INTRODUCTION

Canada appeals certain issues of law and legal interpretations developed in the Panel Report, United States – Final Dumping Determination on Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada (the “Panel Report”). The Panel was established to consider a complaint by Canada regarding the consistency with the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “Anti-Dumping Agreement”) of a measure taken by the United States to comply with the recommendations and rulings of the Dispute Settlement Body (the “DSB”) in the US – Softwood Lumber V proceedings.

The original dispute concerned an anti-dumping investigation by the United States Department of Commerce (the “USDOC”) that led to the imposition, in May 2002, of anti-dumping duties on imports of softwood lumber from Canada. Before the panel in US – Softwood Lumber V (the “original panel”), Canada claimed that, in imposing anti-dumping duties on imports of softwood lumber from Canada, the United States had acted inconsistently with several provisions of the Anti-Dumping Agreement, as well as with Articles VI:1 and VI:2 of the General Agreement on Tariffs and Trade 1994 (the “GATT 1994”). The original panel found, inter alia, that the United States had acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement in determining the existence of margins of dumping on the basis of a methodology incorporating the practice of “zeroing”. In the light of its finding on Article 2.4.2, the original panel applied judicial economy and declined to rule on Canada's claims under Article 2.4 of the Anti-Dumping Agreement (“fair comparison”) in respect of zeroing. The original panel's finding of inconsistency with Article 2.4.2 was upheld by the Appellate Body.

The original panel and Appellate Body reports were adopted by the DSB on 31 August 2004. On 6 December 2004, Canada and the United States jointly informed the DSB, pursuant to Article 21.3(b) of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”), that they had mutually agreed that the reasonable period of time to implement the recommendations and rulings of the DSB would be seven and one-half months, that is, from 31 August 2004 to 15 April 2005. The reasonable period of time was later extended to 2 May 2005 by agreement between the parties.