From Bloomberg.com

Robert Lighthizer

U.S. Trade Representative Robert Lighthizer – Photographer: Andrew Harrer/Bloomberg

Canada is escalating its trade fight with Donald Trump, mounting what the U.S. calls a “broad and ill-advised attack” just as Nafta talks are set to resume.

Prime Minister Justin Trudeau’s government launched a wide-ranging World Trade Organization dispute with the U.S. over how it applies countervailing and anti-dumping duties. The paperwork was filed Dec. 20, days after a mini-round of North American Free Trade Agreement talks ended in Washington, and made public Wednesday.

It drew a harshly worded response from Trump’s trade czar. “Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade,” U.S. Trade Representative Robert Lighthizer said in a statement.

The trade fight already affects plane-makers like Boeing Co. and Bombardier Inc.; lumber producers like West Fraser Timber Co. and Canfor Corp.; and auto companies whose supply chains rely on Nafta, a pact whose fate is uncertain. Canada has launched WTO complaints over softwood and supercalendered paper, and criticized another round of duties applied in a spat over newsprint this week as “unjustified.”

Canada’s WTO claim cites U.S. measures against several of its biggest trading partners, including Canada itself, China, Germany, Japan and all but one of its fellow Group of 20 nations. “It’s almost as if Canada is taking up the cause of the international trading system,” said Mark Warner, a Toronto-based trade lawyer with MAAW Law who practices in the U.S. and Canada. “It seems very aggressive.”

Nafta talks resume in Montreal on Jan. 23. Foreign Affairs Minister Chrystia Freeland, who is Trudeau’s lead minister on the file, met in Washington Tuesday with Commerce Secretary Wilbur Ross and several Republican senators who’ve voiced support for the deal.

Freeland, in a statement Wednesday, indicated the WTO challenge stemmed from the softwood lumber dispute. “This WTO action is part of our broader litigation to defend the hundreds of thousands of good, middle class forestry jobs across our country,” she said. “We continue to engage our American counterparts to encourage them to come to a durable negotiated agreement on softwood lumber.”

Lighthizer called Canada’s WTO claims “groundless” and said they “threaten the ability of all countries to defend their workers against unfair trade.”

Warning signs about Nafta are mounting. Royal Bank of Canada Chief Executive Officer David McKay, who heads the country’s second-largest lender by assets, said this week the chances of a formal withdrawal notice are increasing, while North America’s largest auto parts maker Magna International Inc. warned against current proposals for the sector that amount to a “lose-lose-lose.”