Trade Compliance

GHY discusses changes to international trade regulations and explores cutting-edge compliance strategies.

Canada Launches Another Challenge to U.S. on Softwood Lumber Duties

Posted November 29, 2017

Vowing to “defend Canada’s softwood lumber industry,” the Trudeau government yesterday launched a second legal challenge in as many weeks against the U.S. Commerce Department’s recent decision to impose anti-dumping and countervailing duties against imports of softwood lumber from Canada.

Following its request earlier this month for a special dispute panel under the provisions of NAFTA’s Chapter 19 to challenge the duties, Ottawa filed a request for consultations on Tuesday at the World Trade Organization, marking the first step in a lengthy formal dispute settlement process.

“The U.S. Department of Commerce’s decision to impose punitive anti-dumping and countervailing duties on Canadian softwood lumber producers is unfair, unwarranted and deeply troubling,” the Canadian Embassy said in a statement.

In its request, Canada claims the United States violated Article 2.4.2 of the WTO Antidumping Agreement for four reasons, as well as Article 2.4 of the AD Agreement for employing the controversial “zeroing” methodology in its AD duty determinations. Canada also claims the U.S. violated numerous other articles in the Agreement on Subsidies and Countervailing Measures.

Under WTO rules the U.S. must enter into consultations with Canada within 30 days of the request. If a settlement is not reached within 60 days, Canada may request the establishment of a dispute settlement panel at the WTO. Any country may reject the first request for a panel, but not a second.

The Office of the U.S. Trade Representative immediately pushed back against the move, which it dismissed as “premature given that final duties are not in place yet, pending the final injury determination in December.” Nonetheless, the USTR stated that while the agency was “reviewing” Canada’s consultation request, “we are confident that the Department of Commerce’s determinations fully comply with WTO rules.”

The U.S. International Trade Commission will vote next week on whether the softwood imports have materially injured or threaten to injure U.S. lumber producers and make its final decision on whether to impose the anti-dumping duties by Dec. 18. The proposed anti-subsidy duties range from 3.2% to 8.89%, and countervailing duties range from 3.34% percent to 18.19%.