The end of the softwood lumber dispute could be in sight following a ruling by a North American Free Trade Agreement (NAFTA) panel.

It has instructed the US International Trade Commission (ITC) to issue a determination that the evidence on record does not support a threat of material injury.

The ITC has been given 10 days to comply with the ruling – but under NAFTA rules it has no choice but to comply, even if it disagrees.

The US would then have no grounds to impose the 27% duties against softwood lumber from Canada, and would have to revoke the orders and return the US$2bn duties collected so far.

The Canadian Lumber Trade Alliance said this is the most important victory to date in the two year dispute, although it is concerned that American lumber producers could file an “extraordinary challenge” against the NAFTA panel’s decision.