Canada Plays Down Prospect of Solving U.S. Trade Dispute Over Lumber

Canada on Monday played down the prospect of a resolution with the U.S. over a trade spat on lumber imports before the start of talks to revamp the North American Free Trade Agreement, denting enthusiasm raised by Prime Minister Justin Trudeau last month for such an outcome.

The inability to cut such a deal before the start of the renegotiations, set to formally start on Aug. 16, threatens to add another layer of complexity in efforts by the U.S., Canada and Mexico to find common ground on a new continental trade pact, Canadian lawmakers and trade watchers have warned.

Talks are aimed at settling the latest chapter in a decadeslong trade dispute between Washington and Ottawa over Canadian softwood lumber, which is mostly used to build houses.

Canadian Foreign Minister Chrystia Freeland told reporters in a teleconference from the Philippines on Monday that "she was unable to predict when we might reach an agreement." She said talks continue, adding she and U.S. Commerce Secretary Wilbur Ross have been "actively, energetically and substantively engaged" for the past two months.

She didn't elaborate on what is dividing the two countries. "I do think an agreement which benefits both Canada and U.S....is absolutely possible and achievable, and I can see the outlines of that agreement already."

Last month, Mr. Trudeau said both the U.S. and Canada expressed a desire to settle the softwood dispute before the start of Nafta negotiations. "We are going to work very hard towards that," Mr. Trudeau said at a meeting of U.S. governors in Rhode Island.

In April and then again in June, the Trump administration slapped duties on Canadian softwood lumber, reaching as high as 30% on some products. The U.S. accuses Canada of unfairly selling its lumber in the U.S. at prices below production costs, and providing subsidies to its producers. The Canadian government has repeatedly said there is no merit in the U.S. accusations.

In 2016, the U.S. imported over $5 billion worth of Canadian softwood lumber.

Mr. Ross has said the decadeslong disagreements over softwood lumber illustrate the shortcomings of Nafta.

Trade lawyers and Canadian politicians said it was crucial that a settlement be reached before the start of Nafta talks. "We need to get it off the table, so Ms. Freeland and federal officials can focus on the larger challenge of the broader trade agreement," said John Horgan, premier of British Columbia, the west-coast Canadian province that produces the bulk of softwood lumber exported to the U.S.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

August 07, 2017 10:37 ET (14:37 GMT)