MONTREAL, Que. — A draft resolution between Canada and the U.S. may end the lengthy softwood lumber dispute between the two countries.

"We have found common ground on a possible agreement," Sebastien Theberge, a spokesman for International Trade Minister, Pierre Pettigrew told reporters yesterday. "It’s a new step. We haven’t gone this far before in negotiations."

U.S. officials also confirmed a draft deal had been reached, but added it had yet to be endorsed by industry.

“There is a proposal that both governments have agreed to take back to their industries,” Heather Layman of the U.S. Commerce Department told media in Washington, D.C., yesterday.

The U.S. has accused Canada of dumping softwood into the American marketplace, and slapped 10 per cent countervailing duties against Canadian softwood in 2001. It’s widely thought the draft agreement would re-introduce a quota system for Canadian lumber entering the U.S. Theberge hinted the deal may require the U.S. to return some of the $1.5 billion in duties already collected from Canadian producers.