Canada Takes ‘Unfair, Unjust & Illegal’ US Softwood Duties to Court of International Trade

The Canada–U.S. softwood lumber dispute is one of the largest and most enduring trade disputes between both nations.

Sat 02 Sep 23


Prime Minister Justin Trudeau’s government is broadening its pushback against the latest US decision to keep imposing duties on Canadian softwood lumber.

Trade Minister Mary Ng says Canada is launching challenges under the North American free-trade deal and before the US Court of International Trade.

Minister Ng says Canada wll challenge what it describes as “unfair, unjust and illegal” US duties on Canadian softwood lumber products.

Nine days ago, Ottawa sought a judicial review of last month’s Treasury Department assessment of the levies, which provided modest relief but maintained the combined duty rate at 7.99 per cent.

The softwood tariffs are the legacy of a decades-long trade dispute over Canada’s timber sector structure that remained unresolved when a quota agreement expired in 2015.

Canada’s International Trade Minister, Mary Ng, framed the move as an effort to escalate exporters’ concerns while impressing the US to consider a negotiated settlement.

According to Minister Ng, the dispute has plagued Canada-U.S. relations for decades.

In September 2022, Canada officially challenged the ‘unfair’ US duties on softwood as part of the US-Mexico-Canada dispute resolution—footage courtesy of @CBCNews.

“We have to continue to explore new ways (to resolve it) because the industry expects us, expects me and expects my government to — (and) so do their workers,” she said after a cabinet retreat in Charlottetown. 

“It would be much more preferable that we get to the negotiating table, and let’s come together and have a deal. But in the meantime, we will use all the tools to stand up for the industry.” 

Canada will bring the latest U.S. anti-dumping duty determination before the U.S. Court of International Trade.

It will also challenge the Treasury Department’s fourth review under Chapter 10 of the Canada-United States-Mexico Agreement, which pertains to review and dispute settlement procedures.

Canada made the same move a year ago after the third review.

The dispute centres on Canadian provinces’ stumpage fees

In Canada, lumber-producing provinces set’ stumpage fees’ for timber harvested from Crown land, a system that US producers — forced to pay market rates — say amounts to an unfair subsidy.

It’s not the first time Ng has pushed her US counterparts to help hammer out a solution. 

But US Trade Representative Katherine Tai has said negotiations can only happen once Canada does away with its stumpage fee regime.

“We continue to share with the Canadians that we are committed to the robust enforcement of US trade remedy laws,” Ms Tai’s office said in a statement. 

According to Ms Tai, pushing back against “unfairly traded Canadian imports” remains a priority for the Biden administration.

The US will discuss another softwood lumber agreement; Ms Tai said, “when Canada is ready to address the underlying issues related to subsidisation and fair competition so that Canadian lumber imports do not injure the US industry.”

US producers claim subsidies hurt US timber manufacturing.

US producers have supported the push by the Biden Administration to continue the crackdown on Canadian imports.

They claim that duties are required to keep the playing field level south of the border and allow the domestic forestry and construction industries to thrive. 

According to Andrew Miller, Chairman of the US Lumber Coalition, the duties are “exactly what must happen for enduring expansion of US lumber manufacturing and availability to meet the demand to build more American homes.”

“Failure to fully enforce the trade laws would only undermine long-term confidence in expanding US sawmilling capacity and jobs in the American softwood lumber industry.”

The US industry “remains open” to a new agreement on softwood lumber.

 Still, the coalition says Canadian producers have yet to agree on a “unified position” allowing the two governments to negotiate one. 

In 2020 the World Trade Organisation ruled in favour of Canada.

As reported last month, the WTO has previously ruled that, in August 2020, the US’s import duties on Canadian softwood violated international trading rules.

The WTO found that the US could not prove that Canada unfairly subsidised softwood producers by undercharging wood from government land.

At the time, Minister Ng said the US decision to appeal was “confusing since earlier this year, the US decided that the WTO appeal body did not need to exist.”

The US alleged that the WTO had been making decisions beyond its jurisdiction and had refused to appoint new members, leaving it without enough people to operate.

Stephen de Boer, Canada’s permanent representative at the WTO, told a dispute-settlement meeting that the US refused an arbitration offer by Canada, and its appeal to a body the US has rendered defunct is denying Canada any chance to fight the duties.

De Boer said the US had collected almost $3 billion in illegal duties from Canadian softwood producers since they were introduced in 2017.


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