Canada's WTO broadside: What's the strategy ?

Prime Minister Justin Trudeau meets with U.S. President Donald Trump in the Oval Office of the White House in Washington DC Feb. 13 2017

Canada has "thrown a grenade" at the USA filing a complaint with the World Trade Organisation (WTO) against its southern neighbour's use of trade sanctions, which might wreck their current North American Free Trade Agreement (NAFTA) negotiations, said an worldwide trade law expert.

"Canada's new request for consultations at the WTO is a broad and ill-advised attack on the U.S. trade remedies system", said U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerMORE in a statement.

The WTO revealed on Wednesday that Canada had filed a complaint last month accusing the U.S. of unfairly imposing countervailing and anti-dumping duties, not only on Canadian softwood lumber but also on goods from many other countries.

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Thirty-two-page complaint by Canada cites U.S. investigations of products from countries around the world, with decisions that date back to 1996.

Lighthizer argued that a win for Canada would mainly help other countries like China, which would take any opportunity to dump their low-cost imports into the US market. "In the past Canada has filed one-off cases in relation to a specific product or dispute such as softwood lumber".

Given recent musings that Ottawa expects the Trump administration is about to pull the plug on NAFTA, there is speculation that Canada is either trying to gain leverage ahead of the next round of negotiations, or signaling that, with no free trade agreement in place, it intends to use the WTO to fight its trade battles.

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The Canadian government is taking the United States to the world's trade court in a wide-ranging complaint that accuses Washington of flouting the rules of global commerce.

After reports Wednesday that Canada now considered it inevitable that Trump would try to withdraw the USA from the treaty, one Canadian official with knowledge of the NAFTA negotiation offered a more nuanced position in an email to the Post, saying, "it's not accurate to say we're convinced", but that there was "no question we think there's a chance it could happen". "This is effectively Canada bringing a dispute on behalf of all exporters in the world - the Europeans, Japan, China - because they're making a systemic challenge".

"For example, if the USA removed the orders listed in Canada's complaint, the flood of imports from China and other countries would negatively impact billions of dollars in Canadian exports to the United States, including almost $9-billion in exports of steel and aluminum products and more than $2.5-billion in exports of wood and paper products", Mr. Lighthizer said.

He said it could be another step toward what he says is a nightmare scenario for the NAFTA talks, which is that the Americans call a halt to those negotiations and talk separately with Mexico in hopes of signing a bilateral deal before the Mexican elections later this year and US midterm Congressional elections this fall.

He pointed out that the vast majority of cases Canada is complaining about don't even involve Canadian companies.

This is hardly Donald Trump's first protectionist action against Canada.

Ideally, Canada would want to keep both chapter 19 and the United States' commitment to the WTO, since it gives it more ammunition in disputes.

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