By STEVEN CHASE
Saturday, June 16, 2007 – Page A4
OTTAWA -- Less than one
year after Ottawa signed a deal that was supposed to end the
Canada-U.S. softwood lumber dispute, fresh U.S. complaints are
forcing it to consider concessions that could mean higher
export taxes for some Canadian timber companies.
The United States filed a formal objection against Canadian
softwood practices this spring, charging that recent
provincial aid programs amount to subsidies and complaining
that timber firms are not paying enough export levies under
the 2006 deal.
Unless Canada can agree to terms that assuage U.S.
concerns, the dispute will head to binding arbitration by
foreign judges, a process spelled out in last year's softwood
deal. A loss in court for Ottawa could mean millions of
dollars in extra export taxes, or more curbs on U.S.-bound
Federal Trade Minister David Emerson said yesterday that
opinion is divided on whether Ottawa could successfully fend
off the U.S. complaints in court.
He said he believes Canada should reach a settlement rather
than risk a costly new legal battle that Ottawa might not
"There are some big differences of view on where this thing
could go in arbitration, and, candidly, I'd prefer if we can
reach an understanding, constructively," Mr. Emerson said
"It's always better than getting into another bout of
litigation and arbitration."
The federal Trade Minister couldn't say what form an
"understanding" might take, but one charge Washington wants
addressed is that Canadian producers, particularly in British
Columbia, aren't paying enough export tax given what Americans
say is a surging volume of U.S.-bound wood.
A "surge mechanism" in the softwood deal stipulates that
the penalty on shipments must jump sharply when the amount of
wood shipped hits a trigger point.
The 2006 softwood lumber dispute truce between Canada and
the United States replaced punitive U.S. duties on Canadian
softwood with shipment restrictions and an export tax
collected by Ottawa.
B.C. industry leaders say they're following the 2006
softwood deal to the letter and are prepared to defend their
actions before judges rather than make concessions to
Washington that could cost them tens of millions of dollars in
extra export taxes.
"A plain-language reading of the agreement supports our
position," said John Allan, president of the British Columbia
Lumber Trade Council.
"There's an arbitration process provided for in the
agreement and there's $10-million of our money being put aside
to pay for [it]. We feel we have a strong position ...
therefore use the process."