The Commerce Department set the new rates on Tuesday, settling on average payments of 10.81 per cent.

That figure is a considerable drop from the current average payment of 20.15 per cent.

"This is a very positive step forward as Canada fights to have the illegal duties reduced to zero," John Allan, president of the B.C. Lumber Trade Council, told the Canadian Press.

The softwood dispute has been the main trade irritant between Canada and the U.S.

The U.S. believes Canada improperly subsidizes softwood production because most U.S. timber is harvested from private land at market prices, while in Canada the wood is mostly cut on Crown land.

The U.S. government has collected about $5 billion in duties on Canadian softwood exports to the U.S. since the tariffs were introduced in May 2002.

Canada has claimed several victories in previous decisions by the World Trade Organization and the North American Free Trade Agreement bodies.