Binational NAFTA Panel Sustains, Remands Elements of US AD Investigation on Canadian Lumber

A binational panel formed under the North American Free Trade Agreement issued its decision regarding the Commerce Department's antidumping duty investigation on softwood lumber products from Canada, sustaining and remanding various positions. The panel found that Commerce's scope findings in the proceeding were legal but that its use of its differential pricing analysis to root out "masked" dumping wasn't.

In the investigation, the agency used the differential pricing analysis on three Canadian respondents: Resolute FP Canada, Tolko Industries and West Fraser Mills. The issue is currently being extensively litigated in U.S. courts, with particular attention being paid to the use of the Cohen's d test. The U.S. Court of Appeals for the Federal Circuit previously called the use of the test into question for its seeming lack of adherence to basic statistical principles. The case has now returned to the appellate court, where the U.S. is attempting again to defend its use of the test (see 2308020027). The binational panel remanded the issue for consistency with the Federal Circuit's rulings.

“Canada is pleased that the NAFTA dispute panel agrees that elements of the U.S. dumping determination are inconsistent with U.S. law," said Mary Ng, Canda's minister of export promotion, international trade and economic development. "These duties are unwarranted -- the only fair outcome is for the United States to revoke all duties on Canadian softwood lumber without further delay."

The panel also remanded Commerce's decision to deduct Canadian export taxes under the 2006 Softwood Lumber Agreement from the price paid on lumber subject to the taxes, along with the agency's refusal to grant Resolute a start-up adjustment to the Ignace and Atikokan mills.

Multiple other positions were sustained, including Commerce's calculation of Tolko's General and Administrative expenses, its denial of an offset for the profit generated in Resolute's Thunder Bay pellet mill to the reported Thunder Bay lumber manufacturing costs, and Commerce's calculation of Resolute's G&A expense ratio.