MONTREAL – The U.S. arbitration submission against B.C. softwood lumber producers will remain confidential for a week, but reports about its contents suggest the unfair trade case against Canada is without merit, a group representing B.C. lumber producers said Wednesday.
“(It) ignores the real facts associated with the devastating impact of the Mountain Pine Beetle epidemic on the B.C. Interior,” says John Allan, president of the British Columbia Lumber Trade Council, which represents 85 per cent of the province’s lumber producers.
U.S. forestry companies complain that B.C. trees destroyed by the pine beetle have been turned into logs or lumber – at low provincial government cutting fees – and shipped to the U.S. market.
They say that has given B.C. mills at unfair advantage in softwood sales, said the complaint.
In January, it filed a complaint after consultations last fall failed to result in a resolution.
The B.C. lumber council didn’t expect the full U.S. brief to be immediately made public. But it had anticipated the American penalty request would contain a “fabricated” number to draw attention.
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The industry was bracing for a damage claim that could reach several billion dollars, although recent reports suggest it may be less than US$500 million.
One U.S. trade publication last week suggested the U.S. could seek US$4 billion in damages. But another one based in Washington mentioned a claim of US$499 million.
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The final award, should Canada lose, could be substantially lower. The Americans won a $60-million penalty earlier in the year despite seeking a $2-billion penalty.
Despite B.C. efforts to increase the harvest of beetle damaged pine, the province’s share of the U.S. market has fallen significantly while offshore export volumes particularly to China has grown, Allan said in a news release.
“Given these facts, it is difficult to regard the U.S. claim for hundreds of millions of dollars in damages as anything more than an attempt to grab headlines rather than one that accurately reflects economic and commercial reality.”
He said the industry accelerated the harvesting of damaged timber over the last few years while it still had some value.
This explains the increased volume of poor quality logs, not because the province circumvented the 2006 bilateral agreement as the U.S alleges.
Canada will have until November to respond. An oral hearing is scheduled for Feb. 27 in Washington, D.C.
A final ruling by the three-member panel of European lawyers is expected by fall.
Canada has said it believes the U.S. case was based on “unfounded” allegations.”
British Columbia also denied the province was cheating, saying American producers should have known there would be an effort to clear dead, beetle-infested timber.
The U.S. acknowledges some timber has been damaged by the pine beetle, but said the amount classified by B.C. as “grade 4” or cut-rate, can’t be justified.
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