UNITED STATES – REVIEWS OF COUNTERVAILING DUTY ON SOFTWOOD LUMBER FROM CANADA
Document: Request for Consultations by Canada
Date: 19 April 2004
Document codes: WT/DS311/1; G/L/679; G/SCM/D60/1
Complainant: Canada
Respondent: U.S.
Dispute stage: Consultation
Agreements cited: Art. VI:3  GATT 1994Art. 10, 19.1, 19.3, 19.4, 21.1, 21.2, 21.4, 32.1  Subsidies and Countervailing Measures (SCM)

UNITED STATES – REVIEWS OF COUNTERVAILING DUTY
ON SOFTWOOD LUMBER FROM CANADA

Request for Consultations by Canada

 The following communication, dated 14 April 2004, from the delegation of Canada to the
delegation of the United States and to the Chairman of the Dispute Settlement Body, is circulated in
accordance with Article 4.4 of the DSU.

 My authorities have asked 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 of the General Agreement on Tariffs and Trade 1994
(GATT 1994), and Article 30 of the Agreement on Subsidies and Countervailing Measures
(SCM Agreement). These consultations concern:

 (1) the failure of the United States Department of Commerce (Commerce) to complete
expedited reviews of the countervailing duty order concerning certain softwood
lumber products from Canada in order to promptly establish an individual
countervailing duty rate for each requesting exporter; and

 (2) the refusal and failure of Commerce to conduct company-specific administrative
reviews of the same countervailing duty order in order to establish a final individual
countervailing duty rate for each requesting exporter.

 On 22 May 2002, Commerce published an ame nded final countervaili ng duty determination
and countervailing duty order concerning certa in softwood lumber products from Canada.
1 O n
17 July 2002 and 20 September 2002, Commerce initia ted expedited reviews of the countervailing
duty order.2 On 1 July 2003, Commerce initiated an ad ministrative review of the countervailing duty
order.3 On 25 July 2003, Commerce issued a D ecision Memorandum regarding the methodology for

1 Notice of Amended Final Countervailing Duty De termination and Notice of Countervailing Duty
Order: Certain Softwood Lumber Products from Canada , 67 Fed. Reg. 36070 (Department of Commerce,
22 May 2002), corrected in 67 Fed. Reg. 37775 (Department of Commerce, 30 May 2002).
2 Notice of Initiation of Expedited Reviews of the Countervailing Duty Order: Certain Softwood
Lumber Products from Canada , 67 Fed. Reg. 46955 (Department of Commerce, 17 July 2002); Notice of
Initiation of Expedited Reviews of the Countervailing Du ty Order: Certain Softwood Lumber Products from
Canada, 67 Fed. Reg. 59252 (Department of Commerce, 20 September 2002).
3 Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for
Revocation in Part, 68 Fed. Reg. 39055 at 39058 (Department of Commerce, 1 July 2003).

the administrative review
4 and on 15 March 2004, Commerce issued a Decision Memorandum
regarding selection of companies for company-specific "zero/de minimis" administrative reviews.5

 The measures at issue in these consultations include, but are not necessarily limited to: (1)
the countervailing duty order concerning certain soft wood lumber products from Canada as applied to
exporters that requested company-specific expedite d reviews and/or company-specific administrative
reviews; (2) Commerce's failure to complete expe dited reviews in order to promptly establish an
individual countervailing duty rate for each requesting exporter; (3) Commerce's Decision
Memoranda of 25 July 2003 and 15 March 2004; (4) Commerce's refusal and failure to conduct
company-specific administrative reviews in orde r to establish a final individual countervailing duty
rate for each requesting exporter; and (5) the rele vant US laws and regulatio ns relating to expedited
and administrative reviews.

 In a Fact Sheet released with final exped ited review results for certain exporters on
3 March 2004, Commerce confirmed that there are exporters for which expe dited reviews have not
been completed6 in spite of the fact that these reviews were initiated nearly two years ago. Commerce
has therefore failed to promptly establish an individual countervailing duty rate for these exporters.

 In the Decision Memoranda of 25 July 2003, and 15 March 2004, Commerce confirmed that
the administrative review of certain softwood lumb er products from Canada would be conducted on
an aggregate basis, meaning that Commerce woul d establish a country-wide countervailing duty rate.
7
Commerce also confirmed that the countervailing duty rate established in the aggregate administrative
review will supersede all previously established c ountervailing duty rates, including those established
in the expedited reviews. Further, Commerce deni ed company-specific administrative reviews to all
but 11 exporters, despite the fact many more expor ters requested such reviews to establish final
individual countervailing duty rates. For the selec ted 11 exporters, Commerce has characterized its
review as a "zero/de minimis" review with no assurances that final individual countervailing duty rates
over de minimis will be given effect. In addition, the 11 exporters chosen include only 6 of what
Canada understands to be 69 e xporters that requested both company-specific expedited and
administrative reviews. The exporters that we re not chosen for a company-specific "zero/ de minimis"
administrative review will certainly not receive a final individual countervailing duty rate. Instead,
they will be subject to the country-wide count ervailing duty rate established in the aggregate
administrative review, thereby nullifying any individual countervailing duty rates established in
expedited reviews.

 The United States has therefore acted inconsistent ly with Articles 10, 19.1, 19.3, 19.4, 21.1,
21.2, 21.4 and 32.1 of the SCM Agreement and Article VI:3 of GATT 1994.

 I look forward to receiving your reply to this request and to selecting a mutually acceptable
date for holding consultations within 30 days from the date of receipt of this request. Canada
welcomes any suggestions that the United States ma y wish to make concerning dates on which the
consultations could take place.
Canada – Methodology for Conducting the Review, July 25, 2003 (Case No. C-122-839).
5 First Administrative Review of the Countervailing Duty Order: Ce rtain Softwood Lumber Products
from Canada – Selection of Companies for Company-Specific Reviews, March 15, 2004 (Case No. C-122-839).
6FACT SHEET – Final Results of Expedited Reviews under the Countervailing Duty Order on Certain
Softwood Lumber Products from Canada, 3 March 2004.
7 Products from six Canadian provinces are subject to the countervailing duty order: Québec, Ontario,
Manitoba, Saskatchewan, Alberta and British Columbia.