PORT ANGELES — Merrill & Ring is seeking at least $25 million in damages from the Canadian government.
The Port Angeles-based forestry and land management company says the government has unfairly restricted the company’s log exports from British Columbia in violation of NAFTA, the North American Free Trade Agreement.
Merrill & Ring owns about 8,000 acres of timberland in British Columbia.
Norm Schaaf, vice president of timberland and administration, said the government restrictions compel the company to sell its logs to British Columbia sawmills at below the prices it could get if they were exported.
The restrictions apply only in British Columbia and are supported by the provincial government.
“We can export only those logs that are not bought locally at lower prices than we could obtain elsewhere,” Schaaf said in a news release from the company.
“This is unfair and discriminatory treatment of private land owners; it kills jobs for loggers and other forestry workers and is a violation of NAFTA.”
The company on Monday gave notice of its intention to submit a claim to arbitration under NAFTA seeking at least $25 million in damages.
“It’s a notice of intent to file under several sections of NAFTA,” Schaaf told Peninsula Daily News in an interview.
Next is a mandatory 90-day consultation period with the Canadian government’s Department of Foreign Affairs and International Trade to try to find a resolution, Schaaf said.
If there is no resolution, the claim can be filed with a NAFTA dispute-settlement panel.
Three years of damages
The NAFTA panel can order compensation but can’t require the government to change its rules, Schaaf told the PDN.
He explained that NAFTA allows companies to look back three years for damages, then look forward toward potential future compensation, he said.
He said the claim for at least $25 million covers three years — but if the rules don’t change, then the claim likely will increase, Schaaf said.
“It is a lot of money to us, a significant loss based on the lost value of what could have sold for versus what did sell under export restriction rules,” Schaaf said.
The dispute concerns an agreement on the export of logs from British Columbia, Schaaf said, which is completely separate from the well-publicized U.S.-Canada quarrel over softwood lumber tariffs.
The Canadian government regulates what Merrill & Ring can and can’t export from its British Columbia timberlands, Schaaf said.
He said the company must sell its timber to Canadian mills rather than to mills in the United States or Japan, so Canadian mills get their lumber cheaper.
‘Simply not fair’
Merrill & Ring has hired Barry Appleton, managing partner of Appleton & Associates International Lawyers of Washington, D.C., and Toronto.
“Canada’s system is a clear violation of Canada’s NAFTA obligations, and it is also simply not fair,” Appleton said in Merrill & Ring’s news release.
The news release also said:
“The factual basis of M&R’s claim is that Canada has adopted a protectionist industrial policy favoring log processors in B.C. at the expense of timber harvested from private land.
“The policy is implemented through an arbitrary and discriminatory export control regime that artificially suppresses the prices of timber harvested from privately owned lands while allowing M&R’s competitors who harvest timber from Crown [government] lands to benefit from exemptions that are denied to M&R.”
Merrill & Ring is privately owned. Its family of companies hold 75,000 acres of productive timberland in Western Washington, British Columbia and New Zealand.
The company was established in 1888 with the purchase of the Pysht Tree Farm west of Port Angeles.
