Copyright 2001 Reuters
September 21, 2001
Story by Allan Dowd

VANCOUVER, British Columbia - Canada's top trade official and timber industry said yesterday progress was made in talks with the United States over softwood lumber, but a permanent settlement was still a long way off.

Senior trade officials from Ottawa and Washington met yesterday for a third day in the trade spat that has seen the United States slap a 19.3 percent duty on Canadian shipments of pine, spruce and other lumber used in construction.

"I honestly can say there has been progress, and there now is clearly sufficient common ground between Canada and the United States on the softwood lumber issue to continue these discussions," Trade Minister Pierre Pettigrew said. Another round of discussions will be held in Washington Oct 2-4. Representatives of both sides used this week's meetings in Toronto to explain their arguments over whether Canadian timber producers are subsidized. U.S. sawmills say they are, but Canada denies it. Canada supplies nearly a third of the softwood lumber used in the United States.

"While we're nowhere near a final solution, we're certainly on the road to what could hopefully be a constructive outcome," said David Emerson, chief executive of Canfor Corp. , Canada's largest lumber producer.

A source in the U.S. industry said it was "pleased with the agreement to continue the discussions," but said its push for penalties on Canadian shipments would continue. Representatives of producers in both countries were at the the hotel where the government officials met, but were not directly involved in the talks, which Emerson said involved sharing information not negotiating.

At the heart of the dispute are the countries' differing land-ownership traditions. In Canada nearly all forest land is publicly owned by provincial governments. In the United States the forests are largely in private hands. U.S. lumber producers allege Canada's provinces aid their companies by charging below-market rates to cut trees, and have demanded structural changes that would make the Canadian system much the same as in the United States.

Industry officials said British Columbia, which produces nearly half the Canadian softwood shipped to the United States, outlined changes it was considering to its "stumpage fee" system but the presentation was not meant as a negotiating offer. The officials discounted concern the softwood trade issue would be ignored by the United States in the wake of the deadly suicide attacks on New York and Washington. The attacks, however, has prompted the Canadian producers to suspend a public relations campaign aimed at U.S. consumers who they claim will suffer through higher prices if the duty charges are not dropped.

(with reports by Irene Marushko, Ottawa, Richard Cowan, Washington). Error: Unable to read footer file.