U.S. USES DRUG LAW AGAINST B.C. LUMBER IMPORTERS

Surrey Companies Singled Out For Allegedly Mislabelling Shipments

The U.S. government, employing a federal statute normally used to
prosecute drug and contraband cases, has sued three Canadian
companies, accusing them of illegally importing softwood lumber in the
late 1990s.

The lawsuit, filed June 17 in U.S. District Court in Seattle, seeks
more than US$5 million in penalties and adds a new twist to the
long-running softwood-lumber dispute between Canada and the U.S.

The suit alleges that three Canadian companies based at the same
address in Surrey, British Columbia - Westex Timber Mills Ltd., Palahi
Logging and Specialty Products Inc., and AGM Hardwood Export Inc. -
illegally imported dimension lumber used for framing houses by falsely
labelling it as "rougher headed fascia," a kind of wood typically used
for trim.

The U.S. government says the labelling violated the Softwood Lumber
Agreement, which was in effect at the time. The agreement allowed
Canada to import 14.7 billion board feet of lumber into the U.S.
duty-free and imposed tariffs on any shipments beyond that. The quotas
did not apply to rougher headed fascia.

U.S. Customs typically sends such lumber import disputes to the Court
of International Trade if they can't be resolved. It is unusual for a
case like this to end up in federal district court and rarer still for
prosecutors to use federal statute 1595a, which is normally used in
drug and contraband cases, lawyers from both sides said.

But Assistant U.S. Attorney David Reese Jennings said it's not
uncommon that a federal statute is "dormant and suddenly is pressed
into use for a purpose it's clearly intended to pursue.

"If you look at this statute, it covers not only drugs but any other
item which has been unlawfully imported into the U.S.," Jennings said.
"If this works, you may well see more."

According to the lawsuit, a U.S. customs inspector in Sumas,
Washington, near the Canadian border, discovered the first violation
in a load of lumber destined for Tampa, Florida, in April 1999. A
subsequent investigation found that the defendants imported or tried
to import 173 loads of falsely labelled lumber into the ports of Sumas
and Blaine, Washington, between December 1998 and December 1999, the
lawsuit said.

The suit also names as defendants three Westex executives: president
and managing director Mohinder Sull, general manager and marketing
assistant Wayne Northgraves, and director Baljit Sull.

Paul Brinkman, a Washington, D.C.-based attorney with the law firm of
Alston & Bird, who represented the defendants during the customs
investigation, called the government's tactics heavy-handed.

"It's a draconian penalty, which is fine for seizing a load of
cocaine, but not for a load of lumber products," he said. "It's a
huge, massive penalty."