Softwood talks stuck on deal for export tax

Canadian and U.S. negotiators resumed talks yesterday trying to hammer out a temporary truce in the long-running softwood lumber dispute. The two sides were looking at the latest U.S. proposal for an export tax imposed by Ottawa to replace the 27% import duty being collected by the administration of George W. Bush, the President. There is a broad but not a final agreement that the four major timber producing provinces - British Columbia, Quebec, Ontario and Alberta - would be able to ship duty-free into the U.S. once they overhauled timber management policies to more resemble a U.S.-style market system.

That would likely include allowing more provincially owned timber to be put up for public auction. However, Canada and the U.S. were far apart on an interim deal that would include an export tax and sources said the talks yesterday failed to narrow opposition from some of the provinces. Earlier proposals called for the tax to be based on North American lumber prices with the tax going up as lumber prices fell. While the latest proposal does have some pricing, it includes gearing the tax to provincial market share in the U.S. The four timber provinces have about one-third of the U.S. market, representing about $10 billion a year in sales. However, British Columbia has about 50% of that and is eager to protect its share. In addition, talks are concentrating on what would happen to the US$1-billion in duties that have already been collected. Ottawa wants the duties returned while the U.S. administration wants at least part of it set aside to set up a new North American lumber council to head off future disputes.