DISPUTE SETTLEMENT

DS: United States — Anti-Dumping Measures Applying Differential Pricing Methodology to Softwood Lumber from Canada

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Current status

 

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Key facts

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 9 April 2019

  

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Latest document

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Canada

On 28 November 2017, Canada requested consultations with the United States with respect to the United States' anti-dumping measures applying the Differential Pricing Methodology to softwood lumber products from Canada.

Canada claimed that the measures appear to be inconsistent with:

  • Articles 1, 2.1, 2.4 and 2.4.2 of the Anti-Dumping Agreement; and
     
  • Article VI:1 and VI:2 of the GATT 1994.

 

Panel and Appellate Body proceedings

On 15 March 2018, Canada requested the establishment of a panel. At its meeting on 27 March 2018, the DSB deferred the establishment of a panel.

At its meeting on 9 April 2018, the DSB established a panel. Brazil, China, the European Union, Japan, Kazakhstan, Korea, the Russian Federation and Viet Nam reserved their third-party rights.

On 9 May 2018, Canada requested the Director-General to compose the panel. On 22 May 2018, the Director-General composed the panel.

On 9 November 2018, the Chair of the panel informed the DSB that the panel expected to issue its final report to the parties within the first half of 2019, in accordance with the partial timetable adopted after consultation with the parties.

On 9 April 2019, the panel report was circulated to Members.

The dispute concerned anti-dumping measures imposed by the United States Department of Commerce (USDOC) following an investigation on certain softwood lumber products from Canada (underlying investigation). Canada challenged the USDOC's dumping determinations in the underlying investigation under the weighted average-to-transaction (W-T) methodology provided in the second sentence of Article 2.4.2 of the Anti-Dumping Agreement. Canada challenged (a) how the USDOC met the conditions for the use of the W-T methodology in the underlying investigation using the “Differential Pricing Methodology” (DPM); and (b) the USDOC's use of zeroing under the W-T methodology when applying the DPM in the underlying investigation.

In challenging how the USDOC met the conditions for the use of the W-T methodology, Canada claimed that the USDOC failed to properly find “a pattern of export prices which differ significantly among different purchasers, regions or time periods”, as is required under the second sentence of Article 2.4.2. Canada presented two grounds for its claim.

First, Canada contended that the USDOC found “ a single pattern of export prices which differed significantly among different purchasers, regions and time periods”, which, as stated by the Appellate Body in US — Washing Machines, is inconsistent with the textual requirement under the second sentence of Article 2.4.2 to find a pattern of export prices which differ significantly “among different purchasers, regions or time periods”. The United States disputed Canada's understanding of the text. The Panel upheld this aspect of Canada's claim, concluding that the USDOC acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement by finding “a single pattern of export prices which differed significantly among different purchasers, regions and time periods” in the underlying investigation.

Second, Canada argued, relying on the Appellate Body report in US — Washing Machines, that a “pattern” identified by the investigating authority may only include export prices to purchasers, regions or time periods which “differ significantly” because they are significantly lower relative to export price to other purchasers, regions or time periods. In Canada's view, the USDOC acted inconsistently with Article 2.4.2 because the pattern it identified included export prices to purchasers, regions or time periods which differed significantly because they were significantly higher relative to export prices to other purchasers, regions or time periods. The United States disagreed with Canada's arguments in this regard. The Panel rejected this aspect of Canada's claim, finding that the relevant pattern could include export price to purchasers, regions or time periods “which differ significantly” because they are significantly higher (and not just significantly lower) relative to export prices to other purchasers, regions or time periods.

With respect to the USDOC's use of zeroing under the W-T methodology, Canada considered such type of zeroing to be inconsistent with the second sentence of Article 2.4.2, as interpreted in past cases. The United States considered such type of zeroing to be permissible under the second sentence. The Panel agreed with the United States that such type of zeroing is permissible under the second sentence of Article 2.4.2, and thus rejected Canada's claim. In making its finding, the Panel noted that the second sentence of Article 2.4.2 would become inutile if zeroing was prohibited under the W-T methodology, as this methodology, which is designed to unmask targeted dumping, would not be able to do so. Taking into account this finding, the Panel also rejected Canada's claim under Article 2.4 of the Anti-Dumping Agreement challenging the use of zeroing under the W-T methodology.

The Panel exercised judicial economy on Canada's claims under Articles 1 and 2.1 of the Anti‑Dumping Agreement as well as Articles VI:1 and VI:2 of the GATT 1994, which it considered were not necessary to resolve the dispute.

 

 

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