International Trade Law News

The U.S. International Trade Commission on September 10, 2004 reluctantly voted to comply with the NAFTA Panel's remand instructions and issued a negative threat of injury decision in the antidumping (AD) and countervailing duty (CVD) investigatins on Softwood Lumber from Canada. The decision was made after the United States-Canada Binational Panel on August 31, 2004 remanded the ITC's previous threat of injury determinations with explicit instructions directing “the Commission to make a determination consistent with the decision of this Panel that the evidence on the record does not support a finding of threat of material injury."

In its written decision, the ITC stated that "because the Commission respects and is bound by the NAFTA dispute settlement process, we issue a determination, consistent with the Panel’s decision, that the U.S. softwood lumber industry is not threatened with material injury by reason of subject imports from Canada. In so doing, we disagree with the Panel’s view that there is no substantial evidence to support a finding of threat of material injury1 and we continue to view the Panel’s decisions throughout this proceeding as overstepping its authority, violating the NAFTA, seriously departing from fundamental rules of procedure, and committing legal error."

As a result of the ITC's negative threat of injury finding, the U.S. no longer has the legal grounds to impose the AD and CVD duties on softwood lumber from Canada, currently totaling 27%. However, the AD and CVD orders are unlikely to be revoked immediately as the U.S. lumber industry may request the U.S. Government to raise an "extraordinary challenge" on the NAFTA Panel's ruling. Under the provisions of Chapter 19 of NAFTA, an extraordinary challenge proceeding is a streamlined process to consider whether a decision taken by a particular binational panel is outside the scope of the panel’s authority and poses a threat to the integrity of the panel review system. To date, no NAFTA Panel decision has ever been overturned by an extraordinary challenge.

The ITC's decision can be viewed at the following link: ftp://ftp.usitc.gov/pub/reports/opinions/fremand3opin.pdf.