Bridges Weekly Trade News Digest • Volume 8 • Number 1 • 14th January 2004
Dispute Settlement: Lumber, Byrd Amendment And DSU Review
The year began without an immediate rush of new dispute settlement cases, despite the 1 January 2004 expiry of the "peace clause" (a nine-year moratorium on farming disputes at the WTO). Instead, the continuation of existing disputes — including the Canadian-US softwood lumber case and a probable retaliation request this month on the US Byrd Amendment — topped the agenda. WTO Members also engaged in discussion of the review of the Dispute Settlement Understanding (DSU) in late 2003.
Meeting delayed on retaliation for Byrd Amendment
A number of countries have signalled their intention to request by 15 January a special dispute settlement body (DSB) meeting at which they will ask for WTO authorisation to retaliate against the US. Almost a year ago, a DSB panel found the US Continued Dumping and Subsidy Offset Act of 2000 — also known as the Byrd Amendment — to violate WTO rules. Named after US Senator Robert Byrd, the legislation allows US companies to claim money collected as antidumping or countervailing duty orders on foreign imports. The WTO ruling found the Byrd amendment a "non-permissible specific action against dumping or a subsidy" (see BRIDGES Weekly, 22 January 2003). The 11 co-complainant countries had delayed the request for seeking authorisation to retaliate due to differences concerning the amount. Eight countries have said they are ready to retaliate to the tune of more than US$ 700 million, the amount disbursed by the US government since the legislation was adopted.
The 11 co-complainants are Australia, Brazil, Canada, Chile, EC, India, Indonesia, Japan, South Korea, Mexico and Thailand.
Lumber dispute drags on
On 12 January, Canada’s International Trade Minister Jim Peterson met with US Trade Representative Robert Zoellick and Commerce Secretary Don Evans in Washington in an attempt to resolve differences in the Canadian-US lumber dispute (see BRIDGES Weekly, 8 October 2003). Canada turned down a US proposal aimed at ending tariffs on Canadian lumber exports. The proposal would have locked all Canadian provinces into a quota on softwood exports for at least three years, limiting Canada’s access to the US market. During the meeting, the US Department of Commerce presented a new method for calculating antidumping and countervailing duties on Canadian softwood, reducing the penalty from 27.2 percent to 21.6 percent. A North American Free Trade Agreement (NAFTA) panel is set to review this new duty rate before it can come into effect.
Last year, both NAFTA and WTO interim panel decisions had supported Canada, finding that the US International Trade Commission (ITC) injury ruling on softwood lumber clashed with international trade rules. The ITC had found that US softwood lumber industry was threatened by allegedly subsidised and dumped imports of softwood lumber from Canada, and recommended the imposition of US countervailing and anti-dumping duties.
DSU Review: More debate over unresolved issues
The DSB met for a special (negotiating) session on the review of the DSU from 18-19 December 2003. Members continued to discuss a Mexican study on DSU reform (see BRIDGES Weekly, 26 November 2003). During the meeting, the Chair proposed a list of questions to guide an issue-by-issue discussion on: panel proceedings, the appellate body, and the compliance and implementation phase. Questions included whether an earlier establishment of panels should be facilitated and whether appointing at least on developing country panellist should be made more automatic in cases where developing country Members are party to the dispute. Most Members gave their reactions, but there were no converging views on the issues, even among developing countries. Before the meeting, Indonesia and Thailand circulated a communication (TN/DS/W/61, available at http://docsonline.wto.org), outlining a number of questions and issues, which is set to be discussed in further detail at the next meeting on DSU review.
The next meeting of the DSB is scheduled for 23 January, with a special session on the review of the DSU following from 26-27 January.
ICTSD reporting; "Softwood Lumber: Canada Pleased With NAFTA Ruling On Threat Of Injury," DFAIT NEWS RELEASE, 5 September 2003; "Canada rejects proposed softwood lumber deal with U.S.", GAZETTE TIMES, 13 January 2004; "U.S. proposes cuts to softwood lumber duty," VANCOUVER SUN, 13 January 2004; "11 Co-Complainants Delay Meeting On Retaliation for Byrd Amendment," WTO REPORTER Tuesday, January 13, 2004.