Canadian Prime Minister Jean Chretien said he has bluntly warned President George W. Bush that the United States can't have it both ways on free trade, securing greater supplies of Canadian oil and gas while imposing tariffs on softwood lumber. 
"You want gas, you want oil and you don't want wood?" Chretien said he told Bush in a Monday phone call. "It's too bad, but if you have free trade, you have free trade. And I explained it very clearly." 
Chretien later said he is not trying to link energy and lumber in a trade war. "There is no need for that," he said. But two of his senior cabinet ministers, Fisheries Minister Herb Dhaliwal and Trade Minister Pierre Pettigrew, had earlier issued veiled threats that Canada might take a hard line on C$50 billion a year in energy exports unless the lumber dispute was settled. 
Dhaliwal said the United States would not get cooperation on routing a gas pipeline from Alaska through Canada if it continued with plans to impose a 19.3 percent tariff on softwood lumber. "If the Americans don't want to buy our lumber ... I don't know if we want to let them pump gas from Alaska to the southern 48 states," he said. "Either we have free trade or we don't." 
Pettigrew said Canada has "heard what (the Americans) are saying on the energy front and I am saying that it is up to them to realize that keeping us in a good mood is a good idea. You don't hit a guy with a two-by-four on the forest front before asking him for help on the energy front." 
However, Chretien, following a meeting with Alberta Premier Ralph Klein, said he would not endorse any threat to withdraw co-operation on the gas pipeline. "It's a war when you do that ... I believe in taking a file and resolving a file," he said. Klein and petroleum industry leaders told Chretien it would be "disastrous" for oil and gas exports. 
J.C. Anderson, chairman of Anderson Exploration, said it would be "madness" to restrict any aspect of Canada's energy trade with the United States, while Gwyn Morgan, chief executive officer of Alberta Energy Co., said any retaliation through energy would be "imprudent in the extreme." 
Andre Plourde, an energy economist at the University of Alberta, said a get-tough approach over energy would likely fail, given that the North American Free Trade Agreement prevents Canada from curbing energy exports unless it cuts supplies proportionately in Canada. 
The U.S. Commerce Department, arguing some Canadian lumber producers are illegally subsidized, has threatened to impose a 19.3 percent duty on C$10 billion a year in softwood sales, retroactive to May 19, once a final determination is concluded. 
Canada says it has two favorable rulings from the World Trade Organization and will seek a third if the duties are imposed, as well as appealing under NAFTA. In anticipation of the duties, layoffs have already started in British Columbia and, according to some analysts, could reach 30,000 across Canada. Chretien said he reminded Bush that housing construction has been one bright spot in a weakened U.S. economy and duties on Canadian softwood would only raise prices for consumers and reduce activity.