SOFTWOOD WIN MAY
OPEN DOOR TO TALKS

OTTAWA (CP) -- Canada claimed its most "significant victory" yet in the damaging softwood lumber war with the U.S. in a ruling Thursday (April 19, 2004) that Ottawa said could help spur renewed talks towards trade peace.

A NAFTA dispute resolution panel has found that U.S. lumber producers faced no threat of serious injury from Canada's $10-billion in annual softwood exports -- it's second such ruling.

It knocks the legs out from under the U.S. case for punishing duties, which have averaged 27 per cent on Canada's lumber exports and have cost the industry thousands of jobs and $2-billion US in penalties to date.

The ruling goes straight to the heart of the long-running dispute: are U.S. producers really threatened by Canadian competition?

The panel's answer was clearly no, a finding Canada will use to negotiate a favourable end to the dispute, said Trade Minister Jim Peterson.

"Today's decision says loud and clear that Canadian softwood is not injuring U.S. producers," he said from Washington.

"This is certainly a significant victory for Canada and we  hope the U.S. will comply."

Peterson was in the U.S. capital with Prime Minister Paul Martin, who met with legislators Thursday and sits down today with U.S. President George W. Bush.

Softwood, mad cow and other trade irritants are high on Canada's agenda.

While Martin likely won't want to make too much of t his softwood victory when he meets Bush, he sounded triumphant in a Washington speech Thursday.

The NAFTA panel "vindicated the Canadian position," Martin said.

But the ruling will almost certainly be challenged by the powerful U.S. lumber lobby.

"If (U.S. producers) were behaving rationally, they would have no choice," but to agree with the panel, said Carl Grenier of the Montreal-based Free Trade Lumber Council.

"They've been told twice... the original finding (of threat of injury) was not based on fact or law," said Grenier.

"But they're probably going to try again," to find new excuses to keep duties on softwood imports.

U.S. industry officials couldn't' be reached for comment.

The NAFTA panel ruling said the U.S. International Trade commission's original finding in 2001 that Canada's softwood exports posed a serious threat of injury to American producers "is not supported by substantial evidence."

From: The Daily News, Kamloops, - Friday, April 30, 2004
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