UNITED STATES – INVESTIGATION OF THE INTERNATIONAL TRADE COMMISSION IN SOFTWOOD LUMBER FROM CANADA
Document: Recourse to Article 21.5 of the DSU by Canada Notification of an Appeal by Canada under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 20(1) of the Working Procedures for Appellate Review
Date: 16 January 2006
Document codes: WT/DS277/16
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

Notification of an Appeal by Canada
under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 20(1) of the Working Procedures for Appellate Review

 The following notification, dated 13 January 200 6, from the Delegation of Canada, is being
circulated to Members.

Pursuant to paragraph 4 of Article 16 of the Understanding and Rules and Procedures
Governing the Settlement of Disputes (the "DSU") and Rule 20 of the Working Procedures for
Appellate Review, Canada hereby notifies its decision to appeal certain issues of law and certain legal
interpretations covered in the Panel Report on : Recourse to Article 21.5 of the DSU by Canada
(WT/DS/277/RW dated 15 November 2005).
Canada seeks review by the Appellate Body of the Panel's conclusion that the United States
implemented the rulings and recommendations of the Dispute Settlement Body
1 and the Panel's
findings that the November 24, 2004 threat of injury determination by the U.S. International Trade
Commission (USITC) was not inconsistent with Articles 15.5 and 15.7 of the Agreement on Subsidies
and Countervailing Measures ("SCM Agreement") 2 and Articles 3.5 and 3.7 of the Agreement on
Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("AD
Agreement").3 The Panel has erred in law and in its lega l interpretations of the applicable provisions
of the covered agreements. Canada therefore seeks review of the following:
1. The Panel's failure to carry out its duty under Article 11 of the DSU to make an objective
assessment of the matter before it, by:
(a) failing to assess the applicability of the rele vant covered agreements to the USITC's
determination and failing to assess the confor mity of the determination with those
agreements, and, more specifically, by failing to apply the specific provisions of
Article 3.7 of the AD Agreement and Artic le 15.7 of the SCM Agreement to the

1, Recourse by Canada to Article 21.5 (DS257), Report of the Panel, WT/DS277/RW, circulated
November 15, 2005, para. 8.2.
2Ibid., paras. 7.57 and 8.1.
3Ibid., paras. 7.74 and 8.1.

findings and conclusions in the USITC determination, and as a result, failing to
examine whether those findings and conclu sions were in conformity with those
provisions;
4
(b) declining to examine the USITC's determination in light of the adopted findings of the
original panel in this dispute5;
(c) failing to make an objective assessment of the facts of the case by not conducting a
detailed and searching analysis of the USITC's findings that:
(i) there was a clearly foreseen and immi nent change in circumstances that
would threaten injury to the domestic industry in the absence of protective
measures
6; and
(ii) there was a causal link between the subject imports and a threat of material
injury to the domestic industry and that it was not required to conduct a non-
attribution analysis
7.
2. The Panel's failure to carry out its duties under Article 12.7 of the DSU to set out the
applicability of relevant provisions and provide a "basic rationale" for its findings.8
3. The Panel's errors in finding that the USITC de termination was not inconsistent with Article
3.7 of the AD Agreement and Article 15.7 of the SC M Agreement, and in particular, its failure to
apply the requirements of those provisions that:
(a) a threat of material injury determination must be based on a clearly foreseen and
imminent change in circumstances which would create a situation in which the
dumping or subsidy would cause injury and must be based on facts and not merely on
allegation, conjecture or remote possibility; and
(b) the totality of the factors considered must lead to the conclusion that further dumped
or subsidized exports are imminent and, unless protective action is taken, material
injury would occur.
9
4. The Panel's errors in finding that the USITC' s conclusion that subject imports were entering
the United States at prices likely to have adverse price effects is not inconsistent with Article 3.7 of
the AD Agreement and Article 15.7 of the SCM Agre ement, despite the USITC's failure to conduct a
comparison of import and domestic prices as required by those provisions.10
5. The Panel's errors in finding the USITC's conclusion that the volume of subject imports
would increase substantially in the imminent future is not inconsistent with Article 3.7 of the AD
Agreement and Article 15.7 of the SCM Agreem ent when this conclusion relied on two other

4Ibid., paras. 7.19 – 7.22, 7.26-7.28, 7.35, 7.39, 7.42, 7.50-7.52, 7.55-7.57.
5Ibid., paras. 7.12, 7.35, 7.39, 7.42.
6Ibid., paras. 7.13, 7.35, 7.39, 7.42, 7.52.
7Ibid., paras. 7.62-7.63.
8Ibid., paras. 7.24-7.57.
9Ibid., paras. 7.13, 7.19 -7.22, 7.26-7.28, 7.35, 7.39, 7.42, 7.50-7.52, 7.55-7.57, 7.62-7.63, 7.72-7.73).
10Ibid., paras. 7.50-7.52.

conclusions that the DSB had already found, in the or iginal proceeding, to be inconsistent with the
United States' WTO obligations.11
6. The Panel's errors in finding the USITC's determ ination not inconsistent with Article 3.5 of
the AD Agreement and Article 15.5 of the SCM Agre ement despite the failure of the USITC to: (i)
demonstrate "a causal relationship between the dumped or subsidized imports and the injury to the
domestic industry"; (ii) examine "any known fact ors other than the dumped or subsidized imports
which at the same time are injuring the domestic industry"; and (iii) properly attribute injuries caused
by these other factors. In particular, the Panel erred by:
(a) affirming the USITC's conclusion that th ere was a causal link between dumped and
subsidized imports and future material in jury to the domestic industry even though
fundamental elements of the USITC's analysis were in error;12
(b) affirming the USITC's decision not to conduc t a non-attribution analysis based on its
erroneous conclusion that there were no known "other causal factors" potentially
threatening material injury to the U.S. industry;13
(c) failing to require the USITC to separate and di stinguish the threat of injury posed by
other sources of supply in the marketpl ace, considered both individually and on a
cumulative basis, from the alleged threat attributed to oversupply from Canadian
imports alone.14
Canada respectfully requests that the Appellate Body reverse the findings and conclusions of
the Panel and find that the United States has failed to implement the DSB's rulings and
recommendations.

11Ibid., paras. 7.26-7.28, 7.35, 7.39, 7.42.
12Ibid., paras. 7.62-7.63.
13Ibid., paras.7.71-7.74.
14Ibid., paras. 7.71-7.73.