U.S. and Canada fight over lumber, and beetles

Tue Jan 18, 2011 4:33pm EST
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By Doug Palmer and Allan Dowd

WASHINGTON/VANCOUVER (Reuters) - The United States accused Canada on Tuesday of violating a lumber trade deal by under pricing wood from trees killed in a massive insect infestation in British Columbia.

Washington filed the complaint on behalf of U.S. lumber producers who say their Western Canadian rivals are being subsidized though use of the cheap timber, which they say is prohibited under the 2006 trade deal.

The request for binding arbitration to resolve the dispute is the latest flare-up in a quarrel over lumber used for housing construction that has been a thorn between the major trading partners for decades.

"This type of benefit harms U.S. workers and firms in the lumber industry, and is inconsistent with Canada's obligations under the 2006 Softwood Lumber Agreement," United States Trade Representative Ron Kirk said in a statement.

If the United States wins the case in the London Court of International Arbitration, lumber shipped to the United States from British Columbia, Canada's largest softwood lumber producing province, could be subject to additional export taxes.

Unlike in the United States, nearly all Canadian forests are owned by provincial governments, which sell logging rights to forestry companies using often-Byzantine pricing systems that are based, in part, on the quality of the wood.

American producers complained that British Columbia has used the mountain pine beetle infestation to classify trees as having little or no lumber value when they are actually still usable by sawmills.

"I think the entire U.S. industry and in fact the entire North American industry outside of interior British Columbia has been affected by this behavior," said Zoltan van Heyningen, a spokesman for the U.S. Coalition for Fair Lumber Imports.   Continued...