U.S., Canada remain apart on lumber deal Settlement sought before midnight Thursday

WASHINGTON – U.S. and Canadian negotiators remained far apart Monday as they tried to settle a long-running trade dispute over a popular type of lumber.

“We are far from any agreement,” said Deborah Regan, spokeswoman for the Coalition of Fair Lumber Imports, a U.S. lumber industry group.

U.S. officials declined to comment.

Sebastien Theberge, spokesman for Canada’s international trade minister, said all trade negotiations have good and bad days.

President Bush met Thursday with Canadian Prime Minister Jean Chretien and both expressed optimism that an agreement would be reached. But weekend negotiations failed to get the sides any closer together.

Negotiators are hoping for a settlement before midnight Thursday, when the Commerce Department is scheduled to wrap up its investigation and could issue punitive duties.

The trade dispute involves softwood lumber, commonly used in home construction. The United States imported $6.4 billion worth of softwood lumber from Canada in 2000.

The situation heated up when a 5-year-old trade agreement expired last March. Both sides have since been litigating their cases while their governments try to negotiate a compromise.

U.S. lumber producers say they’re losing sales and jobs because Canada subsidizes its softwood industry by charging artificially low fees to log public lands.

The Canadians argue that their lumber is sometimes cheaper for a variety of market reasons, including production efficiency. They want the United States to drop its legal challenges and open its markets, as promised under the North American Free Trade Agreement.

The United States has proposed taxes of 19.9 percent to 32 percent on Canadian lumber. The taxes would be tied to lumber prices – the lower the price, the higher the tax. Canada countered by proposing taxes ranging up to 10 percent, according to people familiar with the talks.

American Consumers for Affordable Homes spokeswoman Susan Petniunas said taxing Canadian lumber will boost prices for U.S. consumers, particularly on big-ticket items such as homes. She said the tax could cut as many as 450,000 families out of the housing market.

The U.S. proposal is ridiculous, said Petniunas, who represents homebuilders, Home Depot and other related interests. “We are very uncomfortable with the way things are going.”