Canada negotiates softwood lumber agreement with U.S.

The head of the Maritime Lumber Bureau says she welcomes news Canada is finally talking about negotiating a softwood lumber agreement with the United States.

Diana Blenkhorn, who was in Ottawa Monday to press for a long-term agreement, said her group wants to see the trade dispute settled at the negotiating table rather than in the courts.

Only a few hours earlier, Prime Minister Paul Martin revealed his government is willing to enter into talks with the U.S. - provided Washington first returns $3.5 billion in contested duties.

"That is not negotiable," Mr. Martin said at a rare prime ministerial news conference in Ottawa.

Ms. Blenkhorn said she understands his frustrations. Maritime exporters alone have had to place $170 million in deposits to cover American anti-dumping duties.

"I am encouraged to hear the prime minister talk about the potential for negotiation," Ms. Blenkhorn said.

But, she added, "given the U.S. position to date, I don't think 100-per-cent return of duty deposits is realistic."

She said the solution is to resume bargaining for an industry worth $1 billion annually in just Maritime exports to the U.S.

With U.S. Secretary of State Condoleezza Rice bearing down on 24 Sussex Drive, Mr. Martin is first looking for a clear signal the U.S. will abide by free trade rules.

"For us to sit down and negotiate other elements . . . really requires an indication that the United States understands the importance of fulfilling the terms of NAFTA," he said.

"We will be looking for that sign." But that doesn't mean the money, collected from Canadian companies, must actually be returned before Canada enters into new negotiations.

A senior government official clarified that, while Canada will "never forfeit our claim" to the duties and tariffs, their return is not a prerequisite for talks.

"We don't want a precondition," said the official, speaking on background.

As for a U.S. signal of good faith: "we'll know it when we see it."

It was a confusing opening gambit for Ms. Rice's long-delayed official visit.

She was to have a working dinner with Mr. Martin at 24 Sussex Drive on Monday evening and spend this morning in discussion with Foreign Affairs Minister Pierre Pettigrew before returning to Washington.

She was supposed to come in March, shortly after being sworn in as the top diplomat in the administration of President George W. Bush. That visit was abruptly cancelled after Canada backed out of participation in the U.S. missile defence program, reports Canada East. I.L.