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No justification for softwood lumber duties


August 11, 2005
By Pulp & Paper Canada

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International Trade Minister Jim Peterson today welcomed the unanimous decision of the NAFTA Extraordinary Challeng…

International Trade Minister Jim Peterson today welcomed the unanimous decision of the NAFTA Extraordinary Challenge Committee (ECC), which affirms that the NAFTA panel reviewing the U.S. International Trade Commission’s (ITC) threat of injury determination regarding softwood lumber did not violate NAFTA rules as alleged by the United States. The ECC also dismissed allegations that the NAFTA panel had violated the Code of Conduct for Panellists.
“We are extremely pleased that the ECC dismissed the claims of the United States,” said Minister Peterson. “This is a binding decision that clearly eliminates the basis for U.S.-imposed duties on Canadian softwood lumber. We fully expect the United States to abide by this ruling, stop collecting duties and refund the duties collected over the past three years.”

The original NAFTA panel had ruled on August 31, 2004, that the evidence relied on by the ITC did not support its finding of a threat of material injury to the U.S. softwood lumber industry from Canadian imports. As a result, the ITC, on September 10, 2004, issued a determination to comply with the panel ruling that reversed its original threat finding. However, on November 24, 2004, the Office of the United States Trade Representative (USTR) requested that an ECC be formed to review the panel’s action, claiming that the panel had violated the dispute settlement rules established under Chapter 19 of NAFTA. The USTR also alleged that one of the panellists was in a conflict of interest position. The ITC’s final negative threat determination was suspended during the Extraordinary Challenge, but now takes effect as a result of the ECC’s unanimous decision.
The Government of Canada now expects the United States to refund with interest all the duties paid by Canadian softwood lumber exporters since this dispute began, as is required by U.S. law and NAFTA.
For more information regarding Canada’s legal challenges against the United States at the WTO and under NAFTA, please visit http://www.dfait-maeci.gc.ca/eicb/softwood/legal_action-en.asp.
The ECC decision and the NAFTA panel decision are available at http://www.nafta-sec-alena.org.

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CHRONOLOGY OF KEY EVENTS
May 16, 2001:
The United States International Trade Commission (ITC) issued a preliminary determination that Canadian softwood lumber exports to the U.S. had not injured the U.S. industry, but only posed a threat of injury.

May 2, 2002:
The ITC voted 4 to 0 that the U.S. softwood lumber industry was threatened with material injury by reason of imports of softwood lumber from Canada that were found by the U.S. Department of Commerce to be subsidized and dumped in the U.S.

May 22, 2002:
A binational panel was established under NAFTA Chapter 19 to review whether the ITC’s threat of injury determination was contrary to U.S. law.

September 5, 2003:
The panel issued its first report and found the ITC’s threat of injury determination to be inconsistent with U.S. law.

December 15, 2003:
The ITC issued a threat of injury remand determination that reaffirmed its original finding that the U.S. domestic industry was threatened with injury.

April 29, 2004:
The panel issued its second report and found the ITC’s threat of injury remand determination inconsistent with U.S. law.

June 10, 2004:
The ITC issued a second threat of injury remand determination that, once again, found that the U.S. domestic industry was threatened with injury by reason of allegedly dumped and subsidized softwood lumber exports from Canada.

August 31, 2004:
The panel issued its third report and found the ITC’s second threat of injury remand determination inconsistent with U.S. law.

September 10, 2004:
The ITC issued its third remand determination and concluded that Canadian softwood lumber exports do not threaten to injure the U.S. domestic industry.

November 24, 2004:
The United States filed a request for an Extraordinary Challenge Committee.

August 10, 2005:
The ECC issued its ruling confirming that the NAFTA panel reviewing the U.S. International Trade Commission’s (ITC) threat of injury determination regarding softwood lumber did not violate NAFTA rules as alleged by the United States.