The head of the B.C. Lumber Trade Council says the U.S. lumber industry is trying to increase costs for the Canadian lumber producers with its latest round allegations of violations under the softwood lumber agreement.

"The (U.S.) coalition has always sought to use trade action to increase our costs, anything to increase stumpage rates, any opportunity to increase costs of exporting across the border whether it is a tariff or a tax or a quota," said John Allan, president of the council.

Allan noted the U.S. lumber producers have strong backing from Capital Hill with the support of key members of the Senate.

"The political opportunity is there to try and help them when there is dire economic circumstances," Allan said.

U.S. forestry companies contend that B.C. trees killed by the mountain pine beetle epidemic have been turned into logs or lumber at unfairly low provincial government cutting fees and shipped to the U.S. market.

The U.S. has acknowledged that some timber has been damaged by the pine beetle, but said the amount classified by B.C. as "Grade 4"' or cut-rate, could not be justified and that much of the wood was of higher -- and more valuable -- quality and therefore should face higher stumpage fees.

The bottom fell out of the softwood lumber market in North America when the housing market in the U.S. crashed with the financial crisis.

As homebuilding stopped, demand for lumber dried up and prices plunged.

Since then, Canadian lumber producers have closed sawmills and upgraded others to improve efficiency. Canfor (TSX:CFP), the country's biggest lumber producer, is in the midst of a three-year plan to spend $300 million on sawmill improvements.

The Canadian government filed its statement of defence this week against allegations B.C. is violating the Canada-U.S. softwood lumber agreement involving the export of wood from trees savaged by the mountain pine beetle in British Columbia.

Oral arguments had been scheduled to begin at the end of February in Washington, D.C.

B.C. lumber producers have argued all along that the U.S. complaint is without merit and ignored the devastating impact of the pine beetle on the B.C. Interior, according to the British Columbia Lumber Trade Council, which represents 85 per cent of the province's lumber producers.

The council has also noted that despite efforts to increase the harvest of beetle-damaged pine, the province's share of the U.S. market has fallen significantly while offshore export volumes, particularly to China, have grown.

Among other things, the statement of defence says the U.S. had failed to show that "a benefit that may have been conferred on harvesters of timber through lower stumpage rates for improperly graded logs, has been passed through to exporters or producers of softwood lumber."

The United States has won its two previous complaints before the softwood lumber agreement involving wood shipments from Ontario and Quebec. A 10 per cent additional duty on exports was lifted the end of June.

One of those claims had also been filed against Western producers, but it was unsuccessful.