 WT/DS264/R 
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ANNEX D 
 
REQUEST FOR THE ESTABLISHMENT 
OF A PANEL 
 
 
Contents Page 
Annex D Request for the Establishment of  a Panel – Document WT/DS264/2 D-2 
 WT/DS264/R 
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 ANNEX D 
 
 
REQUEST FOR THE ESTABLISHMENT  
OF A PANEL 
 
 
 WORLD TRADE  
ORGANIZATION  WT/DS264/2 
9 December 2002 
 (02-6815) 
 Original:   English 
 
  
UNITED STATES – FINAL DUMPING DETERMINATION 
ON SOFTWOOD LUMBER FROM CANADA 
 
Request for the Establishment of a Panel by Canada
 
   The following communication, dated 6 December 2002, from the Permanent Mission of Canada to the Chairman of the Dispute Settlement Bo dy, is circulated pursuant to Article 6.2 of the 
DSU. 
 
_______________ 
 
 
The United States initiated anti-dumping proceedings against imports of softwood lumber 
from Canada on 23 April 2001.  The Notice of Initia tion was published on 30  April 2001 in the US 
Federal Register, Volume 66, pages 21328 et seq.   The investigation was conducted under the US 
anti-dumping statute (the Tariff Act of 1930 , as amended: 19 U.S.C. section 1763 et seq .) and the 
related regulations of the United States Departme nt of Commerce (Commerce)  (19 Code of Federal 
Regulations 351–357).  On 21 March 2002, Commerce announced its Final Dete rmination, which was 
published on 2 April 2002, in the US Federal Register, Volume 67, pages 15,539 et seq .  Following a 
final affirmative injury determination by th e US International Trade Commission, Commerce 
published in the Federal Regist er on 22 May 2002 an amended Final Determination and an 
Anti-dumping Order on softwood lumber produc ts from Canada (Volume 67, pages 36,067 et seq .).  
Commerce's methodologies and determinations that fo rm the bases of its Final Determination are set 
out in more detail in its underlying decision me moranda, including but not limited to its Issues and 
Decision Memorandum dated 21 Marc h 2002 and its Scope Memorandum  dated 12 March 2002.  As 
a result of violations of the World Trade Or ganization (WTO) agreements described below, 
Commerce determined margins of dumping for im ports of softwood lumber from Canada.   
 On 13 September 2002, the Government of Ca nada requested consultations with the 
Government of the United States, concerning the fina l affirmative determination of sales at less than 
fair value with respect to cer tain softwood lumber products fro m Canada (Inv. No. A-122-838) 
announced by Commerce on 21 March 2002 pursuant to section 735 of the Tariff Act of 1930, as 
amended on 22 May 2002 (Final Determination) and concerning  Commerce's initiation of the  WT/DS264/R 
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 investigation and its conduct of the investigation.   This request (WT/DS264/1) was made pursuant to 
Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes  (DSU), 
Article XXII of the General Agreement on Tariffs and Trade 1994  (GATT 1994) and Article 17 of the 
Agreement on Implementation of Article VI of GATT 1994  (Anti-Dumping Agreement ). 
 
Canada and the United States he ld consultations on 11 Octobe r 2002 covering the initiation of 
the investigation, the conduct of the investigation and the Final De termination.  These consultations 
failed to settle the dispute.   
 Canada therefore requests, pursuant to Articles 4 and 6 of the DSU, Article XXIII of  the 
GATT 1994 and Article 17 of the Anti-Dumping Agreement , that a panel be established at the next 
meeting of the Dispute Settlement Body, to be he ld on 19 December 2002.  Canada further requests 
that the panel have the standard terms of refe rence as set out in Article 7 of the DSU.   
 The measures at issue include the initiation of the investigation, the conduct of the 
investigation, the Final Determ ination and the resulting Anti-dumping Order on Softwood Lumber 
from Canada.  The Government of Canada considers these measures and, in particular, the determinations made and met hodologies adopted therein by the United States Department of 
Commerce under authority of the United States Tariff Act of 1930 , including section 732(c)(4)(E), to 
violate the Anti-Dumping Agreement  and the GATT 1994 for, among others, the following reasons: 
 
1. The application filed by the US domestic  industry and the subse quent initiation of the 
investigation by Commerce did not comply with Article 5 of the Anti-Dumping Agreement, 
including Articles 5.1, 5.2, 5.3, 5.4 and 5.8.  Specifically:  
  (a) The application submitted by the US domestic industry did not include evidence 
reasonably available to it, including pricing of Canadian exports to the United States, 
pricing of the like products sold in Canada by Canadian producers, and Canadian cost 
data in respect of the production in Cana da of the like products.  By Commerce's 
failure to determine whether the applica tion contained all information reasonably 
available to the applicant, and by Comme rce initiating the investigation where the 
application failed to contain evidence reasona bly available to the applicant, and by 
Commerce's failure to terminate the inv estigation when Commerce became aware 
that the application failed to contain evid ence reasonably available to the applicant, 
the United States violated Articles 5.2, 5.3 and 5.8 of the Anti-Dumping Agreement .   
 
 (b) The application submitted by the US domestic industry did not include sufficient 
evidence of dumping to justify initiation of the investigation.  Commerce failed to 
examine the accuracy and ade quacy of the evidence provide d in the application and 
failed to reject the application in view of  the lack of sufficient evidence of dumping 
required to justify the initiation of an i nvestigation, and failed to terminate the 
investigation when it became evident that the application did not contain sufficient 
evidence, thereby resulting in violations by the United States of Articles 5.1, 5.2, 5.3 
and 5.8. 
 
 (c) The Continued Dumping and Subsidy Offset Act of 2000  (CDSOA), by requiring that 
a member of the US industry support the application as a condition of receiving payments under the CDSOA, made an obj ective and meaningful examination of 
industry support for the application impossibl e.  The United States violated Articles 
5.4 and 5.8 in that Commerce's initiation of the investigation was not based on an 
objective and meaningful examination and de termination of the degree of support for 
the application by the domestic industry.  
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  (d) The initiation by Commerce was made w ithout a proper establishment of the facts, 
was based on an evaluation of the facts that was neither unbiased nor objective and 
does not rest on a permissible interpretation of the Anti-dumping Agreement .  
Accordingly, the initiation by Commerce cannot be upheld in light of the applicable 
standard of review under Article 17.6. 
 
2. Commerce erroneously determined there to be  a single like product (under US law, termed 
"class or kind" of merchandise) rather than several distinct like products, thereby failing to assess domestic industry support in respect of each distinct like product and failing to assess 
the sufficiency of evidence of dumping in resp ect of each distinct like product, thereby 
resulting in violations by the United States of Article s 2.6, 4.1, 5.1, 5.2, 5.3, 5.4 and 5.8 of the  
Anti-Dumping Agreement  and Article VI:1 of the GATT 1994.  The like product and industry 
support determinations by Commerce were made without a proper establishment of the facts, 
were based on an evaluation of the facts that  was neither unbiased nor objective and do not 
rest on a permissible interpretation of the Anti-dumping Agreement .  Accordingly, the like 
product and industry support determinations by  Commerce cannot be upheld in light of the 
applicable standard of review under Article 17.6. 
 3. In making the final determination, the United St ates acted inconsistently with Article VI of 
the GATT 1994 and Articles 1, 2.1, 2.2, 2.2.1, 2.2.1. 1, 2.2.2, 2.3, 2.4, 2.4.1, 2.4.2, 2.6, and 9.3 
of the Anti-Dumping Agreement.  Specifically,  Commerce improperly applied a number of 
methodologies based on improper and unfair comp arisons between the export price and the 
normal value, resulting in artificial and/or inflated margins of dumping:  
  (a) The United States violated Article 2 of the Anti-Dumping Agreement , including 
Articles  2.4 and 2.4.2 , and Article VI:1 of the GATT 1994 by Commerce's 
application of the practice of "zeroing" negative dumping margins, the effect of 
which was to inflate margins of dumping and which, in the recommendations and rulings of the Dispute Settlement Body in an earlier dispute, was found to be 
inconsistent with the Anti-Dumping Agreement .  A fair comparison was therefore not 
made by Commerce between the export pri ce and the normal value and a distorted 
margin of dumping was calculated, thereby resulting in violations by the United 
States of Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement.  
 
 (b) The United States violated Article 2 of the Anti-dumping Agreement , including 
Article 2.4, and Article VI:1 of th e GATT 1994 by Commerce's failure, when 
conducting comparisons between prices of products sold in the United States and 
prices of products with different physical char acteristics sold in the Canadian market, 
to make due allowance for differences that affect price comparability, including differences in physical characteristics.  A fair comparison was therefore not made by Commerce between the export price and the normal value and a distorted margin of 
dumping was calculated, thereby resulting in violations by the United States of Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement.  
 
 (c) The United States violated Article 2 of the Anti-Dumping Agreement  including 
Articles 2.2, 2.2.1, 2.2.1.1 and 2.2.2, and Article VI:1 of the GATT 1994 by Commerce's failure to apply a reasonable method in calculating amounts for administrative, selling and general expenses for specific exporters, including an 
improper allocation of general and admi nistrative expenses including financial 
expenses.  A fair comparison was therefore not made by Commerce between the export price and the normal value and a distorted margin of dumping was calculated, thereby resulting in violations by the United States of Articles 2.4 and 2.4.2 of the 
Anti-Dumping Agreement.   WT/DS264/R 
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 (d) The United States violated Article 2 of the Anti-Dumping Agreement , including 
Articles 2.2, 2.2.1, 2.2.1.1, 2.2.2 and paragr aph 7 of Annex I, and Article VI:1 of the 
GATT 1994 by Commerce's failure to appl y a reasonable method to account for 
revenues, including by-product and futures c ontract revenues, as offsets in calculating 
costs and export price for specific exporters .  A fair comparison was therefore not 
made by Commerce between the export pri ce and the normal value and a distorted 
margin of dumping was calculated, thereby resulting in violations by the United States of Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement.  
 
 (e) The methodologies, calculations, compar isons and determinations by Commerce 
were made without a proper establishment of  the facts, was based on an evaluation of 
the facts that was neither unbiased nor objective and does not rest on a permissible interpretation of the Anti-dumping Agreement .  Accordingly, the methodologies, 
calculations, comparisons and determinations  by Commerce cannot be upheld in light 
of the applicable standard of review under Article 17.6. 
 
 (f) The methodologies, calculations, compar isons and determinations by Commerce 
violated Articles VI:1 and VI:2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement  by levying an anti-dumping duty on softwood lumber from 
Canada in an amount greater than the margin of any dumping.   
 
In view of the claims set forth above, Cana da considers that the United States has acted 
inconsistently with Article VI of  the GATT 1994 and Article 1 of the Anti-Dumping Agreement , 
which only permit anti-dumping measures to be a pplied under the circumstances provided for in 
Article VI and pursuant to investigations initiated and conducted in accordance with the 
Anti-Dumping Agreement .  Because the claims set forth above indicate the violations of various 
provisions under the Anti-Dumping Agreement , Article VI of the GATT 1994 and Articles 1 and 18.1 
of the Anti-Dumping Agreement  are consequently violated.   
 
Canada requests that the Panel consider a nd find that the US anti-dumping measures 
concerning imports of softwood lumber from Ca nada, including the initiation, conduct of the 
investigation, and Final Determ ination and resulting Anti-dumping Or der are inconsistent with the 
provisions of the WTO agreements, nullify or impair be nefits accruing directly or indirectly to Canada 
under the WTO agreements, and impede the achievement  of the objectives of the WTO agreements.   
 Canada further requests that the Panel r ecommend that the United States revoke the 
anti-dumping order in respect of softwood lumber from Canada. 
 
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