U.S., Canadian softwood lumber discussions stall

WASHINGTON – After months of sparring, Canada and the United States still can’t agree on trade rules for a popular type of lumber.

Talks between the countries, which are each other’s largest trading partners, didn’t happen this week, as Canadians had wanted. They blamed the United States for failing to respond to their proposals.

Canadian leaders are under pressure to get the issue resolved quickly to help the tens of thousands of mill employees who have been laid off since the United States imposed duties on Canadian softwood lumber last year.

“If President Bush says we are a family, then Uncle Sam ain’t my favorite relative right now,” British Columbia’s Forest Minister Mike de Jong said Friday. “Let me put it in diplomatic terms: Canadians and British Columbians are tired of getting jerked around.”

He said the United States is making Canadians angry at a time when it should be maintaining close ties with its friends. De Jong’s province accounts for about half of Canada’s softwood lumber exports to the United States.

Rich Mills, a spokesman for the U.S. Trade Representative’s office, said high-level government contacts continue. “We are trying to find a productive way forward,” he said.

Softwood lumber, which comes from cone-bearing trees, often is used in home construction for frames, floors and siding, among other uses.

For decades, U.S. softwood producers have argued their Canadian competitors have a significant trading edge because they buy wood off provincial lands by paying “stumpage” fees.

U.S. producers say those prices are too low and amount to a subsidy. They want Canada to change their system or pay duties.

Canadian producers say the U.S. industry is trying to increase its share of the market. They believe their system of buying timber isn’t unfair, just different, and want the United States to respect open trade as promised under the North American Free Trade Agreement.

The situation heated up when a 5-year-old trade agreement expired last March. Both sides since have been litigating their cases while their governments try to negotiate a compromise. Canadian Prime Minister Jean Chretien said he’s hopeful a solution can be reached in the coming weeks.

The U.S. Commerce Department and International Trade Commission have been investigating Canadian softwood trade. The Commerce Department last year imposed two temporary duties on Canadian lumber – 19.3 percent for unfair subsidies and 12.6 percent for dumping cheap wood on the U.S. market.

The 19.3 percent duty expired in December.

Both agencies are expected to wrap up their investigations this spring, and the Commerce Department could issue permanent duties in May.

Canada is contesting the duties at the World Trade Organization, which set up a panel in December to hear the case.

The Coalition for Fair Lumber Imports, which represents the U.S. softwood lumber industry, says it wants a durable solution.

But “we are comfortable that if a negotiated settlement cannot be reached to let litigation play out,” said Deborah Regan, the coalition’s manager of legislative affairs.