Canada to appeal WTO ruling on US ‘zeroing’ in lumber row

A WTO Dispute Settlement Body panel last week rejected Ottawa’s argument that the US use of the method known as “zeroing” violated international trade rules.

In a statement, Foreign Minister Chrystia Freeland said: “The WTO has ruled more than 20 times (in the past) that zeroing, a method of calculating and applying artificially high and unfair duty rates, is inconsistent with WTO rules.”

The United States has repeatedly lost cases before the WTO over its use of zeroing, which calculates the price of imports compared to the normal value in the United States to determine predatory pricing.

But in its ruling last Tuesday, the WTO panel “agreed with the United States that such type of zeroing is permissible” in cases where targeted dumping is suspected.

The repeated rulings by the WTO appeals body especially against the use of zeroing had been one of Washington’s main complaints against the global trade body.

It is one of the issues mentioned by Washington to justify its blocking of appointments of new judges to the appellate branch of a WTO dispute panel, which could force it to shut down by the end of this year.

Canadian softwood lumber has been a source of conflict in US-Canadian trade for more than three decades.

Ottawa brought its latest trade dispute with the United States over the US softwood lumber tariffs to the WTO in November 2017, after the US Commerce Department slapped duties of up to 18.19 percent on the price of Canadian lumber products.

The administration of US President Donald Trump said the move was warranted after concluding that Canada had unfairly subsidized and dumped the product on the US market.

Freeland called the tariffs “unfair and unwarranted.”