NAFTA Talks Could be Affected by WTO Challenge to U.S. AD/CV Proceedings

Sandler, Travis & Rosenberg Trade Report

The World Trade Organization announced this week that Canada has filed a broad complaint against U.S. anti-dumping and countervailing duty laws, regulations, and other measures. U.S. Trade Representative Robert Lighthizer called the case “ill-advised” and suggested it could affect the ongoing negotiations on updating NAFTA, which resume in Montreal Jan. 23. The complaint focuses on a number of practices that Canada asserts are inconsistent with U.S. obligations under WTO rules.

  • failure to apply reduced AD or CV duty rates that result from a section 129 determination (to bring a measure into conformity with WTO rules) to prior unliquidated entries, thus subjecting them to final assessment and liquidation at the higher WTO-inconsistent rates
  • failure to issue instructions to U.S. Customs and Border Protection to refund excess cash deposits immediately following the implementation of a section 129 determination that results in lower AD or CV duty rates
    retroactive implementation of provisional AD or CV duties following preliminary affirmative critical circumstances determinations
  • treatment of export permitting processes, export levies, export quotas, export restraints, export bans, and other similar export controls on input products that are used or incorporated into a product subject to a CV duty investigation as financial contributions
  • in benefit calculations in CV proceedings, assigning a zero value to comparisons where the government price is higher than the benchmark price
  • restriction on interested parties submitting factual information or other evidence before preliminary AD and CV duty determinations
  • consideration of a tie vote by the International Trade Commission in an AD or CV injury investigation to be an affirmative determination

Lighthizer said Canada’s claims are “unfounded” and “could only lower U.S. confidence that Canada is committed to mutually beneficial trade.” This statement suggests that the case could affect how the White House approaches what one observer called the “potentially pivotal” round of NAFTA negotiations scheduled for later this month.

Lighthizer also asserted that Canada is “acting against its own workers’ and businesses’ interests” because a victory would result in a “flood of imports” into the U.S. from China and other countries that “would negatively impact billions of dollars in Canadian exports to the United States, including nearly $9 billion in exports of steel and aluminum products and more than $2.5 billion in exports of wood and paper products.”