Canada obtained a new victory in the softwood lumber dispute which should end the conflict with the U.S., but it probably won’t.
NAFTA’s Extraordinary Challenge Committee (ECC) affirmed on Wednesday 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.
International Trade Minister Jim Peterson welcomed the decision and demanded the immediate repayment of the $4 billion owed by the U.S. “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 panelists 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.
Still, the money won’t flow back to Canada just yet. In a statement from the office of U.S. Trade Representative Rob Portman, the U.S. trade officials expressed their disappointment with the decision. "We are, of course, disappointed with the ECC’s decision, but it will have no impact on the antidumping and countervailing duty orders given the ITC’s November 2004 injury determination. We continue to have concerns about Canadian pricing and forestry practices. We believe that a negotiated solution is in the best interests of both the United States and Canada, and that litigation will not resolve the dispute."
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