l offers mixed decision on Canadian softwood lumber dispute

An arbitration tribunal agreed with the United States that Canada violated the Softwood Lumber Agreement by failing to properly adjust the quota volumes of Canada's eastern provinces in the first six months of 2007 to account for rapidly changing market conditions.

But the tribunal also found the western provinces exempt.

The SLA took effect on Oct. 12, 2006, ending 20 years of litigation between the United States and Canada. The United States has long held that Canada's aid to its softwood lumber industry allowed it to sell to the U.S. market at less than fair market value.

The SLA provides for binding arbitration through the LCIA (formerly the London Court of International Arbitration) to resolve disputes between the United States and Canada regarding interpretation and implementation of the agreement. Under the SLA, there is no appeal from the decision of the tribunal.

The United States argued that Canada breached the SLA by waiting until July 2007, instead of January 2007, to make downward adjustments for the eastern provinces and by failing to make any adjustments for British Columbia and Alberta.

The tribunal found that Canada is required to make a downward adjustment only to the export volume caps for the eastern provinces, but not for British Columbia and Alberta. The tribunal did agree with the United States that Canada needed to make these adjustments starting in January 2007.