updated 12/8/2003 7:46:05 PM ET 2003-12-09T00:46:05

The U.S. government and American lumber producers have agreed to terms that could bring an end to a longstanding dispute with Canada over softwood lumber, the Canadian Press news agency reported.

The agreement reached in Washington includes a timetable for moving toward free trade in lumber. Other terms include giving Canadian exports a duty-free ceiling slightly below Canada’s current share of the U.S. lumber market, and splitting the duties collected for the last 18 months between Canadian and U.S. lumber producers, the news agency said, citing industry sources.

Last year, the United States imposed stiff duties on Canadian softwood lumber imports after accusing Canada of subsidizing the industry. Canada called the duties unwarranted and protested to the World Trade Organization and a trade panel established under the North American Free Trade Agreement.

Canadian industry sources said a deal was hammered out early Saturday with the participation of U.S. lumber producers. Doug Waddell, the chief Canadian negotiator, and Grant Aldonas, undersecretary for trade at the U.S. Department of Commerce, worked to finalize the terms.

Waddell was expected to return to Canada on Monday for meetings with representatives from the producing provinces and the forest industry.

A spokesman for Pierre Pettigrew, Canada’s international trade minister, would not confirm a deal.

“Discussions have progressed this week but we’re not at a point where we have an agreement,” the spokesman, Sebastien Theberg, said. “The discussions and consultations will continue over the next few days.”

The complicated three-year arrangement could be extended annually, a Canadian industry official said. The source said the deal included these terms:

Lumber exporters would have duty-free access to the U.S. market up to a level of 31.5 percent, after which a levy of $200 per thousand board-feet of lumber would kick in.

After three years, Canadian provinces that shift their forest policies to be more market-oriented and pass a review by the U.S. Department of Commerce could increase their duty-free share by 5 percent in the fourth and fifth year.

Also after three years, if the provinces that export 75 percent of the softwood pass the U.S. Department of Commerce review, then softwood would be traded freely from companies in those provinces.

About $1.6 billion in duties collected since May 2002 would be split between Canadian exporters and the U.S. lumber firms that had claimed injury from Canadian softwood. Canadian firms would get back 52 percent of the money, with the rest distributed among U.S. companies.

The United States had imposed duties totaling 27 percent on imports from four Canadian provinces of wood from pine, spruce and other trees used in framing houses and other construction.

Canada has complained the tariffs have cost Canadian lumber companies hundreds of millions of dollars and eliminated thousands of jobs.

An international trade panel of the North American Free Trade Agreement ruled Sept. 5 that the U.S. International Trade Commission had failed to show how Canadian softwood lumber exports threaten the American industry. The panel gave the U.S. commission 100 days to provide information detailing the threat.

Canada accounts for about 33 percent of the U.S. market. Softwood lumber, produced mainly in British Columbia, Quebec, Ontario and Alberta, is mostly used for home construction and do-it-yourself projects.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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