Office of the United States Trade Representative


United States Government Critical of New Canadian Government Lumber

Washington, DC - US Trade Representative Rob Portman and Secretary of
Commerce Carlos Gutierrez responded to the announcement today by the
Canadian Government of a $C 1.5 billion (approximately $US 1.28 billion)
package of assistance for its forest products industry.   The United
States Government will consult with industry sources to gather
information about the potential impact of the subsidies, which would be in
addition to the subsidies to the Canadian softwood lumber industry the
Commerce Department has previously identified.

"Today's announcement is disappointing.  Only days after we fully
complied with a NAFTA decision, Canada responds by announcing huge new
subsidies.  Canada's actions illustrate what the United States has
been saying all along:  the Canadian industry is the beneficiary of
subsidies that create an un-level playing field to the detriment of the U.S.
industry," said Ambassador Portman.  "While we continue to believe that
a long-term, durable settlement is the only way to resolve this
dispute, Canada's actions complicate our attempts to reach a negotiated

The new subsidy announcement follows a decision earlier this week by
the Department of Commerce in which it found that the subsidy margin
during the period of investigation used for the current countervailing duty
order was de minimis.  Those findings were made in response to a
direction from a dispute settlement panel established under Chapter 19 of the
North American Free Trade Agreement. 

"The United States is very disappointed over Canada's
announcement," said Secretary Gutierrez.  "The contrast is startling - at the
same time a NAFTA panel has directed the Department of Commerce to find
that Canadian subsidies are de minimis, Canada announces over a billion
dollars in aid.  This just goes to show that Canada will continue to
funnel vast amounts of assistance to its industry. We will continue to
insist that there subsidies be eliminated by all means at our disposal."


The dispute over trade in softwood lumber stretches back more than two
decades.  Since 2002, the United States has imposed countervailing
(CVD) and antidumping (AD) duties on imports of softwood lumber from
Canada.  The Department of Commerce imposed the AD/CVD orders after it found that the Federal and Provincial governments of Canada provided
subsidies to Canadian softwood lumber producers and that Canadian producers
were dumping softwood lumber in the U.S. market, and after the U.S.
International Trade Commission found that dumped and subsidized imports from Canada threatened to injure the U.S. industry.

The AD/CVD orders are the subject of approximately two dozen separate
legal actions initiated by the Government of Canada, and Canadian
provinces and industry.  The WTO has confirmed the U.S. findings that imports
from Canada were subsidized and dumped, and that the U.S. industry was
threatened with injury.  Other proceedings under the WTO, the North
American Free Trade Agreement, and the U.S. Court of International Trade
are underway.


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