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Tuesday, May 18, 2004

Canada to renew talks on U.S. lumber duties

BLOOMBERG NEWS

Canadian Trade Minister Jim Peterson says he is set to renew talks on ending 27 percent U.S. duties that have cost Canadian lumber companies such as Canfor Corp. about $2 billion during the last two years.

Peterson got the backing of Canada's provinces to resume negotiations at a meeting in Ottawa. They didn't agree on an offer, other than a pledge to continue to adjust lumber programs to assuage U.S. complaints that Canadian producers are unfairly subsidized.

"Our principal goal is to achieve a long-term resolution of the dispute," Peterson said at a news conference yesterday. "Forest policy changes offer the best hope for such a resolution."

Canada rejected in January a U.S. offer to replace the duties with a quota that would leave sawmills with about a third of the U.S. market for pine, spruce and fir boards. The provinces, which control most of the timberland, refused to back it because they said it didn't guarantee a path to free trade.

Such a commitment must be part of any future settlement, Peterson said. The United States argues that the penalties are justified because provinces don't charge their producers market rates to cut on government-owned land, allowing them to undercut their U.S. rivals.

"Our position all along has been to find a long-term, durable solution to this issue, and we're hopeful the process will move forward," Mary Brown Brewer, a spokeswoman for Commerce Secretary Donald Evans, said from Washington, D.C.

Canada has challenged the duties in several cases at the World Trade Organization and under the North American Free Trade Agreement. Most of the decisions have been mixed, supporting Canada's claim that the United States miscalculated the levies, while rejecting the country's assertion that it does not subsidize the lumber industry.

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