WTO Panel Ruling Favours Canada in Challenge to U.S. Lumber Tariffs
August 28, 2020
A World Trade Organization panel has ruled mainly in Canada’s favour and against the United States in the long-running dispute between the two countries over pricing, shipments and alleged subsidies of softwood lumber.
The WTO dispute-resolution panel’s decision, issued August 24, drew praise from Canadian government and timber industry officials but a sharp rebuke from U.S. Trade Representative Robert Lighthizer and a blast of criticism from a U.S. lumber industry group.
Softwood lumber is an important material in housing construction.
Mary Ng, Canada’s minister of small business, export promotion and international trade, hailed the WTO panel’s decision, which was initiated in 2018 by her country’s government, challenging U.S. tariffs on Canadian softwood lumber.
Ng called on the U.S. to end the duties it imposed on Canadian lumber exports in 2017. She said in a statement, “Canada remains unequivocal: U.S. duties on Canadian softwood lumber are completely unwarranted and unfair. This decision confirms that.”
Ng denied U.S. claims that Canada subsidizes its lumber industry.
Lighthizer shows no signs of relenting, however. He said in a statement, “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.”
Jason Brochu, the lumber coalition’s co-chair, noted that the WTO ruling isn’t binding on the U.S.
The WTO ruling and the two countries’ sharply divergent reactions to it come as lumber prices in the U.S. have soared by more than 130% since mid-April, according to the National Association of Home Builders. The reasons include a rise in home-building and DIYs increased interest in home improvement projects as COVID-19 kept many at home.
The WTO panel, among other things, found fault with the factors the U.S. used to determine Canadian stumpage — payments by companies to provincial governments for harvesting timber on government land—and thus to calculate the tariff levels.