U.S.-Canada Lumber Deal Upsets Lawmakers

The Associated Press
Thursday, April 27, 2006; 7:28 PM

TORONTO -- Canada's Parliament exploded in emotional debate Thursday over a lumber deal with the United States, with vehement opposition from some producers and political leaders threatening to quash the agreement.

Prime Minister Stephen Harper and U.S. Trade Representative Rob Portman said agreement had been reached to end the decades-old dispute over softwood lumber, a major home-building component.

Harper told the House of Commons that the deal would return $1 billion of the $5 billion levied against Canadian lumber since 2002 to producers north of the border.

"Canada's bargaining position was strong; our conditions were clear; and this agreement delivers," Harper said to a standing ovation in the House. "It's a good deal that resolves this long-standing dispute and allows us to move on. Today is a great day for Canada."

Bill Graham, opposition leader of the Liberal Party in Parliament, quickly shot back that it was only good news for the U.S. lumber industry and that the North American Free Trade Agreement, whose mediating panels have often ruled in favor of Canada, had now lost its teeth.

"Unfortunately, it's a great day for American industry, for American policy and for American trade _ and it's a disaster for Canada and free trade," Graham said.

Shares of Canadian lumber companies dropped Thursday, as analysts derided the deal.

Harper insisted, however, that he had the backing of the key lumber-producing provinces of British Columbia, Ontario and Quebec.

"I think on balance it's a reasonable deal for Canada and a good deal for British Columbia," Gordon Campbell, premier of the western province that produces nearly half of Canada's lumber.

Canada's $10 billion in annual shipments to the United States of softwood lumber, which comes from pine and other trees, represent about one-third of the U.S. market.

U.S. tariffs on the Canadian lumber started at an average of 27 percent in 2002, but now average 11 percent because of various reviews and trade panel rulings.

Canada's share of the U.S. market would not exceed 34 percent, according to published descriptions of the agreement. To protect American producers from a drop in prices, Canada would impose an export tax of as much as 15 percent, depending on the market price of lumber.

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