[Federal Register Volume 68, Number 14 (Wednesday, January 22, 2003)]
[Notices]
[Pages 3086-3088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1308]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. WTO/DS-264]


WTO Dispute Settlement Proceeding Regarding the U.S. Department 
of Commerce Final Antidumping Determination Concerning Certain Softwood 
Lumber From Canada

AGENCY: Office of the United States Trade Representative.

ACTION: Notice; request for comments.

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SUMMARY: The Office of the United States Trade Representative 
(``USTR'') is providing notice of the request by the Government of 
Canada for the establishment of a dispute settlement panel under the 
Marrakesh Agreement Establishing the World Trade Organization (``WTO 
Agreement'') to examine the U.S. Department of Commerce (``DOC'') final 
determination of sales at less than fair value with respect to certain 
softwood lumber from Canada. The panel request alleges that the 
initiation of the investigation, the conduct of the investigation, and 
the final determination are inconsistent with various provisions of the 
General Agreement on Tariffs and Trade 1994 (``GATT 1994'') and the 
Agreement on Implementation of Article VI of GATT 1994. USTR invites 
written comments from the public concerning the issues raised in this 
dispute.

DATES: Although USTR will accept any comments received during the 
course of the dispute settlement proceedings, comments should be 
submitted on or before February 21, 2003 to be assured of timely 
consideration by USTR.

ADDRESSES: Comments should be submitted (i) electronically, to 
[email protected], Attn: ``DS264 Dispute'' in the subject line, or (ii) 
by fax, to Sandy McKinzy at 202-395-3640, with a confirmation copy sent 
electronically to the email address above.

FOR FURTHER INFORMATION CONTACT: Theodore R. Posner, Assistant General 
Counsel, Office of the United States Trade Representative, 600 17th 
Street, NW., Washington, DC 20508 (202) 395-3582.

SUPPLEMENTARY INFORMATION: Pursuant to section 127(b) of the Uruguay 
Round Agreements Act (``URAA'') (19 U.S.C. 3537(b)(1)), the USTR is 
providing notice that on December 6, 2002, the Government of Canada 
submitted a request for establishment of a dispute settlement panel to 
examine the U.S. Department of Commerce (``DOC'') final determination 
of sales at less than fair value with respect to certain softwood 
lumber from Canada.

Major Issues Raised and Legal Basis of the Complaint

    The notice of the DOC final determination of sales at less than 
fair value with respect to certain softwood lumber from Canada was 
published in the Federal Register on April 2, 2002, and the notice of 
the DOC amended final determination was published on May 22, 2002. The 
notices explain the basis for the DOC's final determination that 
certain softwood lumber from Canada is being sold, or is likely to be 
sold, in the United States at less than fair value.
    In its request for establishment of a dispute settlement panel, 
Canada describes its claims in the following manner:

    The measures at issue include the initiation of the 
investigation, the conduct of the investigation, the Final 
Determination 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 
methodologies

[[Page 3087]]

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 U.S. domestic industry and the 
subsequent 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 U.S. 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 Canada of the like products. By 
Commerce's failure to determine whether the application contained 
all information reasonably available to the applicant, and by 
Commerce initiating the investigation where the application failed 
to contain evidence reasonably available to the applicant, and by 
Commerce's failure to terminate the investigation when Commerce 
became aware that the application failed to contain evidence 
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 U.S. domestic industry did 
not include sufficient evidence of dumping to justify initiation of 
the investigation. Commerce failed to examine the accuracy and 
adequacy of the evidence provided 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 investigation, 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 U.S. industry support the 
application as a condition of receiving payments under the CDSOA, 
made an objective and meaningful examination of industry support for 
the application impossible. 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 determination 
of the degree of support for the application by the domestic 
industry.
    (d) The initiation by Commerce was 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 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 U.S. 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 respect of each distinct like product, thereby resulting in 
violations by the United States of Articles 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 States 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 
comparisons 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 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.
    (b) The United States violated Article 2 of the Anti-dumping 
Agreement, including Article 2.4, and Article VI:1 of the 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 characteristics 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 administrative 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.
    (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 
paragraph 7 of Annex I, and Article VI:1 of the GATT 1994 by 
Commerce's failure to apply a reasonable method to account for 
revenues, including by-product and futures contract revenues, as 
offsets in calculating costs and export price for specific 
exporters. 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.
    (e) The methodologies, calculations, comparisons 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, comparisons 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.

Public Comment: Requirements for Submissions

    Interested persons are invited to submit written comments 
concerning the issues raised in the dispute. Persons submitting 
comments may either send one copy by fax to Sandy McKinzy at 202-395-
3640, or transmit a copy electronically to [email protected], with 
``DS264'' in the subject line. For documents sent by fax, USTR requests 
that the submitter provide a confirmation copy electronically. USTR 
encourages the submission of documents in Adobe PDF format, as 
attachments to an electronic mail. Interested persons who make 
submissions by electronic mail should not provide separate cover 
letters; information that might appear in a cover letter should be 
included in the submission itself. Similarly, to the extent possible, 
any attachments to the submission should be included in the same file 
as the submission itself, and not as separate files.
    A person requesting that information contained in a comment 
submitted by that person be treated as confidential business 
information must certify that such information is business confidential 
and would not customarily be released to the public by the submitter. 
Confidential business

[[Page 3088]]

information must be clearly marked ``BUSINESS CONFIDENTIAL'' in a 
contrasting color ink at the top of each page of each copy.
    Information or advice contained in a comment submitted, other than 
business confidential information, may be determined by USTR to be 
confidential in accordance with section 135(g)(2) of the Trade Act of 
1974 (19 U.S.C. 2155(g)(2)). If the submitting person believes that 
information or advice may qualify as such, the submitting person--
    (1) Must so designate the information or advice;
    (2) Must clearly mark the material as ``SUBMITTED IN CONFIDENCE'' 
in a contrasting color ink at the top of each page of each copy; and
    (3) Is encouraged to provide a non-confidential summary of the 
information or advice.
    Pursuant to section 127(e) of the URAA (19 U.S.C. 3537(e)), USTR 
will maintain a file on this dispute settlement proceeding, accessible 
to the public, in the USTR Reading Room, which is located at 1724 F 
Street, NW., Washington, DC 20508. The public file will include non-
confidential comments received by USTR from the public with respect to 
the dispute; the U.S. submissions to the panel in the dispute, the 
submissions, or non-confidential summaries of submissions, to the panel 
received from other participants in the dispute, as well as the report 
of the panel; and, if applicable, the report of the Appellate Body. An 
appointment to review the public file may be made by calling the USTR 
Reading Room at (202) 395-6186. The USTR Reading Room is open to the 
public from 9:30 a.m. to 12 noon and 1 p.m. to 4 p.m., Monday through 
Friday.

Daniel E. Brinza,
Assistant United States Trade Representative for Monitoring and 
Enforcement.
[FR Doc. 03-1308 Filed 1-21-03; 8:45 am]
BILLING CODE 3190-01-P