*EPF504 08/29/2003
Text: U.S. Trade Representative's Statement on U.S. WTO Lumber Victory
(WTO panel upholds key U.S. actions in lumber dispute with Canada) (480)

A World Trade Organization (WTO) panel "has again upheld key aspects of U.S. actions in the ongoing softwood lumber dispute with Canada," according to the Office of the U.S. Trade Representative (USTR).

In a press release issued August 29, USTR spokesman Richard Mills -- speaking on behalf of U.S. Trade Representative Robert Zoellick -- observed that the WTO panel "agreed on the two most important points in the case."

Mills noted that the panel "found that the provincial governments' sale to lumber producers of timber from public lands constitutes a 'financial contribution' by the Canadian government," thereby giving rise to a 'specific' subsidy -- "the kind of subsidy that can be subject to countervailing duties," as the United States had claimed. Moreover, he said, the panel "once again rejected the Canadian argument that its natural resource subsidies do not fall within the disciplines of the WTO and therefore cannot be subject to countervailing duties under any circumstances."

The USTR spokesman described this finding as "a victory for both the U.S. lumber industry and the environment."

Following is the text of the USTR press release, with further details:

(begin text)

OFFICE OF THE U.S. TRADE REPRESENTATIVE
Washington, D.C.

FOR IMMEDIATE RELEASE
Friday, August 29, 2003

Statement of Richard Mills
Spokesman for the United States Trade Representative

USTR Statement on U.S. WTO Lumber Victory

A World Trade Organization (WTO) panel has again upheld key aspects of U.S. actions in the ongoing softwood lumber dispute with Canada.

The panel agreed with the United States on the two most important points in the case. It found that the provincial governments' sale to lumber producers of timber from public lands constitutes a "financial contribution" by the Canadian government. It found that this contribution and gives rise to a "specific" subsidy -- the kind of subsidy that can be subject to countervailing duties.

This is a victory for both the U.S. lumber industry and the environment. The WTO has once again rejected the Canadian argument that its natural resource subsidies do not fall within the disciplines of the WTO and therefore cannot be subject to countervailing duties under any circumstances. There is no longer any question that the United States can impose countervailing duties against softwood lumber imports from Canada.

The panel found against the United States in other areas, including the methodology for calculating the precise amount of the countervailing duties that the United States can impose and whether subsidies provided to timber harvesters "passed through" arm's-length sales to downstream users of timber. The United States disagrees with the panel's findings on those issues.

Either party can appeal today's report. The United States will review the report in full before making a decision on appeal.

(end text)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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