Bush, Martin Spar on Lumber Tariffs

President Bush and Canadian Prime Minister Paul Martin clashed over U.S. tariffs on Canadian lumber in a 20-minute telephone conversation Friday that culminated in Martin accusing the Bush administration of violating the North American Free Trade Agreement, officials said.

When Bush proposed negotiations to resolve the long-standing dispute, Martin flatly rejected that approach. Instead, he vowed to launch a “double dose” campaign -- by suing in U.S. courts and waging an advocacy drive south of the border to point out that the tariffs add an average of $1,000 to the cost of every new home built in the United States.

The detailed account of the pointed exchange came from officials in Martin’s office, and the White House did not dispute it. Each side characterized the conversation variously as a cordial, direct and candid discussion between two leaders who are on a first-name basis.

Still, the summary of the conversation offered a glimpse of an encounter between the president and one of his counterparts in a form the White House is almost always loath to provide.

The exchange comes as Bush is trying to erase his global image as a leader who is too quick to abandon international diplomacy in favor of conflict. The president had testy relations with Martin’s predecessor, Jean Chretien.

But U.S. and Canadian officials said Friday that Martin and Bush considered each other a friend.

Nonetheless, during their conversation, the two also rekindled their dispute over Bush’s plan to open a portion of the Arctic National Wildlife Refuge in Alaska to oil and gas exploration.

Martin reiterated his concern that such drilling could harm the indigenous population and wildlife while yielding little in the way of new energy sources. Bush rejected those concerns, saying that Canada has ample energy supplies, but the United States does not and therefore must proceed.

This was not the first time that strains in U.S.-Canadian relations had broken into public view.

In 2003, Canada opposed the U.S.-led war in Iraq, and it further antagonized the White House this year by opting out of a missile defense system Bush has championed.

Martin, facing a possible election bid in coming months, has been under growing pressure at home to take a tougher line against the United States on the lumber issue. He and Bush had been scheduled to discuss the tariffs by telephone at the end of August, but the conversation instead focused on Hurricane Katrina.

Friday’s follow-up talk, scheduled by the White House, began on a warm note.

Bush opened by thanking Martin for Canada’s aid after Katrina and noted that when he arrived in Biloxi, Miss., on one of his visits to the storm-damaged region, the first people he saw were Canadians.

The men spent about 15 minutes on the lumber dispute, which has fueled strong anti-U.S. sentiments in Canada.

At issue is Canada’s $10-billion-a-year export market in Douglas fir, pine, spruce and other softwood. U.S. lumber mills contend that the Canadian government, which owns much of the country’s forests, subsidizes Canadian lumber producers. They also have accused the country of dumping lumber on U.S. markets at as much as 75% below cost.

But U.S. lumber importers, homebuilders and consumer groups are siding with Canada, saying the U.S. duties, which were imposed in 2002 and average about 21%, are unwarranted. Several special NAFTA panels have ruled in Canada’s favor, whereas a World Trade Organization panel sided with the United States.

The WTO decision will not be finalized for months. But in the meantime, based on the NAFTA rulings, Canada is demanding that Washington return about $5 billion in deposits for tariffs levied against Canadian lumber producers.

In their conversation, Martin told Bush that in refusing to abide by NAFTA’s rulings, the U.S. was in effect flouting the “integrity of dispute resolution.”

“The prime minister emphasized that it makes little sense to negotiate a victory that we’ve already won,” said Melanie Gruer, a Martin spokeswoman. “The prime minister also told the president that if the tables were turned, Canada would respect the outcome.”

At the White House, Press Secretary Scott McClellan said that Bush had reiterated to Martin “our strong commitment” to NAFTA and suggested bilateral negotiations as a way to find a “lasting” resolution.

McClellan urged reporters to view the lumber dispute in a larger context, noting that lumber represents less than 3% of Canada’s total exports to the U.S.

“I think you have to look at the overall trading relationship that we have, and it’s a good one and a strong one,” he said.

Bush and Martin also briefly discussed the upcoming elections in Haiti, the continuing violence in Sudan’s Darfur region and next month’s Summit of the Americas in Argentina, which both will attend.