UNITED STATES – FINAL COUNTERVAILING DUTY DETERMINATION WITH RESPECT TO CERTAIN SOFTWOOD LUMBER FROM CANADA
Document: Request for Consultations by Canada
Date: 13 May 2002
Document codes: WT/DS257/1; G/L/539; G/SCM/D45/1
Complainant: Canada
Respondent: U.S.
Third parties: China, EU, India, Japan
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 10, 11, 32, 1, 2, 12, 14, 19, 22  Subsidies and Countervailing Measures (SCM)Art. VI, X:3  GATT 1994Art. 21  Subsidies and Countervailing Measures (SCM)

UNITED STATES – FINAL COUNTERVAILING DUTY DETERMINATION
WITH RESPECT TO CERTAIN SOFTWOOD LUMBER FROM CANADA
Request for Consultations by Canada
The following communication, dated 3 May 2002, from the Permanent Mission of Canada to
the Permanent Mission 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 (DSU), 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),
concerning the final affirmative countervailing duty determination by the US Department of
Commerce (Commerce) (File No. C-122839) issued on 25 March 2002, with respect to certain
softwood lumber from Canada.
The measures at issue include the initiation and conduct of the investigation, the final
determination, provision of expedited reviews, and other matters related to these measures. These
measures are inconsistent with, and violate the obligations of the United States under Articles 1, 2, 10,
11, 12, 14, 15, 19, 22 and 32.1 of the SCM Agreement and Articles VI:3 and X:3 of GATT 1994 by:
1. initiating the investigation,
(a) without sufficient evidence of a subsidy, injury, or a causal link between the
subsidized imports and the alleged injury, and
(b) on the basis of an application that failed to identify an appropriate applicant
or its volume and value of production of the domestic like product;
2. failing to make an objective assessment of the degree of support for the application
by the domestic industry;
3. imposing countervailing duties against programmes and policies that are not subsidies
within the meaning of Article 1.1 of the SCM Agreement and more specifically, by
(a) treating stumpage as a "financial contribution",
(b) determining and measuring benefit through impermissible cross-border
comparisons,

(c) failing in its analysis of an alleged benefit to objectively assess the facts on
the record of the investigation, and
(d) presuming that an alleged benefit from stumpage passes through arm’s-length
transactions to downstream recipients;
4. countervailing programmes and policies that are not “specific” within the meaning of
Article 2 of the SCM Agreement;
5. imposing countervailing duties at a higher rate than the alleged subsidy by inflating
the subsidy rate by a number of impermissible means (including by attributing the entirety of
the alleged stumpage benefit to only a portion of the products produced from logs, using
demonstrably inaccurate data, and excluding certain shipments from its calculations);
6. failing to grant or provide for expedited reviews; and
7. failing to conduct its investigation in accordance with fundamental substantive and
procedural requirements, including by failing to address significant evidence and arguments
in its determination, by gathering and relying upon information not made available to the
parties, by failing to issue timely decisions and provide reasonable schedules for
questionnaire responses, briefing, and hearings, and by, in effect, improperly applying
adverse facts available to cooperative parties.
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 may wish to make concerning dates on which the
consultations could take place.