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U.S. Appeals WTO Softwood Lumber Dispute “Into the Void”

Posted September 28, 2020

The long-running softwood lumber dispute between Canada and the United States won’t be settled any time soon as a consequence of Washington appealing a WTO panel report made earlier this year, which ruled largely in favour of Canada, “into the void” of an inoperative Appellate Body.
Canada-US Flags, Softwood Lumber, US Dollars

In a statement, International Trade Minister Mary Ng expressed disappointment over the U.S. decision to appeal the panel’s ruling, particularly as the WTO “is currently unable to hear appeals as a direct result of the U.S. refusal to agree to the appointment of new Appellate Body members.”

Ottawa says it offered to enter into an appeal-arbitration agreement with the U.S. that would have allowed Washington to seek review of the Panel Report had it wanted. Having refused that offer, the Canadian government said it “hoped that the United States would have allowed the adoption of the Panel report and implemented its recommendations and rulings as soon as possible.”

By effectively denying Canada its right to prompt settlement of the dispute under international trade rules, the Trump administration’s “contradictory behaviour” (i.e., litigating the matter at the WTO while at the same time deliberately “sabotaging” the trade body’s legitimacy and capability) “is compounding the unfair treatment accorded to Canadian softwood lumber producers,” said government officials in a submission to the WTO.


Why It Matters

According to Stephen de Boer, Canada’s permanent representative at the WTO, the U.S. has collected nearly $3 billion in illegal duties from Canadian softwood producers since they were introduced in 2017.

In its August 24 report, the WTO dispute panel found that by improperly rejecting the evidence provided by Canada in sixteen different claims and failing to provide “reasoned and adequate” explanations of its findings, the U.S. Department of Commerce acted “inconsistently” with Article 14(d) of the Agreement on Subsidies and Countervailing Measures.

Protesting the decision, U.S. Trade Representative Robert Lighthizer complained that the WTO in its “flawed report” had not deferred to the “reasoned judgment” of Commerce and was, therefore, preventing the U.S. “from taking legitimate action in response to Canada’s pervasive subsidies for its softwood lumber industry.”   

Aside from calling into question whether the evidence presented to Commerce in connection with trade actions initiated by the Trump administration is being assessed in an “objective and unbiased manner” — something with implications for other U.S. enforcement measures targeting a wide range of goods that it claims are subsidized and/or dumped — Washington’s behaviour in this case “significantly reduces the security and predictability that we collectively value in international trade,” according to the Canadian government in its WTO submission.


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