Canadian official upbeat on lumber talks with U.S.

A key Canadian forestry official said on Thursday he saw progress being made in talks with the United States to end the countries' trade fight over softwood lumber. British Columbia Forestry Minister Mike de Jong said U.S. officials appeared interested in a proposal by Canada's largest lumber producing province to overhaul its system regulating how private companies harvest trees from public forests. "I'm not ready to break out the champagne yet, but I am moderately more optimistic than I was yesterday," de Jong told reporters after the second of three days of talks being held in British Columbia. In August, Washington imposed a 19.3 percent duty on the C$10 billion of softwood construction lumber shipped to the United States each year from Canada.

U.S. producers say the Canadian system subsidizes its sawmills. British Columbia produces about half of the Canadian exports, which in total accounts for nearly a third of the lumber bought in the United States. Ottawa and the provinces deny the subsidy allegation, but British Columbia officials said they have presented U.S. officials with proposals to make the province's timber allocation system more market-based. Details of the plan have not been released, but de Jong said one of changes proposed was to end requirements that allocate trees for harvesting based on where in the province they will be processed rather than on market demand. The harvesting rules are key element of the forestry system that critics say has become overly byzantine as it balances private sector demands for timber with public demand to protect forestry jobs and create tax revenue from cutting fees. U.S. trade officials in Vancouver declined comment on the status of the talks. The delegations were scheduled to tour central British Columbia on Friday, and then go to Montreal on Monday for several days of talks on U.S. concerns about similar timber regulation in Quebec and other provinces.