In an exclusive interview with CTV News, U.S. President George Bush says he certainly hopes the softwood lumber trade dispute can be resolved before his presidency ends, improving what he calls a strong and important relationship between the two countries.

"This is a difficult issue. I know it creates anxieties in Canada. I really don't want to create anxieties," Bush told CTV's Tom Clark during an interview conducted Tuesday in the map room of the White House's residential wing.

"On the other hand, I do want to be fair to our folks here as well, and I think we can find ground."

The dispute is based on how governments charge timber companies for the trees they harvest to make lumber. The U.S. claims Canadian lumber companies don't pay market value and imposed punitive duties on them that have cost about $5 billion since 2002.

However, despite the fact the U.S. government removed the duties earlier this year, the money already collected hasn't been returned. Canada wants the money back.

Bush said he's told Prime Minister Stephen Harper he wants the long-running trade irritant resolved.

"The best thing I can do is tell our negotiators to see if you can find common ground. Again, we were close to an agreement before -- maybe that's a place for people to look for common ground," he said.

"I know it's not going to get solved ... if these negotiations are public. It's going to require some very quiet consultations to see if we can do it."

Bush acknowledged that, "there's been some rulings," referring to NAFTA and World Trade Organization decisions that have mainly gone Canada's way.

Harper, Bush and Mexican President Vicente Fox will be meeting in Cancun, Mexico, on Thursday for an annual trilateral meeting. Harper said Tuesday that the softwood dispute will be the top priority item for him.

CTV's Ottawa bureau chief Robert Fife did some digging on what might transpire at the meeting and reported the following on Tuesday night.

"Canadian and U.S. officials are involved in secret negotiations to arrive at a framework agreement on softwood lumber prior to the announcement of formal negotiations," he said.

"They want to have a deal pretty much in place, so that when negotiations resume, they can be concluded quickly and favourably.

"You'll probably see higher quotas for Ontario and Quebec lumber, and higher stumpage fees in B.C. In return, the Americans will give back most of the $5 billion it's already collected.

"I expect that the president and the prime minister will announce the resumption of formal negotiations at this summit," Fife said.

Bush said Canada is the United States' number-one trading partner, adding that trade helps economies grow.

"I think free trade is an important part -- and fair trade, something that Canadians want and something that Americans want is free and fair trade -- benefits both of us. You know, we traded about nearly $500 billion in two-way trade, in 2005, which is very positive for both our economies," he said.

"What I'm concerned about is that protectionist tendency and isolationist tendency that could emerge in both our countries, as well as in Mexico, which would make it harder for us to realize the benefits of collaboration together, make it harder for us to kind of grow together. And that would be not beneficial for the hemisphere, and frankly, it will make it a lot harder for future Americans and Canadians and Mexicans to compete with the Chinese, for example."

U.S.-Canada relations

When asked about relations between Canada and the United States Bush said he believes it is "a very strong and important relationship for the United States of America."

"It's a relationship that we should never take for granted, and I'm confident the Canadians won't take our relationship for granted."

While he acknowledged that Canadians "expressed deep concern" about the U.S. decision to go to war in Iraq, "in the midst of turbulent times, my relationships with the two prime ministers, prior to Stephen Harper, were good, solid relationships."

Some Canadians haven't appeared to warm to Bush. Over the years, he was called a "moron" by former prime minister Jean Chretien's director of communications. And a Liberal MP stomped on a Bush doll on a satirical TV show.

"I guess much has been made about some of the name-calling that went on. That's just part of politics and it doesn't bother me in the least," Bush said.

"If I was bothered about name-calling from Canada, I'd certainly be bothered about name-calling from the United States, as well," he said with a laugh.

"I think I've had very good relations with the Canadians with whom I've dealt. I mean, prime minister Chretien, and his successor, Paul Martin, and I got along just fine. We didn't always agree, but I can understand people not agreeing with some of the decisions I made. But that doesn't necessarily mean there's any problems with the relationship," Bush said.

While Canadians are frustrated over softwood lumber, Bush noted that trade problems regarding BSE and potatoes have been resolved during his presidency.

Asked if he was happier that a Conservative government was now in power, Bush said he respected the will of the Canadian people.

"There were some tense times when I made the decision to go to war in Iraq, and I understand that. ... I fully understand why people -- not only in Canada, but the United States -- express deep concern about the use of force to protect ourselves. I stand by the decision. I think it's the right decision. And, therefore, I wasn't surprised when I heard, you know, members of political parties in both our countries express deep concern about it.

"Having said all that, however, in the midst of turbulent times, my relationships with the two prime ministers, prior to Stephen Harper, were good, solid relationships. We had candid discussions, we were friendly toward each other, we share the same values of human rights and human dignity and freedom to speak and freedom to worship."

Passports

Bush also spoke about a controversial American policy that requires anyone entering the U.S. to have a passport, including American and Canadian citizens.

The new rule will come into effect at the end of 2007, although David Wilkins, the U.S. ambassador to Canada, has said a national ID card might be acceptable.

"You've often said that the reason for this -- or what Stephen Harper calls the passport problem -- you've said that it's because you want to know who's coming and going across that border. So I guess it begs the question, are Canadians not telling you who's coming and going? Are we not doing a good enough job?" Clark asked.

"Oh, I think Canada has been very co-operative and the relationship between our services is very good," Bush said.

"The idea is to have -- it doesn't necessarily have to be a passport. It can be a document, a tamper-proof document that will expedite border crossings, not delay border crossings. The idea is to make sure that tourists and trade moves freely and terrorists don't."

Asked about the prospect of childrens' sports teams having trouble crossing borders because they don't have the correct documentation, Bush said: "Again, the idea is to make it hassle-free as best as possible.

"I can understand -- I mean, on any change of the status quo, you can always find kind of the nightmare scenario that makes life -- it makes it feel like life is going to be a lot worse. I don't think it necessarily has to be. I think we can work with our Canadian counterparts to come up with something that's rational and meets the law that has been passed by the Congress and that I signed."

Fife said if the U.S. has its way, Canadians might see themselves carrying a common North American border pass that could include biometric identifiers such as eye scans.

"These so-called smart cards are less expensive and more secure than passports. They are already being tested here in Canada, and you can expect that too will be a subject at the summit," he said.