INTRODUCTION

On 14 February 2005, Canada requested the establishment of a panel pursuant to Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereinafter “DSU”) concerning the United States’ alleged failure to implement the recommendations and rulings of the Dispute Settlement Body (hereinafter “DSB”) in the dispute “United States – Investigation of the International Trade Commission in Softwood Lumber from Canada”.

At a special meeting on 25 February 2005, the DSB referred this dispute to the original panel, in accordance with Article 21.5 of the DSU, to examine the matter referred to the DSB by Canada in document WT/DS277/8. At that meeting, the parties to the dispute also agreed that the Panel should have standard terms of reference. The terms of reference are, therefore, the following:

On 2 March 2005, the Panel was composed as follows:

China and the European Communities reserved their rights to participate in the Panel proceedings as third parties.

The Panel met with the parties on 28-29 June 2005. It met with the third parties on 29 June 2005. The Panel issued its interim report to the parties on 29 August 2005.

FACTUAL ASPECTS

This dispute concerns the parties’ disagreement as to the consistency with the Agreement on Implementation of Article VI of GATT 1994 (hereinafter “AD Agreement”) and the Agreement on Subsidies and Countervailing Measures (hereinafter “SCM Agreement”) of the measure taken by the United States to comply with the recommendation of the DSB arising out of the Panel's report United States – Investigation of the International Trade Commission in Softwood Lumber from Canada.