Canada takes U.S. to WTO over trade dispute

Canada has launched a wide-ranging trade complaint against the U. S., the World Trade Organisation (WTO) said in a dispute that Washington said would damage Canada’s own interests and play into China’s hands. Canada’s complaint, challenging Washington’s use of anti-dumping and anti-subsidy duties was based on almost 200 examples of alleged U.S. wrong doing and almost all of them concern other trading partners such as China, India, Brazil and the EU.

“Canada’s new request for consultations at the WTO is a broad and ill-advised attack on the U.S. trade remedies system. Even if Canada succeeded on these groundless claims, other countries will primarily benefit, not Canada. Canada’s complaint is bad for Canada,” U.S. Trade Representative Robert Lighthizer said in a statement. The 32-page complaint faulted technical details of the U.S. trade rule book, ranging from the treatment of export controls to the handling of split decisions at the six-member U.S. International Trade Commission. Canadian Foreign Minister Chrystia Freeland said the legal action was in response to the “unfair and unwarranted” U.S. duties against Canada’s softwood lumber producers and part of a “broader litigation” to defend forestry jobs.

“We continue to engage our American counterparts to encourage them to come to a durable negotiated agreement on softwood lumber,” Freeland said in an emailed statement.
Canada said U.S. procedures broke the WTO’s Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures, the General Agreement on Tariffs and Trade and the Understanding on Rules and Procedures Governing the Settlement of Disputes. Anti-dumping and countervailing duties – punitive tariffs to restrict imports that are unfairly priced or subsidised in order to beat the competition – are a core component of Washington’s trade arsenal, and frequently used to defend U.S. interests.

For U.S. President Donald Trump, who has espoused an “America First” trade policy and the unravelling of multi-party trade agreements, those levers for managing individual U.S. trade relationships appear even more important than before. Under WTO rules, the U. S. has 60 days to try to settle the complaint, or Canada, which sends 75 per cent of its goods exports to the U. S., could ask the WTO to adjudicate. Lighthizer said Canada’s demands undermined confidence in its commitment to mutually beneficial trade, and would only damage its own interests if they were realised. “The flood of imports from China and other countries would negatively impact billions of dollars in Canadian exports to the U. S., including nearly nine billion dollars in exports of steel and aluminium products and more than 2.5 billion dollars in exports of wood and paper products,” he said.

The tariffs at the centre of the complaint are allowed under WTO rules but they are subject to strict conditions. The U.S. has been under fire for years about the way it calculates unfair pricing, or dumping. It has already lost a string of WTO disputes after its calculation methodology was ruled to be out of line with the WTO rule book. Trump has threatened to expand the use of punitive duties against China and has angered Beijing by refusing to accede to China’s demand to be treated as any other “market economy”.

He has also upset Canada by demanding major changes to the North American Free Trade Agreement and by slapping punitive tariffs on Canadian softwood lumber exports, leading to a challenge at the WTO and NAFTA. Trade friction has also arisen over a dispute between U.S. planemaker Boeing Co (BA.N) and its Canadian rival Bombardier Inc (BBDb.TO), which faces a potential 300 per cent duty on U.S. sales of its CSeries jets.