Canada to seek NAFTA dispute resolution panel on USA softwood lumber duties

Canada launched a trade challenge Tuesday to US imposed tariffs on Canadian softwood lumber, using the North American Free Trade Agreement (NAFTA) dispute mechanism.

"We are enclosing a Request for Panel Review pursuant to Rule 34 of the NAFTA Rules of Procedure for Article 1904 Binational Panel Reviews", according to the letter submitted by the Canadian government to Paul Morris, U.S. Secretary of the American section of the NAFTA Secretariat.

The Americans unilaterally imposed the tariffs after the USA and Canada could not reach a mutually agreeable settlement to the decades-long lumber dispute.

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The U.S. alleges Canada unfairly subsidizes its softwood industry and sells wood in the United States at unfair rates, which Canada vigorously denies. Prime Minister Justin Trudeau's Liberal government has been hoping to keep the lumber issue separate from NAFTA talks, but the Trump administration has said Canada won't be able to keep the two issues apart so easily.

The initial duties were imposed last spring but it wasn't until November 2 that the U.S. Department of Commerce made a final decision about the amounts that would actually apply. If the ITC finds that USA producers were not injured by Canadian softwood imports, the Commerce Department's case will be terminated.

Canada said it is requesting the panel under NAFTA's Chapter 19, which deals with reviews and dispute resolution related to countervailing and anti-dumping duties.

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The federal government today filed a request to have a NAFTA dispute panel examine the countervailing duties the USA imposed on nearly all softwood lumber imports from Canada earlier this year.

The new anti-dumping rate kicked in on November 8. The new countervailing duty would take effect after the U.S. International Trade Commission votes by December 7 on making its final determination into the issue of U.S. lumber producers being injured.

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