The latest lumber trade dispute between the United States and Canada includes Oregon mill owners, a renegade Canadian lumber baron and North America’s most destructive bark beetle.

The Associated Press

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EUGENE, Ore. —The latest lumber trade dispute between the United States and Canada includes Oregon mill owners, a renegade Canadian lumber baron and North America’s most destructive bark beetle.The conflict entangles two nations, with two-way trade exceeding $430 billion a year, The Oregonian reported.

U.S. industry leaders contend British Columbia misclassifies timber as salvage material so Canadian companies can bombard the United States with subsidized lumber. That, they say, undercuts U.S. mills and jobs.

Canadian government and industry leaders dispute the charges. The conflict is heating up and means that Washington could haul Ottawa back to a London tribunal as soon as this week.

Managers of southern Oregon’s Swanson Group, for example, blame unfair Canadian competition, in large part, for continuing production cuts and the 2007 closure of its Glide mill that employed 100.

Jeff Redd, associate editor at Eugene-based Random Lengths, which tracks the forest-products industry, said the housing crash has heightened tensions as companies fight for shares of a diminished $6 billion U.S. softwood lumber market.

“It’s very seldom there’s been peace in this lumber war,” Redd said. “I don’t imagine either side’s going to change its basic premise anytime soon.”

The outcome of the dispute is crucial to the economies of Oregon, Washington and British Columbia, where forests contain vast stands of fir, pine and other softwoods.

The softwoods are milled into studs and beams for construction, in contrast to hardwood used for cabinetry and floors. Canada holds a 28 percent share of the U.S. softwood market.

Rep. Peter DeFazio, D-Ore., and other Northwest delegation members want the Obama administration to fight what they consider illegal Canadian subsidies.

But John Allan, president of the BC Lumber Trade Council, said his industry organization spent more than $100 million as litigation exploded between 2001 and 2006.

“The U.S. lumber lobby is using U.S. senators, namely Max Baucus of Montana and Olympia Snowe of Maine, to press the administration to take us to the woodshed and beat the hell out of us,” he said.

The heart of the timber tussle is the U.S. claim that Canada maintains a government-controlled system that unfairly subsidizes the lumber industry while the United States uses a market-based approach.

In Canada, officials set prices of timber, most of which is owned by provincial governments. In the United States, companies buy timber at auction.

The Coalition for Fair Lumber Imports, a U.S. industry group based in Washington, D.C., claims British Columbia and other provinces provide timber at below-market costs, depressing lumber prices.

“It allows Canadian companies to chase the lumber price down further and still make money,” said Zoltan van Heyningen, the U.S. coalition’s executive director.

So B.C. lumber mills enjoy cut-rate wood prices, based on falsely graded timber, van Heyningen said, while U.S. producers pay much higher market rates.

But Pat Bell, British Columbia’s minister of forests, mines and lands, said grading standards and enforcement haven’t changed in years. Pulp-grade timber volumes have increased legitimately because of widespread bug kills, he said.

Information from: The Oregonian, http://www.oregonlive.com

Jan 6, 2010