Canada has launched a wide ranging attack on U.S. trade practices with an international complaint over Washington's use of punitive duties. The U.S. called it ill-advised.
The complaint, which was filed last month but not released until Wednesday, ramps up tensions amid talks on renegotiating the North American Free Trade Agreement by the three member countries — the U.S., Canada and Mexico.
Continue Reading Below
A senior government official said Canada is under no illusion that there is a risk President Trump might pull the U.S. out of the trade agreement, while another senior official said the government is prepared for that possibility while not being certain it will happen. Both officials spoke on condition of anonymity because they were not authorized to speak publicly.
Canada is asking the World Trade Organization to examine the use of duties in the United States, alleging they violate international law. Canada cited 122 cases in which it says the U.S. unfairly imposed duties on foreign countries, not just Canada.
The U.S. just announced duties of up to 9 percent on Canadian paper. It follows a series of similar penalties as the U.S. alleges unfair trade practices by Canada in the form of softwood lumber and Bombardier subsidies.
U.S. Trade Representative Robert Lighthizer said in a statement that Canada's complaint is a "broad and ill-advised attack on the U.S. trade remedies system." He said it would damage Canada's own interest and only benefit China.
"Canada's claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade," Lighthizer said. "Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada. For example, if the U.S. removed the orders listed in Canada's complaint, the flood of imports from China and other countries would negatively impact billions of dollars in Canadian exports to the United States."
Nelson Wiseman, a political science professor at the University of Toronto, said Canada's complaint might have been made public Wednesday because Canada could be signaling to the Canadian public not to expect anything from the coming round of NAFTA talks in Montreal later this month, which he says may well be the last round.
"I think Trump will give the six-month notice required under NAFTA because he will see it as a negotiating tactic," Wiseman said. "Trump prefers bilateral negotiations with each of Canada and Mexico."
The U.S. and Canada typically enjoy a friendly trade relationship, but things have soured this year as Trump has demanded big changes to NAFTA, which is in its 24th year.
Trump's demands, which range from requiring that more auto production be in the U.S. to having more government contracts in the NAFTA bloc go to U.S. companies, will likely be unacceptable to Canada and Mexico.