NAFTA Dispute Resolution Forms 5-Member Panel: US Softwood Lumber Tariffs on Canada

NAFTA Dispute Resolution Forms 5-Member Panel: US Softwood Lumber Tariffs on Canada

A binational panel has been formed to review the battle between Canada and the United States over softwood lumber, with three Canadians and two Americans appointed to make a ruling under NAFTA’s contentious Chapter 19 dispute-resolution mechanism, according to the Globe and Mail Tuesday.

The issue of Canadian lumber shipments into the United States is not a direct part of the North American free-trade agreement nor the U.S.-Mexico-Canada Agreement. But under NAFTA’s Chapter 19, Canada and the United States agreed to set up trade panels to settle disputes. The USMCA (or CUSMA) signed last week retains that appeal process.

Under Chapter 19, each country appoints two panelists while the fifth member is typically chosen “by lot” – what amounts to choosing by chance by coin toss.

The Commerce Department began slapping preliminary duties on Canadian lumber in April, 2017. The final combined tariffs took effect in early 2018. Those duties work out to a weighted average of 20.23 per cent, consisting of 14.19 per cent in countervailing duties and 6.04 per cent in anti-dumping levies, imposed against most Canadian lumber exporters.

In November, 2017, the Canadian government decided to challenge U.S. lumber tariffs through the NAFTA appeal process. Ottawa is also contesting the tariffs by taking its fight to the World Trade Organization.

Separately, the U.S. section of the NAFTA Secretariat said there will be no American appeal under Chapter 19 to review the International Trade Commission’s ruling in August that Canadian shipments of uncoated groundwood paper into the U.S market aren’t injuring the American industry.
North Pacific Paper Co., also known as Norpac, had lodged a complaint with the Commerce Department in 2017, alleging unfair competition from Canadian producers of uncoated groundwood paper, including newsprint and book-grade paper. The Commerce Department imposed tariffs on Canadian newsprint exporters earlier in 2018, but the commission overturned those duties, said the Globe and Mail.

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