American complaints about BC lumber have been spiked by an international trade tribunal.
The London Court of International Arbitration announced Wednesday that all allegations made against BC in the long-standing softwood lumber dispute were dismissed, without chance of future appeal.
Had BC lost the case, the cost would have been more than $300 million in penalties charged to mills across the province, driving up lumber costs and hurting the bottom line of each sawmill selling wood into the United States.
"There is a lot of meaning in this ruling - it will impact Conifex directly," said Lorraine Ducharme, spokeswoman for Conifex Timber Inc. with two mills in the Prince George region.
Bill Kordyban, president of Carrier Lumber, said BC mills were at a disadvantage no matter what the outcome. "If you win, you're left with the status quo; but if you lose, you lose big," he explained. Carrier sells anywhere from one-third to one-half of its output into the United States so they have been spared significant penalties.
"There was a financial implication, had we been found to be at fault, but also there is a confidence within the industry and that is absolutely critical," said local MLA Pat Bell, Minister of Jobs, Tourism and Innovation. "The fact that this has brought certainty to our industry and the knowledge that they can go out and make the investments necessary to continue to modernize and upgrade their mills is very good news."
John Allen, CEO of the Council of Forest Industries and president of the BC Lumber Trade Council, said the numbers were too vague for mills to actually calculate how much it would cost them if the ruling was against BC, and therefore how much money to sock away in preparation, but "it was definitely hanging over our heads" and had the ruling gone against BC "there would have been big impacts on mills and mill communities."
The ruling shows the rest of the lumber world that BC abides by its trade agreements, Allen said. The US was arguing that BC had broken the Softwood Lumber Agreement of 2006 by selling trees off of Crown land at unfairly cheap prices. The tribunal - a three-member panel made up of one Canadian, one American and one international adjudicator - was unanimous in rejecting that argument and did so five months ahead of deadline.
The timing helps, said Allen, because the US housing market is showing signs of slow improvement, meaning Canadian lumber could once again be in demand south of the border. When the international financial crisis hit in about 2008, housing starts in the US dropped to about 500,000 per year but have inched up to a rate of about 750,000 per year.
"This is a total victory for British Columbia and Canada," said Bell. "May over May of 2012 against 2011 we're seeing a growth of nine per cent in the US market. With limited recovery happening in the United States it's an opportune time to have a ruling of this nature."
The U.S. claims made against BC at the London Court of International Arbitration were launched by the Office of the US Trade Representative (OTR) and carried out by the US Department of Justice.
"We are disappointed with the outcome of this latest arbitration under the Softwood Lumber Agreement (SLA) between the Government of the United States and the Government of Canada," said Nkenge Harmon, deputy assistant to the United States Trade Representative. "Despite this result, we remain concerned that British Columbia provided publicly owned timber harvested in its interior to softwood lumber producers for prices far below market value."
