In a statement US trade representative Ron Kirk accused Canada of selling softwood timber from public lands to Canadian lumber exporters for prices below those agreed in a 2006 pact.

The Canadian province of British Columbia is said to have sold exporters timber felled from public lands for a low price of 25 cents per cubic meter.

"Canada is in breach of its commitments," said Kirk. "When we believe our trading partners are not living up to their obligations, we will not hesitate to enforce our rights under our trade agreements."

Washington said talks to resolve the matter without arbitration had failed.

It is the third dispute between the two countries over the 2006 agreement, which was designed to regulate the multi-billion dollar trade.

Canada was ordered to pay over Canadian $68 million (US$68.8 million) in export duties after failing to correctly calculate quotas.

The second case, involving provincial subsidies has not yet been resolved.

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