September 14, 2016 / 9:12 PM / a year ago

Canada says deadlocked with U.S. over lumber, ready to litigate

A pile of cut logs sit on Spanish Banks in Vancouver, British Columbia April 26, 2006.Andy Clark

OTTAWA (Reuters) - Canada has not yet managed to settle a long-running dispute with the United States over softwood lumber exports and is ready to resort to litigation if necessary, Trade Minister Chrystia Freeland said on Wednesday.

Freeland, speaking to reporters after talks with U.S. Trade Representative Michael Froman and industry representatives in Washington, said increasingly protectionist trade sentiment in the United States was making the talks more complex.

"This is a notoriously, historically tough and complicated issue to resolve. There are still some fundamental areas of differing points of view between Canada and the United States," Freeland said.

U.S. producers complain that Canadian lumber is subsidized, and have in the past launched trade challenges that resulted in the United States imposing billions of dollars in tariffs.

The most recent round of arguments ended with a 2006 deal that expired in October 2015. Both sides agreed to take no action for a year after that, but without a new treaty, U.S. firms have made clear they will file new damage claims.

"If we don't reach a deal by (next month), negotiations very much can continue ... we are looking for a good deal but we are not looking for any deal," said Freeland, stressing that both sides were talking in good faith.

"We would prefer peace but if we have to fight, we'll fight, and we are absolutely preparing to litigate if that's the direction in which this issue goes. Canada has a very good record of winning cases at all levels on this issue," she added.

Canada has in the past won softwood lumber cases at the World Trade Organization only to see them challenged by the United States.

Froman will soon visit Canada for talks with the domestic lumber industry, Freeland added.

Major Canadian lumber companies include Canfor Corp, West Fraser Timber Co, Interfor Corp and Resolute Forest Products Inc.

Reporting by David Ljunggren; Editing by Chizu Nomiyama, Bernard Orr

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