Trump Trades Blows with Canada

Canada Launches Trade Dispute Against US in WTO, Washington Strikes Back

By filing a WTO complaint over USA use of punitive duties, and charging that the U.S.is in violation of worldwide trade rules, not just in its dealings with us but other countries such as China, "Canada is taking a run against the entire USA trade regime", says John Boscariol, a trade lawyer with McCarthy Tétrault.

Though Canada certainly has plenty of domestic interest in pushing against the trade policies of its southern neighbor, its filing is about more than its own trade disputes.

He said that during the current NAFTA negotiations, which enter the sixth round in Canada later this month, the USA has made it clear that it wants to remove a dispute-resolution mechanism for anti-dumping and countervailing cases under Chapter 19 of the 24-year-old trilateral trade agreement. "Canada and the US share a longstanding and important relationship, but in the face of these unfounded trade actions it's important that our government defends Canada's interests". "Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada", he said. This decision appears even more fraught given the US administration's critical stance on the WTO; the Trump administration feels as if world trade rules are stacked against them.

Trump has also upset Canada by slapping punitive tariffs on Canadian softwood lumber exports, leading to a challenge by Ottawa at the WTO and the North American Free Trade Agreement.

The reason Canada did this, says Boscariol, is in large part because of the softwood lumber, but by taking on the entire US trade remedies system, Canada is taking the position that the USA, as our most important customer, must be held to WTO rules when it imposes these anti-dumping and countervailing measures that hamper free trade.

He further called Canada's accusations "unfounded" and said that they "could only lower United States confidence" that its neighbor is committed to mutually beneficial trade.

Canadian officials did not make an announcement with the release of the WTO filing but did respond to the newsprint duties.

A massive question is left unanswered: why did Canada file this request at the WTO while the NAFTA renegotiations are underway (and nothing short of arduous)?

However, he explained that US President Donald Trump's administration "dislikes" the WTO's dispute-settlement body and believes that countries rely on it "inappropriately to achieve results they can't achieve through negotiations". It follows a series of similar penalties as the U.S. alleges unfair trade practices by Canada in the form of softwood lumber and Bombardier subsidies.

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

In almost all cases, duties were imposed after the Commerce Department and ITA investigated charges by U.S. companies or industries, which claim to have been harmed by unfair import competition. According to the US Department of Commerce, Canadian newsprint paper exports to the United States totaled about 1.6 billion Dollars in 2016.

The highly technical 32-page complaint lists 122 trade enforcement actions undertaken by the Trump administration, dealing with imports ranging from Chinese steel to pasta made in Italy. "It's the same horror show over and over".

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