The World Trade Organization last week delayed ruling on whether Canada should be allowed to impose sanctions on U.S. products in retaliation for American duties on softwood lumber.
The WTO’s dispute settlement body held off after Washington contested the level of the sanctions that Canada was seeking, $400 million.
It also set up a panel to examine whether the United States has complied with a 2004 WTO decision, which ruled that Washington’s duties violated global trade rules.
In that decision, the dispute settlement body rejected claims by the Canadian government that the United States had acted illegally in investigating whether lumber from Canada was being sold at below the cost of production — a practice known as dumping.
But the panel also said that the U.S. government’s calculations of its anti-dumping duties were wrong because Washington used a method called “zeroing”, in which sales at above-market prices are ignored. Washington later cut its duties, but Canada said the move was insufficient.
Ottawa and Washington have a handful of complex disputes over imports of Canadian softwood lumber, which is used by homebuilders. The fight has been building up steam since the expiration of the Softwood Lumber Agreement in March 2001.
Under that accord, Canada had been allowed to ship a certain amount of lumber to the United States without duties, with tariffs set for shipments beyond that level. In return, the United States agreed not to launch any trade action, including the imposition of protective duties.
When the agreement ran out, the United States, under pressure from domestic producers, moved quickly to impose extra duties on Canadian imports.
The WTO watches over respect for the rules of global commerce established by its 148 member nations.
The Associated Press