U.S. lumber industry asks Court to dismiss Canadian action seeking to Block U.S. implementation of WTO decision

The Coalition for Fair Lumber Imports, representing a broad group of U.S. sawmills and timber owners, filed a motion in the U.S. Court of International Trade to dismiss the attempt by Canadian parties to block U.S. government implementation of a U.S. International Trade Commission (ITC) determination made pursuant to U.S. obligations under the World Trade Organization (WTO). The basic facts are as follows: Canadian provinces operate a largely noncompetitive timber system which has been found by the U.S. government to subsidize Canadian softwood lumber that Canadian mills dump into the United States. Canadian timber is sold at below market value, in a huge transfer of Canadian public monies predominantly to some large Canadian lumber companies.

The U.S. International Trade Commission found that lumber from this Canadian nonmarket provincial timber system threatens to injure the U.S. industry. Canada appealed the ITC determination both to NAFTA and WTO panels. The effect was that the ITC, although ultimately forced to withdraw its determination by a NAFTA panel, found, yet again, pursuant to the WTO panel process, that indeed a threat of injury finding was fully justified. Press reports indicate that the WTO subsequently upheld the agency's action as fully within America's WTO obligations. Under U.S. law, the ITC's ruling pursuant to the WTO panel process moots the contrary result from the NAFTA panel process.

The U.S. industry's motion to dismiss states that Canadian parties, having chosen a shotgun approach to litigation, cannot now object the result of its WTO complaint, which was for the U.S. International Trade Commission to make a subsequent finding which has the legal effect of keeping the duties on Canadian lumber in place. Of the over 20 court actions the Canadian parties have filed, this one proved to be one too many, and backfired. Moreover, Canadian parties have no standing in the U.S. courts to challenge U.S. actions to implement the new ITC determination to comply with U.S. WTO obligations. This U.S. agency action was clearly fully consistent with U.S. law. The position of the U.S. government and the Coalition is that the appropriate means of settling the softwood lumber problem is to reach a balanced and fair negotiated agreement.

There have been two softwood lumber agreements between Canada and the United States. The Government of Canada allowed the last agreement to expire, and because reforms had not been enacted in Canada, import duties were again imposed by the United States. Both NAFTA and WTO dispute settlement panels have found that the Canadian provincial timber programs do not provide "adequate remuneration" to the Canadian provinces for their forest resource.