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Arbitrator fines Canada again for softwood lumber breach

A fine of $60 million has been levied against the lumber industry in Eastern Canada by the international arbitrator of the Canada/U.S. Softwood Lumber Agreement.  In this latest decision, the tribunal agreed with the U.S. claimant that a…

A fine of $60 million has been levied against the lumber industry in Eastern Canada by the international arbitrator of the Canada/U.S. Softwood Lumber Agreement.  In this latest decision, the tribunal agreed with the U.S. claimant that a number of provincial assistance program circumvented the 2006 agreement.

Canada’s Minister of International Trade, Peter Van Loan, said the federal government is reviewing the decision. Canada has 30 days to either cure the breach of the agreement, or impose additional charges on exports of softwood lumber to the U.S. from Ontario and Quebec.

Van Loan commented that while the tribunal did rule in favor of the U.S., it did not fully support the Americans’ claim. “I note that the tribunal rejected 97% of the United States’ $1.86 billion claim as having no basis.”

The breach is related to the use of the adjustment factor in the calculation of the volume of exports to the United States. Canada applied the adjustment factor to some provinces beginning July 2007, but the tribunal determined that Canada should have applied it beginning January 2007.

This is the second dispute to result in fines for Eastern Canadian companies. In the earlier case, Canada was directed in 2009 to pay $68 million to remedy the breach of the agreement. A third case was announced only days before this current judgment, and is related to beetle-killed wood in B.C. being priced as “salvage” lumber.