British Columbia's former forests minister Pat Bell says U.S. claim for C$499M penalty under SLA 2006 is less than expected, but number 'doesn't make any sense'

PRINCE GEORGE, British Columbia , August 25, 2011 () – Jobs, tourism and innovation minister Pat Bell is confident Interior British Columbia lumber companies will come out ahead in the face of he United States' claim for a $499 million penalty in a complaint filed under the Softwood Lumber Agreement.

"At one point we were expecting the claim for damages might even be higher, that is usually the way they pursue any of these sorts of claims," Bell said Monday.

"This number doesn't make any sense either but the fact that it's less than what we thought they might ask for probably reflects the weakness of their case."

The figure was released Friday, 11 days after the U.S. Trade Representative presented a brief to the London Court of International Arbitration.

The U.S. accused the provincial government of “dramatically” increasing the amount of beetle-infested timber it was selling at the cut-rate price of 25 cents a cubic metre.

The price hike has given B.C. mills at unfair advantage in softwood sales, said the complaint.

Bell said the issue is over so-called grade four logs that fall short of being 100-per-cent saw logs because they have rot or are badly cracked.

"The American industry is trying to build an argument that we changed the rules when in fact the rules are exactly the same today as they were in 2006," Bell said.

He expects the complaint will take about 18 months to resolve but is being heard in front of an independent tribunal rather than a U.S. court, as in the past.

Bell also noted that in the last three complaints the U.S. has launched - one against B.C. and two against Ontario-Quebec, B.C. won it case, Ontario-Quebec won one of its challenges and the outcome of the one they lost saw the Americans awarded $60 million, well down from the $1.8 billion they were seeking.

In its latest proposal, the U.S. is further arguing the $499 million be collected as an export tax of 30 per cent on top of the existing 15 per cent softwood lumber tax, from March 2012 to Oct, 2012, when the softwood agreement expires.

The Canadian government has 90 days to respond to the U.S. claim, with the issue going before a three-person tribunal at the end of February, 2012.




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