Fearing 'contamination' of the entire Canada-U.S. trade relationship, the premiers are urging Prime Minister Paul Martin to take the issue up with U.S. President George Bush.

Led by British Columbia Premier Gordon Campbell, the first ministers met with U.S. Ambassador David Wilkins in Banff, Alberta on Thursday.

But despite their tough talk, they appear to have made little headway.

"I listened, I heard the concerns," Wilkins -- who has been on the job for just six weeks -- said as he pledged to take the premiers' concerns back to Washington.

The landmark NAFTA panel ruling on softwood lumber delivered Wednesday should have ended the punitive softwood duties on lumber from Canada. But the U.S. said the unanimous ruling was largely irrelevant.

At a press conference Friday afternoon, Campbell told reporters that they have now turned to the prime minister for help.

"The Americans have said they aren't interested in following the legal course of action, so the premiers urged the prime minister to talk ... with the president in regard to that," Campbell said.

According to the B.C. Premier, it's now up to Bush to signal whether or not he plans to thoroughly pursue his stated agenda of hemispheric free trade.

"This will be something the president decides," Campbell said, adding: "What the Americans are doing right now is undermining the whole framework of NAFTA by not living up to their legal obligations."

When Quebec Premier Jean Charest spoke out, he was even more blunt than his western counterpart. The softwood dispute, he said, is symbolic of deeper divisions festering between Canada and its southern neighbour.

"From our point of view, this last ruling brings us to a tipping point. And the fact that ruling after ruling is delivered and not applied has an effect ... on the credibility of NAFTA.

"This issue contaminates other trade issues... and now we feel this has gone on long enough."

Premiers' strengthening resolve in recent days, Charest added, is a direct result of that.

"It isn't just about softwood lumber, it's about the whole trade relationship and where we're going."

Sanctions threatened

Federal and provincial officials accused the United States of reneging on the 11-year-old North American Free Trade Agreement, with an outraged Ottawa renewing threats to slap billions of dollars of sanctions on American goods if Washington doesn't recant, reported The Globe and Mail.

One senior Canadian government official called the U.S. dismissal of the NAFTA ruling a "slap in the face."

Another top-ranked federal official told The Globe that Ottawa is prepared to retaliate if the United States repudiates NAFTA.

"Those rules cannot be flouted and they cannot be ignored," the official said. "If [the United States] ... can't see fit to recognize the rule of law, to honour the agreement that it, itself, established, and to work toward a deal that is fair to all, they should not expect this federal government to take that sitting down."

A group of Liberal cabinet ministers released a statement that questioned the U.S. government's support for NAFTA.

"This raises serious and fundamental questions about the United States's commitment to the NAFTA," the ministers said in the statement.

NAFTA panels have three times ruled that the United States failed to prove that Canadian softwood posed a threat to U.S. producers.

On Wednesday, a last-ditch NAFTA appeals panel rejected Washington's claims that previous softwood rulings in favour of Canada broke trade rules.

If Washington can't prove Canadian softwood lumber poses a threat of material injury to U.S. producers, it is obliged to scrap the duties on imports of Canadian lumber.

Wednesday's ruling should therefore have forced an immediate end to the dispute.

But the United States says that the NAFTA ruling is inconsequential and that it has no intention of scrapping duties on Canadian softwood that exceed 20 per cent for some companies, or refunding the $5 billion in levies collected since 2002.

Canadian premiers and territorial leaders signed a resolution at their meeting in Banff, calling on Ottawa to take all necessary measures to recover softwood levies and force Washington to comply with the ruling.

"It's time for the Americans to say they're going to live up to their legal obligations and return the dollars that they've illegally been taking from Canadians," Campbell said at the meeting.

Ontario Premier Dalton McGuinty warned that the U.S. government's refusal to comply with the ruling could jeopardize relations between the two countries.

"It's the kind of thing that can become more than just a little irritant," McGuinty told reporters.