January 26, 2011

U.S. says it wins again in Canada lumber dispute

WASHINGTON | Fri Jan 21, 2011 5:04pm EST

(Reuters) - A binding arbitration panel has ruled Canada has again breached its softwood lumber deal with the United States, this time with aid offered by provincial governments in Quebec and Ontario, the U.S. trade representative said on Friday.

It marks the second recent win for the United States at the London Court of International Arbitration on the perennially thorny trade issue. It won a similar case at the tribunal in 2009, and last week launched a third case.

"This result is important for U.S. workers, firms and our softwood lumber industry. We look forward to Canada working quickly to implement the decision of the tribunal," U.S. Trade Representative Ron Kirk said in a statement.

The Canadian government said it was reviewing the decision and its impact on Canadian industry.

"I note that the tribunal rejected 97 percent of the United States' $1.86-billion claim as having no basis," Canadian International Trade Minister Peter Van Loan said in a statement.

Lumber producers in the United States have complained for decades that Canada unfairly subsidizes its producers.

In 2006, the two countries agreed to stop fighting about lumber in the courts, and signed a seven-year deal that allowed for binding arbitration of any issues.

In the arbitration result announced on Friday, the London tribunal ruled that provincial grants, loans, tax credits and other programs in Ontario and Quebec did not comply with the terms of the deal, according to the USTR.

Canada now must impose additional charges on lumber exports to the United States from the two provinces, collecting an estimated $59.4 million, the USTR said.

If Canada does not comply within 30 days, the United States can impose additional import duties on Canadian lumber, the USTR said.

A U.S. industry group said the victory boded well for the recently filed case against Canada for allegedly underpricing lumber harvested in British Columbia.

"We encounter just too many compliance issues with Canada," said Zoltan van Heyningen, spokesman for the Coalition for Fair Lumber Imports.