Last fall, Ottawa filed a complaint with the WTO over Chinese levies on Canadian dissolving pulp, which is used to make rayon for clothing and other products.
But the Chinese investigation into Canada's concerns had flaws because it did not follow WTO rules, International Trade Minister Ed Fast alleged Thursday.
"Due to the inability to resolve this matter through ongoing engagement with China, Canada is requesting the establishment of a WTO panel," Fast said in a statement.
WTO tribunals adjudicate disputes between member countries. The panel will then produce a report that says whether it believes the complaints were well founded.
The Chinese duties on Canadian pulp can reach as high as 23.7 per cent. They were imposed against several companies, including Fortress Paper (TSX:FTP) and Tembec (TSX:TMB).
China first imposed the duties in November 2013 against Canada, the United States and Brazil, claiming the imports hurt its domestic pulp market. They became permanent in April 2014.
Fast said the Chinese measures are discriminatory and put Canadian pulp exporters at a disadvantage.
His department said Canadian firms exported $317 million of dissolving pulp to China last year. In 2013, Canada produced about 750,000 tonnes of the pulp and more than half of it was exported to China.