U.S. Lumber Coalition Disappointed by Arbitral Decision Regarding Remedy for Quebec and Ontario Violations of the SLA

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Mar 26, 2014, 04:14 ET

WASHINGTON, March 26, 2014 /PRNewswire-USNewswire/ -- The U.S. Lumber Coalition is disappointed by today's London Court of International Arbitration (LCIA) ruling that Canada is not required to continue to apply compensatory adjustments to export taxes under the Softwood Lumber Agreement (SLA), notwithstanding that the adjustments previously awarded by the LCIA for Canadian violations of the SLA have not been fully collected.

In January 2011, the LCIA found that Quebec and Ontario had provided new subsidies to softwood lumber producers in breach of the SLA. The LCIA tribunal determined that additional export taxes on Quebec and Ontario lumber shipments to the United States were necessary to compensate U.S. industry for these violations. The Tribunal expected these export taxes to amount to $59 million by the then-scheduled expiration date of the SLA in October 2013. However, as of mid-2013, less than $20 million had actually been collected.

After the LCIA issued its decision, the United States and Canada agreed to extend the SLA until 2015. At the joint request of the U.S. and Canadian governments, the Tribunal issued today's clarification that the award of compensatory export taxes was intended to end in 2013, regardless of whether the violations had actually been compensated.

"The Coalition is very disappointed that Canada will not be required to fully compensate U.S. industry for the harm the Tribunal found to be caused by Canada's violations of our trade agreement," said Luke Brochu, Chairman of the Coalition and President of Pleasant River Lumber Company in Maine. "For Canada to be allowed to collect export taxes with one hand, then give them back with the other hand through illegal subsidies, and not to pay a penalty for it, seriously undermines our faith in the usefulness of this trade agreement with Canada."

The Coalition believes that any new trade agreement with Canada governing softwood lumber trade should provide for more automatic adjustments to export measures that reflect, using objective and results-based measures, the benefits that Canadian lumber producers receive from government timber pricing systems and other subsidies. This would allow for adjustments to offset any increased benefits without resort to arbitration, while offering Canadian provinces incentives to adopt verifiable improvements in market pricing for timber.

"The Coalition greatly appreciates the strong effort by the U.S. Government, especially the U.S. Trade Representative and the Department of Justice, to ensure that the SLA is properly enforced," Mr. Brochu stated. "But we believe that, to avoid a return to trade litigation after the SLA expires next year, any new trade agreement with Canada needs to have a more effective enforcement system than what we appear to have under the current agreement."

About the U.S. Lumber Coalition

The U.S. Lumber Coalition is an alliance of large and small lumber producers from around the country, joined by hundreds of thousands of their employees, and tens of thousands of woodland owners. The Coalition is united in opposition to Canada's unfair lumber-trade practices, including the gross under-pricing of timber on government-owned lands. For more information, please visit the Coalition's website at www.uslumbercoalition.org.

SOURCE The U.S. Lumber Coalition