"Today, the WTO Appellate Body issued a report that let stand a United States
International Trade Commission (ITC) determination that dumped and subsidized
Canadian lumber threaten the U.S. lumber industry with material injury. We are
pleased with this result.
"We continue to believe that it is in the interest of both the United States
and Canada to reach a permanent solution to their long-standing differences over
softwood lumber. We hope that today’s development will help to bring us one step
closer to that end."
This dispute concerns Canada’s challenge to a U.S. measure taken to comply
with a prior WTO panel report. The original report found that certain aspects of
the ITC’s threat of injury determination concerning softwood lumber imports from
Canada were inconsistent with U.S. obligations under the WTO Antidumping and
Subsidies Agreements. To implement the original panel’s recommendation that the
United States come into compliance with its WTO obligations, the ITC undertook a
four-month "section 129" proceeding in which it gathered additional evidence,
held a public hearing, provided parties with three opportunities to submit
written briefs and comments, and undertook additional analysis.
At the conclusion of its section 129 proceeding, the ITC issued a new
determination on November 24, 2004, in which it found that the U.S. lumber
industry is threatened with material injury by reason of imports of dumped and
subsidized softwood lumber from Canada. On December 13, 2004, the antidumping
and countervailing duty orders on softwood lumber from Canada were amended to
reflect the issuance of the ITC’s section 129 determination. On December 20,
2004, notice of the amendment of the orders was published in the Federal
The WTO challenge that led to today’s Appellate Body report was initiated by
Canada on February 14, 2005, in a request pursuant to Article 21.5 of the WTO
Understanding on Rules and Procedures Governing the Settlement of Disputes. The
dispute was heard by the same panel that heard the original dispute. On
September 23, 2005, the panel issued its report, finding the ITC’s section 129
determination to be consistent with WTO rules. The panel report was circulated
to WTO Members on November 15, 2005.
The Appellate Body’s report reviewed the panel report. While the Appellate
Body found the panel had not applied the correct level of scrutiny of the ITC
determination, the Appellate Body explicitly stated that this did not mean that
the ITC determination would be found inconsistent with U.S. WTO obligations
using the correct level of scrutiny. The Appellate Body went on to find that it
could not itself reach a conclusion on whether the ITC determination was
WTO-consistent. For this reason, the Appellate Body concluded its report by
making no recommendation one way or the other. As a result, the ITC
determination remains in place.
The WTO Dispute Settlement Body is expected to adopt the report together with
the panel report, as modified, within the next 30 days.
Because the Appellate Body report declined to make a finding on the WTO
consistency of the ITC’s determination, the determination is allowed to stand.
Accordingly, there is no basis for Canada to pursue retaliation.