Canada escalates U.S. lumber dispute, asks WTO to adjudicate

GENEVA, March 16 (Reuters) - Canada plans to ask the WorldTrade Organization (WTO) to set up an adjudication panel tojudge its dispute with the United States over Canadian lumberexports, indicating that talks have failed to resolve the issueand Ottawa is pressing its case.

Canada has submitted the request for a meeting of the WTO'sdispute settlement body on March 27, according to an agendacirculated by the WTO on Friday.

Ottawa launched the complaint in November, saying it wouldforcefully defend its lumber industry against punitive U.S.tariffs, which it said were "unfair, unwarranted and deeplytroubling".

It had already started a challenge under the North AmericanFree Trade Agreement's Chapter 19 dispute settlement mechanism,which the United States wants to remove as part of talks tomodernise the regional trade pact the two countries share withMexico.

The U.S. Commerce Department accuses Canada of unfairlysubsidising and dumping softwood lumber, which is commonly usedin the construction of homes. It has said its duties affectabout $5.66 billion worth of imports.

The disagreement centres on the fees paid by Canadian lumbermills for timber cut largely from government-owned land. Theyare lower than fees paid on U.S. timber, which comes largelyfrom private land.

The United States imposed the tariffs after the failure oftalks to resolve the decades-long dispute over the lumber trade.(Reporting by Tom MilesEditing by Gareth Jones)