2011-08-28

U.S. seeks $499 million export tax against B.C. lumber companies

The United States is seeking a $499 million penalty against Interior British Columbia lumber companies in a complaint filed under the Softwood Lumber Agreement.

The U.S. alleges that Interior sawmills unfairly benefited from the mountain pine beetle epidemic by paying salvage log prices for dead pine trees that were successfully milled into lumber. It bases much of its claim on the fact that the volume of low-grade logs being harvested and milled into lumber has gone up in the B.C. Interior, but the volume of higher grade construction lumber did not decline.

The low salvage timber rate lumber producers paid for pine beetle wood, 25 cents a cubic metre, resulted in a $499 million benefit to B.C. producers in contravention of the 2006 agreement, the United States Trade Representative argues in a brief filed last week with the London Court of International Arbitration. The brief was only made public this week. The U.S. wants the penalty to be imposed as an export tax levied against Interior producers.