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Softwood Lumber Imports from Canada: Issues and Events (CRS Report for Congress)

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Release Date Revised May 9, 2006
Report Number IB10081
Authors Ross W. Gorte, Resources, Science, and Industry Division; and Jeanne Grimmett, American Law Division
Source Agency Congressional Research Service
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Summary:

An administrative review of the original antidumping and countervailing duties for theperiod 2002-2003, finalized December 14, 2004, lowered the official combined duty rate toapproximately 21%. Preliminary results of the administrative review for 2003-2004 importsfurther lowered subsidy and dumping rates; final results will be issued December 5, 2005.Responding to remands from NAFTA panels, the Department of Commerce (DOC) inJuly 2005 further lowered the subsidy margin on Canadian softwood imports, but generallyraised dumping rates. The panel process for these determinations have not been completed,with rulings on the new DOC determinations due in October 2005. The U.S. InternationalTrade Commission (ITC) issued a "no threat" of material injury determination at thedirection of a third NAFTA panel in September 2004; a NAFTA Extraordinary ChallengeCommittee (ECC) affirmed the underlying panel decisions August 10, 2005, completing thisNAFTA case. U.S. industry filed a constitutional challenge to the binational panel systemin federal court September 13, 2005.Canada is challenging U.S. compliance in the WTO cases that it had brought earlierinvolving the DOC final subsidy determination, the DOC final dumping determination, andthe ITC final threat of injury determination. Canada is also seeking to impose sanctions inthe event the United States is found not to have complied with the earlier WTO decisions.A compliance panel found in August 2005 that the United States did not undertake a properbenefit analysis in either its compliance determination or the administrative review for 2002-2003; the United States has appealed. In response to the WTO ruling on the ITC threat ofinjury determination, the ITC issued a new determination in November 2004 in which itcontinued to find threat; this determination has been upheld in the interim report of thecompliance panel. Canada argues that as a result of the NAFTA ECC ruling, which supportsthe ITC "no threat" determination, the United States must terminate the antidumping andcountervailing duties on Canadian lumber imports. At the same time United States maintainsthat the November 2004 ITC threat determination supersedes the earlier ITC "no threat"determination and justifies the continued imposition of duties. Canada has challengedimplementation of the November 2004 ITC determination in the U.S. Court of InternationalTrade.