Prime Minister Stephen Harper announced on Thursday the government has come to an agreement with Washington to settle the long-simmering softwood lumber dispute.

"I am pleased to announce today that the United States has accepted Canada's key conditions for the resolution of the softwood lumber dispute. Canada's bargaining position was strong, our position was clear, and this agreement delivers," Harper said in a speech in the House of Commons.

The deal could still take months to finalize, but Harper called it a resolution to "a long-standing dispute and allows us to move on."

As part of the deal, Harper said the U.S. has agreed to give Canada "unrestricted access" to the American lumber market, under the current market conditions.

"This means no quota, no tariffs," said Harper to the applause of his MPs.

Harper said the U.S. has also agreed to return at least $4 billion in duties it has collected since 2002 to Canadian producers.

He said the government, tired of the "legal wrangling" in the ongoing dispute, asked the Americans for a long-term solution.

They responded, he said, with "a seven-year deal -- with a possibility of renewal."

The so-called framework worked out Tuesday almost collapsed after Ontario publicly rejected the deal as unfair to the province's lumber industry, and companies in Quebec and British Columbia denounced its terms.

An amended package that improved Ontario and Quebec market shares and lessened a penalty seen as discriminatory against British Columbia was tabled Thursday morning.

Harper said the U.S. has also agreed to:

• A return to an exemption in duties for Atlantic lumber producers.
• An exemption for Canadian sawmills on the border between Quebec and the U.S.

"Third country provisions" aimed at easing Canadian concerns about other countries gaining U.S. market share at Canada's expense.

Earlier, the prime minister was absent from Commons for the initial part of Thursday's question period; he was reportedly on the phone, furiously lobbying the provinces to accept the proposal.

Harper later announced that he received the support of British Columbia, Ontario and Quebec -- the top lumber producing provinces in the nation.

B.C. Premier Gordon Campbell told reporters in Victoria Thursday afternoon that although the deal isn't perfect, it's a "reasonable" one for Canada, and a "good" one for B.C.

"We think we've crafted a trade agreement that allows for different responses from different parts of the country. This is a fair trade agreement which will provide the stability we want," said Campbell, whose province accounts for more than half of Canada's $10-billion annual lumber exports to the U.S.

Ontario's Natural Resources Minister David Ramsay, who voiced his fierce opposition to an earlier, leaked version of the deal, expressed optimism Thursday.

The deal, as it was proposed on Wednesday, would have resulted in Ontario's share of the country's softwood lumber exports to the U.S. totalling about nine per cent -- below the province's historical share of roughly 10.5 per cent.

This would result in massive layoffs at northern Ontario mills, according to Ramsay.

But he said that after speaking with political colleagues across the country, he became confident a solution can be found that would satisfy Ontario mills.

"There's goodwill in the country to work together," Ramsay said outside the Ontario legislature in Toronto.

"While this arrangement would require each jurisdiction to make some concessions, Ontario got a critical element -- a more reasonable share of softwood exports."

In Quebec, Premier Jean Charest also welcomed the agreement after the province's market share was adjusted, saying it will benefit the Quebec economy which is heavily dependent on the forest sector.

"Throughout these negotiations, the Quebec government defended the province's interests and those of workers in the forestry sector and in outlying regions," Charest said in a statement.

Alberta, ranked fourth in production behind B.C., Quebec and Ontario, signed on reluctantly.

The U.S. Coalition for Fair Lumber Imports, which has waged an aggressive battle against Canadian softwood, has also apparently embraced the agreement.

"We applaud the tireless efforts of the Bush administration officials who negotiated a means of offsetting Canadian unfair lumber practices," said coalition chairman Steve Swanson.

But support from the Canadian industry was less enthusiastic.

"The B.C. Lumber Trade Council has given conditional support to the framework agreement ... pending a review of the final term sheet," the lumber lobby said in a release.

Council president John Allan said each company will have to crunch the numbers to see if the proposal works for them.

"Agreements of this nature are rarely perfect and the complexities of the issues will always make unqualified support elusive," Allan said.

Still, Jim Shepherd, chief executive officer of Canfor Corp. welcomed the deal.

"For a lot of companies in British Columbia, this doesn't give them everything they wanted, but speaking for us, it gives us a good base to work from," Shepherd told The Globe and Mail.

Critics

The deal sparked heated criticism from the Opposition, who accused the federal government of selling out to the Americans.

Despite the government's claim there will be no quota, producers could be hit with anywhere between a 5 to 15 per cent export tax should the market value of lumber drop.

Liberal Opposition Leader Bill Graham said the deal is good only as long as present-day economic conditions last.

"And we know that when we see the details of this agreement, we will see draconian measures in that agreement that will punish our industry -- the minute the conditions in the United States go down," said Graham.

"And the American industry, which has been sold out to in this agreement, says we're going to shut Canadian lumber out now because it's not in our interests."

Graham lamented the fact the agreement will leave $1 billion collected unfairly from Canada's softwood producers in U.S. hands.

NDP Leader Jack Layton called it "a sellout ... it's really shocking.''

Washington

U.S. President George Bush issued a statement late Thursday, saying he was pleased the decades-old war was headed towards a resolution.

"This agreement shows how NAFTA partners can overcome differences and work together," said Bush, who threw his weight behind the talks and pushed the powerful U.S. lumber lobby to sign on.

"The United States' close ties with our good friend and northern neighbour made this agreement possible. I applaud Prime Minister Harper's leadership in resolving this issue," said Bush.

U.S. and Canadian trade officials announced the agreement at a joint U.S.-Canada news conference at the Canadian Embassy in Washington.

"This agreement is an historic opportunity to resolve a dispute that has lasted for more than two decades," U.S. Trade Representative Rob Portman said.

Canadian International Trade Minister David Emerson called the deal "a watershed moment" in trade relations.

"This agreement is the result of the greatest show of determination in trade diplomacy, in my view, that North America has seen since the negotiation of the NAFTA agreement itself," Emerson said.

"We accomplished more in 80 days than any Canadian government has accomplished in the last decade."

Harper apparently intervened personally with Bush when the deal showed signs of foundering this week on opposition from the Canadian lumber industry.

"There were discussions at the highest levels with the United States," Emerson told The Canadian Press in an interview from Washington.

But he would not confirm Harper had a conversation with Bush.

"The prime minister played a major role in this, is all I will say," Emerson said.

The deal

The first breakthrough came early this week after around-the-clock discussions between Michael Wilson, Canada's ambassador to Washington, and Deputy U.S. Trade Representative Susan Schwab.

The talks resulted in a framework deal, but according to the Canadian Press, the Canadian lumber industry had reservations about some of the details.

Discussions between the B.C. government and lumber industry officials followed, resulting in proposed amendments to the framework, which Wilson forwarded to American officials Thursday morning.

According to CP sources, Wilson returned with a package that amended the point where a border tax would kick in.

The amended package also changed the definition of market share, related to the cap on Canada's portion of the U.S. lumber market.

It also amends the so-called anti-surge rate -- which penalizes lumber-producing regions and companies that exceed their quotas under the seven-year deal.

With files from CTV's Ottawa Bureau Chief Robert Fife and The Canadian Press