The office of the US Trade Representative said an arbitration court had supported claims that Canada broke the terms of a five-year-old agreement on the bilateral lumber trade.

"The tribunal agreed that a number of provincial assistance programs put into place by Quebec and Ontario circumvent the Softwood Lumber Agreement and breach the deal struck by the United States and Canada in 2006," Ron Kirk, the US Trade Representative (USTR), said in a statement.

Canada faces additional export levies for violating the 2006 pact which could amount to $59.4 million dollars, according to the USTR's office.

It was the second complaint by Washington against Ottawa over the lumber pact that has gone to arbitration.

The first, in 2007, was over Canada's miscalculation of export quotas and resulted in a $68 million fine.

The USTR lodged a third complaint on Tuesday, alleging that the province of British Columbia was setting an artificially low price for timber from public lands sold to lumber exporters.

Canadian Trade Minister Peter Van Loan rejected the newest charges, saying they address "a pricing system that is no longer in place" and rely "on unfounded allegations."

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