Canada launches WTO trade complaint against US

Prime Minister Justin Trudeau meets with U.S. President Donald Trump in the Oval Office of the White House in Washington DC Feb. 13 2017

Canada appeared to be mounting a case on behalf of the rest of the world, since it cited nearly 200 examples of alleged US wrongdoing, nearly all of them concerning other trading partners, such as China, India, Brazil and the European Union.

According to a WTO filing dated December 20 and published on January 10, Canada has launched a trade dispute against the USA challenging its repeated use of anti-dumping and anti-subsidy trade remedies.

Canada said the new US duties imposed January 10 broke the World Trade Organization's (WTO) 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.

As with the softwood lumber dispute, workers on both sides of the border are harmed by the trade war.

"Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada", he said.

"Canada's claims are unfounded and could only lower USA confidence that Canada is committed to mutually beneficial trade".

If the USA removed the orders in the complaint, Lighthizer said Canadian exports would be negatively impacted, including steel and aluminum and wood and paper products, Lighthizer said in his statement.

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.

NAFTA has been heavily criticized by Trump, who called it the "worst deal in USA history" and warned that he might scrap it.

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The confusion over Canadian expectations comes ahead of the next round of negotiations, scheduled to be held in Montreal Jan. 23-28.

The United States called the complaint, which includes cases that involve a variety of exports as well as other nations such as China and Brazil, an attack on how the nation goes about using its trade enforcement system.

It also might result in a flood of imports from other countries - if the complaint successfully have American tariffs removed - and cost Canada billions of dollars in exports to the United States, Lighthizer said.

The complaint is "certainly not typical", said Greg Kanargelidis, an global trade lawyer at Blake, Cassels & Graydon LLP.

In doing so, President Donald Trump has reversed a policy favored by past presidents of relying on dispute resolution mechanisms in the WTO and existing agreements such as the North American Free Trade Act (NAFTA).

"In a normal situation you wouldn't expect this to impact the long-term trading relationship that we've got under NAFTA", he said.

Starting January 10, the US Department of Commerce imposed unwarranted countervailing duties up to 9.93 per cent on imported Canadian uncoated groundwood paper (newsprint).

Steep import duties leveled by the USA have become a regular fixture of the industry, according to Joel Neuheimer, a vice-president at the Forest Products Association of Canada. "It's the same horror show over and over".

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