Ruling Urges Canada to Cut, Extend U.S. Drywall Dumping Duty

  • Trade agency finds U.S. did ‘cause injury’ by flooding market
  • But report says full duties wouldn’t be in national interest

A Canadian trade agency is recommending duties on U.S. drywall dumping be temporarily eliminated before being finalized at a lower rate than what was already being applied provisionally.

The Canadian International Trade Tribunal, a quasi-judicial body, issued its ruling in a statement published Wednesday evening online after its investigation into the flooding of Canada’s market in western provinces and territories with low-priced drywall, or gypsum board. The tribunal ruled the dumping did “cause injury” to the Canadian industry, though it also said in a report for Finance Minister Bill Morneau that full imposition of provisional duties wouldn’t be in the national interest.

Enacting provisional duties in their full amount “has or will substantially reduce competition” in Canada’s western regions and “cause significant harm to consumers of those goods or to businesses who use them,” the tribunal said in its report to Morneau, who had earlier requested the tribunal fast-track its recommendations.

It called for the “temporary elimination” of drywall duties by simply refunding them for a period lasting six months or until a certain import volume is reached. Final duties imposed after that should be capped at a reduced rate of 43 percent of the export price, the tribunal recommended.

Trump and Trade

“We will make it a priority to act quickly and respond to the Tribunal’s recommendations,” finance department spokesman Paul Duchesne said in an e-mail Wednesday.

The ruling also suggested the government set aside some tariff revenue for the city at the heart of Canada’s oil sector that was ravaged by fire last year. Dumping concerns are “particularly serious given the risk of delays around reconstruction efforts in Fort McMurray,” Duchesne said.

The ruling and recommendations leave the fate of a long-term Canadian drywall tariff up to Morneau and are the latest potential irritant to ties with the U.S. as President-elect Donald Trump prepares to take office. Prime Minister Justin Trudeau stressed existing bilateral trade ties in a welcome message to Congress released last week.

Trump has pledged to reopen the North American Free Trade Agreement, with Canada saying it’s willing to negotiate even as observers say Mexico is the real target. Canada and the U.S. also are locked in a dispute over softwood lumber, and Trump scored a Nafta victory this week when Ford Motor Co. backed off from a planned Mexico manufacturing expansion.

The drywall ruling comes after the Canada Border Services Agency imposed a provisional tariff as high as 277 percent, finding that American suppliers were dumping the product, or selling it below home market prices, in the four westernmost provinces and two northern territories. The border agency issued a final ruling last month, saying “the margin of dumping is not insignificant.”

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