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Canada, U.S. hammer out softwood lumber deal

VANCOUVER, B.C. -- Canada and the U.S. hammered out a framework Wednesday to negotiate an end to the longstanding s...

VANCOUVER, B.C. — Canada and the U.S. hammered out a framework Wednesday to negotiate an end to the longstanding softwood lumber trade dispute, according to The Canadian Press.

The framework includes a cap on Canada’s share of the U.S. lumber market, a border tax and the return of 78 per cent of the $5 billion in punitive duties collected by U.S. Customs since May 2002. Officials from the major producing provinces briefed lumber industry executives on the proposed framework, settled the day before a self-imposed Apr. 27 deadline. Canada and the U.S. have been battling over softwood lumber for three decades.

In the latest round, the U.S. slapped duties totalling more than 27 per cent on Canadian lumber after American producers complained it was subsidized and being dumped on the U.S. market. The framework, worked out during intensive talks in Washington this week, is supposed to form the basis for a potential long-term settlement of the dispute.

But lumber groups in Quebec and Ontario already say they’re opposed to its terms.

Those terms include capping Canada’s share of the key U.S. market at the present 34 per cent and a sliding tax triggered when the North American market price for softwood lumber falls below US$360.

Sources say the framework is being pitched by Ottawa as a take-it-or-leave-it proposition, with the producing provinces and their lumber sectors expected to turn thumbs-up or thumbs-down.

The framework was produced in high-pressure talks led by Michael Wilson, Canada’s ambassador in Washington, and Deputy U.S. Trade Representative Susan Schwab.

The U.S. government had until midnight today to decide whether to file a final appeal – known as an extraordinary challenge – to a North American Free Trade Agreement ruling that rejected the subsidy argument at the heart of the duties.

Although the deadline had no direct relevance to the talks, in practical terms it was seen as a benchmark for the willingness to negotiate a settlement.

Executives from the B.C. lumber sector, which accounts for more than half the $10-billion annual U.S. export business, were silent on the framework.

But the president of the Ontario Forest Industries Association said her members would be unwilling to accept a quota deal that’s combined with a tax deal.

The U.S. imposed countervailing and anti-dumping duties in 2002 after the U.S. Coalition for Fair Lumber Imports filed their fourth complaint in 30 years alleging provincial forestry policies subsidized Canadian exports.

If this framework produces an agreement, it will echo the 1996 deal that saw quotas and export taxes imposed after Canada overcame previous duties.

Both Canadian and U.S. producers weren’t happy with that deal and the coalition launched its latest complaint within days of the agreements expiry in April 2001.

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