U.S., Canada Face Lumber-Deal Deadline

U.S. and Canadian negotiators were working through the weekend on ways to break an impasse over softwood lumber trade, but may fall short of their goal of reaching a deal, even an interim one, by this week, a Canadian source said.

It is very probable there will not be a deal when the prime minister comes to Washington, said the Canadian source, who asked not to be identified.

U.S. and Canadian government officials were not available for comment.

On Thursday, Canadian Prime Minister Jean Chretien and President Bush are to meet in Washington to discuss several issues, including the thorny softwood lumber dispute. Both governments had been hoping Chretien and Bush could announce a deal at the end of their meeting.

The two countries, which have the world’s largest bilateral trading relationship, have been arguing over lumber trade for decades. Their dispute worsened last April after a five-year deal limiting Canada’s shipments of softwood lumber to the United States expired.

The U.S. lumber industry promptly filed grievances against Canada, accusing it of using unfair government subsidies to dump about $6 billion worth of softwood lumber in the United States each year. The cheap wood, they said, resulted in several permanent mill closings.

Canada denies it is shipping lumber to the United States in violation of trade rules.

The U.S. Commerce Department agreed with the U.S. industry’s allegations and slapped countervailing and anti-dumping duties on Canada’s wood, which is used extensively for home building and remodeling. Together, the duties average about 32%.

Canada has protested the duties to the World Trade Organization. At the same time, it has engaged in negotiations with the United States.

If no deal is reached by Thursday, negotiators from both sides are expected to continue working, with March 21 providing another pressure point in the talks.