April 26, 2006

Canada-US meeting to discuss lumber deal: source

OTTAWA (Reuters) - Ottawa and the United States on
Wednesday launched a fresh round of talks in a bid to end a
long-running softwood lumber dispute, but Ottawa played down
reports that a deal had been struck.

A well-placed Ottawa source said bilateral talks -- which
continued until the early hours of Wednesday morning -- had
started again on Wednesday afternoon.

CBC television said the two sides had a framework deal but
added that legal details had yet to be worked out.

When asked about the CBC report, a spokeswoman for
International Trade Minister David Emerson said nothing had
changed since 3.15 p.m. (1915 GMT), when he denied earlier
reports of a deal.

The two countries are at odds over whether Canada's
provinces are subsidizing lumber producers by charging
below-market rates to log forests.

The United States has slapped countervailing duties on
Canadian lumber exports and is sitting on around $4 billion.
CBC said that under the terms of the deal, Canada would get
back some 80 percent of the money.

The well-placed Ottawa source said one stumbling block was
Washington's insistence that it retain the right to appeal a
recent trade tribunal ruling that went against the United
States. The deadline for that appeal is Friday.

"I reckon we'll get an announcement by Friday but I don't
know what it will be. It could just be that the talks will
continue," the source said.

CTV earlier said the two countries had agreed to a
framework deal to end the dispute, under which the Canadian
share of the U.S. market would be capped at 34 percent and the
United States would return 78 percent of the duties.

The report also said provincial agreement would be
required. This could be a stumbling block, since the provinces
are divided over what terms they would accept.