Canada declares victory in softwood lumber battle with U.S.

Even as Canada declares victory in a major softwood lumber dispute with the United States, the organization representing British Columbia’s forest industry doesn’t expect the persistent American lumber lobby to reduce its competitive tactics.

Even as Canada declares victory in a major softwood lumber dispute with the United States, the organization representing British Columbia’s forest industry doesn’t expect the persistent American lumber lobby to reduce its competitive tactics.

An international tribunal convened under the 2006 softwood lumber agreement ruled Wednesday that Canada did not circumvent the deal by shipping large quantities of pine beetle-infested lumber south of the border.

The United States government argued that B.C. mills had an unfair advantage in softwood sales because they’ve been selling logs made from the destroyed trees at lower prices.

The three-member panel at the London Court of International Arbitration ruled in favour of Canada, though the details of the ruling will remain confidential for 10 days.

If Canada lost the arbitration, financial penalties could have totalled as high as $380 million.

“When you dodge that bullet, you obviously feel pretty good,” said John Allan, president of the B.C. Lumber Trade Council, which represents 85 per cent of the province’s lumber producers.

But he said he doesn’t expect the unanimous ruling, which cannot be appealed, to persuade the U.S. forestry lobby to stop complaining.

“I know their oversight over what we do in Canada will not go away, it will never go away,” Allan said in an interview, noting the industry south of the border have been making similar complaints since the early 1980s.

“They never back down. It doesn’t pay them to back down.”

Provincial and federal politicians were lauding the decision as a triumph for the roughly 53,000 people who work in B.C.’s wood products industry.

“The fact that this is behind us, it’s clearly demonstrated that B.C. has been vindicated,” the province’s jobs minister, Pat Bell, told reporters in Vancouver.

“We’re operating under the rules provided under the softwood lumber agreement. I think (that) will give people the confidence to know that there’s a long-term future in the industry.”

Bell declared the ruling “total victory,” describing the U.S. claims as “frivolous” while suggesting it means brighter days are ahead for the industry.

Ed Fast, the federal minister of international trade, also welcomed the ruling.

“This positive outcome is the result of our close collaboration with provincial and industry partners and proof that the (softwood lumber agreement) is good for Canada’s forestry sector,” he said in Ottawa.

The United States launched the complaint in January 2011, arguing B.C. was unfairly subsidizing wood damaged by the mountain pine beetle, which has been chewing out the guts of forests for years. Pine beetle is a problem in areas across the province, but the B.C. Lumber Trade Council said Wednesday’s decision focuses on wood in the province’s Interior.

Industry observers said the dispute was the most serious to date under the softwood lumber agreement, because it struck at the core of forestry policy and timber pricing.

The U.S. Lumber Coalition expressed bitter disappointment in Wednesday’s ruling.

“While the coalition vehemently disagrees with the (court) panel conclusion, we respect and appreciate the efforts of this panel and the U.S. government to grapple with the complex issues involved in this case,” said coalition chairman Steve Swanson, who also runs the family-owned Swanson Group in Oregon.

The softwood lumber agreement was mutually extended two years last January until October 2015,

B.C. exported $3.83 billion worth of softwood lumber to all world markets in 2011, with roughly half going to the U.S. China is the province’s second largest and fastest growing market.

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