UNITED STATES – INVESTIGATION OF THE INTERNATIONAL TRADE COMMISSION IN SOFTWOOD LUMBER FROM CANADA
Document: Recourse to Article 21.5 of the DSU by Canada Request for the Establishment of a Panel
Date: 15 February 2005
Document codes: WT/DS277/8
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 21.5 of the DSU by Canada

Request for the Establishment of a Panel

 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 21.5 of the DSU.

 On 26 April 2004, the Dispute Settlement Body ("DSB") adopted the Panel report in .
1 The
Panel found that the US International Trade Commis sion's ("USITC") threat of injury determination
in Softwood Lumber from Canada 2, was not consistent with the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 ("AD Agreement") and the Agreement
on Subsidies and Countervailing Measures ("SCM Agreement "). The Panel recommended that the
DSB request the United States to bring its measures into conformity with its obligations under both
the AD Agreement and the SCM Agreement.

 Specifically, the Panel concluded that the USIT C's finding of a likely imminent substantial
increase in softwood lumber imports from Canada wa s not one which could have been reached by an
objective and unbiased investigating authority in ligh t of the totality of the factors and the reasoning
in the USITC determination.
3 On this basis, the Panel concl uded that the USITC determination was
not consistent with the requirements of Article 3.7 of the AD Agreement and Article 15.7 of the
SCM Agreement.4

 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 finding of an imminent substantial increase in
imports.
5

 Finally, the Panel found that in the absence of a WTO-consistent causation finding, it was not
necessary or appropriate to make findings with re spect to whether the ITC attributed the injuries

1 Dispute Settlement Body, Minutes of Meeting (26 April 2004) , WT/DSB/M/168, 2 June 2004, at
para. 5. Also See , Report of the Panel, WT/DS277/R, adopted 26 April 2004 [hereinafter "Panel Report"].
2 Softwood Lumber from Canada, Investigations Nos. 701-TA-414 and 731-TA-928 (Final),
Publication 3509, May 2002.
3 Panel Report, at paras. 7.89, 7.96 and 8.1(a).
4 Ibid.
5 Ibid., at paras. 7.122 and 8.2(a).

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.
6

 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" for the United States to comply with the recommendations and rulings of
the DSB.
7 The United States undertook to bring its measure into conformity with the findings of the
Panel no later than 26 January 2005.

 After the adoption of the Panel report, the United States commenced implementation
proceedings pursuant to its domestic law, specifically section 129(a) of the Uruguay Round
Agreements Act ("URAA").
8 On 24 November 2004, the USITC issued an unpublished
determination9 pursuant to section 129(a)(4) that purported to comply with the DSB's
recommendations and rulings ("the section 129 dete rmination"). The USITC again reached the
unsubstantiated conclusion that the US softwood lumb er industry was threatened with material injury
by reason of imports of softwood lumber from Canada alleged to be subsidized and sold in the United
States at less than fair value (i.e., dumped).10 One of the 6 Commissioners issued a detailed dissenting
opinion in which he found that the evidence before the USITC did not support a finding that the US
domestic industry producing softwood lumber was materially injured or threatened with material
injury by reason of the allegedly dumped and subsidized imports from Canada.
11

 On 10 December 2004, the US Trade Represen tative instructed the US Department of
Commerce ("Commerce") to implement the section 129 determination by amending the anti-dumping
and countervailing duty orders on softwood lumber products from Canada. On 20 December 2004,
Commerce published a notice purporting to amend the anti-dumping and countervailing duty orders
on softwood lumber products from Canada to reflect the section 129 determination. 12 At the DSB
meeting of 25 January 2005, the United States in formed the DSB that it had complied with its
recommendations and rulings.

 Canada considers that the United States has failed to implement the DSB's recommendations
and rulings by:

• failing to make a determination of threat of material injury based on facts rather than on
allegation, conjecture and remote possib ility, as required by Article 3.7 of the AD Agreement
and 15.7 of the SCM Agreement . In particular, the findings of the USITC that allegedly
dumped and subsidized imports were likely to increase imminently and substantially and have
a significant depressing or suppressing effect on domestic prices are not findings that could

6 Panel Report, at para. 7.137.
7 , Agreement under Article 21.3 (b) of the DSU, WT/DS277/7, 4 October 2004.
8 Tariff Act of 1930 , Subtitle IV – Countervailing and Antidum ping Duties, 19 U.S.C. 3538 (2000)
(also referred to as Subtitle A of Title VII of the Tariff Act of 1930).
9 Softwood Lumber from Canada, Investigations Nos. 701-TA-414 and 731-TA-928, unpublished
determination, 24 November 2004 [hereinafter "Section 129 Consistency Determination"].
10 Section 129 Consistency Determination, page 85.
11 Ibid., page 101.
12 69 Fed. Reg. 75,917 (Dep't Commerce 20 December 2004).

have been reached by an objective and unbiased i nvestigating authority in light of the totality
of the evidence considered and the reasoning in the section 129 determination.

• failing to demonstrate a causal relationship be tween the allegedly dumped and subsidized
imports of Canadian softwood lumber and the th reatened injury to the domestic industry, as
required by Article 3.5 of the AD Agreement and Article 15.5 of the SCM Agreement;

• failing to examine in an unbiased and objectiv e manner any and all known factors other than
the allegedly dumped imports and allegedly subsidized imports of Canadian softwood lumber
that were injuring or threatening to injure the domestic industry based on the record before the
USITC, and further failing to ensure that the in juries that could be caused by these factors in
the future were not attributed to the allege dly dumped and subsidized imports of Canadian
softwood lumber, as required by Article 3.5 of the AD Agreement and Article 15.5 of the
SCM Agreement.

 Because the final definitive anti-dumping and countervailing duty orders dated 22 May 2002
13
remain in effect pursuant to an invalid threat of injury determination, Canada considers that the
United States has not taken measures to comply with the DSB's recommendations and rulings.
Canada considers that the following measures, alle gedly taken by the United States to comply with
the DSB's recommendations and rulings, are inconsis tent with the United States' obligations under
Articles 3.5 and 3.7 of the AD Agreement and Articles 15.5 and 15.7 of the SCM Agreement:

• Section 129 Consistency Determ ination, Softwood Lumber fr om Canada, (24 Nov. 2004),
Inv. Nos. 701-TA-414 and 731-TA-928;

• Notice of Amendment to Antidumping and Count ervailing Duty Orders on Certain Softwood
Lumber Products from Canada (20 Dec. 2004), 14 and the 22 May 2002 orders, as purportedly
amended by this notice.

 Accordingly, as there is a disagreement with respect to the existence or consistency with
covered agreements of the measures taken to comp ly with the DSB's recommendations and rulings,
Canada seeks recourse to Article 21.5 of the DSU in this matter. Therefore, Canada requests that a
special meeting of the 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 21.5 of th e Understanding on Rules and Procedures
Governing the Settlement of Disputes.

 Canada requests that the DSB refer the matter to the original panel, if possible, pursuant to
Article 21.5 of the DSU.