Canada Hits Back At US In Lumber Spat

by Glen Shapiro, LawAndTax-News.com, New York

21 January 2011

Canada’s Minister of International Trade, Peter Van Loan, has responded to the United States's decision to initiate arbitration proceedings with the nation over a dispute regarding the implementation of pricing mechanisms prescribed in the Softwood Lumber Agreement (SLA).

Van Loan’s comments come after the announcement by the United States Trade Representative, Ron Kirk that the United States would be seeking a binding agreement on the pricing of softwood lumber exports from Canada, following allegations that Canada is under-pricing lumber entering the US market.

It is alleged by the US, that by selling timber harvested from public lands in the interior region of British Columbia for prices below those provided for under the timber pricing system grandfathered under the SLA, Canada provides a benefit to Canadian softwood lumber producers in circumvention of the export measures provided for in the SLA.

The SLA was intended to resolve disputes over Canadian subsidies on softwood lumber exports. According to the US, under the SLA, Canada agreed to impose certain measures to affect the price of softwood lumber exports to the US. The SLA provides that Canada may not circumvent those export measures, including by the provision of grants or other benefits.

Van Loan’s statement in response, says:

“The US complaint deals with a pricing system that is no longer in place.”

“Canada and British Columbia have been transparent on B.C.’s market-based timber pricing system. The increased proportion of low-value logs in B.C.’s timber harvest is due to the unprecedented infestation of the mountain pine beetle. Regrettably, the United States continues to rely on unfounded allegations that are flatly contradicted by trade and other economic data.”

“I am disappointed that the United States has rejected cooperative dialogue on this matter in favour of formal dispute settlement. There is no justification for arbitration, and Canada will vigorously defend the interests of its softwood lumber industry.”

“The Softwood Lumber Agreement was negotiated with a view to establishing stability, enhancing cooperation and facilitating an open dialogue between Canada and the United States.”

“The Softwood Lumber Agreement has been in effect since October 2006. The Agreement was designed to create a predictable trade environment, and to provide stability and certainty to producers and consumers on both sides of the border. It put an end to unproductive trade litigation and has served both countries’ industries well during the recent global economic downturn."

Under the Softwood Lumber Agreement, the arbitration will be conducted in accordance with the rules of the London Court of International Arbitration (LCIA). A panel of arbitrators will hear the case.

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