December 13, 2007 / 12:39 AM / 10 years ago

Tribunal may rule on U.S.-Canada lumber spat in Feb

NEW YORK (Reuters) - An international arbitration tribunal said on Wednesday it expects to rule by the end of February on U.S. allegations that Canada has violated a bilateral trade pact on softwood lumber.

“We feel that we would probably be in a position to come up with a decision by the end of February,” said Jur Karl-Heinz Bockstiegel, chairman of the tribunal which heard the case for the London Court of International Arbitration, a commercial mediation body.

“It’s not a promise, but that’s our definite intention,” Bockstiegel told the hearing, which was held in New York.

The Softwood Lumber Agreement (SLA) between the two countries was signed in 2006 to end years of wrangling over sales of Canadian softwood lumber -- primarily spruce, pine and fur -- to U.S. buyers. Canada supplies about one third of the lumber used in the United States for construction.

The U.S. lumber industry now contends that Canada is breaking the deal by shipping too much lumber from Western Canada. It also says Canada has allowed the provinces of Quebec and Ontario to create improper financial aid programs for lumber producers.

Wednesday's hearing centered mostly on a section of the SLA which gives Canadian lumber exporters the choice of paying export charges of up to 15 percent based on their selling price to the United States, or capping the charge at 5 percent along with a restraint in sales volume. (here)

The United States accuses Canada of interpreting this section against the spirit of the agreement, giving Canadian exporters an unfair advantage.

Both sides also argued over whether the starting point for calculating export charges and volumes should be the third quarter of last year or the first quarter of this year.

“Canada, has not, in our view, fulfilled its end of the bargain,” Patricia McCarthy, an attorney with the U.S. Department of Justice, told the tribunal.

Canada countered it was clear about its rights.

“In effect, the SLA gives the regions in Canada an effective option, which the United States tries to blur,” said Guillermo Aguilar-Alvarez, a New York-based attorney representing Canada in the case.

Canadian Trade Minister David Emerson told reporters in Ottawa on Tuesday he would not be surprised if the United States brought another lumber-related case against Canada for arbitration.

Washington has informally complained about provincial government subsidies in Canada but has not filed a case yet.

“Well, they’ve said all along that they had concerns over a number of the provincial aid programs and we haven’t yet heard about a filing on that,” Emerson said. “I would not be surprised if there was a filing at some point before long, but until I see it, I just don’t know.”

Reporting by Barani Krishnan; editing by Jim Marshall

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