VANCOUVER (CP) - The federal government announced Wednesday it is asking for a review of the latest U.S. softwood lumber duty rates under the North American Free Trade Agreement.
The Department of International Trade said it opted to challenge the anti-dumping and countervailing duty rates set last month by the U.S.     Commerce Department after consulting with the Canadian lumber industry.

As a result of an administrative review, Commerce announced Dec. 6 that Canadian lumber imports would be subject to a countervailing duty of 8.7 per cent, down from the previous 16.37 per cent, and an anti-dumping rate of 2.11 per cent, a reduction from 3.78 per cent.

When duties were first confirmed in May 2002, Canadian lumber exporters paid about 27 per cent in combined duties. Successive reviews have cut the rate but Canada has insisted there's no reason to impose any duty at all.

"We are rallying with the provinces and our industry from coast to coast to stand strong for Canadians," Trade Minister Jim Peterson said in a statement.

"While a reduction of the rate is certainly welcome news, it isn't enough. There is no doubt in my mind that softwood lumber duties should be dropped and we will keep working on all levels to make sure this happens."

Canada has claimed victory in a series of NAFTA appeals that rejected the basis for the duties, imposed after U.S. lumber producers complained their Canadian competitors were subsidized.

Negotiations to settle the longstanding dispute have proved fruitless and Ottawa has focused on fighting the duties before NAFTA, the     World Trade Organization and U.S. courts. It is also contemplating retaliation against U.S. imports and, said Peterson, looking for other markets for Canadian lumber.

Canadian exporters have deposited more than $5 billion with U.S. Customs since the duties were first imposed.

The dispute has become an issue in the Jan. 23 federal election, especially in British Columbia, which accounts for more than half of lumber exports.

The Liberals have argued the government's strong words and staunch legal counter-offensive is getting results while the New Democrats say Canada should take tougher measures, such as linking the issue to energy exports. The Conservatives say they'd do more to prop up the industry until the dispute is resolved.