Ottawa Denies Canada-US Deal On Softwood Lumber

Canada denied reports and US claims that a deal had been reached to end a longstanding softwood lumber trade row that has soured Canada-US relations.

There is no final confirmation of any agreement with the Americans.
If there should be an agreement, the prime minister will be here in a few moments or later on today to inform the members of this house of this issue.

Earlier this week, Canadian media reported a framework agreement had been reached that would see 78 percent of duties collected by the United States on Canadian lumber imports since 2002 refunded and a limit to 34 percent of the US market for future imports.

A "tentative agreement" had been reached with Ottawa late Tuesday.

Under the tentative agreement the United States would refund Canadian forestry firms 80 percent of duties collected on softwood imports or up to four billion US dollars, plus interest.

The remaining one billion US dollars in duties collected from Canadian firms would be split between US forestry companies and projects to benefit the North American lumber market or for "meritorious initiatives like housing reconstruction in Katrina affected areas.

Canadian provinces must also agree to a five to 15 percent "export charge" on softwood lumber exports to the United States.

They may opt for a 2.5 to five percent export tax, plus limit exports to 30 percent to 34 percent of the US lumber market, depending on lumber prices.

If a Canadian region exceeds its exports limits, the following year exporters in that region would pay a penalty at a rate of 1.5 or double.

Each region`s market share would be based on its average market share between 2004 and 2005.

Logs harvested from Canada`s Atlantic provinces and northern territories would be exempt.

The deal would last seven years, with an option to renew for two more years, and calls for a dispute resolution system and for "policy exits" to be determined within 18 months.