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Associated Press

WASHINGTON (AP) - The government has issued a preliminary decision that would impose penalty tariffs on two types of wheat from Canada, ruling that America's biggest trading partner has been dumping wheat on the U.S. market.

The Commerce Department said it planned to impose tariffs of 8.15 percent on durum wheat, which is used to make pasta, and 6.12 percent on hard red spring wheat in a case brought last September by American wheat farmers.

The ruling, which found that Canada is selling wheat in the U.S. market below the cost of production, represented a second victory in the trade dispute for U.S. farmers. In March, the Commerce Department ruled that the Canadian government was unfairly subsidizing wheat sales.

In that case, Commerce made a preliminary determination that penalty duties should be set at 3.94 percent for both durum wheat and hard red spring wheat. Canadian exporters have been required to post bonds equal to that amount until a definitive ruling in both cases scheduled for August.

Taken together, the two rulings would impose new border taxes of 12 percent on durum wheat and 10 percent for hard red spring wheat.

In Canada, government officials expressed disappointment with the ruling and said that Canadian farmers were being used by American politicians looking for someone to blame for hard times on U.S. farms.

"We reject in no uncertain terms the notion that Canadian wheat is responsible for low prices in the United States," said Canadian Agriculture Minister Lyle Vanclief. "It is regrettable that particular groups in the United States fail to recognize the existence of a North American supply cycle that dictates the market on both sides of the border."

The Commerce Department said it would issue a final ruling in both the subsidy and dumping cases on July 15. The cases then go back to the U.S. International Trade Commission in August for its final ruling whether U.S. farmers are being harmed by the shipments.

If the commission should uphold its preliminary finding of harm, the higher tariffs would go into effect.

U.S. farmers have long said the Canadian Wheat Board is unfairly subsidizing exports of wheat through a variety of policies that include insuring lower grain transportation costs.

Canadian officials have rejected the charges. They contend the support that Canada provides its farmers is less than the support American farmers get from the Department of Agriculture and in any event is consistent with global trade rules administered by the World Trade Organization.

Copyright 2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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