February 27, 2009 / 1:05 AM / 10 years ago

U.S. claims victory in lumber case against Canada

WASHINGTON (Reuters) - An international tribunal has ruled for the United States in a dispute with Canada over a softwood lumber deal struck in 2006, the U.S. Trade Representative’s Office said on Thursday.

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

The decision requires Canada to fix its breach in the agreement within 30 days, acting U.S. Trade Representative Peter Allgeier said in a statement.

Ottawa also must collect an additional 10 percent export charge on softwood lumber shipments from Eastern Canadian provinces until C$68.26 million ($54.8 million at current exchange rates) has been accumulated, he said.

“We are pleased with the tribunal’s decision,” Allgeier said. “This dispute settlement proceeding is now at an end. We look forward to Canada working quickly to cure the breach.”

Canadian officials said they were disappointed with the ruling and would discuss with Canadian industry and provinces how to implement it.

“Canada remains committed to the success of the Softwood Lumber Agreement, which has ended a long-standing dispute and has brought certainty and stability to the lumber industry,” Canadian Trade Minister Stockwell Day said in a statement.

The softwood lumber agreement runs for seven years, with the possibility of an extension for two years. It ended a dispute over duties the United States had imposed on Canadian lumber to offset what it said were unfair pricing practices.

Canada agreed in the 2006 deal to impose taxes and volume caps on exports to the United States when the prevailing price of lumber is at or below $355 per thousand board feet.

The measures become more stringent as the market price of lumber falls. This month, the prevailing monthly price of lumber is $207 per thousand board feet, the U.S. Trade Representative’s Office said.

It said the LCIA tribunal (formerly the London Court of International Arbitration) found Canada breached the 2006 agreement by failing to calculate quotas properly during the first six months of 2007.

A U.S. industry group welcomed the ruling, but said Canada continued to cheat on the pact.

“Better overall Canadian compliance is a must if the Softwood Lumber Trade Agreement is to survive as an alternative to resumed trade litigation,” said Steve Swanson, chairman of the Coalition for Fair Lumber Imports.

In January 2008, Washington also challenged programs for softwood lumber producers by the provinces of Quebec and Ontario that it believes violate the 2006 pact. A decision in that arbitration is expected later this year.

Reporting by Doug Palmer and Roberta Rampton in Washington and David Ljunggren in Ottawa; Editing by Peter Cooney

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