Ottawa is requesting a NAFTA review of U.S. tariffs targeting Canada’s solar power industry under the so-called Chapter 20 dispute settlement provisions of the free trade agreement between Canada, the United States and Mexico, the federal government announced Monday.
The United States has imposed a 30-per-cent safeguard tariff on imports of solar panels from all countries, including Canada, officials said.
“The U.S. tariffs on Canadian solar panels have affected businesses and workers on both sides of the border,” said in a statement Foreign Affairs Minister Chrystia Freeland, who is also responsible for the trade portfolio with the U.S.
“The tariffs violate NAFTA rules and were imposed despite the fact that the United States International Trade Commission found that imports of solar panels from Canada were not harming U.S. industry.”
U.S. President Donald Trump speaks to reporters after signing directives to impose tariffs on imported washing machines and solar panels before signing it in the Oval Office at the White House in Washington, U.S. January 23, 2018. (Jonathan Ernst/REUTERS)
A safeguard tariff is one the three trade remedies allowed for under the World Trade Organization rules, which also include anti-dumping duties and countervailing duties.
However, unlike anti-dumping and countervailing duties, both of which require a determination of material injury to a U.S. firm, applying the safeguard requires establishing a threat of material injury.
But the country invoking the safeguard has to compensate the country targeted by the safeguard.
According to NAFTA’s Chapter 20 rule, the dispute settlement process begins with government-to-government consultations. If the dispute is not resolved, one of the parties involved may request a meeting of the NAFTA Free-Trade Commission, comprised of the countries’ trade ministers.
If the commission is unable to resolve the dispute, one of the countries may call for the establishment of a five-member arbitral panel, the rules say.
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