Skip to main content

Stacks of lumber are pictured at NMV Lumber in Merritt, B.C., Tuesday, May 2, 2017.

JONATHAN HAYWARD/THE CANADIAN PRESS

Canada's decision to turn to the North American Free Trade Agreement for a solution to the latest softwood lumber dispute proves how critical the agreement's dispute resolution mechanisms are to this country, a Canadian international trade expert said Wednesday.

Canada on Tuesday asked a review panel under Chapter 19 of NAFTA to investigate the countervailing duties imposed on Canadian softwood imports into the United States.

The U.S. argues Canada unfairly subsidizes its lumber industry, and the question for the panel will be whether the duties are legal under U.S. laws.

Story continues below advertisement

This is the fifth Canada-U.S. softwood lumber dispute since 1982, and the third in which Canada has sought relief under the dispute mechanisms of free trade agreements with the U.S. They have largely ruled in Canada's favour in the past.

Colin Robertson, a former Canadian trade diplomat, said Wednesday it's no surprise Canada made the application despite political battles with the U.S. over the very existence of the Chapter 19 dispute mechanism.

"It would not be logical for us not to use it and we had to use it within a certain time frame so of course we're going to apply it," said Robertson.

Chapter 19 of NAFTA means Canada can get a panel made up of U.S. and Canadian trade experts to decide if the duties follow U.S. trade law, rather than going to the U.S. court system.

Robertson said trade agreements were pursued by Canada in the first place largely to create a dispute settlement mechanism "to give us some relief from unfair application – and I stress unfair – of American trade law."

"In a psychological fashion from a Canadian perspective (this) kind of underlines why Chapter 19 is essential," he said.

However U.S. President Donald Trump wants Chapter 19 eliminated, and he has support from many U.S. industries who feel it is unconstitutional and that the American courts are best equipped to determine whether U.S. law is being upheld.

Story continues below advertisement

The Canadian government has indicated eliminating Chapter 19 is a non-starter.

Robertson said the negotiations on NAFTA are largely parallel to this particular dispute, and Canada and the U.S. almost certainly knew when the last softwood agreement expired in 2015, that we'd end up back at Chapter 19 eventually.

In the past, NAFTA panels have told the U.S. its laws did not allow it to determine whether Canada's pricing system for wood was fair using U.S. market prices, or that if there was a subsidy at play it was never as big as what the Americans tried to suggest with their duties. In 2005, a NAFTA panel unanimously agreed the U.S. industry had not been injured by Canada's stumpage fee system.

Canada would hope to have similar findings again.

NAFTA rules require a panel decision on this complaint be made no later than the end of September 2018.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter