Canada, U.S. agree to softwood lumber deal

Last Updated: Thursday, April 27, 2006 | 9:51 PM ET

CBC News

Canada has reached a softwood lumber agreement with the United States that will "finally put an end to this conflict," Prime Minister Stephen Harper announced Thursday.

"I'm delighted to announce that we have reached an agreement," Harper told the House of Commons.

"This is what Canada wanted. This is what Canada got. This, colleagues, is a good deal."

A landmark softwood lumber agreement reached Thursday provides Canadian producers unrestricted access to U.S. markets. (CBC)

Harper made the announcement of a revised agreement after an initial deal drew mixed industry reviews on both sides of the border, and criticism from the Ontario government.

Harper was absent from Question Period on Thursday as he tried to marshal support for the agreement from the provinces and the Canadian industry.

Price drops lead to export restrictions

Harper said the U.S. had accepted Canada's key conditions.

The agreement provides Canadian producers unrestricted access to U.S. markets under current market conditions, he said, meaning there is no overall cap on the Canadian share of the U.S. market.

With prices at the current market, this means no quotas or tariffs, Harper added.

But, if the price drops, certain export restrictions will kick in. Producers would have to pay an export tax of five per cent if there's a small drop in price. If it's a larger drop, they would have to pay as much as 15 per cent.

"There is no quota; there is simply an export tax at the bottom of the market," said International Trade Minister David Emerson.

However, exporters who don't want to pay the tax will have to limit their volume of exports.

The U.S. would also return $4 billion of the $5 billion in duties it has collected so far on Canadian lumber imports, Harper said. But $1 billion will remain in U.S. hands.

He said the U.S. has agreed to a seven-year deal with the possibility of a renewal.

B.C., Quebec, Ontario back deal

Ontario Natural Resources Minister David Ramsay said the province would now support the agreement, after it was assured it would get a bigger share of the U.S. market.

"While this arrangement would require each jurisdiction to make some concessions, Ontario got a critical element – a more reasonable share of softwood exports," Ramsay said in a statement.

B.C. Premier Gordon Campbell expressed support, saying "on balance, it's a reasonable deal for Canada and a good deal for British Columbia."

Quebec Economic Development Minister Raymond Bachand said it's "the best deal."

"We're very happy with this deal. Most of what we wanted, we've gained for the first time."

Opposition slams agreement

But Opposition Leader Bill Graham blasted the agreement. He said its details will reveal "draconian measures" that will "punish our industry."

He called the agreement a great deal for the Americans but a "disaster for Canada."

NDP Leader Jack Layton also criticized the U.S. for keeping $1 billion in duties.

"It is incredible that such a thing could be called acceptable," Layton said.

"It's like if a judge said to a thief all you have to do is pay back 80 cents on the dollar and we'll call it even."