Bush Urges Canada to Resolve Lumber Trade Dispute

WASHINGTON – President Bush (search) pressed Canadian Prime Minister Paul Martin for a negotiated settlement of the bitter U.S.-Canadian dispute over lumber tariffs on Friday. Martin rebuffed the overture and warned that Canada would seek relief in U.S. courts if necessary, according to their respective press secretaries.

"The president said we should get back to the negotiating table and work to find a lasting solution," said White House spokesman Scott McClellan (search) in describing the 20-minute phone call.

In Ottawa, Martin spokeswoman Melanie Gruer said the two leaders made no headway.

Martin insisted there's no reason for Canada to negotiate, as it has already won all challenges to U.S. tariffs on Canadian lumber in cases brought before North American Free Trade Agreement panels, Gruer said. "The prime minister emphasized that it makes little sense to negotiate a victory that we've already won."

She said Martin told Bush that Canada would take its fight to U.S. courts and appeal to Americans who benefit from cheaper Canadian lumber — something Martin suggested would be an embarrassment to Bush.

McClellan did not mention that threat in his version of the conversation.

"The prime minister expressed Canada's concerns about the issue of softwood lumber," McClellan said. "The president expressed our strong commitment to NAFTA," he added.

At issue is a dispute over steep U.S. tariffs imposed in 2002 on imports of Canadian softwood lumber used in home construction. The tariffs, which now average about 21 percent, were put in place at the urging of the U.S. lumber industry, which contended it was losing thousands of jobs because of unfair subsidies provided to Canadian producers.

Martin has accused the United States of ignoring a string of NAFTA rulings against the U.S. duties.

Some industry analysts estimate that it costs Americans up to $1,000 more to build new homes since the construction lumber dispute began in 2002.

In the most recent ruling, a NAFTA panel of three judges — two Canadians and one American — in August unanimously dismissed U.S. claims that an earlier ruling in favor of Canada in the lumber dispute violated trade rules.

Most U.S. timber is harvested from private land at market prices, while in Canada, the government owns 90 percent of timberlands and charges fees for logging. The fee is based on the cost of maintaining and restoring the forest.

Canada claims it has lost some $4.1 billion in punitive tariffs. At issue are shipments of such softwoods as pine, spruce and fir.

McClellan said that during the call, Bush also thanked Martin for Canada's help in relief efforts for victims of hurricanes Katrina and Rita.

They also talked about the upcoming election in Haiti, the continuing strife in Sudan's Darfur, next month's Summit of the Americas in Argentina, and oil, McClellan said.

The Canadian spokeswoman said the two leaders discussed the U.S. plan to drill for oil in an Alaska Arctic wildlife refugee — something Canada opposes. Bush, Gruer said, insisted he must move forward because his country needs the oil.