WASHINGTON — Canada has launched a wide-ranging attack against American trade practices in a broad international complaint over that country's use of punitive duties — a move the U.S. is calling "broad and ill-advised."
In a complaint that's dramatically ramping up tensions between the two neighbours in the midst of major trade negotiations, Canada wants the World Trade Organization to examine the use of duties in the United States, alleging that they violate international law for five reasons.
The complaint, filed last month but released Wednesday, comes just as U.S. announces duties of up to nine per cent on Canadian paper, and follows a series of similar penalties as the U.S. alleges unfair trade practices from Canada in the form of softwood lumber and Bombardier subsidies.
Canada is in essence arguing that the American use of anti-dumping and countervailing duties violates global trade rules.
It says the U.S. levies penalties beyond what's allowed by the WTO, improperly calculates rates and unfairly declares penalties retroactive, while also limiting evidence from outside parties. It also accuses the U.S. of using a trade-panel voting system that's biased against foreigners.
The 32-page complaint cites dozens of examples unrelated to Canada, including 122 cases where the U.S. imposed duties on foreign countries. The disputes over paper, lumber, aerospace and now trade in general are occurring just as the countries prepare to meet in Montreal later this month for a potentially pivotal round of NAFTA negotiations.
Canada-U.S. trade lawyer Mark Warner said the complaints might have some merit, and Canada is well within its rights to complain to the WTO. But he questioned the strategic logic of antagonizing the Trump administration in the midst of NAFTA talks.
"This isn't going to calm passions in Montreal," Warner said. "It's almost like Canada is fighting this on behalf of the international community... I wonder why would you bring this complaint now."
He called it surprising that Canada is taking its action against an administration that already dislikes the WTO, and has sabotaged the appointment of new WTO judges. It's practically goading the Trump administration to blow up the organization, Warner added.
Indeed, the Trump administration wasted no time expressing its displeasure.
"Canada's new request for consultations at the WTO is a broad and ill-advised attack on the U.S. trade remedies system," U.S. trade czar Robert Lighthizer said in a statement.
"Remedies ensure that trade is fair by counteracting dumping or subsidies that are injuring U.S. workers, farmers, and manufacturers. Canada's claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade."
He blasted Canada's move as a self-defeating one that will harm the interests of its own workers and businesses. Even if Canada succeeded with their claims, other countries would primarily benefit, not Canada, Lighthizer argued.
"For example, if the U.S. removed the orders listed in Canada’s complaint, the flood of imports from China and other countries would negatively impact billions of dollars in Canadian exports to the United States, including nearly US$9 billion in exports of steel and aluminum products and more than $2.5 billion in exports of wood and paper products," he said.
"Canada's claims threaten the ability of all countries to defend their workers against unfair trade. Canada's complaint is bad for Canada."