Panel Directs U.S. To Review Policy

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Canada welcomed a trade dispute panel ruling which said the U.S. should review parts of its policy on softwood lumber that includes duties on most such products exported from its northern neighbor.

The duties are the legacy of a decades-long trade dispute over the structure of Canada’s timber sector that could not be resolved when a quota agreement expired in 2015. U.S. producers say Canada unfairly subsidizes its lumber industry.

The U.S. has based its tariffs on a finding that Canadian timber harvested from federal and provincial lands with low government-set stumpage fees constitutes an unfair subsidy. Most U.S. timber is harvested from private land at market rates.

On Thursday, the ruling by the North American Free Trade Agreement (NAFTA) dispute panel directed the U.S. to review the treatment of export taxes. The U.S. Commerce Department in July set a duty rate of 7.99 percent on imported Canadian softwood lumber.

“Canada is pleased that the NAFTA dispute panel agrees that elements of the U.S. dumping determination are inconsistent with U.S. law,” said Trade Minister Mary Ng.

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NAFTA was substituted by the United States-Mexico-Canada Agreement (USMCA) in 2020.