The U.S. claim under the Softwood Lumber Agreement (SLA) against Canada for alleged subsidies on British Columbia’s timber stumpage rates has been reduced by nearly $200

million, an industry observer says.

Madison’s Lumber reporter publisher Keta Kosman said Friday the U.S. Trade Representative’s (USTR) Office has reduced its claim to $303.6 million from $499 million U.S. - a near 40-per-cent reduction in the penalty the U.S. has been seeking.

The rebuttal as filed with the London Court of International Arbitration on Dec. 23 and posted on the USTR’s website this week.

“This reduced request to the international tribunal is in response to the Canada’s defense, which was filed in November,” Kosman said in a statement.

“Canada maintained, in its defense, that low quality beetle-kill timber was not misgraded, as the U.S. alleged, because if that were the case timber buyers would have bid more for stands with a significant proportion of low quality trees.

“In further examination of the amounts paid for timber through B.C. Timber Sales, the U.S. found that B.C. buyers did indeed pay more for such stands.”

“This new penalty amount requested in the U.S. rebuttal suggests that USTR is confident that Canada will be charged with the

entire penalty of $303.6 million.”

Council of Forest Industries president John Allan said the amount is still too high.

“It’s unacceptable,” Allan said.

“Our view is we are not guilty, we have not violated the SLA and there is no liability claim here at all.”

Canada has until Feb. 3 to file its own rebuttal of this latest U.S. document and hearings before the London Court of Arbitration will be held in March. A decision is

expected in late-2012.

The U.S. first filed its complaint complaint alleging violations of the Canada-U.S. softwood lumber agreement in August 2011.