The federal government has filed requests for panel reviews under NAFTA to appeal U.S. decisions to impose duties on imports of Bombardier Inc.'s C Series aircraft and softwood lumber from Canada.
The notices follow the U.S. Department of Commerce's plans to impose duty rates of nearly 300 per cent on future imports of Bombardier's C Series planes, and the U.S. International Trade Commission's determination that softwood lumber imported from Canada is subsidized and hurts the U.S. industry.
The North American free-trade agreement's Chapter 19 contains a dispute-resolution mechanism that allows Canada to get a panel made up of U.S. and Canadian trade experts to decide whether the duties follow U.S. trade law, rather than going through the U.S. court system.
The filings were expected, and in the case of softwood, the government had already formally signalled its intention to use Chapter 19 to push back against the U.S. decision to slap duties on Canadian lumber. Those duties average about 20 per cent for most lumber producers.
The move comes on the eve of the sixth round of NAFTA talks, which are due to begin next week in Montreal.
Canada, the United States and Mexico began a renegotiation of the deal last summer, triggered by U.S. President Donald Trump, who has argued the trade agreement is a "disaster" for U.S. workers. The sides remain far apart on many contentious issues, including the rules that govern auto manufacturing, dairy products and Chapter 19 dispute resolution itself. The United States has proposed the elimination of Chapter 19; Canada wants it to stay in place.
Washington moved last year against Bombardier, arguing that the Montreal plane maker is unfairly subsidized because of financial support it has received from the federal and Quebec governments. The trade dispute placed a cloud over Bombardier's signature project, making it nearly impossible for it to sell the aircraft to U.S. airlines.
That was a key factor in persuading Bombardier to cut a deal with Airbus Group SE – a deal that proposes to hand over control of the C Series to its European rival. Although Bombardier receives no cash in return, the transaction would make it possible to manufacture the aircraft at an Airbus facility in Alabama, perhaps solving the problem of U.S. duties on the plane. Ottawa says the Chapter 19 notices are necessary procedural steps in the appeal process against the U.S. decisions.
As first reported by The Globe and Mail last week, Canada is hoping to discuss potential compromises on Chapter 19 and other dispute-resolution provisions in Montreal, in hopes of breaking the bargaining table logjam .
The Canadian Press, with a report from staff