OTTAWA ?U.S. consumers of Canadian lumber say Ottawa has all but won the battle over softwood exports to the United States, and they're urging the federal government to stay the course or risk losing billions of dollars.

Members of American Consumers for Affordable Homes, which include heavyweights such as Home Depot big-box stores and a host of umbrella groups, were in Ottawa this week trying persuade Canadian legislators to stand firm.

The trip came on the heels of a NAFTA-ordered reversal of an International Trade Commission ruling that Canadian industry were practices unfair and threatened injury to U.S. competitors.

It's the third time a NAFTA panel has unanimously ruled that the ITC decision was wrong, ordering it to reconsider. The ITC finally rescinded the ruling Sept. 10.

The United States will likely appeal, but the consumer lobby predicts it won't succeed and hefty duties imposed on Canadian lumber should be ordered repaid within months.

"Canada is on the brink of total victory," said Bobby Rayburn, president of the U.S. National Association of Home Builders.

At stake is at least $3.6 billion in duties collected so far.

International Trade Minister Jim Peterson appears to be leaning toward a negotiated solution.

Sources say it could see Canadian producers get back only 52 per cent of the proceeds and be forced to submit to quotas.

"Negotiating a settlement to replace the duties with quotas, taxes or other border measures in a misguided bid to stave off future litigation would play into the hands of the U.S. lumber firms," said Rayburn.

Added association spokeswoman Susan Petiunas: "When you are near victory, it is not the time to cut a deal, give money to U.S. competitors, or agree to any new quotas, border taxes or measures."

But Peterson said in an interview it would be foolhardy to abandon negotiations exclusively in favour of litigation.

"We've seen them appeal things four times and go nowhere," said Peterson, adding the appeal process could take the issue well into next spring.

"Even if we win it, they have threatened a constitutional appeal on this one, which would put us into the U.S. courts. They have shown us in the past they are very litigious and they are not going to let this go."

The minister said the consumer group told Ottawa this latest decision would settle the issue once and for all, "and we haven't got the money yet."

Litigation may end this dispute, he said, but it won't do anything to prevent another one from flaring up. Government sources say the dispute could drag on in the courts and elsewhere until 2007, with Ottawa paying out about $9 million in legal fees each year.

Still, Peterson said it would be irresponsible to abandon a two-track approach.

"We will continue the litigation and I'm confident we will prevail," he said.

"In the meantime, our producers are paying 27.2 per cent and we will continue to be open to a negotiated settlement that is in the best interests of all Canadians."

Canadian lumber producers ship about $10 billion worth of softwood a year to the United States for home construction and renovation, holding about 34 per cent of total market share.

U.S. lumber producers have long contended Canadian imports are subsidized by low Crown timber-cutting fees, known as stumpage, and other provincial forestry policies.

In April 2001, the producers launched their fourth trade complaint in two decades, resulting an 18.79 per cent countervailing duty and an 8.2 per cent anti-dumping duty.

The levies were later reduced by a series of NAFTA rulings and recalculations by the U.S. Commerce Department.