Canada takes United States to WTO in wide-ranging trade complaint

Posted January 14, 2018

By filing a WTO complaint over USA use of punitive duties, and charging that the U.S.is in violation of worldwide trade rules, not just in its dealings with us but other countries such as China, "Canada is taking a run against the entire USA trade regime", says John Boscariol, a trade lawyer with McCarthy Tétrault.

"Canada's claims threaten the ability of all countries to defend their workers against unfair trade", he said.

He said that during the current NAFTA negotiations, which enter the sixth round in Canada later this month, the United States has made it clear that it wants to remove a dispute-resolution mechanism for anti-dumping and countervailing cases under Chapter 19 of the 24-year-old trilateral trade agreement.

Canada cited five reasons for the complaint, saying the USA levies penalties beyond what's allowed by the WTO, improperly calculates rates, unfairly declares penalties retroactive, limits evidence from outside parties, and has a tilted voting system in domestic trade panels that, in the case of a 3-3 tie, awards the win to American companies. "Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada", he said.

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Canada said USA 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. Missing from Lighthizer's statement, naturally, was any mention of how the administration he works for has lowered confidence in the U.S.'s commitment to mutually beneficial trade. "Canada's complaint is bad for Canada".

Canada has "thrown a grenade" at the USA filing a complaint with the World Trade Organisation (WTO) against its southern neighbour's use of trade sanctions, which might wreck their current North American Free Trade Agreement (NAFTA) negotiations, said an global trade law expert.

"These duties are unwarranted and without merit and we 100 per cent support the federal government's WTO filing position".

However, he explained that US President Donald Trump's administration "dislikes" the WTO's dispute-settlement body and believes that countries rely on it "inappropriately to achieve results they can't achieve through negotiations". One of the United States' demands in the NAFTA renegotiation is chapter 19's elimination.

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Canada's complaint with the WTO is a request for consultation, which formally initiates a dispute in the WTO.

Canadian Foreign Minister Chrystia Freeland said the legal action was in response to "unfair and unwarranted" United States duties against Canada's softwood lumber producers, and is part of a "broader litigation" to defend its forestry jobs.

The U.S. used the same argument it did in imposing stiff duties against softwood lumber: that the Canadian companies received unfair subsidies from the Canadian government.

Steep import duties leveled by the US have become a regular fixture of the industry, according to Joel Neuheimer, a vice-president at the Forest Products Association of Canada.

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