Canada Launches Global Trade Complaint Against US Over Use of Duties

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"Canada's complaint is bad for Canada", said U.S. Trade Representative Robert Lighthizer.

In other words, Canada is trying to show that the United States cannot have it both ways; they can't eliminate chapter 19 and disregard the WTO's authority to judge the US trade remedy system and its decisions.

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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.

Lighthizer argued that a win for Canada would mainly help other countries like China, which would take any opportunity to dump their low-cost imports into the USA market.

He said that during the current NAFTA negotiations, which enter the sixth round in Canada later this month, the United States 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.

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

A spokesman for Foreign Affairs Minister Chrystia Freeland said this challenge is tied to Canada's latest fight with the United States over softwood lumber.

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Edward Alden of the Council on Foreign Relations called it a precarious moment for NAFTA and the global trading system, both of which are under threats and criticism from Trump: "Canada has just detonated a bomb under both".

This is hardly Donald Trump's first protectionist action against Canada.

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

Canadian government officials say they believe it's increasingly possible Mr. Trump will start the process of withdrawing from NAFTA.

The complaint is "certainly not typical", said Greg Kanargelidis, an worldwide trade lawyer at Blake, Cassels & Graydon LLP. Canada has protested the tariffs in other filings with the WTO and under the North American Free Trade Agreement.

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.

Canadian Foreign Minister Chrystia Freeland said the legal action was in response to "unfair and unwarranted" USA duties against Canada's softwood lumber producers, and is part of a "broader litigation" to defend its forestry jobs.

He said it could be another step toward what he says is a nightmare scenario for the NAFTA talks, which is that the Americans call a halt to those negotiations and talk separately with Mexico in hopes of signing a bilateral deal before the Mexican elections later this year and US midterm Congressional elections this fall. "It's the same horror show over and over".