VANCOUVER, B.C. — Canfor Corp. is suing the U.S. government, seeking a minimum of $250 million under the North American Free Trade Agreement for losses it says it has incurred due to export duties.
The amount of the lawsuit may still climb, depending on how long two punishing duties totaling 32 per cent are in place on Canadian softwood lumber exports, says David Emerson, chief executive of the Vancouver-based firm.
He suggests other lumber companies are considering similar moves and are in a bit of a wait-and-see mode. The Canfor suit alleges U.S. authorities were “arbitrary, discriminatory and capricious” in the way they calculated countervailing and anti-dumping duties on the Canadian industry that went into effect starting in August.
The suit is filed under NAFTA’s Chapter 11, which allows companies to sue governments for losses on investments in another of the three countries, in this case the U.S. The notice of intent to sue was filed in Washington on the eve of the first meeting between Marc Racicot, the U.S. special envoy on softwood, and Pierre Pettigrew, the Minister for International Trade. The two men are to meet in Ottawa today.
Meantime, trade analysts are divided over whether the Canfor case is winnable. There is a whole section governing anti-dumping and countervailing duties in the NAFTA agreement, so it is unclear whether Chapter 11 would apply in the end.
Gerry Shannon, president of Shannon and Associates and a former deputy trade minister, says Chapter 11 is a body of work that is very loosely defined and open to interpretation.
“I would never laugh at a Chapter 11 case,” he stresses.
But the spokesman for the U.S. industry insists he is doing just that.
“It is laughable,” says John Ragosta. “The Canadian side should spend more time trying to find a solution.”
Canfor is the Canada’s largest lumber producer, sending 70 per cent of its lumber to the U.S.
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