Canada’s complaint sets stage for NAFTA discussion
January 18, 2018
Canada filed a complaint with the World Trade Organization (WTO) over tariffs under the Trump administration, just a few weeks before scheduled talks on the North American Free Trade Agreement. The complaint was filed Dec. 20, but made public on January 10.
Some analysts have called the complaint a "high-stakes game," designed to destabilize U.S. markets prior to NAFTA discussion. The hog market, which depends on trade within North America, has been on a roller coaster since the news broke; February-dated lean hog contracts fell 2.1 percent to 70.975 cents a pound at the Chicago Mercantile Exchange, following the announcement. Mexico and Canada are the second and third largest destinations for U.S. pork exports after Hong Kong/China, according to the U.S. Meat Export Federation.
Canada's Foreign Minister Chrystia Freeland voiced concerns surrounding the next round of NAFTA talks, and the U.S.' possible withdrawal, the same day the WTO complaint, challenging Washington's use of anti-dumping and anti-subsidy duties, was released.
The 32-page complaint cites nearly 200 examples of alleged U.S. transgressions involving not just Canada, but also China, India, Brazil and the European Union.
“Remedies ensure that trade is fair by counteracting dumping or subsidies that are injuring U.S. workers, farmers, and manufacturers. Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade.” Robert Lighthizer, U.S. trade representative
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Freeland said the legal action was in response to the "unfair and unwarranted" U.S. duties against Canada's softwood lumber producers and part of a "broader litigation" to defend forestry jobs.
In the complaint, Canada says the U.S. procedures broke the WTO's Anti-Dumping Agreement, the Agreement on Subsidies and Countervailing Measures, the General Agreement on Tariffs and Trade and the Understanding on Rules and Procedures Governing the Settlement of Disputes. Anti-dumping laws protect countries from foreign imports that may be brought in and sold at a price lower than the price normally charged in the home market.
U.S. Trade Representative Robert Lighthizer called Canada's new dispute a "broad and ill-advised attack on the U.S. trade remedies system."
"Remedies ensure that trade is fair by counteracting dumping or subsidies that are injuring U.S. workers, farmers, and manufacturers. Canada's claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade," he added in a statement.
Canada-U.S. trade lawyer Mark Warner told reporters that the complaint could be warranted, but the timing may be adding to the growing tension leading up to the NAFTA discussion.
"This isn't going to calm passions in Montreal," Warner said. "It's almost like Canada is fighting this on behalf of the international community… I wonder why would you bring this complaint now."
Warner called Canada's move a self-defeating one that actually harms the interests of its own workers and businesses. Even if Canada succeeded with their claims, other countries would primarily benefit, not Canada, Lighthizer said.
In an interview with the Wall Street Journal, President Donald Trump said he's still willing to terminate NAFTA but would prefer to renegotiate and is willing to wait until after Mexico's upcoming election.
"I'm leaving it a little flexible because they have an election coming up. … [A]nd I understand that that makes it a little bit difficult for them … . [T]here's no rush, but I will say that if we don't make a fair deal for this country, a Trump deal, … I will terminate," he said in a transcript of the interview published by the Wall Street Journal
"With that being said, I would rather be able to negotiate. We've made a lot of headway. We're moving along nicely. Bob Lighthizer and others are working very hard, and we'll see what happens."
Mexico will hold its next general election on July 1, which pushes NAFTA talks beyond the previously set March deadline.
On January 17, Trump told reporters that terminating NAFTA would result in the "best deal" and lead to revamping the 24-year-old trade pact.
"We're renegotiating NAFTA now. We'll see what happens. I may terminate NAFTA," Trump said in an interview with Reuters.
Some in the U.S. agriculture sector have voiced concerns of major tariff increases with a NAFTA withdrawal. And automakers from Detroit and around the country are asking the Trump administration not to quit NAFTA and to back away from some of its demands in the negotiations.
Trump addressed the NAFTA topic at the American Farm Bureau Federation's 2018 Annual Convention.
"To level the playing field for all of our farmers and ranchers as well as our manufacturers we are reviewing all of our trade agreements," he said. "On NAFTA I am working very hard to get a better deal for our farmers and ranchers and manufacturers."