To judge by some of the criticism meted out this week after Ottawa announced its long-awaited softwood aid package, one might think lumber workers and companies had been abandoned by the Liberal government. "Insufficient and inadequate," said the B.C. government; a "mockery" said Quebec; union leaders decried this "Band-Aid solution." The opposition parties also saw little they liked.

If anything, however, the $250-million in assistance may have been more generous than necessary, at least for now -- especially for a government whose fiscal surplus has disappeared with the summer's heat.

The package spearheaded by Natural Resources Minister Herb Dhaliwal and International Trade Minister Pierre Pettigrew is structured to boost employment insurance for displaced workers. But -- and few analysts admit this openly, knowing they'll draw flak from "stakeholders" in the forestry industry -- the 27-per-cent duties imposed on Canadian softwood exports by Washington haven't yet had the terrible impact expected.

A few thousand workers have been laid off, and one shouldn't minimize that. But the industry employs roughly 70,000 people in British Columbia alone. A recent study by PricewaterhouseCoopers suggests the border duties will cost Canadian companies about $1.5-billion a year. But, again, that's in an industry with exports worth more than $10-billion.

Most companies had time to prepare by increasing their U.S.-bound shipments before the duties took effect and by trimming costs where possible. Lumber prices have plummeted recently, adding to the financial pressure. And the weakness in the U.S. economy is bound to hurt as well. Things could be significantly worse by 2003. But Ottawa already has suggested that further aid may become available if necessary.

One should discount the rhetoric, then. But the Canada-U.S. softwood battle does cry out for a solution that comes relatively quickly and is no stopgap effort to paper over differences.

The Liberals have a two-pronged strategy to fight the protectionist U.S. Coalition for Fair Lumber Imports: to seek victory through NAFTA and World Trade Organization panels, while also seeking a negotiated settlement with Washington. That is the optimal way forward. But even though Canada has a strong (albeit not guaranteed) case under international trade law, a final order that the U.S. government eliminate the duties may be two years away.

A negotiated solution, as a result, remains preferable. Bilateral talks ended last spring with the two sides divided over what steps the lumber-producing provinces would have to take to ensure that prices forestry companies pay to cut trees -- known as stumpage -- were in line with market rates.

But another window may open after the U.S. congressional elections next month. The Bush administration has been showing some signs of wanting to put behind it this trade battle, which predates Confederation in one way or another. U.S. negotiators have quietly been in touch with the provinces amid suggestions Washington wants to "retake the initiative," in the words of one Canadian official, from the U.S. lumber coalition.

The U.S. housing industry is one of the few economic bright spots, and high duties on Canadian softwood raise new home prices. Just this week, two U.S. industry groups backed the Canadian position in filings before a North American free-trade agreement panel. An advertising and lobbying campaign to press Canada's case in key states and on Capitol Hill is to start the day after the U.S. vote on Nov. 5.

The broad interest of Canada and the United States is the same: The U.S. economy needs Canadian softwood, which fills about one-third of the U.S. market; Canadian producers need the U.S. market, which buys about two-thirds of Canadian softwood. Vested interests have stood in the way -- particularly because U.S. producers generally aren't as efficient as their Canadian counterparts.

Any negotiated settlement, however, is likely to cause hardship in many Canadian lumber towns, which have been protected by a government-run system that would have to be sacrificed to win the guarantee of an open border. Ottawa's aid package this week includes funds for retraining and diversification. That should be more than a hint; if peace is achieved it will come at a price.