NAFTA rules pro-Canada in lumber case

A North American Free Trade Agreement panel ruled Thursday the United States had not proven that American companies were threatened with injury from Canadian shipments of softwood lumber.

The NAFTA ruling said the U.S. International Trade Commission's finding of a threat of injury was "not in accordance with the law and is not supported by substantial evidence."

NAFTA instructed the ITC to quickly come up with new justifications for the injury finding.

The question of injury is key to whether the United States can continue to impose anti-dumping and countervailing duties against $6 billion worth of Canadian wood sold in the United States each year. Those duties have averaged around 27 percent since 2001.

Canadian Prime Minister Paul Martin will meet Friday with President Bush. Bilateral trade concerns over lumber and beef are among the topics they are expected to discuss.

"We will be talking about bilateral trade issues like our softwood lumber exports where our producers and your consumers continue to be hurt by the inability to solve the dispute once and for all," Martin said in a speech in Washington.

"In fact, just this morning, another NAFTA panel vindicated the Canadian position," Martin added.

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U.S. government officials were not immediately available for comment.

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As this trade dispute continues to be argued before NAFTA and World Trade Organization panels, U.S. and Canadian government officials are expected to weigh whether to launch another round of negotiations to settle the case.

Last year, the two governments discussed replacing the American duties with a new import quota on Canadian spruce, pine, fir and other woods used to build and remodel houses.

Canadian companies have awaited this decision, hoping it could strengthen their position in any negotiation.

"If the Americans can't prove injury to their industry then they don't have anything under their countervailing and antidumping claims," said a Canadian government official, who asked not to be identified.