Canada challenges USA tariff system

Prime Minister Justin Trudeau meets with U.S. President Donald Trump in the Oval Office of the White House in Washington DC Feb. 13 2017

Canada challenges USA tariff system

If the United States decides to continue recognizing the WTO's dispute-settlement mechanism to decide on the fairness of US trade remedies, then a decision in Canada's favour would support Canada's claim that the USA system is biased, making it easier to argue in favour of keeping chapter 19.

According to a WTO filing dated December 20 and published on January 10, Canada has launched a trade dispute against the United States challenging its repeated use of anti-dumping and anti-subsidy trade remedies.

Warner believes that the Canadian government may be playing to a domestic audience in demonstrating that it is not only being "very assertive" in addressing trade disputes, but that it is also trying to "embarrass the Americans" before the world by citing nearly 180 trade breaches over two decades against other countries listed on 24 pages of Canada's 32-page complaint before the WTO.

Indeed, U.S. trade czar Robert Lighthizer called the move an "ill-advised attack", adding that "Canada's claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade".

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.

The action comes amid disputes between the two countries over areas such as dairy, aircraft sales and lumber as well as efforts to renegotiate the North American Free Trade Agreement.

The complaint challenges the ways that the U.S. investigates products for subsidies and below-cost sales.

But by listing almost all trade enforcement actions by the Trump administration, the Canadian complaint also supports dozens of countries affected by the recent imposition of both preliminary and permanent United States duties. Sands, who said the move may have come because Canadian trade negotiators and politicians believe the strategy of playing nice with the Trump administration has not paid dividends. "It's nearly like Canada is fighting this on behalf of the global community ..."

"Canada's claims threaten the ability of all countries to defend their workers against unfair trade", he said.

Anticipating an imminent USA retreat from NAFTA, the Canadian government has made a decision to go on the offensive in managing its trade relations with our Southern neighbor.

"If Canada loses Chapter 19, it would have to go to the WTO", said Warner.

Lighthizer questioned why Canada filed so many complaints that included other countries.

Canada's complaint coincides with separate trilateral negotiations to revise NAFTA, which created an open trading system between the United States, Canada and Mexico.

They fear that it could ultimately prompt United States President Donald Trump to invoke NAFTA's article 2205, notifying partners of intent to withdraw from the pact after a period of six months.

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