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NEWS RELEASE 04-100; September 10, 2004 September 10, 2004
News Release 04-100
Inv. Nos. 701-TA-414 and 731-TA-928

ITC FILES RESPONSE TO SOFTWOOD LUMBER BINATIONAL PANEL DECISION WITH NAFTA SECRETARIAT

The U.S. International Trade Commission today filed its response to the August 31, 2004, decision and order of the United States-Canada Binational Panel in Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 731-TA-928.

The Commission, by a 5-to-1 vote, concluded as follows:

       The Panel's Decision and Order of August 31, 2004, can only be seen as a
  reversal of the Commission's affirmative determination of threat of material
  injury, despite the fact that neither the NAFTA nor U.S. law gives the Panel
  authority to reverse the Commission's determination in these circumstances. As
  such, the Panel's decision signals the end of this Panel proceeding.
       Because the Commission respects and is bound by the NAFTA dispute
  settlement process, we issue a determination, consistent with the Panel's decision,
  that the U.S. softwood lumber industry is not threatened with material injury by
  reason of subject imports from Canada. In so doing, we disagree with the Panel's
  view that there is no substantial evidence to support a finding of threat of material
  injury(1) and we continue to view the Panel's decisions throughout this proceeding
  as overstepping its authority, violating the NAFTA, seriously departing from
  fundamental rules of procedure, and committing legal error.

  (1) Commissioner Pearson has not made a determination on the record in these
  investigations and thus takes no position as to the content of the record or its ability to
  support any particular determination.

The Commission noted that "because the Panel has precluded the Commission from engaging in any analysis of substantive issues, the Commission has not reached and cannot reach any determination regarding whether there is substantial evidence to support this negative determination."

Vice Chairman Deanna Tanner Okun and Commissioners Marcia E. Miller, Jennifer A. Hillman, Charlotte R. Lane, and Daniel R. Pearson voted in the majority.

Chairman Koplan dissented from the determination of the Commission. While he generally joined in the Views of the Commission, he voted to affirm his earlier determination that the U.S. softwood industry is threatened with material injury by reason of imports of softwood lumber from Canada. He noted that the Commission's Views make clear that the enabling NAFTA Act, United States statutes and relevant case law, establish that the Panel lacks the authority to conduct an impermissible de novo review of the record and substitute its judgment for that of the Commission. The Panel's remand with specific instructions, which attempt to compel a reversal, exceeds the Panel's authority under both the substantial evidence standard and NAFTA. As such he could not accede to the Panel's instructions, which he is convinced are contrary to the law.

View the Commission's full opinion at:

ftp://www.usitc.gov/pub/reports/opinions/fremand3opin.pdf

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BACKGROUND By decision dated August 31, 2004, a United States-Canada Binational Panel remanded the Commission's affirmative determinations on remand in its countervailing and antidumping duty investigations on Softwood Lumber from Canada. The Commission had, in its original and two remand determinations, found that the record evidence indicated that the domestic industry was threatened with material injury by reason of subject imports of softwood lumber from Canada. The panel's latest decision includes explicit instructions directing "the Commission to make a determination consistent with the decision of this Panel that the evidence on the record does not support a finding of threat of material injury." The Commission in these views noted that it had "provided the Panel with substantial evidence and a thorough analysis of that evidence, which demonstrates that the volume of subject imports from Canada is significant, over 18,000 mmbf in 2001, comprising over one-third of the U.S. market and likely to increase substantially from those significant levels; that this significant volume of imports is likely to enter at prices that suppress or depress prices in the U.S. market, with prices in 2001 at the end of the period of investigation at levels as low as they were in 2000; and that, largely as a result of this large volume of imports and these low prices, the U.S. industry was in poor financial condition and therefore threatened with material injury by reason of imports of softwood lumber from Canada."