Globe and Mail Update

Canada's forest industry will spend the next couple of weeks considering the fate of the softwood lumber deal with the United States in the face of an Aug. 21 deadline announced by International Trade Minister David Emerson Wednesday.

Mr. Emerson said he has to know by then whether there is enough support for the trade deal to ask the government to go ahead with it.

Most of the 25 executives who met in Toronto Wednesday with Mr. Emerson and Industry Minister Maxime Bernier were tight-lipped about the session.

The ministers and company officials characterized the meeting as "constructive," and Mr. Emerson said he is "optimistic" that the industry will back the deal.

At stake are thousands of Canadian jobs in the forest industry and a possible end to a decades-long trade dispute between Canada and the United States, which has accused Canada of unfairly subsidizing the sector.

Under the proposed agreement, reached in April, the United States would return $4-billion (U.S.) of almost $5.3-billion in punitive duties that it has collected from Canadian companies since May, 2002.

The deal has been criticized by some parts of the industry over a controversial termination clause and because its opponents think it gives Washington too much control over the Canadian industry.

Industry support is important because Canadian companies will have to withdraw legal cases against the duties before the deal can go ahead.

Wednesday's meeting "was a good constructive conversation, the best we have had yet on the subject," said David Gray, chief executive officer of Surrey, B.C.-based Mill & Timber Products Ltd.

Mr. Gray said the meeting marked the first opportunity for face-to-face discussions between Mr. Emerson and lumber sector CEOs over some of the issues that have prompted parts of the industry to reject the deal as its stands now.

"It was a good discussion," said Mr. Gray, who is co-chairman of the Free Trade Lumber Council, a Montreal-based association which has traditionally been opposed to a negotiated settlement of the softwood dispute.

He refused, however, to say whether or not he has been persuaded to back the deal.

"We are in the middle of a process," he said.

Most other executives wouldn't comment on their positions.

The Ontario Forest Industries Association, which has estimated 10 per cent of the sector's jobs could be lost if the deal goes through, also wouldn't comment on Wednesday's meeting.

As for Mr. Emerson, he said he expects companies will back the deal.

"I am very optimistic that we will achieve a significant, substantial amount of support by Aug. 21, which is the date I've given by which I have to know .ƒ|.ƒ|. which companies are supporting this agreement," Mr. Emerson said at the Toronto press briefing that started almost two hours late because the two sides remained behind closed doors.

The government hopes to have new softwood legislation ready when Parliament reconvenes in September.

Mr. Emerson acknowledged that several companies have "some issues and concerns" about the agreement.

"We have undertaken to follow up on some of the issues that maybe need clarification on, some administrative tidying-up," he said.

Last week, Prime Minister Stephen Harper said Canada would abandon the deal if the industry didn't offer clear support for it within the next few weeks.

Across Canada, about 361,000 people work directly in the forest industry and 555,000 jobs are indirectly linked to the sector. All told, more than 900,000 jobs are related to forestry, according to the Forestry Products Association of Canada. The sector accounted for about 3 per cent of Canada's gross domestic product last year and exports $45-billion a year.

Mr. Emerson still has a big job on his hands, said John Brink, president of Brink Forest Products Ltd. in Prince George, B.C., who didn't attend the meeting.

However, Mr. Brink says the lumber industry has to consider what may be in store if the deal is ultimately rejected.

That might set the stage for future trade sanctions by the U.S. industry which could push for punitive tariffs in the 35-per-cent range, more then three times what they are now.

"If this is the alternative, then I am not overly enthusiastic about it," he said.