WTO: U.S. didn't break international law in Canada lumber dispute

GENEVA — The World Trade Organization ruled that the United States complied with international law in its calculation of tariffs against Canadian lumber imports, according to a report made public Monday.

Canada argued the United States artificially inflated antidumping rates by using a different calculation method to avoid complying with an earlier WTO decision.

But a WTO panel, which originally released its findings to the parties in February, said that the U.S. had not broken trade rules in its calculation of the duties.

"We therefore consider that the United States has implemented the recommendations and rulings," the ruling concluded. "The United States did not act inconsistently with its obligations under the asserted WTO agreements."

Washington imposed antidumping and countervailing duties totaling more than 27 percent in May 2002 after accusing Canada of subsidizing its lumber industry.

The U.S. Commerce Department, responding to a complaint under the North American Free Trade Agreement, reduced punitive duties late last year from an average of 16 percent to less than 9 percent. Separate antidumping tariffs averaging about 4 percent were not affected.

U.S. officials took the action under protest and have not ruled out an appeal before a special NAFTA dispute panel. Canada has argued the NAFTA ruling should supersede the WTO.

Most U.S. timber is harvested from private land at market prices, while in Canada, the government owns 90 percent of timberlands and charges fees for logging. The fee is based on the cost of maintaining and restoring the forest.

The decades-long dispute has fueled talk of an outright trade war between the world's largest trading partners and concerns that the rules of free trade under the North American Free Trade Agreement between the United States, Canada and Mexico were now unraveling.

Canada supplies about one-third of the U.S. market for softwood, easily sawed pine, spruce and other wood used in home-building.

Canada insists the forest policies of lumber-producing provinces may not mirror U.S. free markets in timber but they don't amount to subsidies.