This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.
See also:
> One-page summary of key findings of this dispute
> The basics: how disputes are settled in WTO
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> Text of the Dispute Settlement Understanding
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The summary below was up-to-date at
See also: One-page summary of key findings of this dispute
Consultations
Complaint by Canada.
On 21 August 2001, Canada
requested consultations with the US concerning the preliminary
countervailing duty determination and the preliminary critical
circumstances determination made by the US Department of Commerce on 9
August 2001, with respect to certain softwood lumber from Canada. This
request also concerned US measures on company-specific expedited reviews
and administrative reviews. In particular:
- As far as the preliminary countervailing duty determination is
concerned, Canada considered this determination to be inconsistent
with US obligations under Articles 1, 2, 10, 14, 17.1, 17.5, 19.4 and
32.1 of the SCM Agreement and Article VI(3) of GATT 1994.
- With respect to the preliminary critical circumstances
determination, Canada considered this determination to be inconsistent
with Articles 17.1, 17.3, 17.4, 19.4 and 20.6 of the SCM Agreement.
- As regards US measures on company-specific expedited reviews and
administrative reviews, Canada considered these measures are
inconsistent with US obligations under Article VI:3 of the GATT 1994
and Articles 10, 19.3, 19.4, 21.1, 21.2 and 32.1 of the SCM Agreement.
- Canada also considered that the US had failed to ensure that its
laws and regulations are in conformity with its WTO obligations as
required by Article 32.5 of the SCM Agreement and Article XVI:4 of the
WTO Agreement.
On the grounds that the affirmative
preliminary countervailing duty and critical circumstances
determinations had an immediate and significant trade impact, Canada
requested urgent consultations pursuant to Article 4.8 of the DSU.
Although accepting Canada’s request to enter into consultations, the US
did not accept this to be a case of urgency for the purposes of Article
4.8 of the DSU since the measures in question involve the posting of
bond for or deposit of preliminary duties which could be refunded in
whole or in part.
On 25 October 2001, Canada requested the
establishment of a panel. At its meeting on 5 November 2001, the DSB
deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 5 December
2001, the DSB established a panel. The EC and India reserved their
third-party rights to participate in the panel proceedings. On 17
December 2001, Japan requested to participate in the proceedings as a
third party.
On 22 January 2002, Canada requested the
Director-General to determine the composition of the panel. On 1
February 2002, the Director-General composed the panel.
On 27 September 2002, the Panel Report was
circulated. The Panel found that the USDOC Preliminary Countervailing
Duty Determination:
- was not inconsistent with Article 1.1 (a)
SCM Agreement when the USDOC found that the provision of stumpage
constituted a financial contribution, in the form of the provision of a
good or service;
- failed to determine the existence and
amount of benefit to the producers of the subject merchandise on the
basis of the prevailing market conditions in Canada as required by
Article 1.1 (b) and Article 14 and 14 (d) SCM Agreement; and
- failed to establish that a benefit was
conferred to certain producers of the subject merchandise as the USDOC
did not examine whether a benefit was passed through by the unrelated
upstream producers of log inputs to the downstream producers of the
subject merchandise;
Therefore, the Panel concluded that the
USDOC’s imposition of provisional measures based on the preliminary
countervailing duty determination was inconsistent with the US
obligations under Articles 1.1 (b), 10, 14, 14 (d), and 17.1(b) SCM
Agreement.
The Panel exercised judicial economy in
respect of Canada’s claim that the USDOC instructions transmitted to the
United States Customs Service on 4 September 2001, imposed provisional
measures in excess of the subsidy preliminarily found to exist in a
manner inconsistent with Articles 10, 17.2, 17.5, 19.4 and 32.1 of the
SCM Agreement and Article VI:3 of GATT 1994.
The Panel further concluded that the
retroactive imposition of a provisional measure on the basis of the
USDOC Preliminary Critical Circumstances Determination is inconsistent
with Articles 20.6, 17.3, and 17.4 SCM Agreement and exercised judicial
economy in respect of Canada’s claim that the USDOC failed to establish
the existence of critical circumstances under Article 20.6 SCM Agreement
in its Preliminary Critical Circumstances Determination.
Finally, the Panel concluded that the US laws
and regulations challenged by Canada on expedited and administrative
reviews are not inconsistent with the SCM Agreement as they do not
require the executive authority to act in a manner inconsistent with the
US obligations under Articles 19 and 21 of the SCM Agreement concerning
expedited and administrative reviews. As a result the Panel rejected
Canada’s claims that the United States has failed to ensure that its
laws and regulations are in conformity with its WTO obligations as
required by Article 32.5 of the SCM Agreement and Article XVI:4 of the
WTO Agreement.
The Panel recommended that the DSB request the
United States to bring its measure into conformity with its obligations
under the SCM Agreement.
At its meeting on 1 November 2002, the DSB
adopted the Panel Report.
Implementation of adopted reports
At the DSB meeting of 28
November 2002, the US said that the measures at issue in this dispute
were no longer in effect and that the provisional cash deposits that
Canada challenged had been refunded prior to the circulation of the
Panel Report. As such, it was not necessary for the US to take any
further action to comply with the recommendations and rulings of the DSB.
Canada dismissed the US view that no action was required on its part to
implement the recommendations and rulings of the DSB. Canada stated that
the legal methodologies found by the Panel to be plainly illegal in the
US Preliminary Countervailing Duty Determination remained unchanged in
the Final Determination.
Mutually agreed solution
On 12 October 2006, the United States and Canada informed the DSB that they had reached a mutually agreed solution under Article 3.6 of the DSU in the disputes WT/DS236, WT/DS247, WT/DS257, WT/DS264, WT/DS277 and WT/DS311. This solution was in the form of a comprehensive agreement (Softwood Lumber Agreement) between the United States and Canada, dated 12 September 2006.
On 23 February 2007, the United States and Canada informed the DSB that on 12 October 2006 they had concluded a further Agreement, which amended the original Agreement to facilitate its entry into force. |
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