Agence France Presse | 22 Jan 2011

US claims victory over Canada in lumber dispute

WASHINGTON — The United States claimed victory against Canada Friday in a trade dispute over Ottawa’s alleged subsidies for lumber exports to the United States.

The office of the US Trade Representative said an arbitration court had supported claims that Canada broke the terms of a five-year-old agreement on the bilateral lumber trade.

"The tribunal agreed that a number of provincial assistance programs put into place by Quebec and Ontario circumvent the Softwood Lumber Agreement and breach the deal struck by the United States and Canada in 2006," Ron Kirk, the US Trade Representative (USTR), said in a statement.

Canada faces additional export levies for violating the 2006 pact which could amount to $59.4 million, according to the USTR’s office.

In a statement, Canadian Trade Minister Peter Van Loan noted "that the tribunal rejected 97 percent of the United States’ $1.86-billion claim as having no basis."

Ottawa, he added, was "closely reviewing" the decision and its impact on its forestry sector.

It was the second complaint by Washington against Ottawa over the lumber pact that has gone to arbitration.

The first, in 2007, was over Canada’s miscalculation of export quotas and resulted in a $68 million fine.

The USTR lodged a third complaint on Tuesday, alleging that the province of British Columbia was setting an artificially low price for timber from public lands sold to lumber exporters.

Van Loan rejected the newest charges, saying they address "a pricing system that is no longer in place" and rely "on unfounded allegations."

He pointed to an "unprecedented infestation of the mountain pine beetle" in British Columbia for an increased proportion of low-value logs in the province’s timber harvest, sold at auction.