United States – Investigation of the International Trade Commission in Softwood Lumber from Canada, Recourse to Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes by Canada (WT/DS277): Report of the Appellate Body

Summary

INTRODUCTION

Canada appeals certain issues of law and legal interpretations developed in the Panel Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada, Recourse to Article 21.5 of the DSU by Canada (the “Panel Report”). The Panel was established to consider Canada's complaint regarding the consistency with the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “Anti-Dumping Agreement”) and the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”) of a measure taken by the United States to comply with the recommendations and rulings of the Dispute Settlement Body (the “DSB”) in the US – Softwood Lumber VI proceedings.

The original dispute related to the determination of the United States International Trade Commission (the “USITC”), on 16 May 2002, that the United States softwood lumber industry was threatened with material injury by reason of dumped and subsidized imports of softwood lumber from Canada (the “original determination”). This original determination of a threat of material injury, along with separate determinations of dumping and subsidization by the United States Department of Commerce, served as the basis for the imposition of definitive anti-dumping and countervailing duties on imports of Canadian softwood lumber later that month.

Canada alleged before the panel in US – Softwood Lumber VI (the “original panel”) that several aspects of the USITC's investigation and determination of a threat of material injury were inconsistent with the Anti-Dumping Agreement and the SCM Agreement, in particular, with Articles 3.5 and 3.7 of the Anti- Dumping Agreement and Articles 15.5 and 15.7 of the SCM Agreement.

The original panel concluded, inter alia, that:

… the USITC determination is not consistent with Article 3.7 the [Anti-Dumping] Agreement and Article 15.7 of the SCM Agreement in that the finding of a likely imminent substantial increase in imports is not one which could have been reached by an objective and unbiased investigating authority in light of the totality of the factors considered and the reasoning in the USITC determination [and]

… the USITC determination is not consistent with Article 3.5 of the [Anti-Dumping] Agreement and Article 15.5 of the SCM Agreement in that the causal analysis is based on a finding which is, itself, not consistent with Article 3.7 the [Anti-Dumping] Agreement and Article 15.7 of the SCM Agreement.