WTO sides with Canada over U.S. duties on lumber

GENEVA — The World Trade Organization ruled Thursday that the United States had failed to bring its import duties on Canadian lumber into line with international trade rules.

A WTO panel overturned an earlier ruling, which Canada appealed. The panel said the previous ruling had incorrectly assessed the duties when concluding that the U.S. measures complied with trade rules.

The earlier panel “articulated and applied an improper standard of review in its assessment,” Thursday’s ruling said. The decision means Washington could still face 4.25 billion Canadian dollars ($3.7 billion) in penalties that Ottawa had said it would seek in the long-running lumber dispute.

However, the panel said it had been unable to complete a full analysis of whether the U.S. International Trade Commission had miscalculated the duties.

In March 2004, the global trade body found that USITC had failed to be “objective and unbiased” when it reported to the U.S. government on alleged “dumping” of Canadian lumber at below market price.

It said that while the United States had the right to impose duties on Canadian lumber, some breached international trade rules because the U.S. Commerce Department had miscalculated them. The WTO ordered the United States to comply with WTO rules.

The United States says it has fallen into line thanks to USITC rulings in late 2004 that amended import duties. But Canada contested this at the WTO, saying the country’s producers were still facing unfair duties worth 150 million Canadian dollars ($131 million) a month.

“The United States can no longer claim that its measure is WTO-consistent,” said Canada’s Trade Minister David Emerson. “I will be consulting closely with the provinces and industry to determine the best way forward following this successful appeal.”

Ottawa and Washington have a handful of complex disputes over imports of Canadian softwood lumber, which is used by house builders, and have turned frequently to the WTO in their battle.