Canada has responded to the US use of punitive duties by launching a broad international trade complaint with the World Trade Organization (WTO).

Trade disputeClick image to enlarge

The complaint, which alleges that the US use of duties violates international law for five reasons, has been dismissed by Washington as “broad and ill-advised,” says a new story from the Canadian Press.

The complaint was filed in December but only made public this week, as the US levied duties of up to nine per cent on Canadian paper, the latest in a series of impositions it has introduced in response to what it describes as unfair trade practices, such as subsidies for softwood lumber and Canadian aerospace giant Bombardier.

The 32-page Canadian complaint alleges that US anti-dumping and countervailing duties violate international trade law in that they go beyond what the WTO allows, are based on improperly calculated rates, and are unfairly declared to be retroactive. Canada is also objecting to the limiting of evidence from outside parties. It says the US trade-panel voting system is biased against foreigners.

The dispute comes as the two countries gear up to resume the troubled NAFTA talks in Montreal later this month, prompting one observer to wonder about the timing.

The Canadian Press story notes that while Canada-U.S. trade lawyer Mark Warner says the complaints might have merit, and that Canada is well within its rights to complain to the WTO, he’s not sure why Canada would risk antagonizing the US at this particular time.

“This isn't going to calm passions in Montreal,” says Warner. “It's almost like Canada is fighting this on behalf of the international community... I wonder why would you bring this complaint now.”

The US wasn’t slow to respond to Canada’s move.

“Canada's new request for consultations at the WTO is a broad and ill-advised attack on the U.S. trade remedies system,” said US trade representative Robert Lighthizer in a statement.

“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.”

Among other things, Lighthizer said that removing the orders cited in Canada’s complaint would result in a tide of imports from China and elsewhere into the US that would in turn impact Canadian exports to the US, including nearly US$9 billion in steel and aluminum.

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