WASHINGTON -- Canadian hopes of a quick end to the softwood lumber trade fight evaporated yesterday as the Bush administration confirmed it will file yet another appeal in the long-running case.

The U.S. government announced it would challenge a recent NAFTA panel ruling that found its 27.2-per-cent duty on Canadian lumber illegal.

The rare "extraordinary challenge" under North American free-trade agreement rules would delay final resolution of the case well into 2005. But federal Trade Minister Jim Peterson vowed that Ottawa would continue to fight for the repeal of the duties and the return of all duties.

"We know that U.S. producers will use every litigation tool available to them in this dispute, but Canada will continue to mount a strong case," Mr. Peterson said. "All along, Canada has maintained that the American industry is not injured by Canadian softwood. Our position will not change."

U.S. authorities have collected roughly $2.8-billion (U.S.) in duties from Canadian lumber companies since 2002.

The head of a U.S. industry group that has waged a long fight against the Canadian lumber industry said the U.S. legal case is strong and predicted the NAFTA ruling would be overturned.

"All that the U.S. industry has ever requested is an end to Canadian lumber subsidies and dumping through open and competitive timber and log markets, like in the United States," said Rusty Wood, a Georgia lumber mill owner and chairman of the Washington-based Coalition for Fair Lumber Imports.

"The dispute will not end until there are reasonable Canadian commitments to bring the needed reforms about."

A string of legal decisions, most notably an Aug. 31 NAFTA ruling, have bolstered Ottawa's long-time contention that the duties -- aimed at countering alleged Canadian dumping and subsidies -- are illegal and should be removed. The panel -- made up of two Americans and one Canadian -- found that the 27.2-per-cent duty on Canadian lumber is illegal because Washington failed to prove imports are harming U.S. businesses.

But Mr. Wood called the NAFTA panel ruling "aberrant" because it runs counter to U.S. law. He also repeated a claim that one of the U.S. panelists had a conflict of interest in the case -- a charge the panelist sought to refute.

Several WTO decisions have challenged the way the United States calculated the duties.

In September, the quasi-judicial U.S. International Trade Commission reluctantly agreed to come into line with the NAFTA ruling. But the commission complained that the panel had overstepped its legal authority.

Canada walked away from a tentative settlement last year that would have seen it collect a temporary border tax on lumber exports.

But a string of trade rulings, both at NAFTA and the WTO, have convinced many in Canada that a more favourable deal is likely once all the litigation runs its course.