Canada is taking its lumber fight against the United States to one of the most contentious elements of NAFTA - Chapter 19, which sets up trade panels to settle disputes.
Canada is launching a challenge under the North American Free Trade Agreement against recently announced USA duties against Canadian softwood lumber imports.
The Canadian government is keen on having the binational panel examine the lumber dispute because in the past, Canada has emerged victorious when appealing its case through NAFTA in the long-running trade battle.
The initial duties were imposed last spring but it wasn't until November 2 that the U.S. Department of Commerce made a final decision about the amounts that would actually apply. It said it would instruct U.S. Customs and Border Protection to collect cash deposits from importers of softwood lumber from Canada based on the final rates. If the ITC finds that US producers were not injured by Canadian softwood imports, the Commerce Department's case will be terminated.
The reduction in tariff rates came as cold comfort to Canadian producers, which had been hoping for a breakthrough softwood deal.
"As our government has said publicly for some time, we will forcefully defend Canada's softwood lumber industry, including through litigation, which we are launching today", the statement said.
In Tuesday's letter, Canada said the review through Chapter 19 should focus on "the final determination of the U.S. Department of Commerce in the countervailing duty investigation of softwood lumber from Canada".
Earlier this month, the U.S. Department of Commerce sided with the American lumber industry's contention that Canadian lumber was subsidized by the government and imposed a combined tariff of 20.83 percent on imports. The new countervailing duty would take effect after the U.S. International Trade Commission votes by December 7 on making its final determination into the issue of U.S. lumber producers being injured.