U.S. hikes pressure on Canada in timber pricing spat

Fri Oct 8, 2010 6:56pm EDT
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By Doug Palmer

WASHINGTON (Reuters) - The United States accused Canada on Friday of unfair timber pricing practices that it said violated a 2006 bilateral softwood lumber agreement and took the first step toward arbitration to resolve the dispute.

U.S. Trade Representative Ron Kirk said the United States has asked Canada for formal consultations on its concern that the province of British Columbia was charging too low a price for timber harvested on its public lands.

British Columbia is home to major lumber producers Canfor Corp West Fraser Timber Co and Tolko Industries.

"The decision to move to consultations is intended to emphasize the importance of resolving this matter," Kirk said in a statement that followed what he said had been months of unsuccessful bilateral talks on the issue.

Canadian Trade Minister Peter Van Loan said he was disappointed with the U.S. decision and Canada would argue forcefully in the upcoming consultations that there is "no justification for arbitration."

"The U.S. complaint deals with a pricing system that is no longer in place," Van Loan said in a statement in Ottawa.

The fight stems from different timber ownership structures. In the United States, much land is privately held. In Canada, provincial governments own most timber and charge fees to log it.

Under the rules of the 2006 pact, the two sides have to begin talks within 20 days and either side can ask for binding arbitration if a deal is not struck within 40 days.   Continued...