Canada-U.S. Blog Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

A Long Time Coming: Canada Files WTO Case Against U.S. Systematic Trade Remedies Measures

Posted in Antidumping, Canada's Federal Government, Softwood Lumber, Trade Agreeements, Trade Remedies, U.S. Federal Government, World Trade Organization

On December 20, 2017, Canada filed a Request for Consultations with the World Trade Organization (“WTO”) setting out various concerns with the application of U.S. trade remedies that Canada considers to be inconsistent with WTO rules.   On January 10, 2018, the Chairman of the Dispute Settlement Body circulated a communication of Canada’s 32 page Request for Consultations in what will be known as Case WT/DS535.  With the recently increasing AD/CVD investigations against Canada and imposition of duties, a WTO case was expected.  However, such a broad-reaching Request for Consultations is unexpected.  This Request for Consultations challenges the way the United States conducts antidumping and countervailing duty proceedings for all countries, not just Canada.  It is bigger than any one trade irritant and for that reason – this is going to be significant.

Canada’s Request for Consultations sets out the following categories of concerns with U.S. antidumping and countervailing duty laws:

  • The liquidation of final anti-dumping duties and countervailing duties in excess of WTO-consistent rates an failure to refund cash deposits collected in excess of WTO-consistent rates;
  • Retroactive provisional anti-dumping duties and countervailing duties following preliminary affirmative critical circumstances determinations;
  • The US treatment of export controls in countervailing duty proceedings;
  • The improper calculation of benefit in countervailing duty proceedings involving the provision of goods for less than adequate remuneration;
  • The U.S’s effective closure of the evidentiary record before the preliminary determination; and
  • The U.S. International Trade Commission Tie Vote Provision.

These five concerns are further expanded upon raising numerous other concerns about the fundamental way in which the United States Department of Commerce and the International Trade Commission make decisions, how the Department of Commerce calculates antidumping and countervailing duties and how the United States keeps the duties collected after an adverse WTO decision.

If one is familiar with the 2006 Softwood Lumber Agreement, one would be able to see part of Canada’s strategy in filing this WTO complaint at this time.  The Request for Consultations stems from the most recent round in the age-old Softwood Lumber Dispute.  However, it is broader than the typically focused AD/CVD review requests.  This means that Canada is starting out aggressively and sees a battle down the road.

If Canada is successful at the WTO, the United States may have to change the way it approaches trade remedies cases.  However, before that happens, there needs to be a DSB panel report, an appeal to the Appellate Body and, possibly, an arbitral panel and then – threats of retaliation.  This dispute has a long road ahead of it.  The time to reach the end of the litigation process in this case may take even more time since the United States is not approving new members of the Appellate Body.

It can be expected that other WTO Members (Canaad attached lists of U.S. AD/CVD decisions to their Request for Consultations that involve other countries) will be filing companion Requests for Consultation with the WTO (which will be assigned a distinct file number) to join and expend Canada’s list of grievances – which would result in one very significant trade dispute/review of the U.S. antidumping and countervailing duty laws, regulations, policies, guidelines and practices.  If a companion Request for Consultations is filed by another country, that companion dispute would continue even if Canada decides to not proceed further. Eventually, the companion complaints will be joined and proceed together.  Further, it can be expected that other WTO members will participate as third parties and that they will file their notifications very quickly.  This case will become a monster WTO proceeding with (likely) over 25 parties/third parties.