Canada reports progress with U.S. on lumber as Trudeau, Trump talk again

By David Ljunggren

Canadian Prime Minister Justin Trudeau and U.S President Donald Trump spoke again about bilateral trade on Wednesday, the second conversation in as many days between the two leaders amid strains over softwood lumber and dairy.

Trudeau’s office declined to say who initiated the phone call and revealed no details about the tone or content of the conversation, saying only that Trudeau continued to emphasize the importance of the trade to U.S. jobs.

It is extremely rare for the two to speak two days in a row, highlighting tension between their countries.

“The two leaders continued their dialogue on Canada-US trade relations, with the Prime Minister reinforcing the importance of stability and job growth in our trade relations,” Trudeau’s office said in a statement.

Trump is considering issuing an executive order to pull the United States from the North American Free Trade Agreement with Canada and Mexico, a senior administration official said on Wednesday, a move that could unravel one of the world’s biggest trading blocs.

News of the possible executive order, first reported by Politico shortly before midday, came two days after U.S. Commerce Secretary Wilbur Ross announced tariffs on Canadian lumber exports, which U.S. producers complain are unfairly subsidized. The move triggered the fifth bilateral dispute over Canadian lumber in less than 40 years.

Canadian Foreign Minister Chrystia Freeland said the two nations have made progress in recent days on the softwood lumber dispute, “but we are not there yet,” adding that the United States should treat Canada with respect, given that Canada is a major supplier of softwood.

Freeland said she had long conversations with Ross on Sunday and Monday about lumber.

“We do believe a negotiated deal is achievable. There is a deal to be had … but we are also absolutely prepared to fight this out in the courts,” she said.

Freeland, who described the tariffs as “punitive, unfair and just plain wrong,” said Canada would strongly defend its domestic industry.

Stocks in Canadian lumber firms, which rose on Tuesday on relief the duties had not been higher, posted mixed results. Resolute Forest Products Inc shares closed up 15.0 percent on Wednesday while West Fraser Timber Co Ltd fell 2.6 percent.

In Washington, the National Association of Homebuilders said the duties would hurt American wages and raise house prices.

The premier of the Pacific province of British Columbia, a major lumber-producer, urged Ottawa to retaliate by banning exports of U.S. thermal coal to Asia via Vancouver. A shortage of port capacity means some U.S. coal firms rely on Canada.

In an open letter to Trudeau, premier Christy Clark cited the “unfair and unwarranted” lumber duties.

In Quebec, another lumber province, softwood negotiator Raymond Chretien said the two sides should try to settle the dispute ahead of the NAFTA talks.

“If lumber is not resolved (before NAFTA) the atmosphere will be so polluted,” he said in an interview.

(Additional reporting by Allison Lampert in Montreal and Andrea Hopkins in Ottawa; Editing by Chris Reese and Tom Brown)

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