(Canadian Press)
The
federal government will ask the World Trade Organization for authority to retaliate against at least $4.1 billion in U.S. imports over American non-compliance with WTO rulings on softwood lumber.
Government
officials said Wednesday the Department of International Trade will apply Feb. 14 to the WTO compliance panel after the trade body ruled last year that Canadian lumber imports pose no threat of injury to American
producers.
The request for authority to retaliate will be filed at the same time to preserve Canada's rights if the panel finds the United States hasn't abided by the WTO's ruling and rescinded punitive import
duties levied on Canadian lumber.
The unprecedented dollar figure represents the total amount of countervailing and anti-dumping duties collected since the tariffs were imposed in May 2002 after the U.S. Commerce
Department ruled Canadian lumber imports were being subsidized unfairly by provincial forestry policies.
Canada appealed the duties - initially totalling about 27 per cent - under WTO and North American Free
Trade Agreement rules. Both WTO and NAFTA panels found Canadian lumber, which supplies about a third of the U.S. market, does not threaten American mills.
In a background briefing, officials said the retaliatory
amount is the largest Ottawa has ever requested against the United States in a trade dispute. It could climb even higher because the compliance review and retaliation request will take several months to complete.
The officials said it's too early to say what U.S. imports might be targeted for retaliatory duties.
The threat-of-injury argument is crucial because it underpins the justification for imposing the duties on the
roughly $10 billion in Canadian lumber sold into the U.S. home-construction and renovation market.
The United States has asked for an NAFTA extraordinary challenge committee to review a NAFTA panel ruling that
also found no threat of injury.
If Canada wins that review - a decision is expected in March or April -it expects the duties to be lifted and the money refunded to lumber exporters. But the United States has
signalled it doesn't seen the extraordinary-challenge as final and that it isn't obliged to return the money.
The demand for a WTO compliance review comes as both sides are putting out feelers for renewed
negotiations to settle the decades-old lumber trade dispute.
Industry leaders from both sides were to meet in Chicago later this month but the session, already postponed from December, has been delayed,
apparently because of scheduling conflicts.
Ottawa's stated strategy in the softwood dispute is a two-track approach - a full-court press of legal challenges against the duties under NAFTA and WTO rules, along
with openness to negotiate a deal if it leads to free trade in lumber.
Canada has always rejected claims softwood lumber production is subsidized to the point where it competes unfairly with U.S.-produced lumber.
The U.S. lumber industry, which has filed four trade complaints in the last 20 years, contends artificially low provincial cutting fees on Crown timber - known as stumpage - and other forestry policies give
Canadian producers an unfair advantage.
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