United States Rejects WTO Dispute Report Shielding Canada’s Harmful Lumber Subsidies

Trade Representative Robert Lighthizer today criticized a World Trade Organization (“WTO”) panel report that applies an erroneous Appellate Body interpretation and would shield Canada’s massive lumber subsidies from U.S. action imposing countervailing duties to support the U.S. softwood lumber 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 shield non-market practices and harm U.S. interests,” said Ambassador Lighthizer.  “The panel’s findings would prevent the United States from taking legitimate action in response to Canada’s pervasive subsidies for its softwood lumber industry.”

Contrary to WTO rules, the panel did not defer to the reasoned judgment of the investigating authority, the U.S. Department of Commerce, and it applied a fundamentally flawed Appellate Body interpretation so that the panel failed to acknowledge the impact of the Canadian government’s subsidies advantaging the Canadian the lumber industry.

Background: 

The United States has expressed concerns about unfairly dumped and subsidized imports of softwood lumber products from Canada for nearly 40 years, and there is a long history of litigation over the issue at the WTO and in domestic courts.  In 2017, the U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (“USITC”) found, for the third time in three decades, that the Canadian federal and provincial governments are subsidizing Canadian softwood lumber producers, which are selling softwood lumber in the U.S. market and causing material injury to U.S. softwood lumber producers.

The softwood lumber industry is a vital part of the U.S. economy.  There are thousands of sawmills throughout the United States, the majority of which are small, local mills.  In 2016, the last full year of data analyzed during the investigation, the U.S. softwood lumber industry employed more than 18,000 workers in more than 30 states and shipped approximately $7.12 billion of softwood lumber products.  Imports of softwood lumber products from Canada in 2016 totaled $5.78 billion.

The United States is evaluating options in response to the panel report.

Source: Office of the United States Trade Representative