April 28, 2006

US sees “new tone” in Canada ties after wood deal

By Randall Palmer

OTTAWA (Reuters) - There is a "new tone" in relations
between Canada and the United States, as witnessed by a deal
pushed through by national leaders to resolve a timber trade
dispute, the U.S. ambassador to Canada said on Friday.

"Leadership matters, and that leadership in my opinion made
the difference," David Wilkins told a forum on U.S.-Canadian

"Call it a breath of fresh air, a new effort or new energy,
a renewed commitment -- whatever term you want to describe it.
But there is a sense in my opinion both in Ottawa and
Washington that we are entering a positive, productive stage in
our relationship."

Wilkins made a controversial intervention in Canada's
election campaign last December when he spoke out against what
he saw as U.S.-bashing by then-Prime Minister Paul Martin.

Martin had said the United States needed to heed a global
conscience and join efforts to combat global warming. Wilkins,
arguing that Canada's record on the issue was worse than
Washington's, saw that as particularly offensive.

He declined to make direct comparisons about U.S. relations
with Canada under Martin and those under current Prime Minister
Stephen Harper, but the inference was clear.

"You'll have to draw those conclusions. I'm not," he said.

Harper, a Conservative, defeated Martin in the January 23
election and he quickly agreed with President Bush to negotiate
on the decades-old softwood lumber dispute, which centers on
U.S. tariffs on Canadian lumber shipments that the U.S. says
are subsidized.

Bush presented a new offer to Harper last weekend and the
two sides unveiled a framework agreement late on Thursday.

"There is definitely a positive momentum...affecting our
relationship," Wilkins said.

"To get a 25-year dispute behind us I think is very
positive and gives us a lot of momentum to work together on a
lot of issues."

Canadian opposition parties hammered the Conservative
government for accepting the deal, under which Washington will
return only $4 billion in duties, leaving about $1 billion to
be distributed to U.S. lumber firms and to be used for North
American lumber industry initiatives.

Canadian export taxes will kick in if lumber prices fall.

"Why did the government give in on bended knee to Uncle
Sam?" asked former Liberal Finance Minister Ralph Goodale.

Conservative Jason Kenney said the Liberals had been close
to accepting a deal that would have returned only $3.5 billion
to Canadian firms.

He said the Liberal premiers of the three biggest
lumber-producing provinces backed the deal because they were
sick of inaction.

"They realized that this deal will bring $4 billion back to
Canada and it will bring peace and open trade for the Canadian
forest industry," he said.

The timber dispute had soured relations between Canada and
the United States for decades. The two countries are the
world's largest trading partners, trading some $1.3 billion in
goods and services every day.