U.S. warns Canada on plan for lumber sector supports

Wed Jan 16, 2008 5:27pm EST
 
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WASHINGTON (Reuters) - The U.S. government is pressing Canada to ensure that plans to help its slumping timber industry do not endanger a shaky truce in a trade dispute that featured years of lumber lawsuits.

Prime Minister Stephen Harper's new plan for nearly $1 billion in assistance to struggling Canadian communities has raised concerns, U.S. Trade Representative Susan Schwab's office said in a statement.

Schwab sent a letter on Tuesday to Canadian Trade Minister David Emerson, seeking "Canada's assurance that any funds disbursed to the forestry sector ... will be used in a manner consistent with Canada's obligations under the U.S.-Canada Softwood Lumber Agreement," Sean Spicer, a spokesman for Schwab, said in a statement.

The two countries signed the agreement in 2006 after years of costly lawsuits over Canadian timber exports to the United States, which some timber interests here argue were dumped on the U.S. market.

Canada's proposed aid package would support unemployed workers and struggling industries in Canada, including the timber industry, and could become reality if the minority Conservative government's next budget is passed by parliament.

Canada's forestry and auto workers have been hit by the strong Canadian dollar and weak demand from the United States.

The U.S.-Canadian lumber agreement was hailed as a halt to years of costly wrangling over lumber trade. But it was quickly marred by disputes over provincial subsidies and differing interpretations of language related to import surges.

The two countries are trying to settle some differences at a private arbitration court.

(Reporting by Missy Ryan, Editing by Russell Blinch and David Gregorio)