March 6, 2008 / 1:39 AM / 9 years ago

Canada says U.S. still committed to softwood deal

3 Min Read

OTTAWA (Reuters) - The Bush administration has assured Canada it will not walk away from a 2006 lumber agreement, even as it accuses Ottawa of not living up to its obligations, Trade Minister David Emerson said on Wednesday.

A spokeswoman for U.S. Trade Representative Susan Schwab raised the issue of the "viability" of the agreement on Tuesday, after an international arbitration panel ruled partly in Canada's favor, the latest twist in a long-running feud over exports of Canadian softwood lumber to the United States.

But Emerson said he had received assurances that the deal was safe.

"I've talked to the U.S. trade representative. We've both committed in writing and verbally with each other that we're committed to seeing this agreement through," Emerson told reporters.

"It's an important stabilizer in terms of our relationship and I expect to see her to continue to move in that direction."

Schwab's spokeswoman, Gretchen Hamel, said on Tuesday that Washington disagreed with a key finding in the court ruling, which addressed a U.S. complaint that Canadian provinces owed millions of dollars in export taxes aimed at limiting softwood volumes shipped to the United States.

The court said British Columbia and Alberta -- which account for over half the softwood shipments -- did not owe anything, though some other provinces did.

Hamel said the finding was not consistent with the "balance" that the two countries had negotiated. "The viability of the softwood lumber agreement is dependent on maintaining that balance," she said.

Canadian opposition parties, who believe the deal is flawed because it gave too much away to U.S. industry, said that poor administration by the Conservative government could lead to more U.S. complaints, or even a withdrawal from the deal.

"This could possibly trigger further arbitration or even put the agreement itself in jeopardy," said Navdeep Bains, a Liberal legislator.

Canada supplies about one-third of the U.S. market for softwood lumber, such as spruce and pine, which is used mainly in home construction.

With U.S. demand for lumber crashing along with the its housing market, industry groups in the United States are stepping up pressure on Washington to challenge Canada in court over what they call unfair practices and subsidies.

"They do have the option of simply pulling out," said Peter Julian, a legislator with the New Democratic Party.

But Emerson played down fears the deal would be called off.

"The softwood lumber agreement is more robust than that. Its a remote risk, I think," he said.

"Walking away is not something that can be done quickly and easily ... The built-in termination provisions in the agreement were designed to disincent people from quickly or easily walking away, so I don't expect it to happen."

Reporting by Louise Egan; editing by Rob Wilson

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