The sometimes chilly relationship between the U.S. and Canada just dropped a few degrees with a new Canadian complaint to the World Trade Organization that parts of the U.S. system for international trade remedies are unfair.
The two countries, already at loggerheads over Canada’s dairy supply management system and softwood lumber subsidies, appear ready to face off in the WTO over the way the U.S. tries to protect domestic industry from foreign subsidies on everything from steel to wheat.
The Canadian “request for consultations,” the first step in a WTO dispute process, takes aim at several U.S. trade remedy policies, including claims that the U.S. levies duties that are higher than the WTO allows as well as unfairly collects retroactive duties after a subsidization ruling.
“Canada’s new request for consultations at the WTO is a broad and ill-advised attack on the U.S. trade remedies system,” U.S. Trade Representative Robert Lighthizer said in reaction to the Canadian complaint. “U.S. trade remedies ensure that trade is fair by counteracting dumping or subsidies that are injuring U.S. workers, farmers, and manufacturers. Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade.”
The Canadian complaint, which was filed with the WTO on Dec. 20, came about a month after the U.S, International Trade Commission ruled that Canadian exports of subsidized softwood lumber are hurting U.S. producers. That decision allowed the U.S. to begin levying anti-dumping and countervailing duties on Canadian product coming across the border.
Furthermore, on Tuesday, the Commerce Department issued a preliminary ruling that Canada is subsidizing production of groundwood paper - paper made from pulp for commercial printing - at a rate of 4.42 to 9.93 percent. That decision allows U.S. Customs and Border Protection agents to collect cash deposits from importers.
Canadian Minister of Foreign Affairs Chrystia Freeland and Minister of Natural Resources Jim Carr issued a critical statement, claiming the countervailing duties would hurt U.S. newspapers that rely on imports.
“We are deeply disappointed with the unjustified preliminary countervailing duty rates announced today by the U.S. Department of Commerce,” they said. “Any duties will have a direct and negative impact on U.S. newspapers, especially those in small cities and towns, and result in job losses in the American printing sector.”
But Lighthizer today stressed that Canada’s WTO complaint against the U.S. trade remedy system would end up hurting Canada.
“Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada,” Lighthizer said. “For example, if the U.S. removed the orders listed in Canada’s complaint, the flood of imports from China and other countries would negatively impact billions of dollars in Canadian exports to the United States, including nearly $9 billion in exports of steel and aluminum products and more than $2.5 billion in exports of wood and paper products.”