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Canadian softwood lumber is pictured at the Port of Vancouver Lynnterm terminal in North Vancouver. The U.S. and Canada will end up agreeing to an even worse deal than the 2006 softwood agreement.

Ben Nelms/The Globe and Mail

The U.S. government says it is launching investigations to determine whether softwood lumber imports from Canada were dumped into the country and harmed the American forestry sector.

The U.S. Commerce Department says it will work with the U.S. International Trade Commission to examine allegations that wood was dumped at less than its fair value and that Canadian forestry firms received unfair financial assistance from governments.

The decision to investigate is in response to petitions filed last month from the U.S. Lumber Coalition and could result in the imposition of preliminary duties in the next few months.

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The Commerce Department will determine whether dumping took place while the International Trade Commission will decide if the U.S. industry was materially injured or threatened.

If the commission determines by Jan. 9 that Canadian softwood harmed the U.S. lumber sector, it will issue preliminary countervailing duties on Feb. 21 and preliminary anti-dumping duties on May 4, unless those deadlines are extended.

Canada exported about US$4.5-billion worth of lumber to the U.S. last year, according to the Commerce Department.

The U.S. Lumber Coalition alleges that provincial governments, which own most of Canada's vast timberlands, provide trees to Canadian producers at rates far below market value, along with other subsidies.

As a result, the group says Canadian lumber is being sold for less than fair value in the U.S., hurting mills, workers and communities.

Softwood producers in Canada dispute the U.S. Lumber Coalition's allegations. Montreal-based Resolute Forest Products said producers in Quebec and Ontario pay market prices and should have access to free trade with the U.S.

The B.C. Lumber Trade Council has said the claims levelled by the U.S. lumber lobby are based on unsubstantiated arguments that were previously rejected by independent NAFTA panels.

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