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Issue #583 | Forest Products

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2014 Media Kit
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Canada mulls trade sanctions against US

By: | at 07:00 PM | Channel(s): International Trade  

On Nov 23rd Canada said it was considering whether to slap trade sanctions on a wide range of US imports to retaliate for Washington’s refusal to abandon a controversial anti-dumping law.

A spokeswoman for Canada’s international trade ministry said if the sanctions were imposed, the maximum value could reach $720 million in 2007.

Ottawa is angry that the United States has not obeyed rulings by the World Trade Organization to repeal the Byrd Amendment, which allows US companies to receive duties collected from foreign competitors.

The amendment has in particular been applied to imports of Canadian softwood lumber, the focus of a protracted bilateral trade dispute. Canadian softwood lumber producers have paid over $3 billion in cash deposits to date.

Ottawa said it would spend the next month asking Canadians what they thought about the idea of sanctions and what imports they felt should be targeted.

“Clearly, retaliation is not Canada’s preferred option, but the US has failed to live up to its international trade obligations and repeal the Byrd Amendment,” International Trade Minister Jim Peterson said in a statement.

The European Union recently said it was likely to slap sanctions on $40 million to $50 million worth of US goods ranging from textiles to sweet corn in early 2005 if the Byrd Amendment was not repealed soon.

A Canadian government release said Ottawa would consult with citizens before deciding whether to slap a 100% surtax on a long list of US imports worth a total of C$5 billion ($4.2 billion) a year.

But Carrie Goodge, a spokeswoman for the international trade ministry, said the government would in fact choose products from the list that might be subject to the tax.

A WTO ruling in August allowed Canada to impose sanctions worth up to 72% of the money collected from Canadian companies under Byrd and then paid to US firms.

The total handed over to US companies from their Canadian counterparts this year is expected to reach a modest $14 million. But Goodge said $1 billion of US duties on Canadian softwood could be paid out every year starting in 2007, which means in theory Canada could impose sanctions of $720 million.

Officials say the softwood lumber dispute will be on the agenda when President George W. Bush visits Ottawa this week. He and Prime Minister Paul Martin will also discuss a US ban on the import of live Canadian cattle.

The list of products on which Canada has proposed imposing the punitive surtaxes includes live swine; cigarettes; whiskies; rum, vodka, wine, beer made from malt; plywood; televisions; various dried beans and peas; and some clothes. (Reuters) ($1=$1.19 Canadian).