U.S. seeks Jan. 29 lumber talks with Canada

All the players in a contentious trade fight between the United States and Canada are being called to Washington to try to end a dispute over softwood lumber, the U.S. Commerce Department said on Tuesday. "We're shooting for January 29," Commerce Department spokeswoman Julie Cram said, for "discussions" on how to resolve a trade case that has brought U.S. duties averaging more than 27 percent on $6 billion worth of Canadian lumber. Hosted by the Commerce Department, the talks would bring together U.S. and Canadian federal government officials, Canadian provinces and representatives of both countries' wood industries. Still unclear, according to Cram, is whether the discussions would stretch beyond one day.

Deborah Regan, spokeswoman for a coalition of U.S. lumber firms and timber landholders, said, "We would like this to be the start of negotiations" with Canada. In recent weeks, Commerce Undersecretary Grant Aldonas has been trying to jump-start talks that broke down last March, before the U.S. duties were set in place on the Canadian wood used by U.S. homebuilders. Washington insists Canada is unfairly subsidizing its wood and dumping it in the United States. Canada counters that it can export wood cheaply because it is a more efficient producer. Ottawa has filed suit against the U.S. duties. Rulings by the World Trade Organization and NAFTA panels are expected in coming months.

While the Commerce Department denies it has set a deadline for trying to reach a deal with Canada, several Canadian industry sources have said they were informed there is a Feb. 14 timeframe. Carl Grenier, executive vice president of the Free Trade Lumber Council in Montreal, called that a "very ambitious timeline for such a complex issue." He added, "The notion that we would all sit down and suddenly find the light is not too credible." Grenier's group has been working with lumber consumers in the United States for no controls on Canadian wood exports.

The Commerce Department has told Canada that its lumber industry could escape the U.S. duties if they purchased wood from Canadian provinces by auction or other market-oriented means. But many details still have to be worked out. Also, the countries could negotiate interim steps until the market reforms are achieved by Canadian provinces. One idea is to replace the U.S. duties with a Canadian "export tax" on softwood lumber. Some Canadian firms would prefer that the United States continue to collect the duties until the legal cases are decided. That way, if Canada wins in court, the duties would be refunded to the companies, plus interest. They worry that if Canadian provinces, some of which are running deficits, begin collecting the "export tax," those revenues would never be refunded, according to Canadian sources.