WASHINGTON (Reuters) - Canada's lumber industry will reject a framework deal that has been worked out between the United States and Canada to resolve a long-running trade dispute because it was not consulted, a source close to the industry told Reuters on Wednesday.
"Every industry group in the country has said no, rejects it, wasn't consulted about it. The Canadian government was busy consulting with the U.S. industry but neglected to consult with its own industry," the well-placed source said.
"They've announced that they have a deal, only they don't."
CBC television said earlier on Wednesday that the two sides had a framework deal but added that legal details had yet to be worked out. The two countries are at odds over whether Canada's provinces are subsidizing lumber producers by charging below-market rates to log forests.
The source said Canadian industry representatives were particularly angry about proposals in the framework agreement to pay $1 billion of disputed duties back to the United States.
Under a U.S. law known as the Byrd amendment, Washington takes money from duties collected on imports it decides are unfairly priced and distributes it to U.S. competitors. This law has funneled some $4 billion into a pot to which U.S. and Canadian firms are now fighting for access.
The U.S. Court of International Law ruled earlier this month that the United States violated a provision of the North American Free Trade Agreement by applying the Byrd law to duties on Canadian goods.
"The first item on this term sheet is illegal -- that 20 percent or $1 billion of the deposits will go to the United States, half going to the (U.S. lumber) coalition," the source said.
"This ignores completely that (Canada) just won the Byrd case and they can't give out this money, not legally."
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