World Trade Organization

• Author: International Law Group

The World Trade Organization (WTO) has issued a Panel Report on the U.S. Investigation of the International Trade Commission (USITC) in Softwood Lumber from Canada. Canada commenced that case on December 20, 2002, by requesting consultations and alleging violations by the U.S. of GATT 1994, Article VI of the Anti-Dumping Agreement (AD Agreement), and Article 30 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).

The dispute concerns the USITC investigation and final determination regarding Canadian softwood lumber, as well as the final definitive anti-dumping and countervailing duties subsequently applied. In May 2001, the USITC determined preliminarily that there was a reasonable indication that the U.S. softwood lumber industry was threatened with material injury because of the allegedly subsidized Canadian imports. In May 2002, the U.S. Department of Commerce issued anti-dumping and countervailing duty orders on Canadian softwood lumber (see 67 Federal Register 36068, May 22, 2002). Canada asked the WTO establish a Dispute Settlement Panel to review the matter. In a related matter, the WTO Appellate Body issued a report regarding "United States - Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada" (WT/DS257/AB/R) on Jan. 19, 2004. See 2004 International Law Update 28

The Panel finds that the USITC determination is inconsistent with Articles 3.7 of the AD Agreement and Article 15.7 of the SCM Agreement in that the conclusion that imports would increase substantially could not have been reached by an unbiased investigating authority based on an objective examination of the evidence. The USITC analysis as to causation rests upon the likely effect of substantially increased imports in the near future. The "non-attribution" requirement in anti-dumping cases mandates that other causal factors be distinguished and separated from the dumped imports at issue. The USITC should have considered other factors potentially causing injury in the future, and it thus is inconsistent with Article 3.5 of the AD Agreement and Article 15.5 of the SCM Agreement requiring that "injuries caused by these other factors must not be attributed" to the subject imports. Thus, a fundamental element of the causal analysis is inconsistent with the AD and SCM Agreements.

The Panel holds, in particular:

(1) The USITC determination is not consistent with Article 3.7 of the AD Agreement and Article 15.7 of the...