02-12362. WTO Dispute Settlement Proceeding Regarding the U.S. Department of Commerce Final Countervailing Duty Determination Concerning Certain Softwood Lumber From Canada

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice; request for comments.

SUMMARY:

The Office of the United States Trade Representative (“USTR”) is providing notice that, on May 3, 2002, the United States received from Canada a request for consultations under the Marrakesh Agreement Establishing the World Trade Organization (“WTO Agreement”) regarding the U.S. Department of Commerce (“DOC”) final countervailing duty determination concerning certain softwood lumber from Canada. Canada alleges that the initiation and conduct of the countervailing duty investigation, the final determination, the provision of expedited reviews, and related matters are inconsistent with Articles 1, 2, 10, 11, 12, 14, 15, 19, 22, and 32.1 of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”) and Articles VI:3 and X:3 of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”).

USTR invites written comments from the public concerning the issues raised in this dispute.

DATES:

Although USTR will accept any comments received during the course of the dispute settlement proceedings, comments should be submitted on or before May 31, 2002 to be assured of timely consideration by USTR.

ADDRESSES:

Comments should be submitted to Sandy McKinzy, Monitoring and Enforcement Unit, Office of the General Counsel, Room 122, Office of the United States Trade Representative, 600 17th Street, NW., Washington, DC 20508, Attn: Softwood Lumber Final CVD Dispute, with a confirmation copy sent by fax to [phone]. Telephone: [phone].

FOR FURTHER INFORMATION CONTACT:

Amber L. Cottle, Assistant General Counsel, Office of the United States Trade Representative, 600 17th Street, NW., Washington, DC [phone].

SUPPLEMENTARY INFORMATION:

Section 127(b) of the Uruguay Round Agreements Act (“URAA”) (19 U.S.C. 3537(b)(1)) requires that notice and opportunity for comment be provided after the United States submits or receives a request for the establishment of a WTO dispute settlement panel. Consistent with this obligation, but in an effort to provide additional opportunity for comment, USTR is providing notice that consultations have been requested pursuant to the WTO Dispute Settlement Understanding (“DSU”). If such consultations should fail to resolve the matter and a dispute settlement panel is established pursuant to the DSU, such panel, which would hold its meetings in Geneva, Switzerland, would be expected to issue a report on its findings and recommendations within six to nine months after it is established.

Major Issues Raised by Canada

The notice of the DOC final countervailing duty determination concerning certain softwood lumber from Canada was published in the Federal Register on April 2, 2002. The notice explains the basis for the DOC's final determination that Canada provides countervailable subsidies to the Canadian lumber industry.

In its panel request, Canada describes its claims in the following manner:

The measures at issue include the initiation and conduct of the investigation, the final determination, provision of expedited review, and other matters related to these measures. These measures are inconsistent with, and violate the obligations of the United States under Articles 1, 2, 10, 11, 12, 14, 15, 19, 22 and 32.1 of the SCM Agreement and Articles VI:3 and X:3 of GATT 1994 by:

1. Initiating the investigation,

(a) Without sufficient evidence of a subsidy, injury, or a causal link between the subsidized imports and the alleged injury, and

(b) On the basis of an application that failed to identify an appropriate applicant or its volume and value of production of the domestic like product;

2. Failing to make an objective assessment of the degree of support for the application by the domestic industry;

3. Imposing countervailing duties against programmes and policies that are not subsides within the meaning of Article 1.1 of the SCM Agreement and more specifically, by

(a) Treating stumpage as a “financial contribution”,

(b) Determining and measuring benefit through impermissible cross-border comparisons,

(c) Failing in its analysis of an alleged benefit to objectively assess the facts on the record of the investigation, and

(d) Presuming that an alleged benefit from stumpage passes through arm's-length transactions to downstream recipients;

4. Countervailing programmes and policies that are not “specific” within the meaning of Article 2 of the SCM Agreement;

5. Imposing countervailing duties at a higher rate than the alleged subsidy by inflating the subsidy rate by a number of impermissible means (including by attributing the entirety of the alleged stumpage benefit to only a portion of the products produced from logs, using demonstrably inaccurate data, and excluding certain shipments from its calculations);

6. Failing to grant or provide for expedited reviews; and

7. Failing to conduct its investigation in accordance with fundamental substantive and procedural requirements, including by failing to address significant evidence and arguments in its determination, by gathering and relying upon information not made available to the parties, by failing to issue timely decisions and provide reasonable schedules for questionnaire responses, briefing, and hearings, and by, in effect, improperly applying adverse facts available to cooperative parties.

Public Comment: Requirements for Submissions

Interested persons are invited to submit written comments concerning the issues raised in this dispute. Comments must be in English and provided in fifteen copies to Sandy McKinzy at the address provided above. A person requesting that information contained in a comment submitted by that person be treated as confidential business information must certify that such information is business confidential and would not customarily be released to the public by the submitting person. Confidential business information must be clearly marked “BUSINESS CONFIDENTIAL” in a contrasting color ink at the top of each page of each copy.

Information or advice contained in a comment submitted, other than business confidential information, may be determined by USTR to be confidential in accordance with section 135(g)(2) of the Trade Act of 1974 (19 U.S.C. 2155(g)(2)). If the submitting person believes that information or advice may qualify as such, the submitting person—

(1) Must so designate the information or advice;

(2) Must clearly mark the material as “SUBMITTED IN CONFIDENCE” in a contrasting color ink at the top of each page of each copy; and

(3) Is encouraged to provide a non-confidential summary of the information or advice.

Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR will maintain a file on this dispute settlement proceeding, accessible to the public, in the USTR Reading Room, which is located at 1724 F Street, NW., Washington, DC 20508. The public file will include non-confidential comments received by USTR from the public with respect to the dispute; if a dispute settlement panel is convened, the U.S. submissions to that panel, the submissions, or non-confidential summaries of submissions, to the panel received from other participants in the dispute, as well as the report of the panel; and, if applicable, the report of the Appellate Body. An appointment to review the public file may be made by calling the USTR Reading Room at [phone]. The USTR Reading Room is open to the public from 9:30 a.m. to 12 noon and 1 p.m. to 4 p.m., Monday through Friday.

Bruce Hirsh,

Acting Assistant United States Trade Representative for Monitoring and Enforcement.