The US and Canadian trade chiefs on Saturday signed a deal ending a longstanding and bitter US$4.5 billion trade row over softwood lumber tariffs.
US Trade Representative Susan Schwab and her Canadian counterpart David Emerson initialed an agreement following two months of talks in the wake of an interim accord in April.
The deal ends a two-decade dispute over Washington's anti-dumping duties, which were imposed on Canadian lumber after US authorities ruled that its northern neighbor was offloading the wood cheaply on the US market.
After simmering for several years, the dispute took a new turn in 2002 when the US claimed that Canada subsidized its lumber. Washington has collected US$4.5 billion in punitive tariffs since then.
"Putting an end to decades of squabbling and trade wars over softwood lumber between Canada and the United States has got to be the proudest moment of my life," Emerson said, adding that the deal would help to enhance broader ties between the North American neighbors.
"I know the pain and the suffering that people in lumber-dependent communities have gone through over the years," he said.
Canadian Prime Minister Stephen Harper and the White House hailed the agreement.
"It demonstrates that, as two countries, we will disagree at times," Harper said in a statement. "But with goodwill and mutual respect, we can resolve our differences in a positive manner for both sides."
The Canadian government would now begin drafting legislation "immediately," he said.
In Washington, a spokesman for US President George W. Bush said the president was "pleased" with the agreement.
"Many difficult issues were overcome by both sides in concluding this text, and we look forward to the agreement taking effect this fall," spokesman Tony Snow said in a statement.
Under the accord, all duties will be fully revoked and Canadian exporters will get back more than US$4 billion. All litigation will be halted.
The remaining money in duties collected from Canadian firms will be split between US forestry companies and projects in communities that rely on lumber, as well as to help build low-income housing in areas such as those affected by Hurricane Katrina.
The deal also contains provisions to enhance cooperation between the US and Canadian lumber industries.
For future trading, Canadian provinces must also agree to a 5 to 15 percent "export charge" on softwood lumber exports to the US -- something which rankled with some in Canada when the planned deal was first announced in April.
Alternately, they may opt for a 2.5 to 5 percent export tax, plus limit exports to 30 to 34 percent of the US lumber market, depending on prices.
The accord, expected to come into force in the fall, is meant to last for seven years with an option to be renewed for two more years.
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