Domestic lumber interests yesterday postponed filing an unfair-trade complaint against Canada at the request of the Reagan administration, which said the Canadian government is prepared to make a new proposal at talks here Wednesday.
The administration request caught the industry hours before it was going to accuse Canada of illegally subsidizing its lumber producers by allowing them to buy government-owned timber at cut-rate prices.
Attorney Alan W. Wolff said the industry is seeking penalty duties of 27 percent to compensate for the Canadian subsidies.
Sen. Max Baucus (D-Mont.) said subsidized Canadian lumber now accounts for 30 percent of sales in the United States.
The issue, which has escalated in the past month after four rounds of negotiations failed to bring the two countries any closer to a solution, threatens to scuttle a proposal for a free-trade agreement between the United States and Canada that is supported by President Reagan and Prime Minister Brian Mulroney.
Administration sources said the Canadian proposal calls for the appointment of high-level negotiators for both sides -- similar to the special envoys used in the acid-rain issue -- to try to work out a solution in the next few months.
While U.S. lumber interests said they are willing to postpone filing their complaint for a week to give the Canadians a chance to present their plan, they said naming special envoys does not go far enough to keep them from filing the complaint next week.
"We need some kind of specific proposal that would deal with subsidies, not merely the promise of more discussions and negotiations," said David Stahl, spokesman for the Coalition for Fair Lumber Imports, which is composed of seven lumber trade associations.
The domestic lumber industry lost a similar unfair-trade complaint three years ago.
But they said that a changed attitude from the Reagan administration and a new legal ruling on subsidies by the Commerce Department in a different case makes them more confident of a victory this time.
In addition, a Democratic trade package that goes to the House floor this week contains a provision that enlarges the definition of subsidies to include the sale of natural resources such as timber at cut-rate prices to domestic industries.
"We have reason to believe from statements of high Reagan administration officials that, if the case was resubmitted, there would be a more favorable ruling," said Rep. Don Bonker (D-Wash.), who was present at the industry news conference that originally was called to announce the filing of the case but instead announced its postponement.
Although decisions on complaints of unfair-trade tactics are supposed to be made by the International Trade Commission and the Commerce Department acting as quasi-judicial bodies, the lumber issue has taken a highly charged political turn.
As a result of the near defeat by the Senate Finance Committee of permission to negotiate a free-trade pact, Reagan promised to push for a speedy settlement of the lumber dispute.
In a letter to Finance Committee Chairman Bob Packwood (R-Ore.), Reagan said the lumber issue must be resolved before any free-trade agreement can be submitted to the Senate.