Lumber tariff reduction fuels dispute.

The U.S. government reduced punitive tariffs on Canadian softwood lumber imports but by less than Canada wanted, extending a heated cross-border dispute. Canadian officials denounced the decision, saying they will challenge it.

The World Trade Organization agreed to investigate whether

The Commerce Department decision would cut tariffs from an average of 27.2 percent to 21.2 percent. A preliminary U.S. decision had recommended that tariffs be cut in half for easy-to-saw pine, spruce, and other softwood lumber used to build homes.

The Department of Commerce said the final decision accurately reflected subsidies by six Canadian provinces that allow their producers to sell lumber in the United States at below normal value--at prices that compete unfairly with U.S. producers.

While the U.S. timber industry has generally applauded the tariffs, home builders on both sides of the border say they have driven up the cost of new homes in the United States and hurt Canadian lumber exporters and communities that depend on them.

The United States imported about $4.6 billion of softwood lumber from Canada in 2003, nearly a third of the U.S. market.-- Tulsa World