In this Sept 21, 2018 photo, a sign of the World Trade Organization (WTO) is seen on their headquarters in Geneva. The WTO says slumping global trade should put policymakers on guard for a sharper slowdown if trade tensions continue. (FABRICE COFFRINI / AFP)
GENEVA – Canada has the right to impose tariffs on US imports in the future to ward off the threat of the United States penalizing Canadian manufacturers for alleged unfair subsidies, the World Trade Organization said on Wednesday.
Canada brought a case to the WTO in 2016 over US anti-subsidy duties on Canadian "supercalendered" paper, which is used in glossy magazines and catalogues. A WTO panel in 2018 and a WTO appeals body in 2020 found these duties breached global trading rules, prompting Canada to request the right to impose tariffs on a specific amount of US goods.
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The WTO typically allows successful complainants to impose tariffs on a specific amount of imports, but in this case awarded Ottawa a formula to calculate the volume of US imports to hit should Washington use similar methods to determine whether US producers are facing unfair Canadian competition
The WTO typically allows successful complainants to impose tariffs on a specific amount of imports, but in this case awarded Ottawa a formula to calculate the volume of US imports to hit should Washington use similar methods to determine whether US producers are facing unfair Canadian competition.
At issue is a US rule that allows the Commerce Department to select only the facts that are adverse to the other party, in this case Canada, if it is not satisfied that the other party has complied with a request for information to the best of its ability.
Canada said this was an ongoing practice in the United States, citing nine US cases of duties applied in this way, including to Chinese solar cell, tire and PET resin makers, as well as to Indian stainless steel pipe producers.
The US Trade Representative's office said the decision upheld the US duty calculation model. But the USTR added that it was unhappy with the WTO's decision since US duties on the Canadian paper were removed years ago and Canada was not suffering any economic harm.
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"Canada's pursuit of this arbitration under these circumstances is a further demonstration of a broken system that emboldens (WTO) members to litigate for the sake of litigation instead of helping Members resolve disputes," USTR said. It added that this reinforces the Biden administration's calls for WTO reform.
The US subsidy investigation into paper had resulted in import duties for Canadian firms Port Hawkesbury Paper LP, Resolute FP, Irving Paper Ltd and Catalyst Paper Corp.
US authorities removed the duties in 2018, and payments made by importers since August 2015 were returned with interest.