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Canada Files Wide-Ranging WTO Challenge to US AD/CVD Rules

Canada recently filed a wide-ranging challenge at the World Trade Organization to U.S. procedures in antidumping and countervailing duty investigations. In a request for consultations publicly released Jan. 10, Canada said several aspects of U.S antidumping and countervailing duty laws and regulations violate WTO rules, including the retroactive cash deposit requirements after “critical circumstances” determinations.

In AD/CVD investigations, the Commerce Department routinely sets cash deposit requirements beginning 90 days prior to its preliminary determinations when it finds that exporters are increasing shipments in an effort to avoid duties before they are imposed. Canada says these “critical circumstances” determinations run counter to WTO rules, which only allow “retroactive imposition of definitive” (i.e., final) “duties during the 90 days prior to the preliminary determination.”

Canada also says the retroactive duties violate WTO countervailing duty rules because they result in the collection of “provisional duties” (i.e., cash deposits) during the 60-day period after the date a CV duty investigation begins, and also result in the application of provisional duties longer than the WTO allows in CV duty cases.

Canada also identified several other areas of U.S. AD/CVD law that it says violate WTO rules. The complaint said the U.S. only applies rate changes from WTO decisions to entries beginning the date of its “Section 129” implementation notice, continuing to apply WTO-inconsistent cash deposit requirements to entries before the notice. Commerce also improperly treats export controls as subsidies and bars the introduction of new evidence after the preliminary stage in AD/CVD investigations, Canada said.

The request for consultations begins a 60-day period of discussions between the U.S. and Canada. If that period passes without agreement, Canada may request a dispute settlement panel to decide the case. U.S. Trade Representative Robert Lighthizer issued a statement calling the request for consultations a “broad and ill-advised attack on the U.S. trade remedies system,” and said it “could only lower U.S. confidence that Canada is committed to mutually beneficial trade.” Even if Canada succeeds on its “groundless claims,” other countries, namely China, would benefit, he said. “Canada’s complaint is bad for Canada.”