U.S., Canada form group to resolve lumber dispute

The United States and Canada agreed to establish a special working group to try to resolve a decades-old dispute between the two countries over softwood lumber trade, a U.S. official said on Thursday. The decision to set up the group came out of daylong meetings in Washington on Thursday, said a spokesman for the U.S. trade representative. The spokesman said the two governments would meet again in September, but a date had not been set. He had no details on the composition of the group or how long its work might take. Earlier this month, the U.S. Commerce Department announced it was setting preliminary import duties of 19.3 percent on Canadian softwood lumber. The action was taken after the Commerce Department determined that Canada's provincial governments were unfairly subsidizing their lumber industries. Canada has vigorously denied the charge and has threatened to challenge the U.S. duty at the World Trade Organization.

On March 30, a bilateral deal expired that limited Canada's duty-free softwood lumber shipments to the United States to 14.7 billion board feet a year. U.S. industry promptly asked the Bush administration to impose heavy punitive duties on Canadian lumber. The expired agreement came after several years of litigation between the two trading partners over lumber shipments. Canada's exports have accounted for about one-third of the U.S. lumber market. In an attempt to minimize long and costly litigation, U.S. and Canadian trade officials held a preliminary meeting in Ottawa last month and a second meeting on Thursday. As those talks proceeded, about 300 unionized workers rallied outside the U.S. Consulate in Vancouver, British Columbia, against what they said would be thousands of lost jobs in the Canadian forest industry if the tariffs were not removed.

"We're not giving in to bullies, because if you give into bullies like the Americans, they keep coming back,'' Jim Sinclair, president of the British Columbia Federation of Labor, told the protesters. Other union officials said Canada should restrict energy sales to the United States if Canadian lumber is denied free access to the U.S. market, an idea Ottawa has been reluctant to consider. Union officials in the United States are supporting their domestic industry's attempts to limit Canadian softwood lumber shipments, saying uncontrolled trade will result in more U.S. plant shutdowns and layoffs. John Ragosta, a lawyer representing U.S. lumber companies and timber landholders, told Reuters that he had not yet heard details of the new U.S.-Canada working group. He expressed some optimism the group could move the trade dispute toward a resolution.