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WTO panel rejects U.S. duties on Canadian softwood lumber [UPDATED]

A World Trade Organization dispute-resolution panel has published a report disagreeing with the countervailing duties that the U.S. established in 2017 on softwood lumber exports from Canada.

After a two-year review, a three-person WTO panel said the U.S. Department of Commerce and U.S. International Trade Commission incorrectly benchmarked Canadian timber prices in their calculation of stumpage fees.

The U.S. imposed the duties maintaining that Canada’s stumpage system, which sees fees paid to the provinces, unfairly subsidizes the Canadian forestry industry. U.S. lumber producers are privately operated.

In November 2017, Canada challenged the countervailing duties and, after consultations with the U.S., requested a WTO panel oversee the issue in March 2018.

The BC Lumber Trade Council (BCLTC) applauded the ruling. “For more than three years, our industry has paid billions of dollars in countervailing duties that today’s decision confirmed should never have been paid in the first place” said Susan Yurkovich, president and CEO of BCLTC, in a statement.

In its 225-page report, the WTO identified more than 40 instances where, in its own words, no “unbiased and objective” investigating authority could have reached the findings that Commerce made based on the evidence before it.

“This report is a scathing indictment of the U.S. Department of Commerce’s subsidy findings and the biased process it followed in reaching them,” said Yurkovich.

“For three decades, we have been saying that the U.S. trade remedy process is flawed. Unfortunately, this is just the latest chapter in the ongoing attack on the Canadian lumber industry. Each of the prior two lumber disputes ended with neutral, international tribunals issuing rulings that forced Commerce to rescind their flawed and unsupported subsidy findings for similar reasons.

“If the errors identified by the WTO Panel are properly addressed and corrected, the Department of Commerce would have no choice but to completely reject the U.S. industry’s subsidy claims and put an end to these baseless claims against Canadian producers,” she said.

John Yakabuski, Ontario’s minister of natural resources and forestry, and Vic Fedeli, Ontario’s minister of economic development, job creation and trade, echoed Yurkovich’s comments in a statement, saying the province “welcomes the decision.”

“By ruling strongly in our favour, the WTO has reaffirmed our position that U.S. duties on our lumber are unjustified,” they say.

“We will continue to work closely with the industry, the provinces and the federal government, and use all available avenues to fight unfair duties on Canadian softwood lumber.”

Read the key findings or download the full WTO report here.

This article was originally posted on Aug. 24 and updated on Aug. 26.