The Asssociated Press
September, 2005


The Canadian government on Tuesday dropped
hints of an escalating trade war with the United States, as two
federal ministers suggested tariffs on American products in
retaliation for Washington's on against Canadian lumber.

Trade Minister Jim Peterson is identifying areas where Canadian
tariffs could put maximum pressure on the U.S. economy with minimal
damage domestically, two of his cabinet colleagues told reporters
attending a Liberty Party caucus in western Canada.

Industry Minister David Emerson used a sports analogy to describe
the federal government's willingness to retaliate against its North
American Free Trade Agreement partner.

"I have a background from my younger days in hockey," Emerson said.
"When somebody slammed you into the boards with undue force and
aggression, you took their number. I think we've got to take their
number."

The Bush administration imposed the tariffs in 2002 after accusing
Canada of subsidizing its lumber industry. Most U.S. timber is
harvested from private land at market prices, while in Canada, the
government owns 90 percent of timberlands and charges fees for
logging.

The warning comes one week after the United States announced it
would ignore a decision by a NAFTA panel that found Canadian lumber
exports did not harm U.S. producers.

Emerson said Ottawa was trying to "identify a number of products
where a tariff on American exports into Canada can be applied
without serious damage to the Canadian economy and, hopefully, with
maximum impact in the U.S."

Canada is already seeking WTO authorization for billions of dollars
in punitive tariffs against U.S. imports and is going before the
U.S. Court of International Trade in New York to force the refund of
duties.

With more that 80 percent of Canadian exports going to the United
States and the countries exchanging $1 billion each day, Canada
would need to tread carefully to avoid a crippling trade war.

But the Canadian federal government is intent on making its point
that U.S. Customs has illegally collected $4.1 billion in tariffs on
Canadian softwood since 2002, said Finance Minister Ralph Goodale.

"Canada has wanted to make it very clear that we are not happy with
the position of the United States to simply ignore what is a clear
NAFTA ruling in Canada's favor," Goodale said.

One particularly tough measure has already been ruled out: imposing
export quotas on Canadian oil going to the United States.

Emerson, who initially supported the idea when he was a lumber
industry executive, now says it would unfairly saddle the western
oil-producing province of Alberta with the bulk of the economic
fallout.

"We are stronger as a country when we pull together in a unified
way," he said.