Canada rejects lumber deal with U.S.

WASHINGTON – Canada on Monday turned down an American proposal aimed at ending steep U.S. tariffs on Canadian lumber imports.

Provincial governments opposed the deal, which would have dropped the tariffs in exchange for a quota system limiting Canada’s access to the U.S. market.

“It’s not a question of rejecting,” Canadian Trade Minister Jim Peterson told reporters Monday after meeting with U.S. Trade Representative Robert Zoellick and Commerce Secretary Don Evans. “All we’re doing is pointing out there’s no support from the provinces.”

A spokesman for Zoellick declined to comment on the lumber dispute, but said the overall tone of the meeting was positive.

“It was a constructive and introductory-type meeting,” said spokesman Richard Mills. “While the U.S. and Canada have a number of bilateral issues that we have to work with each other on, both countries share a desire to open markets and expand trade liberalization.”

Peterson and Canadian Prime Minister Paul Martin took office last month, and Martin is scheduled to hold his first one-on-one meeting with Bush on Tuesday.

Softwood lumber from pine, spruce and other trees is commonly used to build homes. The United States imported nearly $6 billion of it from Canada in 2002, about a third of the American market.

The United States imposed stiff duties on softwood imports from four Canadian provinces in May 2002 after accusing Canada of subsidizing the industry. Canada called the duties unwarranted and protested to the World Trade Organization and a NAFTA dispute panel.

In early December, the Commerce Department proposed giving Canadian lumber duty-free access to 31.5 percent of the U.S. softwood market with stiff tariffs on shipments above that level. Canada currently has about 34 percent of the U.S. lumber market, but all of its imports are subject to the punitive tariffs.

Peterson said he remains optimistic that a solution can be reached.

“Both sides feel it is in their interest to come to a negotiated settlement,” he said.

Last month, the U.S. International Trade Commission reaffirmed the U.S. tariffs, saying American lumber producers still are being hurt by Canadian lumber imports.

In a separate action last month, a panel set up by the World Trade Organization criticized the U.S. duties as improper.