01-21832. WTO Dispute Settlement Proceeding Regarding the U.S. Department of Commerce Preliminary Countervailing Duty Determination and Preliminary Critical Circumstances Determination Concerning Certain Softwood Lumber From Canada, and Section 777a(...

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 August 21, 2001, 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) preliminary countervailing duty determination and preliminary critical circumstances determination concerning certain softwood lumber from Canada, as well as section 777a(e)(2)(A) and (B) of the Tariff Act of 1930 (19 U.S.C. 1677f-1(e)(2)(A) and (B)). Canada alleges that:

• DOC's preliminary countervailing duty determination is inconsistent with Articles 1, 2, 10, 14, 17.1, 17.5, 19.4, and 32.1 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) and Article VI:3 of the General Agreement on Tariffs and Trade 1994 (GATT 1994);
• DOC's preliminary critical circumstances determination is inconsistent with Articles 17.1, 17.3, 17.4, 19.4, and 20.6 of the SCM Agreement; and
• Section 777A(e)(2)(A) and (B) of the Tariff Act of 1930, 19 CFR §§ 351.214(k) and 351.213(b) and (k), and the operation of these provisions in the DOC countervailing duty investigation of certain softwood lumber products from Canada are inconsistent with U.S. obligations under Article XVI:4 of the WTO Agreement, Article VI:3 of the GATT 1994, and Articles 10, 19.3, 19.4, 21.1, 21.2, 32.1, and 32.5 of the SCM Agreement.

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 September 20, 2001 to be assured of timely consideration by USTR.

ADDRESSES:

Submit comments to Sandy McKinzy, Monitoring and Enforcement Unit, Office of the General Counsel, Room 122, Office of the United States Trade Representative, 600 17th Street, N.W., Washington, D.C., 20508, Attn: Softwood Lumber dispute. Telephone: [phone].

FOR FURTHER INFORMATION CONTACT:

Willis S. Martyn, Associate General Counsel, Office of the United States Trade Representative, 600 17th Street, N.W., Washington, D.C., [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. 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 preliminary countervailing duty determination and preliminary critical circumstances determination concerning certain softwood lumber from Canada was published in the Federal Register on August 17, 2001. The notice explains the basis for DOC's preliminary determinations that Canada provides countervailable subsidies to the Canadian lumber industry and that critical circumstances exist. The notice further states that DOC will instruct the U.S. Customs Service to suspend liquidation of all entries of certain softwood lumber from Canada that are entered, or withdrawn from warehouse, for consumption on or after May 19, 2001. In addition, importers will be required to post a cash deposit or bond equal to the 19.31 percent ad valorem subsidy rate calculated by DOC for all imports that are entered, or withdrawn from warehouse, for consumption on or after August 17, 2001. In its panel request, Canada describes its claims against DOC's determinations in the following manner:

Regarding the preliminary countervailing duty determination, Canada considers this determination to be inconsistent with U.S. obligations under Articles 1, 2, 10, 14, 17.1, 17.5, 19.4, and 32.1 of the SCM Agreement and Article VI(3) of GATT 1994. Such inconsistencies include the determination's treatment of stumpage as a “financial contribution”, its finding that stumpage is “specific”, its presumption that an alleged benefit from stumpage passes through an arm's-length transaction to a downstream recipient, its measurement of the “adequacy of remuneration” by reference to conditions in another country rather than prevailing market conditions in Canada, and its inflation of the subsidy found by calculating a “weighted average country-wide rate” based upon only a portion of Canadian exports of softwood lumber to the United States.

With respect to the preliminary critical circumstances determination, Canada considers this determination to be inconsistent with Articles 17.1, 17.3, 17.4, 19.4, and 20.6 of the SCM Agreement because it is based upon an alleged export subsidy that was found to be de minimis, purports to apply a rate that is in excess of the rate determined for subsidies found to have been bestowed inconsistently with GATT 1994 and the SCM Agreement, was made without the requisite finding of injury caused by massive imports of softwood lumber benefiting from this alleged export subsidy, and was based on a distorted finding of “massive imports”. Furthermore, there is no basis in the SCM Agreement for the application of provisional measures pursuant to such a determination.

Section 777a(e)(2)(A) and (B) of the Tariff Act of 1930 provides that, in certain situations, DOC may limit its investigation to less than all known exporters or producers of the subject merchandise or calculate a single, country-wide subsidy rate to be applied to all exporters and producers. The regulations at 19 CFR 351.214(k) and § 351.213(b) and (k) concern administrative reviews of countervailing duty orders. In its panel request, Canada describes its claims against section 777a(e)(2)(A) and (B) and the regulations in the following manner:

The U.S. measures at issue with regard to expedited and administrative reviews are section 777A(e)(2)(A) and (B) of the Tariff Act of 1930, U.S. Department of Commerce regulations at 19 CFR 351.214(k) and § 351.213(b) and (k), and the operation of these measures in the ongoing U.S. countervailing duty proceeding against certain softwood lumber products from Canada. Canada considers these measures to be inconsistent with U.S. obligations under Article VI:3 of the GATT 1994 and Articles 10, 19.3, 19.4, 21.1, 21.2 and 32.1 of the SCM Agreement. Canada also considers that the United States has failed to ensure that its laws and regulations are in conformity with its WTO obligations as required by Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.

Public Comment: Requirements for Submissions

Interested persons are invited to submit written comments concerning the issues raised in the dispute. Comments must be in English and provided in fifteen copies. 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 commenter. 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 submitter believes that information or advice may qualify as such, the submitter—

(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, N.W., Washington, D.C. 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 (Docket WTO/DS-__, Softwood Lumber Dispute) may be made by calling Brenda Webb, [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.

Julia Christine Bliss,

Acting Assistant United States Trade Representative for Monitoring and Enforcement.