Northern News Services

Yellowknife (Apr 01/02) - A federal cabinet minister has backed away from his suggestion that Canada retaliate against the American stand on Canadian lumber by refusing to co-operate on energy projects, said an industry representative.

Industry executives were quick to react to a report in the Globe and Mail report last Tuesday that Natural Resources Minister Herb Dhaliwal was considering taking action in the energy sector in retaliation for a 29 per cent duty slapped on exports of softwood lumber.

Petroleum industry representatives asked Dhaliwal to clarify his comments that afternoon, said Pierre Alvarez, president of the Canadian Association of Petroleum Producers.

"He has reassured us there will be no linkage (between lumber and the energy sector)," Alvarez said. "We fundamentally reject any notion of linking the two commodities."

Alvarez said he perceived Dhaliwal's comments as an expression of the frustration Canadian loggers are feeling about the way the lumber dispute has unfolded.

A free trade expert at Carleton University in Ottawa said there are very few industries that are willing to step into a trade war to help another.

"Governments have on occasion been dumb enough to do that," said Michael Hart, a professor of trade policy. But Hart added that has not happened since Pierre Trudeau was prime minister.

Dhaliwal was unavailable for comment by deadline. Western Arctic Liberal MP Ethel Blondin-Andrew was also unavailable. A spokesperson in her office would say only that, "she's having some private time right now."

Alvarez said the petroleum industry, with no trade barriers, serves as a model for trade between the two nations.

In the Globe and Mail story, Dhaliwal was said to suggest that Canada may not co-operate in the development of a pipeline that would ship Alaska gas to U.S. markets through Canada.

The territorial government is supporting a more advanced proposal to ship Canadian gas from the Beaufort Delta to U.S. markets down the Mackenzie Valley.

Territorial cabinet ministers said it may be a mistake to draw the energy industry into the softwood lumber dispute.

Finance Minister Joe Handley said Canada should think very carefully before getting into any trade dispute with its neighbour to the south.

"If we're just a little mouse, we don't want to get into a spitting match with the elephant next door," Handley said. "Hitting them on the energy side could end up hurting us, particularly the NWT, more than them."

Resources Minister Jim Antoine said he appreciates the tough stance Dhaliwal is taking on free trade, considering the possibility that the Deh Cho may one day export lumber to the U.S. "We'd like to have a better idea of what he has in mind," said the Nahendeh MLA of the link between softwood lumber and energy.