Canada Launches Nafta Challenge of Lumber Duties on Eve of Talks

(Bloomberg) -- Canada is using a trade deal Donald Trump has threatened to scrap to formally challenge a U.S. decision to slap duties on softwood lumber.

Foreign Minister Chrystia Freeland announced Tuesday the request for a dispute panel review under the North American Free Trade Agreement. The challenge is being led by government as well as several provinces and lumber companies including West Fraser Timber Co. and Canfor Corp.

The U.S. confirmed tariffs on the lumber this month, though at levels lower than earlier indicated. Countervailing duties of 14.25 percent and anti-dumping duties of 6.58 percent will be levied on Canadian lumber, the Commerce Department said Nov. 2.

Freeland, in a statement released by her office Tuesday, called the duties “unfair, unwarranted and deeply troubling” for Canadians, echoing previous statements on the lingering dispute. “We will forcefully defend Canada’s softwood lumber industry, including through litigation, which we are launching today.”

Canada gave formal notice of its challenge in a letter to the U.S. Section of the Nafta Secretariat, dated Tuesday. The fifth round of Nafta talks begins Wednesday in Mexico City, and the Trump administration has already proposed eliminating the Chapter 19 dispute panels being used in this challenge from the agreement.

Canada is the world’s largest softwood lumber exporter and the U.S. is its biggest market. The trade dispute has been an intermittent source of friction for years and was reignited in 2016 when the U.S. lumber industry filed a petition asking for duties. The group alleges Canadian wood is heavily subsidized and imports are harming U.S. mills and workers.

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