Canada launches NAFTA challenge against U.S. lumber duties

A pile of logs is pictured in Squamish, British Columbia, Canada April 25, 2017. REUTERS/Ben Nelms

OTTAWA (Reuters) - The Canadian government on Tuesday launched a NAFTA trade challenge of the U.S. Commerce Department’s decision earlier this month to impose duties on softwood lumber exports from its northern neighbor.

Canada is pursuing the challenge under the North American Free Trade Agreement’s Chapter 19 dispute settlement mechanism, which the United States wants to remove as part of talks to modernize the three-nation trade pact.

“We will forcefully defend Canada’s softwood lumber industry, including through litigation‎, which we are launching today,” Canada’s foreign ministry said in a statement. It called Washington’s Nov. 2 decision to impose final duties on Canadian lumber exports as “unfair, unwarranted, and deeply troubling.”

The U.S. Commerce Department accuses Canada of unfairly subsidizing and dumping softwood lumber, which is commonly used in the construction of homes. Canada denies it is dumping the lumber.

The decision to impose tariffs follows failed talks to end the decades-long lumber dispute between the two countries.

Reporting by David Ljunggren; Editing by Paul Simao