TORONTO (AP) – The World Trade Organization ruled Wednesday that the United States complied with its international obligations in applying antidumping duties against Canadian lumber imports, a Canadian official said.

The confidential ruling was released to both countries. 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 argued the United States artificially inflated antidumping rates by using a different calculation method to avoid complying with an earlier WTO decision.

The United States imposed antidumping and countervailing duties totaling more than 27 percent in May 2002.

Revisions have cut both duties roughly in half since then but Canadian lumber exporters have paid more than $4.3 billion in duties so far.

“Canada is disappointed that the WTO compliance panel has found that the United States complied with its WTO obligations,” said Brooke Grantham, a spokesman with Canada’s Department of International Trade.

Grantham said the report was supposed to be confidential but it was leaked. He said would be able to discuss further details when it is released in late April. Canada is considering an appeal.

The Bush administration defended continued tariffs on Canadian softwood lumber imports Tuesday but said the United States remains committed to a negotiated settlement to end the dispute.

At a hearing before a Senate subcommittee, U.S. officials said tariffs are necessary to protect U.S. businesses hurt by what they called unfair subsidies from Canada’s provincial governments. Canada supplies about one-third of the U.S. market for softwood, easily sawed pine, spruce and other wood used in home-building.

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. NAFTA is a decade-old free-trade agreement linking Canada, the United States and Mexico.

Canada has argued NAFTA ruling should supersede the WTO.

U.S. Trade officials could not be immediately reached for comment.

U.S. lumber coalition chairman Steve Swanson said the WTO ruling reaffirms the American industry’s belief Canadian lumber is heavily subsidized and dumped into the U.S. market.

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