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Cablegate: Softwood Lumber: Canadian Reactions to Usdoc

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS OTTAWA 001765

SIPDIS

STATE FOR EB/TPP/BTA AND WHA/CAN

DEPT PASS USTR - MELLE

COMMERCE FOR 4320/MAC/WH/ON/OIA/BENDER AND
ITA/IA/TERPSTRA

E.O. 12958: N/A
TAGS: ETRD PREL CA
SUBJECT: SOFTWOOD LUMBER: CANADIAN REACTIONS TO USDOC
POLICY BULLETIN

REF: 02 OTTAWA 844

1. SUMMARY: Canadian reactions to the USDOC policy
bulletin on softwood lumber, which was released by
Undersecretary Grant Aldonas on June 18, were mildly
positive except in Quebec where there was broad
disappointment that the section concerning that
province was excluded from the document. Whatever
reactions may emerge, nothing in the bulletin can have
come as a surprise given the extensive process that
generated it, and there is currently no alternative
"exit strategy" from the dispute. END SUMMARY.

2. In March 2002 (reftel), when USDOC imposed anti-dumping
and countervailing duties on softwood lumber from Canada,
Mission Canada witnessed some of the strongest criticism of
U.S. trade policy in a decade. The fact that the release of
the policy bulletin made scarcely a ripple in the media
shows just how much the political temperature around this
issue has cooled. Yet the economic stakes are as high as
ever. Indeed, on June 20 two major Quebec-based players,
Domtar and Tembec, announced a restructuring of their money-
losing mills in Eastern Canada (this announcement was
reported without mention of the policy bulletin).

3. Quebec business and political players expressed
disappointment that their province was not covered by the
bulletin, and focused on responding to this situation, which
press commentators interpreted as threatening to isolate
Quebec from other provinces in negotiations with U.S.
interests. Quebec Forest Industry Council head Georges
Courteau said Quebec "must pursue talks with with a set of
new ideas to put on the table." Quebec Natural Resources
Minister Sam Hamad said the province would make use of the
comment period to submit further explanation of Quebec's
practices.

4. Representatives of integrated, western-based producer
Weyerhaeuser Canada, when interviewed the day before
publication, were supportive of the policy bulletin process,
and said they also support the use of interim measures for
up to two years or so provided they are part of an "exit
strategy" leading to a permanent solution.

5. B.C. Lumber Trade Council President John Allan was
quoted calling the bulletin "a significant step" and said he
was "pretty confident we can show the Americans we've got
market-based policy reform in B.C." "Obviously we are
pleased it has come out," Allan said. "By and large it is
consistent with our understanding on what we have discussed
with the U.S." Allan was quoted saying that the interim
aspects of U.S. proposals for resolving the dispute are
more problematic, and also that while he did not like the
numbers in the U.S. proposal, it could be enough to get both
sides back to the negotiating table in coming weeks.

6. B.C. Forests Minister Mike De Jong portrayed the bulletin
as a necessary step. "For the first time we are seeing from
the U.S. federal administration a clear acceptance of the
notion that we need to establish in clear terms the rules
upon which we are going to get off this trade dispute
treadmill. That has been a fundamental objective of ours in
British Columbia from the outset."

CELLUCCI

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