WASHINGTON - The World Trade Organization ruled Tuesday that the United States erred in approving stiff tariffs on imports of Canadian softwood lumber used to build homes.

Canada's trade minister said the interim ruling, which was not made public, supports Canada's claim that its logging practices - which include charging fees for use of government-owned forests - are not a form of subsidies.

"Yet again, it appears that the U.S. is being told that its attempts to prove that our softwood industry is subsidized are flawed," Trade Minister Pierre Pettigrew said in a statement.

But a U.S. trade official disputed Pettigrew's account.

He called the ruling mixed and said the United States prevailed in at least one crucial respect: The WTO ruled that Canada's system of providing lumber producers with timber from public lands is a financial contribution and, therefore, subject to duties such as those imposed by the United States.

The U.S. official, who spoke on condition of anonymity, said the WTO found that the United States had used the wrong methodology in calculating the tariffs - but did not say it was wrong to impose the tariffs in the first place. The WTO panel urged U.S. officials to take into account lumber prices in Canada rather than the United States in assessing any possible duty, sources on both sides of the conflict said.

"There's no longer any question that the U.S. can impose a countervailing duty on softwood lumber imported from Canada. The only question now is the amount" of the duty, the U.S. official said.

The dispute centers over differing logging practices in the two countries. 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, called stumpage, for logging. The fee is based on the cost of maintaining and restoring the forest.

The United States contends that Canada's fees are artificially low and amount to subsidies that allow Canadian mills to sell wood below market value. Last year, the Bush administration slapped antidumping duties averaging 27 percent on softwood imports from four provinces, contending that Canadian lumber imports threatened the U.S. industry.

Canada complained to the world trade body that U.S. tariffs have cost Canadian lumber companies hundreds of millions of dollars and wiped out thousands of jobs.

U.S. home builders and other lumber users supported the Canadians, saying the 27 percent duties could add more than $1,000 to the cost of a typical home.

John Allan, president of the British Columbia Lumber Trade Council, a Canadian industry group, said the WTO ruling confirmed that U.S. subsidy claims are groundless.

"The U.S. producers are persisting in their legal witch-hunt in search of a nonexistent Canadian bogeyman when they should be trying to restore stability and prosperity to the North American lumber market," Allan said.

But a spokesman for the Coalition for Fair Lumber Imports, which represents the U.S. industry, said ruling reaffirmed its belief that Canadian timber is subject to U.S. tariffs.

"They approved the fact ... that financial contributions did occur," said Scott Shotwell, a spokesman for the U.S. group.

The case is similar to a decision issued last summer. The panel is expected to issue a final report on the dispute in July.

Softwood lumber from pine, spruce, fir and hemlock trees is used to frame houses. The United States imported nearly $6 billion worth of softwood lumber last year, about one-third of the American market.

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