U.S. trade policy wins WTO approval

Friday 12 Apr 2019

 
A World Trade Organization ruling approved a long-outlawed U.S. trade policy on Tuesday, when a panel of adjudicators said Washington's use of "zeroing" to calculate anti-dumping tariffs was permissible in the case of Canadian softwood lumber.

The WTO's long-running row over zeroing is a technical dispute that turned into a power struggle between the United States and the arbiters of international trade law. The United States has suffered a string of defeats at the WTO over zeroing, a calculation method ruled to have unfairly increased the level of U.S. anti-dumping duties. Zeroing occurs when the investigating authority ignores, by treating as zero, cases where export prices are higher than prices at home. Critics have said this artificially inflates dumping margins.

The repeated losses helped to fuel U.S. President Donald Trump's campaign to reform the WTO, where the United States is blocking appointments at the WTO's Appellate Body, effectively the supreme court of world trade. Trump said last year the United States could withdraw from the WTO if "they don't shape up."

The panel's decision to side with this American argument this time was "really disappointing," Susan Yurkovich, the chief executive of B.C.'s Council of Forest Industries, told CBC News.

"Prior decisions have ruled in Canada's favour," she said. Because this decision represents a departure from past rulings, the industry would support a federal government decision to test it with an appeal.

Yurkovich described the decision overall as "mixed," pointing out the panel did side with Canada in faulting the way the U.S. calculated its anti-dumping duties. Canada launched the WTO dispute in November 2017, saying it would forcefully defend its lumber industry against "unfair, unwarranted and deeply troubling" U.S. tariffs.

Canada has also launched a complaint under the provisions of Chapter 19 of the North American Free Trade Agreement (NAFTA.) The first hearing to investigate American claims of injury to its domestic industry is scheduled for May 7.

The U.S. Commerce Department had accused Canada of unfairly subsidizing and dumping softwood lumber, which is commonly used in the construction of homes. Its duties affected about US$5.66 billion ($7.5 billion) worth of imports. In the past, successful trade arbitration has not been enough to end U.S. duties on Canadian lumber. But the prospects for a negotiated settlement this time appear bleak for now.

The U.S. industry is not interested in coming to the table, Yurkovich said, and she doesn't see any meaningful or satisfactory solutions on the horizon.

For further coverage on this latest ruling click here.

Source: cbc.ca



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