Investigation of the International Trade Commission in softwood 
lumber from Canada ............................................................................................................. ...1 
(a) Recourse to Article 21.5 of the DSU by Canada ........................................................................1  
2. United States – Investigation of the International Trade Commission in softwood 
lumber from Canada ............................................................................................................. ...2 
(a) Recourse to Article 22.2 of the DSU by Canada ........................................................................2  
 
1. United States – Investigation of the International Trade Commission in softwood lumber 
from Canada 
(a) Recourse to Article 21.5 of the DSU by Canada (WT/DS277/8)  
1. The Chairman  drew attention to the communicati on from Canada contained in document 
WT/DS277/8 and invited the representative of Canada to speak. 
2. The representative of Canada  said that, once again, his country wished to thank the Panel and 
the Secretariat for their work on the dispute betw een Canada and the United States in the softwood 
lumber injury case.  He recalled that at its sp ecial meeting on 26 April 2004, the DSB had adopted the 
Report of the Panel in the case:  "United States – Investigation of the International Trade Commission 
in Softwood Lumber from Canada".  The Panel had f ound that the threat of injury determination by 
the US International Trade Commission was incons istent with US obligations under the Anti-
Dumping Agreement and the SCM Agreement.  The Panel had found that the US International Trade 
Commission's (ITC) determination that there woul d be a likely imminent substantial increase in 
imports of softwood lumber products from Canada w as not one that could have been reached by an 
objective and unbiased investigating authority.  As th e US ITC's causation analysis was based on this 
same finding, the Panel had also found it to be  inconsistent with the previously-mentioned 
Agreements.  Consequently, the DSB had recommended  that the United States bring its measures into 
conformity with its obligations under the Anti- Dumping Agreement and the SCM Agreement.  
Unfortunately, the United States had not done so.  The United States could have easily and rightly 
issued the only determination that was consistent with both its WTO obligations and US law – that 
was a determination that imports of Canadian soft wood lumber did not threaten to injure the US 
industry.  Such an action would bring long overdue  finality to a dispute that was unduly affecting WT/DSB/M/184 
Page 2  
 
 consumers and producers on both sides of the borders.  Instead, the United States had asserted that it 
had complied with the DSB's rulings and recommendations by issuing a new threat of injury determination.  That determination had simply r eaffirmed the ITC's original determination and had 
also relied on the same faulty analysis that had b een criticized by the Panel.  Almost three years had 
passed since the ITC had issued its original final affi rmative threat of injury determination.  The US 
failure to respect its international trade obligations  was not inconsequential.  In fact, based on the 
illegal threat of injury determination issued by the ITC in May 2002, the Canadian lumber industry 
had paid over Can$4.25 billion in cash  deposits to the United States to date, an amount that was 
growing at a rate of approxima tely Can$150 million per month.  The enormous financial burden 
resulting from the illegal US trade actions contin ued to have a tremendous negative impact on 
hundreds of companies, their worker s and communities across Canada.  As if this weren't enough, the 
over Can$4.25 billion in cash deposits could ultimately be distributed to the US lumber industry under 
another WTO-inconsistent US measure that remained in place: i.e. the US Byrd Amendment.  Canada 
considered that the United States had failed to co mply with the DSB's recommendations and rulings.  
The United States continued to impose anti-dumpi ng and countervailing duties based on an illegal 
threat of injury determination.  The United States, therefore, continued to violate its obligations under 
both the Anti-Dumping Agreement and the SCM Agreemen ts.  In the light of the US failure to bring 
its measure into conformity with its obligations, Ca nada sought recourse in this matter to Article 21.5 
of the DSU. 
3. The representative of the United States
 said that his country regretted that Canada had chosen 
to request the establishment of a compliance panel u nder Article 21.5 of the DSU with respect to the 
measures taken by the United States to comply w ith the recommendations and rulings of the DSB in 
this dispute.  He recalled that the United Stat es had informed Members at the 25 January 2005 DSB 
meeting that it had fully implemented these recomme ndations and rulings within the agreed period of 
time.  In particular, on 24 November 2004, the US International Trade Commission had issued a new 
determination taking into account the WTO findings .  In addition, on 20 December 2004, the United 
States had amended the anti-dumping and counter vailing duty orders on softwood lumber from 
Canada to reflect the new determination.  The Unite d States disagreed with Canada's assertion that the 
new determination and the amendment of the unde rlying anti-dumping and countervailing duty orders 
to reflect that determination were not consiste nt with the Anti-Dumping Agreement and the SCM 
Agreement . Accordingly, the United States considered th at Canada's request for a compliance panel 
was unnecessary and without basis.  In that re gard, the United States looked forward to the 
opportunity for a panel to confirm that the United States had fully complied with its obligations, and 
the United States accepted the establishment of a panel at the present meeting. 
4. The DSB took note  of the statements and agreed , pursuant to Article 21.5 of the DSU, to refer 
to the original Panel, if possible, the matter ra ised by Canada in document WT/DS277/8. The Panel 
would have standard terms of reference. 
5. The representative of the European Communities  reserved third-party rights to participate in 
the Panel's proceedings. 
2. United States – Investigation of the International Trade Commission in softwood lumber 
from Canada 
(a) Recourse to Article 22.2 of the DSU by Canada (WT/DS277/9) 
6. The Chairman  drew attention to the communicati on from Canada contained in document 
WT/DS277/9 and invited the representative of Canada to speak.  
7. The representative of Canada  said that his country was also requesting authorization from the 
DSB, pursuant to Article 22.2 of the DSU, to suspend the application to the United States of  WT/DSB/M/184 
 Page 3 
 
 
 concessions or other obligations in  an amount to be established yearly equivalent to the level of 
nullification and impairment caused by improper US implementation.  For the year 2005, this amount 
would be approximately Can$4.25billion which wa s the amount of the collected and un-refunded 
illegal countervailing and anti-dumping duties. For fu ture years, the level of suspensions of 
concessions would equal the amount of total c ountervailing and anti-dum ping duty cash deposits 
collected and retained on the anniversary date of the filing of this request.  Canada wished to inform 
the DSB that it had entered into an agreement with the United States that provided that any 
proceedings pursuant to Article 22.6 of the DSU w ould be requested to be  suspended until adoption 
by the DSB of its recommendations and rulings in the Article 21.5 compliance proceedings. 
8. The representative of the United States  said that his country regretted that Canada had 
requested authorization to suspend concessions or othe r obligations in this dispute.  As his delegation 
had noted in its statement under the previous age nda item, the United States had fully implemented 
the recommendations and rulings of the DSB prior to the expiration of the agreed-upon reasonable 
period of time.  Therefore, on 23 February 2005, the United States had informed the DSB by letter that, pursuant to Article 22.6 of the DSU, the Unite d States had objected to the level of suspension of 
concessions proposed by Canada.  Under the terms of the DSU, the filing of this objection had 
automatically resulted in the matter being referred to  arbitration, and no further action was required of 
the DSB.  Indeed, Article 22.6 of the DSU did not refer to any decision by the DSB. Consequently, the matter was already being referred to arbitrati on.  Nevertheless, the Un ited States had no objection 
if the DSB wished to take note of that fact and c onfirm that it might not consider Canada's request for 
authorization, which was on the agenda of the pr esent meeting, since the matter had been referred to 
arbitration.  The United States added that, pursuan t to an agreement between the United States and 
Canada, once the Arbitrator was constituted, th e United States and Canada would request the 
Arbitrator to suspend its proceedings until the comp letion of the Article 21.5 proceedings.  The United 
States was confident that should the Arbitrator ever have to consider the matter, it would find that the 
US objections to Canada's propo sed actions were well-founded. 
9. The DSB took note
 of the statements and it was agreed  that the matter raised by the United 
States in document WT/DS277/10 is referred to arb itration, as required by Article 22.6 of the DSU. 
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