US Loses WTO Case on CV Duties on Canadian Supercalendered Paper
A panel at the World Trade Organization held that 2015 countervailing duties levied against two Canadian producers of supercalendered paper relied on assumptions that were not justified, and an appellate body panel agreed on Feb. 6.
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Supercalendered paper is glossy paper used in advertising inserts, catalogs and magazines.
The U.S. had levied 20.18% countervailing duties on Port Hawkesbury supercalendered paper, arguing that the company received subsidized electricity and that the government of Nova Scotia provided for below-market stumpage and biomass. It also levied a 17.87% duty on Resolute Canada as part of the same case in 2015 (see 1512090012). It used adverse facts determinations, because it said that the companies did not cooperate with full information about subsidies, therefore Commerce Department officials could make assumptions about what the subsidies were worth. The WTO has repeatedly criticized the Commerce Department's adverse facts approach.
The CVD case was dropped in July 2018, after the panel went against the United States (see 1807100056). At that time, U.S. Trade Representative Robert Lighthizer called the report “the latest example of judicial activism at the WTO seeking to undermine [antidumping and countervailing duty] laws and make it harder for Members to address unfair trade” (see: 1807090025).
The Canadian Embassy said “this finding has important implications for U.S. subsidy investigations: Commerce will be required to cease its unfair practice of imposing punitive duty rates in situations where such rates are uncalled for.” While it will not affect supercalendered paper exports, since the duties were rescinded and refunded, Canada said it should have a positive impact on future CVD cases against Canadian products.
“This decision shows the importance of a functioning WTO dispute settlement system and finding a permanent solution to the Appellate Body impasse,” the Embassy said. The appellate body was able to rule in this case, because oral arguments were held before two of the panelists' terms expired.
One panelist dissented, saying that the case was no longer able to be appealed since the original CVD case had been reversed by Commerce.