Canada takes softwood lumber fight to WTO

Canada is challenging U.S. timber tariffs by taking its battle to the World Trade Organization, the next appeal launched in a couple of weeks by the national government.

Stephen de Boer, Canada’s ambassador and permanent representative to the WTO, made the formal request on Tuesday throughout the group that referees international trade.

He wrote two letters to U.S. trade diplomat Christopher Wilson, requesting WTO consultations with the United States to talk about the long-running softwood-lumber dispute. 1 letter raises concerns about the Trump government’s countervailing duty and another complains about the anti-dumping tariff.

The final conclusion on Nov. 2 by the U.S. Department of Commerce led to a countervailing duty of 14.25 percent and anti-dumping obligation of 6.58 percent against most Canadian lumber imports south of the border, for a joint tariff averaging 20.83 percent.

The lawsuit through the WTO follows Canada’s decision on Nov. 14 to take its softwood struggle against the United States to one of the most controversial elements of the North American free-trade arrangement — Chapter 19, which divides trade panels to settle disputes. Ottawa is hoping a binational panel under NAFTA will strike down countervailing duties on Canadian softwood.

The new anti-dumping speed — for what the Americans describe as Canada selling softwood below market value — kicked in on Nov. 8. The new countervailing duty would take effect following the U.S. International Trade Commission votes, by Dec. 7, on the dilemma of U.S. lumber manufacturers being injured.

Mr. de Boer said the United States made inconsistent calculations associated with timber pricing, which subsequently resulted in anti-dumping steps that fail to abide by international trade rules. He also contested the Commerce Department’s decision to slap the countervailing duty against what the United States sees as subsidized Canadian lumber.

U.S. manufacturers state that under their system, the expense of timber rights on private property is more expensive than the Canadian stumpage prices paid by forestry companies to cut down trees on provincially owned land.

The Commerce Department ruled that provincial stumpage prices paid by Canadian lumber companies are too low and amount to subsidies. The United States “erroneously determined the presence and amount of any benefit,” Mr. de Boer wrote. “Canada has different provincial markets for stumpage that reflect significant differences in the provincial forests, the accessibility, availability, and quality of standing timber, transport costs, distance to market and other prevailing market conditions.”

Another option is for Canada to challenge the punitive tariffs Before the U.S. Court of International Trade.

Foreign Affairs Minister Chrystia Freeland’s office reiterated Canada’s view that the United States has proceeded unfairly using a protectionist stand against Canadian softwood.

“The U.S. Department of Commerce’s decision to impose punitive anti-dumping and countervailing duties on Canadian softwood lumber producers is unjust, unwarranted and deeply troubling,” according to a statement issued by Ms. Freeland’s office.

The softwood appeal process is unfolding as the United States takes aim at other Canadian forestry products — uncoated groundwood paper like newsprint, directory paper and book-grade pages.

Groundwood from Canada is subsidized and being dumped at below market value, based on U.S. manufacturer North Pacific Paper Co., also called Norpac.

Norpac said the Commerce Department should dismiss the views of Resolute Forest Products Inc. and White Birch Paper Co. because those companies concentrate on their Canadian mills. White Birch closed its Bear Island mill in Virginia in the summer.

Resolute, White Birch, Catalyst Paper Corp., Kruger Inc., Tembec Inc., Alberta Newsprint Co. and Irving Paper Ltd. produce uncoated groundwood paper in Canada, based on Norpac, which is based in Washington State.

The U.S. International Trade Commission issued a preliminary ruling in September that the U.S. groundwood industry has been hurt by Canadian shipments.

Norpac asserts that Canadian forestry companies have benefited from a wide assortment of subsidies directly and indirectly, such as Catalyst receiving favourable electricity rates in British Columbia.

The U.S. paper manufacturer said the Canadian government and six states have provided subsidies to paper mills in Canada: Newfoundland and Labrador, British Columbia, Alberta, Ontario, Quebec and New Brunswick.

Courtesy: The Globe And Mail

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