Ottawa sending signal to U.S.

It also shows a Canadian government trying to send a strong signal to the United States that it will not sit idly by as the Americans refuse to heed the August ruling of a NAFTA panel that it must return $5-billion in import duties to Canadian lumber firms. The U. S. government has said a later, contradictory ruling by the World Trade Organization means the two countries must negotiate a settlement to the long-standing dispute.

Mr. Wilkins, who has consistently called for the two countries to return to the negotiating table, was asked if he considered the Canadian directive to explore new softwood trade partnerships warning to his government.

“I don’t consider it as such, no,” said Mr. Wilkins, whose country receives 85% of Canadian exports.

Carl Grenier, head of the Free Trade Lumber Council, said the government’s push to diversify the market for Canadian lumber is a good strategy, but does not lessen the need for a resolution to the current dispute, which he said has threatened the entire NAFTA agreement.

“Not to say that this is not a good idea because there is an obvious danger in having too much of one’s eggs in one basket,” Mr. Grenier said from Montreal. “But the fact of the matter is that it’s hard to diversify markets in any circumstances because markets are already occupied. You have to displace someone to create the market.”

Companies such as Canfor Corp., Canada’s largest producer of softwood lumber, have already started exploring new markets in China and India, two countries whose huge populations put great demands on natural resources such as energy and lumber.

However, it would take years to fully exploit such markets, Mr. Grenier said, so the federal government must still make solving the trade dispute with the United States its No. 1 priority.

Ottawa pulled out of scheduled softwood lumber trade negotiations in August after the United States said it would not comply with the NAFTA Extraordinary Challenge Committee’s ruling to return import duties to Canadian lumber firms. Mr. Peterson has repeatedly said the Americans must make a show of good faith before Canada can agree to softwood talks.