Canada attacks US tariffs by taking case to World Trade Organization

Canada has filed a sweeping trade case against the United States at the World Trade Organization (WTO), lobbing a diplomatic grenade at the Trump administration’s “America First” approach amid an increasingly embattled trade relationship between the longstanding North American allies. The trade case could exacerbate tensions between the two nations, which have frayed in recent months as the countries wrestle with trade disputes and attempts to renegotiate the North American Free Trade Agreement. Canada’s case challenges the US use of tariffs to punish unfair trade practices and protect its markets, saying those actions violate WTO rules. The case could expand into a multinational trade dispute given that Canada, a champion of global agreements, filed it in a way that allows other countries to join. The 37-page document outlines numerous problematic trade actions that it says the US has taken against China, South Korea, Japan and Germany. The case, which was filed on December 20 and made public on Wednesday, centres on the punitive tariffs that the US imposes when it finds other countries guilty of subsidising their products or of selling them abroad at unfairly low prices, a practice known as dumping.

The US has lost cases in the World Trade Organization over this system, which differs substantially from that of many countries. Robert E Lighthizer, the US trade representative, called Canada’s action “a broad and ill-advised attack” on the American trade system. “US trade remedies ensure that trade is fair by counteracting dumping or subsidies that are injuring US workers, farmers and manufacturers,” he said in a statement on Wednesday. “Canada’s claims are unfounded and could only lower US confidence that Canada is committed to mutually beneficial trade.” Canada has borne the brunt of several US trade actions, including a decades-long dispute over lumber and recent cases against Bombardier airplanes and Canadian newsprint. “There are now billions of dollars of Canadian exports to the US that are potentially subject to these restrictions,” said Chad P Bown, a senior fellow at the Peterson Institute for International Economics in Washington. “That’s what this dispute is all about.” The case could take years to work its way through the World Trade Organization, Bown said, but could eventually help Canada combat the types of trade actions the US is increasingly bringing. It could also help Canada protect itself if the US withdraws from Nafta or significantly alters key parts of the trade pact that provide an important channel for Canada to appeal trade disputes between the countries. Canada’s foreign minister, Chrystia Freeland, said the WTO filing was linked to a long-running dispute over Canadian lumber exports.