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By Susan Delacourt, Ottawa Bureau Chief

August 27, 2005

WINNIPEG: Canada and the United States have launched an all-out war of words in the softwood lumber dispute, with at least one cabinet minister denouncing the U.S. as a "bully" and "hypocritical," and the U.S. ambassador accusing Canadians of "emotional tirades."

This new frontier in the battle over the softwood lumber trade was provoked by an interview that David Wilkins, the new U.S. ambassador to Canada, gave to the Ottawa Citizen's editorial board on Thursday.

David Wilkins, America's Ambassador to Canada on Thursday

In that interview, Wilkins accused Canadians of reacting emotionally to the U.S. decision to ignore a North American Free Trade Agreement (NAFTA) panel ruling in favor of Canada in the softwood lumber dispute.

Wilkins also dangled the possibility of U.S.-launched trade battles against Canada on multiple fronts, including the dairy, egg and broadcasting industries.

Industry Minister David Emerson was the most blunt-spoken in response yesterday, warning that Canadians might have to brace themselves for this war of words to turn into an all-out trade war.

"Are we going to stand together? Are we going to unite? Are we going to be stronger than the sum of our parts or are we going to be endlessly bickering among ourselves and allowing the bully to basically mop the floor with us?" he said.

Emerson, who was a forestry executive before entering federal politics in 2004, appeared particularly incensed at Wilkins' suggestions that Canada was waging this battle through emotions as opposed to negotiation.

"When we know this is a game which the Americans play where heads they win, tails we lose, I think that we have a right to get emotional," said Emerson.

"This has been going on basically for several decades and I think it's hypocritical for him to think that we haven't been negotiating. We have. There hasn't been a response from the other side and it's been a very cynical negotiation every time we sat down and talked."

Prime Minister Paul Martin endorsed Emerson's tough talk and categorically rejected Wilkins' comments to the newspaper about Canadians indulging in "emotional tirades."

"It's not emotional to state the facts and the facts are that when you sign an agreement you should live up to its terms," Martin said yesterday after his cabinet wrapped up a full-day session in Winnipeg.

Martin intends to place a protest call to U.S. President George W. Bush at some point, but he won't say when, except that the timing of the call will be organized around when it best serves Canadian interests. No attempt was made yesterday by the Prime Minister's Office to get in touch with Wilkins directly, but Martin aides say the ambassador will obviously be getting the message, even if only informally, that the government resented his comments.

Discussion of this dispute was reportedly heated around the cabinet table yesterday, with ministers divided on how best to retaliate with the U.S.

All Martin would say on that point was that the cabinet discussed "a full range" of options for the next steps in this nasty trade dispute.

He also said he intends to consult with some of the former negotiators of the NAFTA agreement — some of whom are involved in the softwood talks already — and he didn't rule out even asking for help from former prime minister Brian Mulroney, whose government brought in the free-trade agreement.

"Do I believe that it's important that we stay together (on this)? Absolutely," Martin said.

Tempers have been boiling in Canada since the United States announced earlier this month that it was rejecting a ruling by a special panel set up to referee disputes under NAFTA.

The panel ruled on Aug. 10 that the Americans had no right to levy punitive duties on Canadian softwood coming into the U.S. Despite numerous similar decisions in recent years by trade adjudicators, the U.S. has collected $5 billion in duties from Canada's lumber exporters since May 2002.

International Trade Minister Jim Peterson said yesterday that Wilkins would be better off talking to his bosses in the U.S. instead of chiding Canada for its reactions.

"The message that the ambassador should be delivering to Washington is that they should not confuse emotion with commitment and determination by Canadians to make sure the NAFTA is respected," Peterson said.