World Trade Organization

• Author: International Law Group
• Pages: 77-78

Page 77

A Panel of the World Trade Organization (WTO) has issued its Report in the U.S.-Canadian Softwood Lumber dispute after Canada claimed that the U.S. had failed to implement earlier WTO Reports. This is a proceeding under Article 21.5 of the Dispute Settlement Understanding, providing for a review of whether governmental measures taken after WTO review comply with WTO trading rules.

This dispute goes back to 2001, when the U.S. Department of Commerce (DOC) began an anti-dumping investigation which resulted in duties on the six largest Canadian exporters of softwood lumber.

In the original investigation, the DOC calculated a weighted average normal value and export price for each product type, and then aggregated the results to produce one single margin of dumping for the product under investigation for each investigated exporter. In the process of aggregation, the DOC assigned a value of 'zero' as the amount of dumping where the weighted average export price was more than the weighted average normal value.

Where the weighted average export price was less than the weighted normal value, however, the DOC arrived at a weighted average margin of dumping. This process of assigning a zero value as the amount of dumping for individual product type comparisons is known as "zeroing."

In 2004, a WTO Panel found that the DOC had failed to comply with Article 2.4.2 of the Anti-Dumping Agreement (ADA). See 2004 International Law Update 59. This Article provides in part that "the existence of margins of dumping during the investigation phase shall normally be established on the basis of a comparison of a weighted average normal value with a weighted average of prices of all comparable export transactions or by a comparison of normal value and export prices on a transaction-to-transaction basis. ..."

The WTO Appellate Body largely upheld the Panel Report. See 2004 International Law Update 127. In particular, it approved the Panel's finding that the DOC's "zeroing" methodology to determine the existence of dumping margins was inconsistent with the ADA.

In May 2005, the DOC issued a Notice of Determination Under Section 129(b)(2) of the Uruguay Agreements Act (URAA) [19 U.S.C. 3538(b)(2)]. The A...