U.S. rejects Canada's payment for lumber deal breach

Fri Apr 3, 2009 5:31pm EDT
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By Roberta Rampton

WASHINGTON (Reuters) - The United States Trade Representative on Friday said a Canadian offer of $36.66 million (C$46.7 million) fails to make amends for a breach of the softwood lumber trade deal between the two countries.

The U.S. government will review its options for responding to the offer, which could include imposing duties on imports of Canadian lumber, USTR Ron Kirk said in a release.

"Canada's claim that it has complied with the arbitration tribunal's decision regarding Canada's obligations under the (softwood lumber agreement) is unfounded," Kirk said.

In February, the LCIA (formerly the London Court of International Arbitration) ruled that Canada had miscalculated quotas for lumber exports from four provinces for the first half of 2007.

An LCIA tribunal directed Canada to impose a 10 percent duty on lumber exports from the provinces until it had collected a total of C$68.26 million.

On Tuesday, Canada said it would pay C$46.7 million in damages, but said it would pay more if the tribunal rules that was not enough.

The USTR said the agreement provides that if Canada fails to cure its breach on time and as ordered, the United States can impose customs duties to collect the damages ordered by the tribunal.

"The United States is now reviewing the options available and will make a decision shortly on an appropriate course of action," the USTR said in the release.   Continued...

<p>A pile of cut logs sit on Spanish Banks in Vancouver, British Columbia April 26, 2006. REUTERS/Andy Clark</p>