OTTAWA (Reuters) - Canada should slash anti-dumping duties on U.S. drywall imports, an official Canadian trade panel said on Wednesday ahead of the inauguration of an American administration likely to take a tough stance with its trading partners.
In a recommendation to Finance Minister Bill Morneau, the Canadian International Trade Tribunal (CITT) said U.S. firms had dumped drywall in Canada but maintaining current duties of up to 276.5 percent would harm businesses, consumers and the country's trade interests.
The United States is Canada's biggest trading partner and U.S. President-elect Donald Trump has promised to either renegotiate or scrap the North American Free Trade Agreement and overhaul trade policy after he takes office on Jan. 20.
Canadian construction firms have said tariffs on U.S drywall make it more expensive to build homes out of the material, also known as gypsum board, and are hampering recovery efforts in the Alberta town of Fort McMurray which was ravaged by a fire last year.
"The imposition of provisional duties or duties applicable to gypsum board imported from the United States .. in its full amount, is contrary to Canada's economic, trade or commercial interests," the CITT, which operates in Canada's trade remedy system and reports to parliament, said in a statement.
The CITT said the import duty should not exceed 43 percent until U.S. imports reached a certain level. The full duties will continue to be collected in full until Morneau decides what to do with the CITT report.
Morneau is very likely to agree with the recommendations, said a person familiar with the matter who asked to remain anonymous given the sensitivity of the situation.
The CITT also said Ottawa should consider waiving all duties on drywall used in the Fort McMurray region if it felt the reduced 43 percent tariff would harm the reconstruction effort.
The duties were provisionally imposed by the Canadian Border Services Agency last September after CertainTeed Gypsum Canada Inc, a unit of French construction firm Compagnie de Saint Gobain PA, complained about dumping.
Canadian Finance Ministry officials were not immediately available for comment. CertainTeed Gypsum Canada did not immediately respond to a request for comment.
The U.S. embassy in Ottawa referred questions to the U.S. Commerce Department, which did not immediately respond to a request for comment.
Reporting by David Ljunggren; Editing by Andrew Hay