UNITED STATES - PRELIMINARY DETERMINATIONS
WITH RESPECT TO CERTAIN SOFTWOOD LUMBER
FROM CANADA

Report of the Panel

(Continued) 

C. CLAIM OF INCONSISTENT CVD LAW CONCERNING EXPEDITED AND ADMINISTRATIVE REVIEWS

(a) Arguments of the parties

(i) Canada

7.116 Canada claims that US countervailing duty law¹³⁹ violates the United States' obligations under the WTO because it fails to provide for company-specific expedited reviews and "administrative reviews"¹⁴⁰ in countervailing duty cases in which the investigation was conducted on an aggregate basis¹⁴¹, and because it mandates that a single country-wide duty rate calculated in an administrative review supersedes all individual rates previously determined in the countervailing duty proceeding.¹⁴² Canada considers that these measures are inconsistent with US obligations under Article VI:3 of GATT 1994 and Articles 10, 19.3, 19.4, 21.2 and 32.1 of the SCM Agreement.¹⁴³

7.117 In particular, Canada submits that the US legislation is in violation of Article 19.3 SCM, which according to Canada provides that exporters "not actually investigated" are entitled upon request, with "no exceptions" to an "expedited review" to establish an individual countervailing duty rate for that exporter.¹⁴⁴ Canada further submits that the US legislation is in violation of Article 21.2 SCM Agreement, which in Canada's view entitles exporters and producers to a "company-specific administrative review" upon request, again with "no exceptions".¹⁴⁵

7.118 Canada submits that by maintaining legislation which is inconsistent with the SCM Agreement, the US also failed to ensure the conformity of its laws, regulations and administrative procedures with its obligations under the SCM Agreement in violation of Article XVI:4 WTO Agreement and Article 32.5 SCM Agreement.

7.119 Canada further submits that, since the USDOC conducted the softwood lumber investigation on a country-wide basis, the cited US legislation denies expedited reviews and company specific administrative reviews to the exporters concerned in the investigation, which in turn will necessarily amount to a duty being applied to certain exporters in excess of their individual duty rate. This, Canada argues, is in violation of Articles 19.3, 21.2 and 19.4 SCM Agreement.

7.120 According to Canada, the US statute, Section 777A(e)(2)(B), by failing to explicitly provide for company-specific expedited and administrative reviews where an investigation has been conducted on an aggregate basis, makes such reviews impossible. Canada further submits that Section 351.213(b) of the USDOC Regulations specifically denies exporters and producers an "administrative review" if the investigation was conducted on an aggregate basis. Finally, Canada argues, the requirement of Section 351.213 (k) (2) of the Regulations, that a single country-wide duty rate calculated in an administrative review supersede all individual rates previously established through expedited reviews, undoes the benefit of the expedited review under Article 19.3 SCM Agreement, and prevents exporters from obtaining an individual rate in an administrative review.

(ii) United States

7.121 The US argues that the US laws and regulations referred to by Canada do not constitute mandatory legislation, and therefore cannot be challenged as such before a WTO panel.¹⁴⁶

7.122 In particular, the US argues, US law does not prohibit the conduct of such reviews. The United States maintains that the USDOC Regulations cited in Canada's claim do not apply to cases in which investigations are conducted on an aggregate basis - a very rare situation - and the fact that no regulations concerning expedited or administrative reviews have yet been promulgated for this situation does not mean that such reviews are prohibited. Rather, the US submits, Section 751 of the US Tariff Act provides for a broad authority to conduct reviews, and does not require further regulations to be implemented by the USDOC. The US further notes its view that Article 21.2 SCM Agreement in any case does not imply an unfettered right to a review in all cases upon request as Canada seems to be suggesting. The US asserts that Canada also is mistaken when it claims that a decision by USDOC to conduct an investigation on an aggregate basis necessarily implies the denial of an expedited review or a company-specific "administrative review".

(b) Analysis

7.123 Canada argues that the US laws and regulations are inconsistent with Articles 19.3 and 21.2 SCM Agreement relating to expedited and administrative reviews respectively.

7.124 With regard to expedited reviews, Article 19.3 SCM Agreement provides as follows:

"When a countervailing duty is imposed in respect of any product, such countervailing duty shall be levied, in the appropriate amounts in each case, on a non discriminatory basis on imports of such product from all sources found to be subsidized and causing injury, except as to imports from those sources which have renounced any subsidies in question or from which undertakings under the terms of this Agreement have been accepted. Any exporter whose exports are subject to a definitive countervailing duty but who was not actually investigated for reasons other than a refusal to cooperate, shall be entitled to an expedited review in order that the investigating authorities promptly establish an individual countervailing duty rate for that exporter". (emphasis added)

7.125 Article 21.2 SCM Agreement concerning certain kinds of reviews provides that:

"The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive countervailing duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset subsidization, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the countervailing duty is no longer warranted, it shall be terminated immediately".

7.126 Due to the US laws and regulations' alleged inconsistencies with Articles 19.3 and 21.2 SCM Agreement, Canada also alleges that the US violates Article 32.5 SCM Agreement, which provides as follows:

"Each Member shall take all necessary steps, of a general or particular character, to ensure, not later than the date of entry into force of the WTO Agreement for it, the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement as they may apply to the Member in question."¹⁴⁷

7.127 Canada further, and finally, alleges that because exporters in the lumber case are denied by US law the possibility of expedited reviews and company-specific administrative reviews, the United States also violates Articles 10, 19.4 and 32.1 SCM Agreement and Article VI:3 of GATT 1994. Article 19.4 SCM Agreement provides that no countervailing duty shall be levied in excess of the amount of the subsidization found to exist, calculated per unit of the subsidized exported product. Canada argues that the legislatively required denial of the reviews at issue will necessarily result in a violation of Article 19.4 SCM Agreement as certain exporters will be subject to countervailing duties in excess of their rates of subsidization. As a consequence, according to Canada, Articles 10 and 32.1 SCM Agreement are violated, as these provisions require Members to ensure conformity with the SCM Agreement and Article VI:3 of GATT 1994 in conducting investigations and applying countervailing duties.

(i) Mandatory versus discretionary legislation

7.128 We consider that it is a well established GATT/WTO practice that legislation can only be challenged as such before a WTO panel, when it is mandatory in nature and requires the violation of the Agreement. As the Appellate Body in the United States � 1916 Act stated:

"88. As indicated above, the concept of mandatory as distinguished from discretionary legislation was developed by a number of GATT panels as a threshold consideration in determining when legislation as such - rather than a specific application of that legislation - was inconsistent with a Contracting Party's GATT 1947 obligations. The practice of GATT panels was summed up in United States - Tobacco as follows:

� panels had consistently ruled that legislation which mandated action inconsistent with the General Agreement could be challenged as such, whereas legislation which merely gave the discretion to the executive authority of a contracting party to act inconsistently with the General Agreement could not be challenged as such; only the actual application of such legislation inconsistent with the General Agreement could be subject to challenge. (emphasis added)

89. Thus, the relevant discretion, for purposes of distinguishing between mandatory and discretionary legislation, is a discretion vested in the executive branch of government". (footnotes omitted) (emphasis added)¹⁴⁸

7.129 We thus consider that legislation which merely gives the executive authority the discretion, either through silence or otherwise, to act inconsistently with the Agreement cannot as such be challenged before a Panel, i.e. independent of its actual application in a particular case.

7.130 The question before us is thus whether the US laws and regulations on administrative and expedited reviews are inconsistent with the SCM Agreement by mandating a violation of the relevant provisions of the SCM Agreement. Canada challenges the following US legislative provisions as inconsistent with the obligations of the United States under the SCM Agreement:

• Section 777A(e)(2)(A) and (B) of the Tariff Act of 1930, as interpreted by the Statement of Administrative Action (SAA)(pages 941-942); and
   
• the Department of Commerce Regulations at 19 C.F.R. Section 351.214(k) and Section 351.213(b) and (k)¹⁴⁹

(ii) The US Statute and the Statement of Administrative Action

7.131 Sections 777A(e)(2)(A) and (B) of the US Tariff Act provide as follows:

" (e) Determination of Countervailable Subsidy Rate.

. . .

(2) Exception. If the administering authority determines that it is not practicable to determine individual countervailable subsidy rates under paragraph (1) because of the large number of exporters or producers involved in the investigation or review, the administering authority may

(A) determine individual countervailable subsidy rates for a reasonable number of exporters or producers by limiting its examination to

(i) a sample of exporters or producers that the administering authority determines is statistically valid based on the information available to the administering authority at the time of selection, or

(ii) exporters and producers accounting for the largest volume of the subject merchandise from the exporting country that the administering authority determines can be reasonably examined; or

(B) determine a single country-wide subsidy rate to be applied to all exporters and producers."

7.132 The relevant part of the SAA reads as follows:

"Section 265 (1) of the implementing bill repeals section 706 (a)(2). It eliminates the presumption in favor of a single country-wide CVD rate and amends section 777A of the Act to establish a general rule in favor of individual CVD rates for each exporter or producer individually investigated. [�] In addition, instead of examining a limited number of individual exporters and producers, section 777 A (e)(2)(B) would permit Commerce to calculate, on the basis of aggregate data, a single country-wide subsidy rate to be applied to all exporters and producers of the subject merchandise."¹⁵⁰

7.133 Section 777 of the US Tariff Act of 1930 does not deal with the conduct of administrative or expedited reviews as such, but merely provides for the possibility in investigations and reviews to calculate the rate of subsidization on an aggregate basis and to determine a country-wide subsidy rate. In our view, the SAA¹⁵¹ only confirms that although no longer the rule, it remains possible to conduct an investigation or a review on an aggregate basis and determine a country-wide duty rate. Nothing in the statute or the SAA indicates that expedited reviews or company-specific administrative reviews are necessarily excluded where an investigation has been conducted on an aggregate basis. In other words, neither the statute nor the SAA on its face appears to prohibit the USDOC from conducting such reviews where the investigation has been conducted on an aggregate basis.

(iii) USDOC Regulations

7.134 We now consider whether the US Department of Commerce Regulations cited by Canada prohibit the USDOC from conducting either expedited reviews or company-specific "administrative reviews", and if so, whether any such prohibition would violate Articles 19.3 or 21.2 SCM Agreement, as Canada alleges.

(a) Expedited reviews

7.135 With regard to expedited reviews, Canada alleges that USDOC Regulations Section 351.214(k)(l) prohibits the conduct of expedited reviews where an investigation has been conducted on an aggregate basis.

7.136 We recall the relevant part of Article 19.3 SCM Agreement, namely that any exporter whose exports were not actually investigated for reasons other than a refusal to cooperate is "entitled" to an expedited review to establish an individual countervailing duty rate. To us, this text makes clear that an expedited review to establish an individual countervailing duty rate must be conducted, upon request, for any exporter of the type referred to in Article 19.3 SCM Agreement. Thus, the question before us is whether the relevant regulations prohibit the USDOC from conducting such reviews in aggregate cases.

7.137 Section 351.214(k)(1) of the USDOC Regulations provides in relevant part:

(k) Expedited reviews in countervailing duty proceedings for noninvestigated exporters. (1) Request for review. If, in a countervailing duty investigation, the Secretary limited the number of exporters or producers to be individually examined under section 777A(e)(2)(A) of the Act, an exporter that the Secretary did not select for individual examination or that the Secretary did not accept as a voluntary respondent (see � 351.204(d)) may request a review under this paragraph (k).

7.138 Canada argues that because this regulation refers only to expedited reviews in the case of investigations conducted on the basis of the exception set forth in Section 777A(e)(2)(A) of the Act (sampling), it is impossible for the USDOC to conduct such reviews in investigations conducted on the basis of the other exception in the statute (aggregate cases), which is provided for in Section 777A(e)(2)(B) of the Act. Canada bases this argument on the fact that expedited reviews are expressly provided for in the Regulations, except in respect of aggregate cases. In Canada's view, it is a basic principle of statutory construction that if a right is provided for in certain circumstances, its deliberate exclusion in other circumstances must be given meaning, in particular, that no such right exists in those other cases. Thus, Canada argues, Section 351.214(k)(1), by providing for expedited reviews for cases other than aggregate cases, precludes the possibility of such reviews in aggregate cases.

7.139 The United States responds that Section 351.214(k)(1) does not cover aggregate cases. According to the United States, the fact that the USDOC has not issued regulations to cover such cases, which are rare, does not justify Canada's conclusion that US law prohibits expedited reviews in aggregate cases. The United States further argues that the USDOC has broad discretion under the statute, in particular Section 751 of the US Tariff Act (which is not before us in this dispute), to conduct the kinds of reviews required by the SCM Agreement.¹⁵² According to the US, Section 751 of the Tariff Act provides the USDOC with ample authority to fulfil all of the United States' obligations under the SCM Agreement, with regard to expedited and administrative reviews alike.

7.140 We note that the regulation at issue in respect of Canada's claim concerning expedited reviews, Section 351.214(k)(l) USDOC Regulations, addresses only one of the two situations identified in the US statute as an exception to the general rule of company-specific rates of subsidization. Namely, this regulation addresses the exceptional situation of an investigation conducted on the basis of some sort of a sample. Canada would have us infer, a contrario, that the silence of this regulation and the absence of any other in respect of the other exceptional situation - an investigation conducted on an aggregate basis - means that the USDOC is prohibited by law from conducting expedited reviews in such a situation. We find Canada's a contrario argument to be unjustified. We consider that the fact that no regulation exists regarding the apparently rare case of aggregate investigations does not imply that the USDOC is required by law to deny any requests for expedited review where an aggregate countervailing duty rate has been applied. In other words, the USDOC Regulations are simply silent on the issue.

7.141 We thus agree with the US that the fact that the USDOC has not elected to codify specific rules for handling what could potentially be an extremely large number of expedited reviews in an aggregate case does not in any way diminish the Department's statutory authority to conduct such reviews.¹⁵³ We therefore find that the fact that 19 C.F.R. � 351.214(k)(1) does not specifically address the possibility of expedited reviews in aggregate cases does not prohibit such reviews. In fact, as Canada acknowledged in the course of the second meeting with the Panel, "with respect to expedited reviews, we note that the United States has in fact posted a notice indicating that it will accept requests for such reviews in the Lumber IV case."¹⁵⁴ We consider that this is further evidence of the fact that the US laws and regulations challenged by Canada do not require the authority to deny any expedited reviews in case of an aggregate investigation. We consider that the fact that no regulation exists regarding the apparently rare case of aggregate investigations, does not imply that exporters are denied by law the right to an expedited review where an aggregate countervailing duty rate was applied. The US laws and regulations cited by Canada thus do not mandate a violation of the requirement under Article 19.3 SCM Agreement to conduct an expedited review in order that the authority promptly establish an individual countervailing duty rate for any exporter whose exports are subject to a definitive countervailing duty but who was not actually investigated for reasons other than a refusal to cooperate. For this reason also, we do not find that the USDOC is required by law to violate Article 19.4 SCM Agreement in the softwood lumber case by inevitably levying countervailing duties in excess of the amount of the subsidy found.

7.142 In sum, we find that the above-cited US laws and regulations concerning expedited reviews do not mandate a violation of Article 19.3 SCM Agreement, or thereby, of Article 19.4 SCM Agreement, and thus reject Canada's claims in this respect.

(b) Company specific "administrative reviews"

7.143 Canada submits that Article 21.2 SCM Agreement, read in the light of Article 21.1 SCM Agreement, contains the clear obligation to provide company-specific "administrative reviews" i.e., calculation of duty rate for a given period, upon request, without exceptions. Thus, Canada argues, the United States must provide for, and conduct, administrative reviews upon request to determine not only whether countervailing duties are necessary at all, but also to establish company-specific rates. Canada asserts that there are no exceptions to the US obligation to provide for administrative reviews.¹⁵⁵

7.144 According to Canada, under US law, contrary to the clear obligation in Article 21.2 SCM Agreement, an administrative review is not available to an exporter (nor to a producer, domestic interested party, foreign government, or importer) where the USDOC has conducted its investigation or prior administrative review under Section 777A(e)(2)(B) of the Act (i.e. where the USDOC has established a country-wide rate).

7.145 Canada further argues that because US law prohibits such company-specific administrative reviews, it also violates the requirement in Article 19.3 SCM Agreement to conduct expedited reviews upon request. Here, Canada argues, because exporters and producers are denied an administrative review (to finalize the rate of duty collection) if the investigation was conducted on an aggregate basis, this means that an exporter or producer would still be denied the opportunity to obtain a final individual countervailing duty rate, contrary to Article 19.3 SCM Agreement, even if that exporter or producer were given the right to an expedited review to establish an individual cash deposit rate. Canada further argues that, as a result, Article 19.4 SCM Agreement is also violated, as the legislatively required denial of the reviews at issue will necessarily result in a violation of 19.4 SCM Agreement since certain exporters will be subject to countervailing duties in excess of their rates of subsidization.

7.146 The United States argues, in the first instance, that Article 21.2 SCM Agreement does not contain the obligation asserted by Canada. The United States notes that what its law refers to as "administrative reviews" are the annual reviews that it conducts to finalize the duty collection rate under its retrospective duty assessment system. In the US view, these sorts of reviews are not covered by Article 21.2 SCM Agreement. Rather, according to the United States, Article 21.2 SCM Agreement provides for, and requires, three completely different types of review: reviews to determine (1) whether the continued imposition of the duty is necessary to offset subsidization; (2) whether the injury would be likely to continue or recur if the duty were removed or varied; or (3) both.¹⁵⁶ Furthermore, the United States argues, even if Canada were correct that Article 21.2 SCM Agreement does require administrative reviews in the US sense of the term, Section 751(a) of the Tariff Act gives the USDOC ample discretion to conduct administrative reviews.

7.147 The legislative provisions cited by Canada as violating US obligations in respect of administrative reviews are Section 351.213(b) subparagraphs (1) and (2), and Section 351.213(k) subparagraph (2) of the USDOC Regulations.

7.148 Section 351.213(b) subparagraphs (1) and (2) of the USDOC Regulations provide as follows:

(b) Request for administrative review. (1) Each year during the anniversary month of the publication of an antidumping or countervailing duty order, a domestic interested party or an interested party described in section 771(9)(B) of the Act (foreign government) may request in writing that the Secretary conduct an administrative review under section 751(a)(1) of the Act of specified individual exporters or producers covered by an order (except for a countervailing duty order in which the investigation or prior administrative review was conducted on an aggregate basis), if the requesting person states why the person desires the Secretary to review those particular exporters or producers.

(2) During the same month, an exporter or producer covered by an order (except for a countervailing duty order in which the investigation or prior administrative review was conducted on an aggregate basis) may request in writing that the Secretary conduct an administrative review of only that person.

(3) During the same month, an importer of the merchandise may request in writing that the Secretary conduct an administrative review of only an exporter or producer (except for a countervailing duty order in which the investigation or prior administrative review was conducted on an aggregate basis) of the subject merchandise imported by that importer. (emphasis added)

7.149 Section 351.213(k) subparagraph (2) on administrative review provides:

(2) Application of country-wide subsidy rate. With the exception of assessment and cash deposit rates of zero determined under paragraph (k)(1) of this section, if, in the final results of an administrative review under this section of a countervailing duty order, the Secretary calculates a single country-wide subsidy rate under section 777A(e)(2)(B) of the Act, that rate will supersede, for cash deposit purposes, all rates previously determined in the countervailing duty proceeding in question. (emphasis added)

7.150 Canada further asserts that the only requests the Secretary of the USDOC will consider for an individual administrative review in cases where administrative reviews are conducted on an aggregate (country-wide) basis, are those for individual assessment and cash deposit rates of zero under subparagraph (1) of Section 351.213(k) and even then, "only to the extent practicable." This regulation provides in relevant part as follows:

"(k) Administrative reviews of countervailing orders conducted on an aggregate basis - (1) Request for a zero rate. Where the Secretary conducts an administrative review of a countervailing duty on an aggregate basis under section 777A(e)(2)(B) of the Act, the Secretary will consider and review requests for individual assessment and cash deposits of zero to the extent practicable�."

7.151 In view of the nature of Canada's claim the first question that we must address is the nature of the obligations under Article 21.2 SCM Agreement, and in particular, whether that provision requires "administrative reviews" as that term is used in this dispute, i.e. the yearly review procedure undertaken by the United States in its retrospective duty assessment system. Here, we agree with the United States that Article 21.2 SCM Agreement deals with different kinds of review mechanisms, requiring the authority to provide for the right of interested parties to request the authorities to examine whether the continued imposition of the duty is necessary to offset subsidization, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. Thus, the first type of review addresses the question of whether subsidization is present at all, while the second type of review, by its very terms, has to do primarily with injury questions, that is, the effect on the domestic industry of changing or removing entirely the countervailing duty. This second type of review thus does not have to do with finalizing the rate of countervailing duty during a particular period for which estimated duties have been collected, but rather with the underlying need and rationale, from the standpoint of the affected domestic industry, for maintaining a countervailing duty. In short, Article 21.2 SCM Agreement is silent on the question of "administrative reviews".

7.152 In the USDOC Regulations, Section 351.213 quoted above deals with administrative reviews under Section 751 (a) of the US Tariff Act entitled "periodic review of amount of the duty" and sets forth the yearly duty assessment and review mechanism as part of the US retrospective duty assessment system. Section 751 (b) of the Tariff Act entitled "reviews based on changed circumstances" provides that the US International Trade Commission shall upon receipt of a substantiated request from an interested party review whether revocation of the order is likely to lead to the continuation or recurrence of injury.¹⁵⁷ In our view, Section 751 (b) of the Tariff Act is the relevant provision of the US legislation implementing the US obligations under Article 21.2 SCM Agreement to review the need for continued imposition of the duty, inter alia upon request from an interested party to examine whether injury would be likely to continue or recur if the duty were removed or varied. Leaving aside the question of whether the US legislation provides for detailed regulations to deal with all the rights exporters are entitled to in this context, we find that the US statute allows the investigating authority to provide for and conduct reviews consistently with the SCM Agreement.

7.153 In addition, we consider that although Section 351.213 (b) states that the rules relating to administrative duty assessment reviews are not applicable to cases where the original investigation or the prior administrative review was conducted on an aggregate basis, it does not restrict the USDOC 's authority to conduct reviews, nor does it require the authority to deny interested parties the right to request reviews in the sense of Article 21 SCM Agreement. We further note that subparagraph (k) of the same Section 351.213 provides an opportunity for exporters to request reviews where their subsidy rates are zero.¹⁵⁸ We consider that this review possibility tracks Article 21.2 SCM Agreement which provides for reviews to determine inter alia whether the continued imposition of the duty is necessary to offset subsidization.¹⁵⁹

7.154 We conclude that with regard to "administrative reviews", the challenged USDOC Regulations specify the rules that apply to a certain kind of review, and do not on their face alter the general statutory requirement to conduct reviews in the sense of Article 21 SCM Agreement. In our view, and in light of the broad statutory authority for the US authorities to conduct administrative reviews under Section 751 of the Tariff Act, and the specific provision in the Regulations which allows for review requests in case of a zero duty rate, we do not consider that the US laws and regulations mandate the executive authority to deny interested parties the opportunity to request a review of the need for the continued imposition of the duty under Article 21.2 SCM Agreement. In the absence of provisions in the legislation which require the executive authority to act in violation of the SCM Agreement, we reject Canada's claim in this respect.

7.155 We next consider Canada's claim that the alleged prohibition under US law of company-specific administrative reviews in aggregate cases also violates Article 19.3 SCM Agreement, by foreclosing the possibility in such cases that the results of expedited reviews would ever give rise to company-specific final countervailing duty rates, and Article 19.4 SCM Agreement, as certain exporters will be subject to countervailing duties in excess of their rates of subsidization. As we have found that the legislation challenged by Canada does not mandate a violation of Article 21.2 SCM Agreement, and that the USDOC has broad discretion to conduct reviews under Article 21 SCM Agreement, we also reject this claim. In addition, and more specifically, we note that Section 351.213(k) subparagraph (2), cited by Canada in connection with this claim, does not directly address the situation alluded to by Canada, and thus does not mandate the violation alleged by Canada. In particular, this regulation provides that where an administrative review is conducted on an aggregate basis, the final results of that review will supersede the previously-established countervailing duty rates. This regulation therefore does not address, or contain any requirements regarding, the circumstances under which an administrative review will be conducted on an aggregate basis.

7.156 Finally, Canada challenges what it views as the inevitable denial of expedited reviews and company-specific "administrative reviews" in the current softwood lumber investigation as a necessary result of the USDOC's decision to conduct this countervailing duty investigation on an aggregate basis. In light of the fact that at the time of the Preliminary Determination which is under review by the panel, no final determination had yet been made, no reviews of such a determination could have actually been requested, let alone denied, nor has Canada argued that this has happened.

7.157 Therefore, given our finding that the laws and regulations cited by Canada do not preclude the USDOC acting consistently with the US' obligations under Articles 19.3 and 21 SCM Agreement with respect to expedited and administrative reviews, we consider that it is not appropriate to rule on a potential denial of a request for review if no such request has even been made. The WTO dispute settlement system allows a Member to challenge a law as such or its actual application in a particular case, but not its possible future application.

7.158 In sum, we find that the US laws and regulations challenged by Canada do not require the executive authority to violate Articles 19.3 and 21.2 SCM Agreement in respect of the reviews required thereby, and are therefore not inconsistent with the SCM Agreement.

(c) Conclusion

7.159 For the reasons set forth above, we find that the US laws and regulations on Expedited and Administrative Reviews as challenged by Canada do not constitute a violation of the provisions of Articles 19 and 21 SCM Agreement in respect of the reviews required thereby, and we therefore reject all of Canada's claims in this respect.

VIII. CONCLUSIONS AND RECOMMENDATIONS

8.1 In light of the findings above that the USDOC Preliminary Countervailing Duty Determination

(a) was not inconsistent with Article 1.1 (a) SCM Agreement when the USDOC found that the provision of stumpage constituted a financial contribution, in the form of the provision of a good or service;

(b) failed to determine the existence and amount of benefit to the producers of the subject merchandise on the basis of the prevailing market conditions in Canada as required by Article 1.1 (b) and Article 14 and 14 (d) SCM Agreement; and

(c) failed to establish that a benefit was conferred to certain producers of the subject merchandise as the USDOC did not examine whether a benefit was passed through by the unrelated upstream producers of log inputs to the downstream producers of the subject merchandise;

we conclude that the USDOC's imposition of provisional measures based on the preliminary countervailing duty determination was inconsistent with the US obligations under Articles 1.1 (b), 10, 14, 14 (d), and 17.1(b) SCM Agreement. In light of our conclusion, we apply judicial economy, and therefore do not rule on Canada's claim that the USDOC instructions transmitted to the United States Customs Service on 4 September 2001, imposed provisional measures in excess of the subsidy preliminarily found to exist in a manner inconsistent with Articles 10, 17.2, 17.5, 19.4 and 32.1 of the SCM Agreement and Article VI:3 of GATT 1994.

8.2 In light of the findings above concerning the USDOC Preliminary Critical Circumstances Determination, we conclude that the retroactive imposition of a provisional measure on the basis of the USDOC Preliminary Critical Circumstances Determination is inconsistent with Articles 20.6, 17.3, and 17.4 SCM Agreement. In light of this conclusion, we decide to apply judicial economy and therefore do not rule on Canada's claim that the USDOC failed to establish the existence of critical circumstances under Article 20.6 SCM Agreement in its Preliminary Critical Circumstances Determination.

8.3 Finally, in light of the findings above concerning the US countervailing duty laws and regulations, we conclude that the US laws and regulations challenged by Canada on expedited and administrative reviews are not inconsistent with the SCM Agreement as they do not require the executive authority to act in a manner inconsistent with the US obligations under Articles 19 and 21 of the SCM Agreement concerning expedited and administrative reviews. As a result we also reject Canada's claims that the United States has failed to ensure that its laws and regulations are in conformity with its WTO obligations as required by Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.

8.4 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement. Accordingly, we conclude that, to the extent the United States has acted inconsistently with the provisions of the SCM Agreement, it has nullified or impaired benefits accruing to Canada under that Agreement. We recommend that the Dispute Settlement Body request the United States to bring its measure into conformity with its obligations under the SCM Agreement.

_______________

139 The relevant US law is found in Section 777 A (e) (2) (A) and (B) Tariff Act of 1930 and USDOC Regulations at 19 C.F.R. Sections 351.214 (k) (1) with regard to expedited reviews and section 351.213 (b) and (k) concerning administrative reviews.

140 Canada does not define the term "administrative review", which is not a term found in the SCM Agreement. From its arguments before us, we understand Canada uses this term to refer to the reviews conducted to finalize the rate of duty collection under the retrospective duty assessment system used by the United States in applying countervailing duties. This is the meaning that we ascribe to this term in our findings.

141 We understand Canada to use the term "aggregate" to refer to an investigation where instead of individual rates of subsidization being calculated, an overall average rate or "country-wide" rate is calculated, for the purpose of applying countervailing duties.

142 Canada asserts that under US law the only exception is for requests for administrative review concerning zero or de minimis subsidies, and even there, only where practicable.

143 In its Request for Establishment of a Panel (WT/DS236/2), Canada also cites Article 21.1 SCM Agreement in connection with its claims concerning US legislation. Canada does not pursue an allegation of a violation of this provision in its submissions in this dispute, however. Rather, it argues in its oral statement at the first meeting that Article 21.2 SCM Agreement should be read in conjunction with Article 21.1 SCM Agreement as meaning that the review obligations in Article 21.2 SCM Agreement relate not only to whether countervailing duties should continue, but also to the level at which duties should continue to be imposed. Canada's First Oral Statement, para. 106. We therefore do not address any allegation of violation of Article 21.1 SCM Agreement in our findings.

144 First Written Submission of Canada, paras. 163 - 165.

145 First Written Submission of Canada, paras. 166 - 168.

146 The United States further considers that the Panel should decline to address these claims as Canada's challenge to these laws and regulations as applied because, in the absence of any final measures at the time of the request for establishment of this case, no reviews have been initiated yet. Canada is thus, in the US view, seeking an advisory opinion from the Panel. US First Written Submission, para. 102.

147 Canada also alleges on the same basis a violation of Article XVI:4 of the WTO Agreement.

148 Appellate Body Report, United States - Anti-Dumping Act of 1916, WT/DS136/AB/R and WT/DS162/AB/R, adopted 26 September 2000, paras. 88 - 89.

149 19 C.F.R. �� 351.213(b) and (k) and 351.214(k). (Exhibit CDA-39)

150 �Statement of Administrative Action� in Message from the President of the United States Transmitting the Uruguay Round Agreements, Texts of Agreements Implementing Bill, Statement of Administrative Action and Required Supporting Statements, H.R. Doc. No. 103-316, vol. 1, p. 941 (1994). (Exhibit CDA-38)

151 We note that as was recognized by the Panel in the United States - Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan case, the SAA is "an authoritative expression by the Administration concerning its views regarding the interpretation and application of the Uruguay Round agreements, both for purposes of US international obligations and domestic law". Panel Report, United States - Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan, WT/DS184/R, adopted as modified by Appellate Body Report WT/DS184/AB/R on 23 August 2001, para. 7.198.

152 The US argues that Section 751 of the US Tariff Act authorizes reviews to �determine the amount of any net countervailable subsidy� at least annually, upon request. It also authorizes reviews of �new shippers,� defined as exporters and producers that did not export the subject merchandise to the United States during the period of investigation and were not affiliated with exporters or producers who did. In addition, the United States argues, the statute authorizes the USDOC to conduct a review �whenever [Commerce or the ITC] receives information concerning, or a request from an interested party for a review . . . which shows changed circumstances sufficient to warrant a review of,� inter alia, a countervailing duty order. US First Written Submission, para. 110.

153 The US asserts that it is a long-established principle of US law that administrative agencies have the discretion to promulgate formal procedures or to proceed on a case-by-case basis, especially when the agency has not had sufficient experience with a particular issue to formulate binding regulations. See Securities & Exchange Commission v. Chenery Corporation,, 332 US 194, 202-203 (1947). US First Written Submission, para. 112.

154 Canada's Oral Statement at the Second Meeting, para. 71 referring to USDOC , Countervailing Duty Order on Softwood Lumber Products from Canada: Request for Expedited Review, available online at http://www.ia.ita.doc.gov/lumber/expedite/ index.html (posted 24 May 2002). (Exhibit CDA-103).

155 Canada's Oral Statement at the Second Meeting, para. 78

156 According to the United States, the USDOC has the discretion under US law to conduct the first type of review, while the second type of review, falls under the authority of the US International Trade Commission.

157 Section 751 (a) (1) and 751 (b) (1) of the US Tariff Act of 1930, as amended, provide as follows:

SEC. 751. ADMINISTRATIVE REVIEW OF DETERMINATIONS

(a) PERIODIC REVIEW OF AMOUNT of DUTY. -

(1) IN GENERAL. - At least once during each 12-month period beginning on the anniversary of the date of publication of a countervailing duty order under this title or under Section 303 of this Act, an anti-dumping duty order under this title or a finding under the Anti-Dumping Act, 1921, or a notice of the suspension of an investigation, the administering authority, if a request for such a review has been received and after publication of notice of such review in the Federal Register, shall

(A) review and determine the amount of any net countervailable subsidy,

(B) review, and determine (in accordance with paragraph (2)), the amount of any anti-dumping duty, and

(C) review the current status of, and compliance with, any agreement by reason of which an investigation was suspended, and review the amount of any net countervailable subsidy or dumping margin involved in the agreement, and shall publish in the Federal Register the results of such review, together with notice of any duty to be assessed, estimated duty to be deposited, or investigation to be resumed.

[�]

(b) REVIEWS BASED ON CHANGED CIRCUMSTANCES. -

(1) IN GENERAL. - Whenever the administering authority or the Commission receives information concerning, or a request from an interested party for a review of -

(A) a final affirmative determination that resulted in an anti-dumping duty order under this title or a finding under the Anti-Dumping Act, 1921, or in a countervailing duty order under this title or Section 303,

(B) a suspension agreement accepted under Section 704 or 734, or

(C) a final affirmative determination resulting from an investigation continued pursuant to Section 704(g) or 734(g), which shows changed circumstances sufficient to warrant a review of such determination or agreement, the administering authority or the Commission (as the case may be) shall conduct a review of the determination or agreement after publishing notice of the review in the Federal Register.