International Decision: United States — Anti-Dumping Measures Applying Differential Pricing Methodology to Softwood Lumber from Canada

Abstract

This dispute, brought by Canada against the United States, constitutes another chapter in three separate sagas: the enduring softwood lumber dispute between the two North American nations, the debate over the acceptability of the practice of “zeroing,” and the fight over the value and role of WTO Appellate Body precedent. Notably, the Panel departed from established Appellate Body decisions finding, inter alia, that zeroing was permissible under a weighted average-to-transaction (W-T) methodology. This departure is remarkable, not just because it runs counter prior jurisprudence, but also for the reasoning supporting it and the circumstances in which it occurred. Indeed, the Panel Report was issued in the midst of a crisis of the WTO dispute settlement system arising from the United States’ decision to block the reappointment of Appellate Body members. The United States justified this action, which eventually resulted in the Appellate Body losing its quorum to hear new appeals on December 10, 2019, on the basis of complaints, among others, that the Appellate Body had championed an approach to precedent, which the United States found incompatible with the intended role of dispute settlement within the WTO. While Members worked feverishly to formulate a compromise that might respond to the United States’ criticisms and soften the effect of the Appellate Body’s approach, the Panel suggested its own. Thus, it found room to depart from prior precedent (which the United States argued had been wrongly decided) while paying lip service to the Appellate Body.