By David Ljunggren
OTTAWA, June 10 (Reuters) - Talks between Canada and the
United States to resolve a dispute over exports of softwood
lumber are making little progress and the matter likely will
return to the courts, sources familiar with the negotiations
said on Friday.
U.S. producers complain that Canadian softwood lumber is
subsidized, and have in the past launched trade challenges that
resulted in the United States imposing billion of dollars in
tariffs.
The most recent round of arguments ended with a 2006 deal
that expired in October 2015. Both sides agreed to take no
action for a year after that, but without a new agreement, U.S.
firms look set to file new damage claims.
"The two sides are so far apart right now that a deal looks
very unlikely," said one person familiar with the talks.
In March, President Barack Obama and Canadian Prime Minister
Justin Trudeau asked officials to work out possible solutions
and report back within 100 days.
Although the deadline runs out on June 18, Canadian Trade
Minister Chrystia Freeland said the sides would work until June
29, when Obama and Trudeau meet in Ottawa.
"It's a really tough issue and what we're looking for is a
good deal. There is a lot of work we have to do," Freeland said.
Representatives from the sides held talks in Canada last
month - a meeting that one source described as "not a success" -
and in the United States this week.
"While differences remain, U.S. and Canadian negotiators
will continue to work to see if a deal can be achieved," said
Matt McAlvanah, a U.S. Trade Representative spokesman.
As the U.S. economy recovers, Canadian firms could benefit
from more home construction. Exports of softwood lumber totaled
C$5.9 billion ($4.6 billion) in 2015, up from C$5.5 billion in
2014, according to Statistics Canada data.
The 2006 agreement said that if prices fell below a certain
level, Canadian firms could pay export taxes or agree to quota
limits while paying lower tax rates.
One challenge for Canada is that domestic lumber producers
are split over the best strategy, say officials in Ottawa.
Firms on the west coast - who have diversified operations by
boosting exports to Asia - are more likely to agree to a deal
limiting exports, while those in central and eastern Canada want
no restrictions.
Major Canadian lumber firms include Canfor Corp CFP.TO ,
West Fraser Timber Co WFT.TO , Interfor Corp IFP.TO and
Resolute Forest Products Inc RFP.N .
($1=$1.27 Canadian)
(With additional reporting by Roberta Rampton in Washington;
Editing by Alan Crosby)