A dispute settlement panel at the World Trade Organization (WTO) found that the United States improperly applied countervailing duties on Canadian softwood lumber.
But US Trade Representative Robert Lighthizer immediately criticized the panel report, stating that it applied an Appellate Body misinterpretation.
Lighthizer argued that it would protect Canada’s huge lumber subsidies from US action imposing countervailing duties to support the US softwood industry and its workers.
“This flawed report confirms what the United States has been saying for years: the WTO dispute settlement system is being used to protect non-trade practices and harm US interests,” Lighthizer said.
“The panel’s findings would prevent the United States from taking legitimate action in response to Canada’s widespread subsidies for its softwood industry,” he added.
Contrary to WTO rules, according to the United States, the panel did not submit to the reasoned judgment of the investigating authority, the Commerce Department, and applied a fundamentally flawed interpretation of the WTO Appellate Body, so that the panel did not recognized the impact of Canadian government grants on behalf of the Canadian timber industry.
The United States has raised concerns about subsidized and dumped imports of softwood products from Canada for nearly 40 years, and there is a long history of litigation on the issue in the WTO and in US courts.
In 2017, the Department of Commerce and the International Trade Commission (USITC) found, for the third time in three decades, that the federal and provincial governments of Canada are subsidizing Canadian softwood producers, who sell softwood in the US market. and causing significant harm to US softwood lumber producers.
According to data from the White House Trade Representation (USTR), the softwood industry is a vital part of the US economy.
There are thousands of sawmills throughout the United States, most of which are small, local sawmills. In 2016, the last full year of data analyzed during the investigation, the US softwood industry employed more than 18,000 workers in more than 30 states and shipped approximately $ 7.12 billion worth of softwood products.
Canada’s imports of softwood products in 2016 totaled $ 5.78 billion.
The United States is evaluating options in response to the panel report.