By David Schepp BBC News Online North America business reporter

Of the several trade issues facing Canada and the US, none is more long-running than lumber.

The two normally friendly trading nations have been at loggerheads for years over whether Canada has illegally subsidised softwood lumber exports - used for home construction - to the US.

Pettigrew says US consumers are being hurt

Canada has denied the charges and recently filed a 31-count complaint with a North American Free Trade Agreement (Nafta) panel to review the punitive tariffs - as high as 27% - that the US has imposed.

In addition, Canada continues to pursue challenges through the World Trade Organisation (WTO), which already ruled partially in favour of Canada last summer on the issue of export restraints.

Also, Canada said last month it will spend $13 million to explain to Americans how Bush administration trade policies, including the tariff on softwood lumber, have a negative impact on US consumers.

Neighbourly criticism

US President George W Bush announced the imposition of the lumber tax earlier in March, which were approved by the US International Trade Commission and took effect last month.

The decision brought harsh criticism from trade-policy experts and threatened the US president's commitment to free trade, an issue Mr Bush has loudly touted during his brief presidency.

Canada's PM Chretien is seeking resolution

Given his desire to have Congress grant him trade-promotion authority - the ability for the president to make free-trade deals with only an up or down vote by Congress - it is a difficult position for Mr Bush to be in.

But duties on Canadian exports of lumber are just one of a number of tariff proposals that have Mr Bush in hot water with his trading partners.

Some accuse him of talking out of both sides of his face - calling for greater, freer trade from one side while announcing trade-stifling tariffs from the other.

Mr Bush's call for duties on a wide range of imported steel products in March remains a highly contentious issue among members of the European Union and the basis for a possible trade war.

In addition, a recent farm-aid bill signed by the president in May further stirred criticism over US trade policies. Canada reiterated its opposition to the new law last week.

"If you produce in the US at subsidised prices, it makes it uneconomical to convert in developing countries," Canadian Finance Minister John Manley said during the recent meeting of G7 finance ministers in Halifax, Nova Scotia.

Eyeing trade

Mr Manley's comments came at the run-up to the meeting of the Group of Eight (G8) industrialised nations later this month in Kananaskis, Alberta.

G8 members

Britain Canada France Germany Italy Japan Russia United States

But even as Canada wags its finger in the face of its much larger southern partner, it is still heavily reliant on exports to it.

The United States is Canada's biggest trading partner and vice versa.

Trade between the two nations totalled $380.7bn in 2001, with Canada accounting for 23% of American exports and 19% of imports, according to data from the US Department of Commerce.

In reporting its latest statistics for international trade, the Canadian government noted "the United States accounted for more than two-thirds of the increase in Canada's exports in April".

It noted export growth was particularly strong in automotive products - Canada's largest export sector - and machinery and equipment.

These two categories account for nearly half of all exports from Canada.

Poverty plan

Even as most areas experienced growth, trade in softwood lumber fell to C$1.1bn ($717m, �479m), a 4.8% decline, according to Statistics Canada.

Adequate supplies of softwood lumber in the US as well as a two-month drop in new-home construction were cited as reasons for the sizable decrease.

But the Canadian government also said, "confusion over the outcome of the softwood-lumber dispute in the wake of changing duties and tariffs," also contributed to the decline.

The confusion is likely to continue.

President Bush, Canadian Prime Minister Jean Chretien and other leaders from the G8 will have their plates full with weightier issues during their two-day meeting - 26-27 June.

Among the topics are the global battle against terrorism, strengthening the global economy and a plan to lift Africa out of poverty and other topics.

A decades-long dispute over lumber isn't likely to be addressed during the brief confab - even if it is set amid the splendour of a Canadian pine forest.