OTTAWA (CP) – The U.S. ambassador to Canada predicted Sunday that the softwood lumber trade issue could be resolved this year.

David Wilkins said on the CTV television program Question Period that everyone on both sides of the Canada-U.S. border now recognizes it is in their best interests to solve the long-simmering dispute.

“I’m optimistic. I know that people of good faith, friends, can work out their differences,” Wilkins said. “And I have no doubt that people on both sides of the border want to resolve this issue and resolve it this year.”

The sale of Canadian softwood lumber into the United States has been an irritant between the two countries for 30 years.

Americans have argued that Canadian lumber is unfairly subsidized through low stumpage fees for cutting in Crown forests. But Canada has won nearly every round under the North American Free Trade Agreement when the dispute has been heard by trade dispute tribunals.

The United States has collected more than $5 billion in punitive tariffs and Canadian producers want the money returned. Canada won a major battle last month when a NAFTA panel essentially eliminated most of the punitive duties. The U.S. could still appeal the ruling.

President Bush and Canadian Prime Minister Stephen Harper discussed softwood lumber at a meeting in Mexico this past week. Wilkins said they had a very frank discussion.

He also suggested that while Bush had a good relationship with past Liberal prime ministers, the president appreciated Harper’s strong stand in support of the coalition military mission in Afghanistan.