UNITED STATES – INVESTIGATION OF THE INTERNATIONAL TRADE COMMISSION IN SOFTWOOD LUMBER FROM CANADA
Document: Recourse to Article 22.2 of the DSU by Canada
Date: 15 February 2005
Document codes: WT/DS277/9
Complainant: Canada
Respondent: U.S.
Third parties: China, EU, Japan, South Korea
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. VI:6  GATT 1994Art. 1, 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 3.8, 12, 18.1  Anti-dumpingArt. 10, 15.1, 15.2, 15.3, 15.4, 15.5, 15.7, 15.8, 22, 32.1  Subsidies and Countervailing Measures (SCM)

UNITED STATES – INVESTIGATION OF THE INTERNATIONAL
TRADE COMMISSION IN SOFTWOOD LUMBER FROM CANADA

Recourse to Article 22.2 of the DSU by Canada

 The following communication, dated 14 February 2005, from the delegation of Canada to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 22.2 of the DSU.

 Canada requests that a special meeting of th e Dispute Settlement Body (DSB) be held on
25 February 2005 to consider the following agenda item:

United States – Investigation of the Interna tional Trade Commission in Softwood Lumber
from Canada -

Recourse by Canada to Article 22.2 of th e Understanding on Rules and Procedures
Governing the Settlement of Disputes

 The Panel in this dispute concluded that th e US International Trade Commission's (USITC)
finding of a likely imminent substantial increase in softwood lumber imports from Canada was not
one which could have been reached by an objective and unbiased investigating authority in light of
the totality of the factors and the reasoning in the USITC determination. On this basis, the Panel
concluded that the USITC determination was not consistent with the requirements of Article 3.7 of the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
("AD Agreement") and Article 15.7 of the Agreement on Subsidies and Countervailing Measures
("SCM Agreement").

 The Panel also concluded that the USITC's determination was not consistent with the
requirements of Article 3.5 of the AD Agreement and Article 15.5 of the SCM Agreement because the
USITC's analysis rested upon its unsubstantiated findi ng of an imminent substantial increase in
imports.

 In addition, the Panel found that in the absen ce of a WTO-consistent causation finding, it was
not necessary or appropriate to make findings with r espect to whether the ITC attributed the injuries
caused by other factors to the allegedly dumped and s ubsidized imports. In view of the fundamental
significance of the non-attribution requirement and to give guidance should the issue arise in
implementation, however, the Panel set out its seri ous concerns on this issue. The Panel concluded
that given the overall absence of discussion of other factors potentially causing injury in the future,
the Panel would conclude that the ITC determina tion is not consistent with the obligation in
Article 3.5 of the AD Agreement and Article 15.5 of the SCM Agreement that "injuries caused by
these other factors must not be attributed" to the allegedly dumped and subsidized imports.

 On 26 April 2004, the DSB adopted the Panel Report. The United States stated that it
intended to implement the DSB's recommendations and rulings.

 On 1 October 2004, pursuant to Article 21.3(b) of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU), Canada and the United States agreed on a
"reasonable period of time" of nine months for th e United States to implement the recommendations
and rulings of the DSB. That period of time expi red on 26 January 2005. Ca nada considers that the
United States has failed to comply with the DSB's recommendations and rulings within the reasonable
period of time provided.

 Therefore, pursuant to Article 22.2 of the DSU, Canada requests the authorization of the DSB
to suspend the application to the United States of its concessions or other obligations, in an amount
representing the total amount of countervailing and anti-dumping duty cash deposits collected and not
refunded as a result of the United States' failure to properly implement the DSB's recommendations
and rulings ( i.e. the United States' failure to revoke th e countervailing and anti-dumping duty orders
of 22 May 2002)
1. To date, this amount is approximately $CAD 4.25 billion . For the year 2005, the
level of suspension of concessions should, therefore, equal this amount. In subsequent years, the level
of suspension of concessions will equal the am ount of total countervailing and anti-dumping duty
cash deposits collected and retained on the anniversary date of the filing of this request.

 This level of suspension is equivalent to the level of nullification and impairment of benefits
accruing to Canada that results from the United Stat es' failure to bring its measures into compliance
with its WTO obligations.

 Canada intends to suspend tariff con cessions and related obligations under the General
Agreement on Tariffs and Trade 1994 by imposing additional impor t duties above bound custom
duties on products originating in the United States. For each year in which Canada intends to take
such measures, Canada will notify the DSB of the amount of duties improperly collected and retained
by the United States during the prior year and of the level of the duties it will impose on selected
products.