The United States inappropriately applied countervailing duties on Canadian softwood lumber, according to a World Trade Organization (WTO) dispute settlement ruling issued on August 24.
The WTO report came in response to Canada’s challenge of the U.S. Commerce Department’s imposition of countervailing duties on Canadian softwood lumber in 2017, after the countries failed to reach a new agreement on softwood lumber.
In its finding, the WTO is asking Commerce to reassess duties imposed on Canadian softwood lumber in a way that conforms with international obligations under the World Trade Agreement.
The U.S. Lumber Coalition, an alliance of large and small softwood lumber producers from US, working to address Canada’s lumber trade practices, stated the following: ‘‘this WTO panel report represents the latest example of judicial overreach within the WTO seeking to undermine the U.S. trade laws, which makes it harder for U.S. producers to address unfair trade. Proper enforcement of the U.S. countervailing duty laws under the U.S. trade laws are essential for U.S. industry, workers, and their communities to combat unfairly subsidized imports. Canada’s unfair trade practices in softwood lumber are well documented, and the harm these practices cause to the U.S. forestry industry and workers is undisputed. U.S. Lumber Coalition Executive Director Zoltan van Heyningen expressed deep disappointment that “the WTO panel with this report, like other WTO Appellate Body and panel reports, has added to U.S. obligations and diminished U.S. rights, addressing issues it has no authority to address, taking actions it has no authority to take, and interpreting WTO agreements in ways not envisioned by the WTO Members who entered into those agreements.”
The BC Lumber Trade Council (BCLTC) applauded the WTO ruling that vindicates Canada in its challenge to the U.S. Department of Commerce’s 2017 subsidy determination against Canadian softwood lumber products.
BCLTC stated: After an exhaustive, two-year review of Commerce’s findings with respect to countervailing duties, the WTO panel agreed with Canada that every key finding of subsidization was without merit. “For more than three years, our industry has paid billions of dollars in countervailing duties that today’s decision confirmed should never have been paid in the first place,” said Susan Yurkovich, president and CEO of BCLTC. In its 225-page report, the WTO identified more than 40 instances where, in its own words, no ‘unbiased and objective’ investigating authority could have reached the findings that Commerce made based on the evidence before it. “This report is a scathing indictment of the U.S. Department of Commerce’s subsidy findings and the biased process it followed in reaching them,” Ms. Yurkovich observed. “For three decades, we have been saying that the U.S. trade remedy process is flawed. Unfortunately, this is just the latest chapter in the ongoing attack on the Canadian lumber industry. Each of the prior two lumber disputes ended with neutral, international tribunals issuing rulings that forced Commerce to rescind their flawed and unsupported subsidy findings for similar reasons. Today’s decision is an important step towards, what we expect, will be the same result. If the errors identified by the WTO Panel are properly addressed and corrected, the Department of Commerce would have no choice but to completely reject the U.S. industry’s subsidy claims and put an end to these baseless claims against Canadian producers.”
The lumber dispute dates back to the 1980s and has included a previous round of WTO cases lasting from 2001 to 2006. That concluded with a settlement under which Washington suspended duties as long as lumber prices were sufficiently high.
The agreement expired in 2015, prompting the Trump administration’s subsequent move to impose tariffs of up to 17.99% against what it saw as unfair subsidies for Canadian exporters of softwood lumber, which is used in home construction.
Monday’s case, the ninth before the WTO in the lumber dispute, concerned subsidies. A different WTO panel last year largely upheld U.S. anti-dumping duties on Canadian lumber, prompting a Canadian appeal.
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