The Canadian government fired back Wednesday at “inaccurate” claims from a group of influential American senators who are demanding the U.S. government support legal action against Canadian lumber exporters this October.

B.C. Premier Christy Clark has already warned that “thousands” of West Coast jobs could be lost if the Canadian and U.S. governments don’t find a settlement by then in a protracted dispute that dates back decades.

The senators, in a letter sent this week to U.S. Trade Representative Michael Froman, say tough action will be necessary unless the two governments reach an agreement that prevents American lumber producers from “the harmful effects of subsidized Canadian lumber in the U.S. market.”

The Canadian ambassador to the United States, David MacNaughton, sent his own letter Wednesday to one of the senators, taking issue with the claim that the “adverse impacts” of Canadian lumber in the U.S. market have been “well-documented for decades.”

He also challenged the assertion from 25 senators from both the Democratic and Republican parties that “subsidized and unfairly traded” Canadian lumber does “severe” harm to U.S. mills and mill workers.

“It is clear to me that inflated rhetoric can only complicate efforts to reach a solution” before the October deadline, MacNaughton told Oregon Democratic Sen. Ron Wyden, a senior member of the Senate’s powerful finance committee.

He said the letter made inaccurate claims to Froman, President Barack Obama’s top trade official.

“Despite repeated investigations and litigation in this sector over the past 35 years, there has never been a countervailing subsidy finding or an adverse impact (injury or threat of injury) determination by the U.S. government that has survived legal challenge.”

Canadian and U.S. negotiators have been meeting for months in hopes of reaching a deal before the October expiry of a 2006 accord that used duties and quotas to limit Canadian exports to American consumers.

The U.S. Coalition for Fair Lumber Imports, a powerful lobby group in Washington, D.C., has argued that the 2006 deal failed to control the inflow of lumber that the coalition says is unfairly subsidized by federal and provincial governments.

The U.S. Commerce Department has long supported these claims, citing as evidence in its most recent annual report last month a list of federal and provincial programs and policies, including the B.C. stumpage system that charges companies harvesting on Crown land.

“Should Canada and the United States be unable to reach an agreement that meets these conditions, the U.S. industry has made clear that it is prepared to exercise its rights under U.S. trade laws,” stated the senators’ letter.

“It is critical that U.S. trade laws be fully enforced against unfairly traded imports, including softwood lumber.”

The agreement was signed by two key members of the powerful Senate finance committee, Wyden and Idaho Republican Mike Crapo.

Another 23 senators, including California Democrat Dianne Feinstein, Minnesota Democrat (and former  comedian) Al Franken, and Florida Republican Marco Rubio, signed the letter. Of the 25 eight sit on the finance committee.

One trade analyst said the likelihood of a settlement has diminished following Obama’s final visit as president to Ottawa in June for the Three Amigos Summit.

“The best chance Canada had to reach a new softwood agreement was during Obama’s recent visit to Canada,” said Naomi Christensen of the Canada West Foundation.

“This late in the game, it would take political will from both leaders to make a deal happen. The bipartisan letter from U.S. senators to Froman only confirms that the U.S. lumber lobby is gearing up to have tariffs imposed on Canadian softwood crossing the border when the litigation freeze lifts in October.”

Christensen noted that even if the U.S. doesn’t have a solid legal case to argue before the World Trade Organization or the North American Free Trade Agreement, dispute resolution before international tribunals will take about two years after duties are imposed on Canadian imports.

“The U.S. industry has an incentive to lobby for duties because even if they are found to be illegal — which has been the case in the majority of recent disputes — it is the U.S. government, not industry, that would be on the hook for repayment.”