OTTAWA, Ont. — The U.S. has 100 days to prove that Canadian softwood exports are damaging the American lumber industry according to a NAFTA panel ruling.

The ruling, made by three American and two Canadian panelists, was unanimous that the U.S. had failed so far to prove that Canadian timber pricing has threatened American producers. The decision has been hailed as a victory by Canadian officials, in what they hope may prove to be a giant step towards victory in the long-running trade war.

"All of this is good news for us but the litigation process is slow," Trevor Eakelin, chairman of the Alberta Softwood Lumber Trade Council, told the Canadian Press. "Obviously by the time we get a new calculation from the ITC (International Trade Commission), we will be into 2004 and we’ll have to continue to pay the punishing duties."

Since May 2002, Canadian producers have doled out about $1 billion in countervailing duties and half that in anti-dumping deposits. The anti-dumping deposits would have to be returned to Canada if the final ruling favours Canada.

John Allan of the B.C. Lumber Trade Council also praised the ruling.

"This is about the fundamental underpinnings of the American case against us," he said. "This is the bedrock upon which the subsidy and dumping allegations rest and this bedrock, in my view, has now been badly shattered."

Both NAFTA and the World Trade Organizations have handed down a series of recent rulings that Canadian officials have considered victories.

"We are more confident than ever about our legal case," said International Trade Minister, Pierre Pettigrew.

– With files from CP